9911796707
TMI Blog2018 (12) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... on-1, dated 29 June 2017 (collectively referred to as the 'Rate Notifications') if not, whether on facts and circumstances of the case, the Unleavened Flatbreads be classified: (i) as 'bread' as mentioned under Entry No. 97 of Notification Number 02 Number 2/2017- Integrated Tax (Rate), dated 28 June 2017, Notification Number 2/2017-Central Tax (Rate), dated 28 June 2017 and Notification Number 2/2017-State Tax (Rate) No. MGST1017/ C.R. 103(1)/Taxation-1, dated 29 June 2017 (collectively referred to as the 'Exemption Notifications); or (ii) as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included [other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905]on a totally defatted basis not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905) under Entry No, 13 of Schedule III of Rate Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, Pancakes supplied be treated as All Goods i.e. Waffles and wafers other than coated with chocolate or containing chocolate; biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread) as mentioned under Entry No. 16 of Schedule III of Rate Notifications, If not whether on facts and circumstances of the case, the Pancakes be classified any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit 5. "Whether on facts and circumstances of the case, Pizza Base supplied be treated as 'Pizza Bread' as mentioned under Entry No. 99 of Schedule / of Rate Notifications. If not, whether on facts and circumstances of the case, the Pizza Base be classified any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atta, maida, water, palmolein oil, salt, sugar, baking powder, wheat gluten etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the bread is packed, the packet is labelled and subsequently stored and transported at -18 Degree Celsius temperature or transported ambient. We have attached herewith the manufacturing process flow as Exhibit 1. Leavened Flatbread information ('Bread Products') 1.8. The Applicant has been engaged in manufacturing and supplying leavened flatbreads including Naan, Kulcha and variants of these type of leavened breads referred to internationally in different countries as Pitta bread, Chalupa, Corn bread, Leavened Flatbreads and Unfolded Leavened FIatbread. 1.9. While manufacturing these leavened flatbreads, the Applicant uses various raw materials such as maida, tandoori atta, atta, water, rice flour, oil, yeast, salt, sugar etc. The bakery process can be defined as a succession of steps that ensure the proper transformation of basic ingredients into leavened flatbread. The baking processes the Applicant uses follow the same basic steps as, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported at - 18 Degree Celsius temperature. These products are similar to cakes included in entry number 16 of Schedule III to the Rate Notifications. We have attached herewith the manufacturing process flow as Exhibit 1. Pizza bread information 1.17. The Applicant manufactures and supplies Pizza bread which is also called Pizza base. The products are manufactured by the Applicant using various ingredients including flour, water, sugar, salt, baking powder, yeast, oil etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the pizza bread is packed and labelled and subsequently stored and transported at- 18 Degree Celsius temperature. We have attached herewith the manufacturing process flow as Exhibit I. Questions before AAR 2.1. The Applicant has approached the Hon'ble authority to determine the classification of * Unleavened Flatbreads such as Plain Chapatti, Tortilla, Tortilla Wraps, Wraps, Roti Rolls, Roti, Chapatti, Paratha and Paratha Wraps * Leavened Flatbreads such as Naan, Chalupa, Pita Bread, Kulcha, Leavened Flatbread, Unfolded Leavened Flatbread * Wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case, the Flatbreads be classified: (i) as 'bread' as mentioned under Entry No. 97 of Notification Number 02 Number 2/2017 Integrated Tax (Rate), dated 28 June 2017, Notification Number 2/2017-Central Tax (Rate), dated 28 June 2017 and Notification Number 2/2017-State Tax (Rate) No. MGST10171 C.R. 103(1)/Taxation-1, dated 29 June 2017 (collectively referred to as the 'Exemption Notifications'); or (ii) as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905] on a totally defatted basis not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905) under Entry No. 13 of Schedule III of Rate Notification or (iii) Any other Schedule Entry as per Rate Notification or Exemption Notification as your good office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing unleavened flatbreads. The products are manufactured by the Applicant using various ingredients including atta, maida, water, palmolein oil, salt, sugar, baking powder, wheat gluten etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling, After the cooling process, the unleavened flatbread is packed and labelled and subsequently stored and transported at -18 Degree Celsius temperature or transported ambient. 