2020 (10) TMI 724 - AAR - GST

Classification of goods - HSN Code - rate of tax - pre-mix popcorn maize packed with edible oil and salt - whether classified under HSN Heading 2008 chargeable to tax at the rate of 12%? - tax rate of 12% have retrospective effect from 1st July 2017 or not? - HELD THAT - Chapter 20 covers Preparations of vegetables, fruit, nuts or other parts of plants. As per Explanatory Notes to Chapter 20 covers vegetables, fruit, nuts and other edible parts of plant prepared r preserved not provided for in Chapter 7, 8 and 11. It is seen that these processes in Chapter 7, 8, and 11 include freezing, steaming, boiling, dried, provisionally preserved and milling. Therefore, any edible part of plant such as seeds, which is preserved in any other process than these is classifiable under Chapter 20. Explanatory Notes to chapter 2008 states that fruits, nuts and other edible parts of plants prepared or preserved in processes other than the above ones. Other substances (e.g. starch) may be added but the essential character of the edible part of the plant should remain unaltered. In the instant case, the product are corn kernels or seeds (edible parts of the maize plant) which are cleaned, destonned to which oil, salt and various spice and flavour mixes are added before being packed together. It is seen from the packaging that they are specifically packed for popcorn vending machines. Not for retail sale . The Ingredients mentioned on the packaging are Corn, RBD Plamolien oil, Iodised Salt and some of them have added flavours such as Butter Flavour, Turmeric Powder, Natural Carotenoids, natural food colours etc. The corn kernels are only cleaned and flavors added. They do not undergo any of the processes of Chapter 7, 8 or 11. This product is essentially corn kernels to which oils salt and various spices, and flavours are added. But the essential nature of the product is still the corn kernels which are the seeds of the maize plant. If heated, these corn kernels will become popcorn with the added flavours - corn kernels /seeds with added oils and spices are classifiable under CTH 20081990. Those food preparations not specified elsewhere in the Tariff and preparation for use either directly or after processing for human consumption are categorized in this head. It is also stated in the HSN notes that those preparations made from edible parts of plants of heading 2008 are excluded from this heading. Therefore, the product is question is covered under CTH 20081990 and not under CTH 2106 - On the applicable rate of tax, the product in hand is classified under CTH 20081990 and is liable to CGST @6% as per Si No 40 of Schedule II of N/N. 01/2017-C.T. (Rate) dated 28.06.2017 and SGST @6% as per Sl.No. 40 of Schedule II of Notification No. II (2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dates 29.06.2017. This rate effective from 1st July 2017 and there has been no change since then.

Summary

Issues Involved:
1. Classification of pre-mix popcorn maize under the appropriate HSN code.
2. Applicable GST rate for pre-mix popcorn maize.
3. Retrospective applicability of the GST rate from 1st July 2017.

Issue-wise Detailed Analysis:

Classification of Pre-mix Popcorn Maize:
The applicant, engaged in processing and packaging maize corn with edible oil and salt, sought to classify their product under HSN Heading 2008, which would attract a GST rate of 12%. They argued that their product, being a mixture of maize corn kernels with oil and salt, should be classified under HSN 2008 as "other edible parts of plants otherwise prepared or preserved." The applicant referenced a similar ruling by the Maharashtra AAR, which classified pre-mix popcorn under HSN 2008.

Upon examination, the Authority noted that the product consists of maize corn kernels with added oil, salt, and flavorings, specifically packed for popcorn vending machines and not for retail sale. The essential character of the product remains that of corn kernels, which are seeds of the maize plant. Under the Customs Tariff Act, Chapter 20 covers preparations of vegetables, fruit, nuts, or other parts of plants not provided for in Chapters 7, 8, or 11. Since the product retains its essential nature as corn kernels, it is classified under CTH 2008.

Applicable GST Rate:
The Authority confirmed that the product falls under CTH 20081990, which pertains to "other edible parts of plants otherwise prepared or preserved." According to Notification No. 01/2017-C.T. (Rate) dated 28.06.2017, the applicable GST rate for products under this heading is CGST @6% and SGST @6%, totaling 12%. This classification and rate have been effective since 1st July 2017 and have not changed.

Retrospective Applicability of GST Rate:
The applicant also sought clarification on whether the GST rate of 12% under HSN 2008 would apply retrospectively from 1st July 2017. The Authority confirmed that the applicable rate of CGST @6% and SGST @6% under CTH 20081990 has been in effect since 1st July 2017. Therefore, the rate of 12% is applicable retrospectively from this date.

Ruling:
1. The pre-mix popcorn maize (corn kernels) packed with edible oil and salt supplied by the applicant is classified under CTH 20081990.
2. The applicable rate of tax is CGST @6% as per SI No 40 of Schedule II of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 and SGST @6% as per Sl.No. 40 of Schedule II of Notification No. II (2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017, effective from 1st July 2017.