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2021 (1) TMI 594 - AAR - GSTLevy of GST - PAPAD of different shapes and sizes in un-cooked condition - Classification of goods - rate of tax - HELD THAT - The main ingredient of their product i.e. so called Papad of different shapes and sizes i.e. Fryums is wheat flour, superfine wheat flour, whereas main ingredient of Papad is batter of Pulses i.e. Moong dal, Udad Dal, black pepper and not of wheat Flour and Maida. In the market most popular papad are of Moong dal Papad and Udad dal papad . Therefore, main ingredients of both the Product i.e. Fryums and Papad are not same but are different. Further, the manufacturing processes of both the product have also some differences. In Fryums some sort of moisture are maintained at specific temperature and then fried the Fryums and applied Masala then put in a unit container for sale whereas Papad are required to be completely dried in sun light otherwise Papad will become rotten if some moisture remains in Papad and cannot be useful for consumption. Further Papad are commonly sold in ready to cook condition and not fried or baked whereas applicant product sold as ready to eat. Hence the applicant s claim that their product fried Fryums are known as papad is totally baseless and misleading. The applicant has relied upon the judgment of Hon ble Supreme Court in the case of Shivshakti Gold Finger 1996 (5) TMI 419 - SUPREME COURT wherein the Hon ble Supreme Court examined the matter under Rajasthan Sales Tax Act, whether Gol Papad manufactured out of Maida, Salt and Starch are Papad or not. It was held that size or shape is irrelevant and that Papad of all shapes and sizes are covered under the entry Papad. Thus, the fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of fried 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. In 5(b) above preparation for use after processing has been included and mentioned therein such as cooking, dissolving or boiling in water, milk or other liquids. Obviously, the term such as is purely illustrative but not exhaustive and therefore processing includes frying also, hence fried goods are also covered under chapter head 2106 which is ready for human consumption - In the instant case the most appropriate rule of interpretation which is to be used while interpreting the phrase by whatever name it is known in the heading 1905 is the legal principle of Ejusdem Generis. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. The words ejusdem generis mean of the same kind or nature . 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 product different shapes and sizes 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 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. It can be concluded that applicant s product of different shape and sizes is 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.
Issues Involved:
1. Classification of "Papad" of different shapes and sizes. 2. Applicable rate of SGST and CGST on the supply of such "Papad." Detailed Analysis: 1. Classification of "Papad" of Different Shapes and Sizes: The applicant, engaged in manufacturing and marketing "Papad" of various shapes and sizes, filed for an advance ruling to determine the appropriate tariff heading for their product. They argued that their product should be classified under Chapter Tariff Heading 1905, which includes "Papad, by whatever name it is known, except when served for consumption," and thus should be exempt from GST. The applicant cited various judicial pronouncements to support their claim, emphasizing the need for updated interpretation of laws in line with technological advancements and changing market trends. They also referred to previous cases where courts had classified similar products under the "Papad" category, regardless of shape or size. However, the Authority for Advance Ruling (AAR) examined whether the term "Papad" in common parlance would include different shapes and sizes of un-fried "Fryums." They referred to the Customs Tariff Act, 1975, and various judicial decisions, emphasizing the common parlance test, which interprets terms based on their popular meaning among those dealing with the subject matter. The AAR noted that "Papad" and "Fryums" are distinct products in the market, with "Fryums" commonly known as "Namkeen" and not "Papad." They concluded that un-fried "Fryums" do not fall under the tariff item 1905 90 40, which is specific to "Papad." 2. Applicable Rate of SGST and CGST on Supply of Such "Papad": The AAR then addressed the appropriate classification for un-fried "Fryums." They referred to Chapter Heading 2106 of the Customs Tariff Act, 1975, which covers "Food preparations not elsewhere specified or included." This heading includes preparations for use either directly or after processing for human consumption. The AAR concluded that un-fried "Fryums" should be classified under Tariff Item 2106 90 99, which pertains to other food preparations not specified elsewhere. Consequently, the applicable GST rate for un-fried "Fryums" is 18% (CGST 9% + GGST 9% or IGST 18%) as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended. Ruling: 1. The product of different shapes and sizes manufactured and supplied by the applicant is "un-fried Fryums" and not "Papad," and is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975. 2. The applicable GST rate on the supply of such un-fried "Fryums" is 18% (CGST 9% + GGST 9% or IGST 18%). This detailed analysis ensures that the classification and applicable tax rates are consistent with the legal interpretations and common parlance understanding of the terms involved.
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