1.6. Further, we wish to reiterate the fact that the Applicant uses atta, maida, water, palmolein Oil, salt, sugar, baking powder, wheat gluten etc. while manufacturing the range of unleavened flatbreads. We have attached herewith Exhibit 3 providing the list of ingredients used for each of the unleavened flatbreads the Applicant produces. 1.7. In the light of the above discussion, we wish to mention that the ingredients used and the processes followed while manufacturing the unleavened flatbreads and Plain Chapatti or Roti are similar. Thus, the Applicant is of the belief that the range of unleavened flatbreads should to be classified under Entry No. 99A of Schedule of Rate Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ysed on the basis of how these expressions are used in the trade or industry or in the market or, in other words how these are dealt with by the people who deal in them. Though the common parlance or commercial parlance tests are the generally accepted tests, various other tests have been evolved from time to time to interpret items of taxing statutes. One of such tests is "commonsense test" or "commonsense rule of interpretation" On the basis of the above judgments, it can be concluded that either the common parlance or the user test should be applied in interpreting a word not defined by the statute. 1.11. In the present instance, the conditions laid down for applying the common parlance test as described above (i.e. not defined in the statute and having an open market) are satisfied. Hence, it is humbly submitted that the word 'Plain Chapatti or Roti' should be understood in the sense in which it is understood by the common man and by any common trader in the food industry, 1.12. In this regard, the Applicant wishes to submit that they are engaged in manufacturing and supplying unleavened flatbreads including Plain Chapatti and variants of Chapatti flatbreads referred to inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the range of unleavened flatbreads manufactured and supplied by them should be classified as 'Plain Chapatti or Roti' and should accordingly be levied to GST. 1.18. Without prejudice to the above mentioned submission, in case the unleavened flatbreads manufactured by the Applicant does not qualify as 'Plain Chapatti or Roti' within the meaning of Rate Notification, we request your good office to provide ruling on its possible alternate classification under below mentioned entry considering the facts and circumstances of the case. (i) Entry No. 97 of Exemption Notification, which stands for Bread (branded or otherwise), except when served for consumption and pizza bread; or (ii) Entry No. 13 of Schedule III of Rate Notification, which stands for Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included (Other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905]on a totally defatted basis not elsewhere specified or included (oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the tariff item, subheading, heading and chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the first schedule to the Customs Tariff Act, 1975 (51 of 1975). Reference to Customs Tariff Act, 1975 (51 of 1975) It is now pertinent to understand the clarification provided under the Customs Tariff Act, 1975 with respect to Heading 1905. The relevant entry is attached herewith as Exhibit 2. The said chapter 19 does not provide any clarification with respect to these terms in form of chapter notes, heading notes. Thus, the said term 'leavened bread would need to be understood as known in common parlance. Dictionary meaning of the term 'bread' 2.4. The Webster Dictionary has defined the term 'bread' as a usually baked and leavened food made of a mixture whose basic constituent is flour or meal. The definition basically consists of two parts, one process of making bread ie. Baked and leavened and other is ingredient used while manufacturing bread ie, Flour or meal. Upon the satisfaction of the above mentioned conditions, the leavened flatbreads would be classified as bread. 2.5. In this regard, we wish to submit that the Applicant f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s used everyday by those who use or deal with those goods. The copy of the judgment is attached as Exhibit 4. 