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2021 (8) TMI 838 - AAR - GSTClassification of goods - rate of tax - HSN Code - Supply of various instant flour mixes - Composite supply or mixed supply - Gota Instant mix flour - Khaman Instant mix flour - Dalwada Instant Mix Flour - Dahiwada Instant Mix Flour - Idli Instant Mix Flour - Dhokla Instant Mix Flour - Dhosa Instant Mix Flour - Pizza Instant Mix Flour - Methi Gota Instant Mix Flour - Handvo Instant Mix Flour - instant mix flour for gota/methi gota along with chutney powder/kadhi chutney powder - khaman along with masala pack - HELD THAT - The Classification of goods under GST is based on HSN. The customs Tariff is based on HSN. The general Interpretative Rules are to be sequentially followed as the way to classify the goods. We are to classify within the confines of law and procedure as laid down in GST regime. The Section notes and chapter notes of Custom Tariff are part and parcel of the Custom Tariff Act, 1975 which is to say, part and parcel of law enacted by the Parliament and therefore, we are obliged in GST regime to follow the classification based on HSN as per law. The Explanatory notes to HSN have guidance value to classify goods. As per Rule 1 of the General Rules for the Interpretation of CTA, 1975, for legal purposes, classification shall be determined according to the terms of the headings and any relative Section of Chapter Notes. Thus, the classification of the product is required to be determined in accordance with the terms of the headings. As per Chapter Heading11.06, it covers Flour, Meal and Powder of the dried leguminous vegetables of Chapter Heading 07.13 and other specified products. On inspection of the Packets of each product, we find that each of the packet is marked Instant Mix - As the products of the applicant contain Spices and additives in different proportions, which are not mentioned in the Chapter Heading 11.06 or the relevant Explanatory Notes of HSN. The applicant has referred to CBIC Circular No. 80/54/2018-GST dated 31.12.2018, which has inter-alia clarified the applicability of GST on Chhatua or Sattu . The CBIC has clarified in the Circular that the flour of ground pulses and cereals, improved by the addition of very small amounts of additives continues to be classified under HSN Code 1106. On examination of the percentage breakup of the subject products and the composition of the products, we find that this is not the case of addition of very small amounts of additives in subject products - the subject Circular is not applicable in present case as the said products are different from Sattu and have spices and additives in varying proportions as cited by the applicant and are in the nature of instant mix. The various products being supplied by the applicant contain Spices and additives apart from flour of dried leguminous vegetables, rice and wheat, in different proportions. The Spices and additives contained in these products include Sugar, Iodised Salt, Chili Powder, Turmeric powder, Sodium Bicarbonate, Citric Acid, Hydrogenated Vegetable Oil, Citric Acid etc. These Spices and additives are other than those substances mentioned in the Explanatory Notes of HSN for Chapter Heading 11.01 and 11.02 which could be added in very small quantities to improve or enrich the flours and the resultant product still remain classified in those Chapter Headings - It is also evident from the recipe submitted by the applicant that the Spices and additives have been added to the flours with a view to their use as food preparations. As such, in view of the Explanatory Notes of the HSN, these products are excluded from the Chapter Heading 1101 and 1102. The idli mix or dhosa mix are completely different from idli/dhosa batters. Idli/Dhosa batters are in semi- liquid form which can be directly poured on to the frying pans for preparation of idlis and dhosas - Instant mix of idli/dhosa are not idli/dhosa batters and therefore does not get covered under Sl. no. 100A, Chapter/Heading/ Subheading / Tariff item 2106 as Roasted gram, idli/dosa batter, chutney powder. The subject 10 products of Mix Flour/ Instant Mix Flour are preparations for use, after processing, such as cooking, carrying out the detailed procedure for cooking as mentioned on the packets of all the said products, then ready for human consumption - Chapter Heading 2106 is not confined to processed or semi processed food, cooked or semi cooked food, preserved food and ready to eat food. In fact, a food preparation which is not elsewhere specified in the HSN, gets covered under HSN 2106. On the packets of all the above products-Category Instant Mix has been printed on the packets and the detailed procedure recipe is printed on back side of the packets - there are no merit to treat the subject goods as flour. As these products are not specifically mentioned under any specific Tariff item, the products merit classification under the residual entry other at HSN 210690. Though the issue involved in that case was regarding admissibility of Sl. No. 28 of Notification No. 3/2006-Central Excise to the Instant Food Mixes (Gota Mix, Khaman Mix, Dal Wada Mix etc.), the fact that in the said Sl. No. 28, the description of goods mentioned against Chapter Heading 2106 included Instant Food Mixes such as Pongal mix, Vadai mix, Pacoda mix, Payasam mix, Gulab Jamun mix, Rava Dosa mix, Idli mix, Dosa mix, Murruku mix, and Kesari mix, supports our view that various Instant Food Mixes (Instant Mix / Ready Mix Flour) being supplied by the applicant are classifiable under HSN 2106. Applicable rate of GST - HELD THAT - Food preparations not elsewhere specified or included falling under Chapter Heading 2106 are covered under the aforesaid Entry at Sr. No. 23 of Schedule- III of Notification No. 1/2017-Central Tax, as amended, attracting Goods and Services Tax @ 18%, though some of the specific products of Chapter Heading 2106 excluded from this entry are covered under different entries of Schedule-I or Schedule-II, attracting Goods and Services Tax @ 5% or 12%. None of the aforesaid 10 products of various Instant Mix / Ready Mix Flour being supplied by the applicant are the products which have been excluded from the entry at aforesaid Sr. No. 23 of Schedule III or which have been specifically included in any other entry of other Schedule of Notification No. 1/2017-Central Tax, as amended or in any of the entries of Notification No. 2/2017-Central Tax. The gotas/methi gotas and chutney powder/kadhi chutney powder supply is not naturally bundled and the supply is for a single price. Also the supply of Khaman instant mix flour with masala pack is not naturally bundled and the supply is for a single price. These supplies fall under mixed supply. As per law, a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. Thus, these mixed supply shall be treated as a supply of Instant Gota Mix OR Instant Methi Gota Mix or instant Khaman mix flour in said matter.
