2023 (9) TMI 162 - AAR - GST

Classification of goods - Crackle, containing the ingredients Sugar, Cashew Nuts, Butter, Liquid glucose and other permitted Flavours - classified under the Tariff Heading 1704 enumerated at Serial number 32AA of Schedule III of Notification No. 01/2017 as a Sugar boiled confectionery or not - HELD THAT - As per HS explanatory notes, Heading 1704 of HSN covers most of the sugar preparations which are marketed in a solid or semi-solid form and generally suitable for immediate consumption thus collectively referred to as sweetmeats, confectionery or candies (based on C.B.E C FAQs issued on 29-09-2-17), Where as ,'Sugar boiled confectionery' is sugar and water, etc, boiled at such a temperature that practically no water remains and a vitreous mass is formed ,is bought and consumed by end users. In the present scenario, the impugned product is sold only to ice-cream manufactures. As per the submissions of the applicant, the impugned products are not meant for consumption by the end users directly but are used in the process of ice-cream making, specifically used as toppings only. Hence, the impugned product under the name N.B.S. Crackle which is an industrial input cannot be classified under sugar boiled confectionery . The product by name Crackle , manufactured and supplied by the applicant containing the ingredients Sugar, Cashew Nuts, Butter, Liquid glucose and other permitted Flavours, not to be classified under the Tariff Heading 1704 enumerated at Serial number 32AA of Schedule III of Notification No. 01/2017 as a Sugar boiled confectionery.

Summary

Issues Involved:
1. Classification of the product "Crackle" under GST.
2. Determination of the appropriate GST rate for the product.

Summary:

Issue 1: Classification of the Product "Crackle" under GST

The applicant, engaged in manufacturing and supplying an edible product named "Crackle" (also known as 'N.B.S Crackle'), sought an advance ruling to classify this product under the Tariff Heading 1704 as "Sugar boiled confectionery," attracting a 12% GST rate.

The applicant argued that the product contains sugar, cashew nuts, butter, and liquid glucose, and follows a manufacturing process similar to traditional sugar boiled confectionery. They supported their claim with dictionary definitions, judicial interpretations, and technical test reports, asserting that the product should be classified under tariff head 1704, specifically under Serial number 32AA of Schedule II of Notification No. 01/2017.

The Authority examined the submissions and found that while Chapter 17 of the HSN covers 'Sugar & Sugar Confectionery,' the specific classification of 'Sugar boiled confectionery' under GST requires the product to be suitable for immediate consumption by end users. However, the impugned product is sold exclusively to ice-cream manufacturers and used as an industrial input for toppings, not for direct consumption by end users. Therefore, the product cannot be classified under "sugar boiled confectionery."

Issue 2: Determination of the Appropriate GST Rate for the Product

Given the classification issue resolved above, the product "Crackle" does not fall under the specific entry of "sugar boiled confectionery" under Tariff Heading 1704. Consequently, it cannot attract the 12% GST rate applicable to sugar boiled confectionery under Serial number 32AA of Schedule II of Notification No. 01/2017.

Ruling:

Question: Whether the product by name "Crackle"�, manufactured and supplied by the applicant containing the ingredients Sugar, Cashew Nuts, Butter, Liquid glucose, and other permitted Flavours, should be classified under the Tariff Heading 1704 enumerated at Serial number 32AA of Schedule III of Notification No. 01/2017 as a Sugar boiled confectionery?

Answer: Negative.