2.9. The Apex Court has laid down as to when the common parlance test can be used. It has provided that the following conditions need to be satisfied to call for common parlance test. These are; * No meaning has been attributed in the statute * There is an open market for such goods The above position has been succinctly encapsulated by the Hon'ble Bombay High Court in the case of Pharm Aromatic Chemicals v MCGM (1997 (95) ELT 203 Bom) = 1994 (2) TMI 320 - BOMBAY HIGH COURT. The Bombay High Court commented'. Various principles or tests have been evolved by the Supreme Court from time to time for interpretation of items of taxable goods. One of the well-known principles of interpretation is that words of everyday use must be construed not in the scientific or technical sense but as understood in the common parlance 2.10. Another test akin to the common parlance test is the "commercial parlance test". According to this test, items in taxing statutes should be judged and analysed on the basis of how these expressions are used in the trade or industry or in the market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce indicates 'served in hotels, restaurants, eating houses and meant for immediate consumption. In this regard, the Applicant wishes to submit the fact that it does not serve any of its leavened flatbreads for immediate consumption to its customers. 2.17. In this regard, the Applicant places reliance on the judgement delivered by tribunal in case of East India Hotel on 31 March, 2009. The issue before the said tribunal was whether bread sold from the shop in the shopping arcade of the Five Star Hotel as counter sale is covered by the schedule entry A-4 of the BST Act or as covered by the schedule entry C-II-1 5. The entries A-4 & C-11-15 at the time of decision were as follows: A-4: "Bread in loaf or rolls or in slices, toasted or otherwise except when "sewed for consumption" in any public restaurant including any eating house, hotel, refreshment room or boarding establishment or any part thereof which is large or in any club or by a caterer or when sold under a registered trade mark" C-11-15:" Food and the alcoholic drinks 'served for consumption' in any eating house, restaurant, hotel refreshment room or boarding establishment or any part thereof having gradation of the four ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards to Question No. 3 "Whether on facts and circumstances of the case, Corn Chips, Corn Taco and Corn Taco Strips supplied be treated as Wafers under Entry No. 16 of Schedule III of Rate Notifications If the same is not classifiable as 'wafer', whether on facts and circumstances of the case, the Corn Chips, Corn Taco and Corn Taco Strips be classified (i) as "Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905]on a totally defatted basis not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905)" under Entry No. 13 of Schedule III of Rate Notification; or (ii) Any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit Applicant's interpretation of law or facts 3.1 The Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... small quantities of cellulose gum, citric acid, guar gum etc. Further, customers in the foodservice channel and, in some cases, the end consumer fry the products which makes them cripsy similar to products such as wafers, i.e. a thin crisp cracker. 3.6 Hence, it can be concluded that Corn Chips, Corn Taco and Corn Taco Strips are classifiable under entry number 16 of Schedule III of the Rate Notification. Common and Commercial Parlance Theory 3.7 Without prejudice to above submission, we wish to reiterate our submission with respect to common and commercial parlance theory made under applicants interpretation of fact and law of Question 1: 3.8 The courts in various rulings have upheld the position that in the absence of a statutory definition, a word is to be interpreted by understanding its meaning under the common parlance. It has provided that the following conditions need to be satisfied to call for common parlance test. * No meaning has been attributed in the statute * There is an open market for such goods. 3.9 Another test akin to the common parlance test is the "commercial parlance test". According to this test, items in taxing statutes should be judged and analyse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Chapter 1905 32 90 subject to GST accordingly. Contextual interpretation 3.18 Snacks such as Corn Chips, Corn Taco and Corn Taco Strips are seen as an alternative to potato chips, cream wafers, etc. Corn Chips, Corn Taco and Corn Taco Strips are becoming popular amongst consumers with the increasing demand for alternative varieties of wafers and snacking food items. 