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2024 (10) TMI 877 - AAR - GSTClassification of goods - rate of tax - dried softy ice cream mix (low fat) in vanilla flavour - N/N. 1/2017-Central Tax (Rate) dated 28.6.2017 - HELD THAT - The product in question i.e. Vanilla Mix - dried softy ice cream mix (low fat) in vanilla flavour comprise of several ingredients and each ingredient play a role in the product. Since this product is intended to use for making of soft serves, each Ingredient has a specific role to make the soft serve smooth and creamy in texture. Further. it is also conclusive that not only the contents of the product in question but the processing done in the soft serve machine also play a vital role in giving the smooth and creamy texture characteristic of soft serves. The submissions made by the applicant are not enable and the product in question does not fall under the Heading 0404. Perusal of the Chapter Note 5 reveals that food preparations subjected to further processing for human consumption are covered under Heading 2106. It is also apparent that powders for ice-creams and similar preparations are also covered under Heading 2106. Further. preparations consisting of milk powder, sugar and any other added ingredients are also included under Heading 2106. Powder for table cream, jellies, ice-cream and similar preparations, whether or not sweetened are also included in Heading 2106. It is also evident that the product in question cannot be termed as a dairy produce. The product i.e. Vanilla Mix - dried softy ice cream mix (low fat) in vanilla flavour is classifiable under Heading 2106 90 99 of the First Schedule to Tariff Act attracting tax at the rate of 9% of CGST and 9% of SGST.
Issues Involved:
1. Classification of "Vanilla Mix" under the appropriate tariff heading. 2. Determination of the applicable rate of tax for "Vanilla Mix." Issue-wise Detailed Analysis: 1. Classification of "Vanilla Mix": The applicant, VRB Consumer Products Private Limited, sought an advance ruling on the classification of their product, "Vanilla Mix," which is a dried softy ice cream mix (low fat) in vanilla flavor. The applicant proposed that the product should be classified under Heading 0404 of the Customs Tariff Act, 1975, which covers "products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included." The applicant emphasized that milk solids, which constitute 34% of the product, are the essential ingredient, thereby justifying classification under Heading 0404. However, the Authority for Advance Ruling (AAR) found that the product contains 61.2% sugar, making sugar the major ingredient. Additionally, the product includes other ingredients such as stabilizers, anti-caking agents, and natural flavoring substances, which contribute to the product's identity and functionality. The AAR observed that the product is intended for use in making soft serves, which involves further processing in a soft serve machine, indicating that the product is a prepared foodstuff rather than a natural dairy product. The AAR concluded that the product does not fall under Heading 0404, which is meant for products of animal origin with minimal processing. Instead, the AAR determined that the product falls under Heading 2106, which covers "Miscellaneous edible preparations," including powders for ice-creams and similar preparations. The classification under Heading 2106 is appropriate given the product's composition and intended use. 2. Determination of the Applicable Rate of Tax: The applicant contended that the product should attract a tax rate of 2.5% under Heading 0404. However, based on the classification under Heading 2106, the AAR ruled that the product "Vanilla Mix" attracts a GST rate of 18%, comprising 9% Central GST (CGST) and 9% State GST (SGST). This decision aligns with the provisions of Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017, which prescribes the tax rates for various goods under the GST regime. Conclusion: The Authority for Advance Ruling concluded that the "Vanilla Mix" is classifiable under Heading 2106 90 99 of the First Schedule to the Tariff Act, attracting a GST rate of 18% (9% CGST and 9% SGST). The ruling emphasized the product's nature as a prepared foodstuff, which involves significant processing and a mixture of ingredients beyond natural milk constituents.
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