2020 (10) TMI 630 - AAR - GST

Classification of goods - ready to consume pouch milk fortified with vitamins A and D and small quantities of turmeric (Haldi) and black pepper extracts - classified under HSN 0401 and exempt under Serial No. 25 of Notification No. 2/2017- Central Tax (Rate) dated 28/06/2017 or otherwise? - whether the product gets removed from HSN 0401 for the use of the additives like the vitamins and turmeric extracts? - HELD THAT - Explanatory Note concerning HSN 0401 says, products of this heading may be frozen and may contain the additives referred to in the General Explanatory Note to this Chapter. The said General Explanatory Note states that Chapter 4 covers milk (full cream milk and wholly or partially skimmed milk), cream, buttermilk, curdled milk and cream, yoghurt, kephir and other fermented or acidified milk and cream, whey, the products consisting of natural milk constituents, not elsewhere specified or included, butter and other fats and oils derived from milk, dairy spreads, cheese and curd - The products mentioned above, the Note continues, may contain, in addition to natural milk constituents (i.e., milk enriched in vitamins or mineral salts), small quantities of stabilising agents which serve to maintain the natural consistency of the product during transport in a liquid state, as well as very small quantities of anti-oxidants or of vitamins not normally found in the product. Circular No. 52/26/2018-GST dated 09/08/2018 of TRU, Department of Revenue, Government of India (Trade Circular No. 11/2018 dated 13/08/2018 of the State Government) already clarifies that milk fortified with vitamins A and D is classifiable under HSN 0401. The above Explanatory Note further explains that such milk remains classified under HSN 0401 even if a small quantity of items containing anti-oxidant properties are added - The applicant s product, therefore, remains classifiable under HSN 0401 even after a small quantity of curcuminoids, having ant-oxidant properties, are added, provided the Analysis Report referred to in para 2.1 is accurate. It follows that the product is exempt under Entry No. 25 of the Exemption Notification.

Summary

Issues:
1. Admissibility of the application
2. Classification of the product under HSN 0401 and exemption under Entry No. 25 of the Exemption Notification

Admissibility of the application:
The applicant sought an advance ruling regarding the classification of a variant of ready-to-consume pouch milk fortified with vitamins and small quantities of turmeric and black pepper extracts. The ruling was sought to determine if the product could be classified under HSN 0401 and exempt under a specific notification. The application was admitted as the issues raised were not pending or decided elsewhere under the GST Act.

Classification of the product under HSN 0401 and exemption under Entry No. 25:
The applicant argued that the product, despite the additives, remains milk as defined in the Tariff Act. The applicant provided evidence supporting the nutritional value of the additives and the production process, claiming that the product is akin to pasteurized milk fortified with vitamins. The Authority analyzed the relevant tariff classifications and explanatory notes, concluding that the product falls under HSN 0401 even with the addition of curcuminoids. Referring to a government circular, it was clarified that milk fortified with vitamins remains classified under HSN 0401, thus exempt under the specified entry. The ruling declared the applicant's product as classifiable under HSN 0401 and exempt under the relevant notification.

This detailed judgment thoroughly examined the arguments presented by the applicant and the revenue, interpreting the relevant legal provisions and explanatory notes to arrive at a conclusion regarding the classification and exemption status of the product in question.