2022 (2) TMI 1156 - AAAR - GST

Classification of goods - rate of GST - products are mixture of flours of cereals and dried leguminous or not - Dosai Mixes - Idly Mixes - Tiffen Mixes - Health Mix - Porridge Mixes - Circular No.80 dated 31.12.2018 issued by DOR, MOF, GOT - whether these products' classification as relied on circular No.80, would fall under mere mixture of flour of ground pulses and cereals and such flour improved by the addition of very small amounts of additives or not? HELD THAT - On going through the details furnished by the appellant, it clearly shows that they are having ingredients of flour as major part, other spices are also added so as to entice the consumers to use them for consumption. Had it been mere mixture of dried leguminous vegetable flour, the common consumer does not attract to these products. Thus the products manufactured would certainly have value addition which would basically distinguish the products of the appellants from that of mere mixture of various flours of cereals. The explanatory note and entry in serial number 59 of Schedule I of Notification No. 1/2017- Central Tax Rate, dated 28-6-2017speaks about the flours of cereals and dried leguminous vegetables. Whereas the products of the appellants do contain the flour and the same is not meant for supply as flour but meant as dosai mix, idly mix, vada mix, tiffin mix, health mix and porridge mix which are the products for human consumption by way of cooking as directed in the container label. Hence these products are not mere mixture of dried leguminous vegetable or cereals and hence not classifiable under HSN 1106. The appellant has relied on the decision of Gujarat Advance Ruling Authority, in the case of IN RE M/S. DIPAKKUMAR KANTILAL CHOTAI (TALOD GRUH UDYOG) , 2021 (1) TMI 693 - AUTHORITY FOR ADVANCE RULING, GUJARAT claiming similarity between the products. Though Advance Ruling is applicable only to the person seeking the said ruling, the jurisdictional authority and the concerned Authority, it is pertinent to mention that the relied upon decision has been appealed by the Department and the Gujarat Appellate Authority in the said case of IN RE SHRI DIPAK KUMAR KANTILAL CHOTAI (TALOD GRUH UDYOG) , 2021 (10) TMI 54 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT , has held that the Instant Mixes' are classifiable under CTH 2106 and are covered under Sr. No. 23 of Schedule-Ill of Notification No. 01/2017-C.T.(Rate) as amended and are leviable to GST @ 18%. Further the appellant at the time of personal hearing has stated that the learned State jurisdictional authority who has the administrative jurisdiction over the applicant, has stated that the applicant's products fall under the chapter heading 2106 attracting GST 5% as per Notification No.41/2017, dated. 14.11.2017 through their written submissions. It is worth mentioning that the remarks of the Jurisdictional Officer is not substantiated and it is his comments/opinion and this Authority is not bound by their observations. Further, Advance Ruling is a facility extended to the applicant to have clarity on the tax liability of their supplies being made/proposed to be made and this authority examines the facts independently - also, under Section 60 of the GST Act 2017, the appellants might have availed the opportunity of provisional assessment before the jurisdiction Assessing officer. Having failed to avail this, the appellant need not raise the issue before this forum. Appeal dismissed.

Summary

Issues Involved:

1. Classification of products under HSN codes.
2. Applicable GST rate for the products.
3. Interpretation of circulars and notifications regarding GST rates.
4. Consideration of previous rulings and their applicability.

Detailed Analysis:

1. Classification of Products under HSN Codes:

The appellant, a manufacturer of various ready-to-cook food products, argued that their products should be classified under HSN codes 0713 and 1106, which pertain to dried leguminous vegetables and their flours. They cited Circular No. 80 dated 31.12.2018, which clarifies that mixtures of flour of ground pulses and cereals fall under HSN 1106. The appellant contended that their products are similar to those described in the circular and should thus be classified under HSN 1106, attracting a lower GST rate.

However, the judgment emphasized that the products contain significant value additions beyond mere flour mixtures, such as spices and other ingredients to enhance taste and appeal. These additions distinguish the products from simple flour mixtures and align them more closely with food preparations not elsewhere specified, as described under HSN 2106.

2. Applicable GST Rate for the Products:

The appellant sought clarification on the applicable GST rate for their products, arguing for a 5% rate based on their classification under HSN 1106. The Lower Authority ruled that the products fall under HSN 2106, attracting an 18% GST rate (9% CGST + 9% SGST).

The judgment upheld this classification, stating that the products are food preparations requiring further cooking, thus fitting the description under HSN 2106. The products are not simple flour mixtures but are enhanced with additional ingredients, making them distinct from the items covered under HSN 1106.

3. Interpretation of Circulars and Notifications Regarding GST Rates:

The appellant relied heavily on Circular No. 80 and other notifications to support their classification under HSN 1106. They argued that their products, being mixtures of flour with minor additives, should fall under the lower GST rate category.

The judgment clarified that while the circular provides guidance, the specific nature and composition of the appellant's products, which include significant value additions, align more with the descriptions under HSN 2106. The products are intended for human consumption after further cooking, fitting the criteria for food preparations not elsewhere specified.

4. Consideration of Previous Rulings and Their Applicability:

The appellant referenced previous rulings, including those from the Gujarat Authority for Advance Ruling, which classified similar products under HSN 1106. However, the judgment noted that these rulings are specific to the applicants who sought them and are not universally applicable.

The judgment also highlighted that the Gujarat Appellate Authority had subsequently classified similar instant mixes under HSN 2106, supporting the Lower Authority's decision in this case.

Conclusion:

The judgment concluded that the appellant's products, being enhanced mixtures requiring further cooking, are correctly classified under HSN 2106. This classification attracts an 18% GST rate. The appeal was dismissed, upholding the Lower Authority's ruling.