2021 (1) TMI 547 - AAR - GST

Classification of goods - PAPAD of different shapes and sizes manufactured/ supplied by the applicant - whether the product would attract CGST and SGST? - HELD THAT - The issue of proper classification of the product Fry Snack Foods called Fryums and admissibility of exemption notification under Central Excise regime was examined by the Hon ble Customs, Excise and Gold Appellate Tribunal (CEGAT, as it was known then) in the case of TTK. PHARMA LTD. VERSUS COLLECTOR OF CENTRAL EXCISE 1992 (8) TMI 183 - CEGAT, NEW DELHI where it was held that the product Fry Snack Foods called Fryums have been considered as Namkeen and not as Papad . It can be seen that PAPAD is a thing entirely different and distinct from FRYUMS. Therefore, in common parlance or in market, Fryums are not sold as PAPAD instead of PAPAD sold as papad and Fryums are sold as Fryums. Both the products are different and have their individual identity. Accordingly, in common parlance test, the applicant s product i.e. different shapes and sizes of Papad is not Papad but is Un-fried Fryums - the Un-fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of Unfried Fryums - HELD THAT - Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. Chapter Note 6 pertaining to Tariff Item 2106 90 99 also provides inclusive definition and products mentioned therein are illustrative only - Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. The principle of ejusdem generis is applicable in interpreting the CTH No. 1905 whereby the phrase by whatever name it is known , should be read in conjunction with the terms Papad and hence the scope of the term Papad would get limited to only such word which is similar to Papad or such class of individuals. In the instant case the applicant goods un-cooked Fryums is not similar to Papad or such class of Individuals. The phrase by any other name and by whatever name it is known have a proximate purpose in a statute and hence the principle laid down by the P H High Court supra will apply on all squares. Therefore, in the instant Case the goods Papad cannot be termed as Fryums hence applicant goods is to be classified under CTH No. 2106 and not under CTH No. 1905 of Custom tariff Act, 1975 - the product different shapes and sizes un-fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods falling under Heading 2106. Therefore, Goods and Services Tax rate of 18% is applicable to the product Un-fried Fryums as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. The applicant s product of different shape and sizes is un-fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975.

Summary

Issues Involved:
1. Classification of "Papad" of different shapes and sizes under GST.
2. Determination of the applicable tariff heading and GST rate for the product.

Detailed Analysis:

Issue 1: Classification of "Papad" of Different Shapes and Sizes Under GST

Applicant's Interpretation:
- The applicant, engaged in manufacturing "Papad" of various shapes and sizes, contended that their product should be classified under Chapter Tariff Heading 1905, specifically 19059040, which exempts it from GST as per Notification No. 02/2017-CT (Rate) dated 28.06.2017.
- They argued that despite variations in shape and size, the product remains "Papad" as the ingredients and manufacturing process are consistent with traditional "Papad."

Authority's Findings:
- The term "Papad" is not defined under the Customs Tariff Act, CGST Act, GGST Act, IGST Act, or related notifications. Thus, it must be interpreted in its common parlance.
- The Supreme Court has established that in the absence of statutory definitions, terms should be construed according to their common parlance understanding (Indo International Industries v. Commissioner of Sales Tax, U.P.).
- The applicant's product, commonly known as "Fryums," does not align with the traditional understanding of "Papad" in common parlance or trade.

Judicial Precedents:
- The Tribunal in T.T.K. Pharma Ltd. v. Collector of Central Excise classified "Fryums" as "Namkeen" and not "Papad," emphasizing that the product is not immediately consumable and requires frying.
- The Supreme Court in Commissioner of Commercial Tax, Indore Vs. M/s. T.T.K. Healthcare Ltd. likened "Fryums" to "seviyan," reinforcing that they are not "Papad."

Conclusion:
- The Authority concluded that "Un-fried Fryums" are not classifiable as "Papad" under Tariff Item 1905 90 40.

Issue 2: Determination of the Applicable Tariff Heading and GST Rate for the Product

Authority's Analysis:
- Chapter Heading 2106 covers "Food preparations not elsewhere specified or included," which includes preparations for use either directly or after processing.
- The principle of ejusdem generis was applied to interpret the phrase "by whatever name it is known," limiting the scope to items similar to "Papad."
- The product "Un-fried Fryums" does not fit within this scope and is appropriately classified under Tariff Item 2106 90 99.

Applicable GST Rate:
- As per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, the product falls under Heading 2106, attracting an 18% GST rate (CGST 9% + GGST 9% or IGST 18%).

Supporting Rulings:
- The Gujarat Advance Authority in M/s. Sonal Product and the Madhya Pradesh Advance Authority in M/s. Alisha Foods have similarly classified "Fryums" under Tariff Item 2106 90 99, attracting an 18% GST rate.

Final Ruling:
- The product "Un-fried Fryums" manufactured and supplied by the applicant is classifiable under Tariff Item 2106 90 99 of the Customs Tariff Act, 1975. The applicable GST rate is 18% (CGST 9% + GGST 9% or IGST 18%).

Ruling:
Question: Under which tariff heading would "Papad" of different shapes and sizes manufactured/supplied by the applicant attract CGST and SGST?

Answer: The product "Un-fried Fryums" manufactured and supplied by the applicant is classifiable under Tariff Item 2106 90 99. The applicable GST rate is 18% (CGST 9% + GGST 9% or IGST 18%).