3.19. Hence, considering the context surrounding such products, it should be concluded that they are similar to wafers falling under Chapter 1905 32 90 subject to tax accordingly. 3.20 Without prejudice to the above mentioned submission, in case the Corn Chips, Corn Taco and Corn Taco Strips manufactured by the Applicant does not classify as 'wafer' within the meaning of emption Notification, we request your good office to provide ruling on its possible alternate classification under (i) Entry No. 13 of Schedule III of Rate Notification, which stands for Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included (other than preparations for infants or y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancakes' 4.4 In this connection, we refer to dictionary meaning of the term 'Pancake'. The Webster Dictionary defines it as 'a flat cake made of thin batter and cooked (as on a griddle) on both sides'. Pancakes are generally prepared from starch based batter. 4.5 The products are manufactured by the Applicant using various ingredients including flour, water, sugar, salt, milk, syrup, vegetable oil etc. Upon raw material intake, the ingredients go through various processes including mixing, dough dividing, baking on a hot plate on both sides and cooling- After the cooling process, the pancake is packed and labelled and subsequently stored and transported at - 18 Degree Celsius temperature. Basically, it is a flat cake, often thin and round, prepared from a starch based batter and is cooked on a hot surface such as griddle or frying pan. It may be served at any time of the day with the variety of the topping or fillings including jam, fruit, syrup or ice cream. Common and Commercial Parlance Theory 4.7 Without prejudice to above submission, we wish to reiterate our submission with respect to common and commercial parlance theory made under applicants interpretation of fact and l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the said term is not defined under Customs Tariff Act, 1975. Common Parlance Theory 5.5 It is humbly submitted that the Applicant manufactures 'pizza bread'. The pizza bread is subsequently used as the bread on which toppings such as cheese and sauce are added by the customer or end consumer. Such bread is commonly known as 'pizza bread' in grocery stores across the country, people purchase 'pizza bread' in order to prepare pizzas at home using their own ingredients for toppings. Customers in the foodservice channel, such as restaurants, also purchase pizza bread that they apply a topping to before heating it up or cooking it and sending the finished product to their customers. 5.6 Basis the plain reading of the notification and the meaning of the word 'pizza bread' under common parlance, the Applicant submits that entry number 99 of Schedule I to the Rate Notifications should apply and GST to be levied accordingly. 5.7 Without prejudice to the above mentioned submission, in case the product manufactured by the Applicant does not qualify as 'pizza bread' within the meaning of Rate Notification, we request your good office to provide ruling on its possible alternate classifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ater 2. Sunflower Oil 3. Palmolein Oil 3. Water 4. Wheat Gluten 4. Rice Flour 5. Salt 5. TBBI 6. Dimodaan Hp-1 6. Yeast 7. Sugar 7. Salt 8. Baking Powder 8. Sugar 9. Gluten List of Ingredients Pizza Bread Corn Chips S. No. Ingredients S. No. Ingredients 1. Maida 1. Masa flour Water 2. Water 2. Water 3. Glycerine 3. Cal.Prop 4. Wheat Gluten 4. Citric Acid 5. Salt 5. Cellulose Gum 6. Sugar 6. Gaur gum 7. Yeast Corn Taco strips 8. Baking Powder S. No. Ingredients 9. Sunflower Oil 1. Masa flour Water 10. TBBI 2. Water 11. Datem 3. Cal. Prop 12. Calcium Propionate 4. Citric Acid 13. Chilli Flakes 5. Cellulose Gum 14. Oregano Leaves 6. Gaur Gum Corn Bread Pancakes S. No. Ingredients S. No. Ingredients 1. Wheat Flour 1. Maida 2. Water 2. Water 3. Vegetable ghee 3. Sugar 4. Whole ground corn 4. Salt 5. Lime juice 5. Sodium bicarbonate 6. Sugar 6. Sodium acid pyrophosphate 7. salt 7. citric acid 8. Emulsifier 8. calcium propionate 9. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finished Goods Storage-Cold Room @ <-18 C Dispatch Additional submission to Advance Ruling application submitted by applicant on 23 May 2018 We, Signature International Foods India Private Limited (the "Applicant" or "Company") a private limited company incorporated under the provisions of the Companies Act, 1956 holding GST registration number 27AACCH2133E1Z3, have filed an advance ruling application on 23 May 2018 for the classification of products manufactured by and supplied by the Company. In this connection, we have attended a personal h earing for the acceptance or rejection of the application of advance ruling under sub section (2) of section 98 of Central and Maharashtra Goods and Service Tax Act, 2017 (the Act) on 3 July 2018. During the course of the personal hearing, the authorized representative of the Office of Assistant Commissioner of State Tax (the Nodal Officer) has submitted a letter providing views on the classification of bakery products manufactured and supplied by the Applicant. In the letter, the learned Nodal Officer has given his opinion in respect of the classification of bakery products, as under: a. Indian food stuff like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wraps, Paratha Wraps and other variants of leavened flatbreads such as leavened flatbreads and unfolded leavened flatbreads. Without prejudice to submissions made in the advance ruling application, the Applicant wishes to make an additional submission providing a responses to the views provided by the learned Nodal Officer on variants of unleavened flatbreads and all types of leavened flatbreads. It shall be noted that this additional submission shall be considered to be in addition to submissions made in advance ruling application. Applicants additional submissions-- 1. Applicants response to classification of some variants of unleavened flatbreads such as Roti Rolls, Paratha and Paratha Rolls 1.1 The Applicant wishes to submit that learned Nodal Officer has not considered ingredients and the manufacturing processes used while manufacturing unleavened flatbreads. In the letter, it was mentioned that (i) the food stuff such as Paratha, Paratha Rolls, Roti Rolls shall be classified as per the common parlance test as laid down by the Hon'ble Supreme Court of India (ii) Indian food stuff products such as Paratha, Paratha Rolls, Roti Rolls cannot be identified as Plain Roti or R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same or similar and the predominant usage or function of the unleavened flatbreads is as an underlying carrier in one's meal. 1.6 Additionally, the learned Nodal Officer has mentioned that common man cannot say Paratha or Roti Rolls as plain Roti, Roti. In this regard, we wish to submit that the learned Nodal Officer has applied 'nomenclature test' only while classifying unleavened flatbreads. While it has not given any importance to the End User Test, which is also relevant in the underlying case. In food industry, various types of unleavened flatbreads are called different names by different users depending upon the regions where the food is served or consumed. variants of Chapatti flatbreads are referred to internationally in different countries as Tortilla, Tortilla Wraps, Wraps, Roti Rolls, Roti, Chapatti, Paratha and Paratha Wraps. Therefore, it is imperative that one shall give due regards to End User Test also. Considering the same, we wish to reiterate the fact that various types of unleavened flatbreads like those mentioned in the application are being used in one's daily meal accompanied by protein or vegetables and sauce and hence, shall be classified as Plain Chapat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riants of unleavened flatbreads. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the unleavened flatbread is packed and labelled and subsequently stored and transported at -18 Degree Celsius temperature or transported ambient. 7. It shall be noted that the residual category was introduced for those product categories, which cannot be classified under any of the schedules of Rate Notification. The learned Nodal Officer has not given due regard to ingredient test, manufacturing test and end-user test in its submissions. Thus, we wish to continue with the interpretation provided in the advance ruling application. 8. Applicants response to classification of leavened flatbreads such as Naan, Chalupa, Pita Bread, Kulcha, Unfolded Flatbread 2.1 We wish to re-submit that learned Nodal Officer has not considered ingredients and the manufacturing processes used while manufacturing leavened flatbreads. In the letter, it was mentioned that: Sr.No. Name of Leavened flatbread Learned Nodal officer's relevant contentions 1. Chalupta 1. Traditional Chalupa are small. thick, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance ruling from Para 2.1 till Para 2.18 in Annexure III wherein we have provided our submissions with respect to applicability of exemption in respect of all variants of leavened flatbreads considering above mentioned tests. We have provided below our additional responses to the contentions of learned Nodal Officer with respect to the classification of leavened flatbread. Leavened Flatbread - Chalupa 2.5. The learned Nodal Officer has mentioned that: "a Chalupa is a specialty of Mexico. Traditional Chalupa are small, thick, boat shaped fried maza topped only with salsa, cheese and shredded lettua. These are filled with various ingredients such as chicken, pork, chopped onion etc. So, in view of the manufacturing process and type of ingredients used in it, so the Chalupa could not fall under Entry No. 97 of the Exemption Notification. It would be covered under residual entry and taxable at 9% in CGST and MGST Act". 