Issues Involved:
1. Classification and applicable GST rate on various instant mix flours. 2. Classification and applicable GST rate on instant mix flour supplied with chutney powder/kadhi chutney powder. 3. Classification and applicable GST rate on instant mix flour supplied with masala pack. Analysis of Judgment: 1. Classification and Applicable GST Rate on Various Instant Mix Flours: The applicant, M/s. Ramdev Food Products Pvt. Ltd., manufactures and supplies various instant mix flours such as gota, khaman, dalwada, dahiwada, idli, dhokla, dhosa, pizza, methi gota, and handvo. The classification of these products under GST is based on the Harmonized System of Nomenclature (HSN). The applicant argued that these products should be classified under HSN 1101, 1102, or 1106 based on their dominant flour component. However, the Authority for Advance Ruling (AAR) held that these products contain significant proportions of spices and additives, which are not mentioned in the relevant HSN headings or explanatory notes. The AAR referred to the CBIC Circular No. 80/54/2018-GST dated 31.12.2018, which clarified that flour improved by the addition of very small amounts of additives continues to be classified under HSN code 1106. However, the AAR found that the applicant's products contain higher proportions of additives and spices, making the circular inapplicable. The AAR concluded that the products are not merely flour but food preparations that require further processing and cooking. Therefore, they are classified under HSN 2106 90 as "Food preparations not elsewhere specified or included," attracting 18% GST (9% CGST + 9% SGST) as per Sl. No. 23 of Schedule-III to the Notification No. 01/2017-Central Tax (Rate) dated 28-6-17. 2. Classification and Applicable GST Rate on Instant Mix Flour Supplied with Chutney Powder/Kadhi Chutney Powder: The applicant supplies instant mix flour for gota/methi gota along with chutney powder/kadhi chutney powder. The AAR examined whether this constitutes a composite supply or a mixed supply under Section 8 of the GST Acts. The definitions of "composite supply" and "mixed supply" were analyzed, and it was determined that the supply of gota/methi gota and chutney powder/kadhi chutney powder is not naturally bundled but supplied for a single price. As a result, this constitutes a mixed supply, which is treated as a supply of the item attracting the highest rate of tax. Hence, the mixed supply of instant mix flour of gota/methi gota with chutney powder/kadhi chutney powder is treated as a supply of Instant Gota Mix Flour/Instant Methi Gota Mix Flour, classified under HSN 2106 90, attracting 18% GST (9% CGST + 9% SGST). 3. Classification and Applicable GST Rate on Instant Mix Flour Supplied with Masala Pack: The applicant supplies instant mix flour for khaman along with a masala pack. The AAR determined that this supply is not naturally bundled and is supplied for a single price, making it a mixed supply under Section 8 of the GST Acts. Consequently, the mixed supply of instant mix flour of khaman and masala pack is treated as a supply of Instant Mix Flour of Khaman, classified under HSN 2106 90, attracting 18% GST (9% CGST + 9% SGST). Ruling: 1. The ten instant mix flour products are classified under HSN 2106 90, attracting 18% GST (9% CGST + 9% SGST). 2. The mixed supply of instant mix flour of gota/methi gota with chutney powder/kadhi chutney powder is treated as a supply of Instant Gota Mix Flour/Instant Methi Gota Mix Flour, classified under HSN 2106 90, attracting 18% GST (9% CGST + 9% SGST). 3. The mixed supply of instant mix flour of khaman and masala pack is treated as a supply of Instant Mix Flour of Khaman, classified under HSN 2106 90, attracting 18% GST (9% CGST + 9% SGST).
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