2.6. In this connection, we wish to submit that the learned Nodal Officer has not taken the list of ingredients submitted along with the advance ruling application into consideration. We wish to submit that the Applicant does not use Chicken, Pork, Chopped Onion etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the menu cards of many restaurants across India and internationally. 2.12. The range of leavened flatbreads manufactured by the Company, including naan, are produced on the same production line using the same or similar production methods and processes. The flow chart included in the original application shows that the Applicant follows the same or similar processes for all variants of leavened flatbreads. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the leavened flatbread is packed and labelled and subsequently stored and transported at -18 Degree Celsius temperature or transported ambient. 2.13. Without prejudice to above mentioned submissions and submissions made in application for advance ruling, we wish to submit that the learned Nodal Officer confirmed that Naan is used as a Roti, which is eaten with curry in South Asia. Considering the same, it shall be classified under Entry NO. 99A of Schedule I of Rate Notification ie. Plain Chapatti or Roti. However, the learned Nodal Officer has classified the same under residual category without providing any lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsumer as there are certain additional processes such as defrosting, addition of toppings and heating which is carried out before serving for consumption to the end consumer or customer. 2.20. The majority of the products supplied the Company are supplied frozen at a temperature of -18*c. It is not possible for the customer or end consumer to eat the product when they receive it at -18*c for a number of reasons. The first reason is that the bread is very hard when it is in a frozen state and the person trying to eat the frozen product could damage their teeth if they try to bite into the frozen product. Frozen bread can be very brittle and there is a risk that the bread breaks into pieces if someone tries to eat it. The bread would not be functional as a carrier in its frozen state. In addition, frozen bread does not taste good. The points above are relevant if the bread is bought by a customer in the foodservice channel such as hotels and restaurants or if the frozen bread is consumed in the home. Therefore, the breads that the Company supplies are not served for immediate consumption and are not ready to serve. 2.21. The customer or end consumer the thaws the frozen bread and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, corn chips corn taco, corn taco strips. The dealer seeks clarification of tax rate in respect of following commodities. 1 Unleavened flat breads 2 Leavened flat breads. 3 Corn chips, Corn Taco, Corn Taco strips. 4 Pan cake. 5 Pizza bread. I have gone through the submission of documents submitted by the dealer. I will discuss each item one by one and explain my opinion in this regard as below. Unleavened flat breads - Dealer is engaged in manufacturing of Unleavened flat breads like Roti, Chappati, Paratha, Paratha wraps, Tortilla, Tortilla wraps, Roti Rolls, etc. 1) Dealer has clarified his product i.e. Unleavened flat breads schedule entry 99 (A) as "Khakhra, pain chappati or roti" so far as Indian food stuffs like Roti, Plain Roti is concerned it can be clarified under Tariff heading 2016 under entry 99 (A) and should be taxed at CGST 2.5% and SGST 2.5%. But the food stuffs like Paratha wraps, Paratha, Roti rolls cannot clarified in above mentioned entry i.e. entry 99 (A) because as per Hon. Supreme Court guideline these should be common parlance test for determination of tax rate of particular commodity. So if we apply this common parlance test to these Indian foo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read. So the products like Naan, Pita Bread, Kulcha, levened bread can be served for consumption. These food products are ready for consumption. They are not raw or unfinished from. Ready to serve foods should be construed as a food which is ready to eat. The schedule entry No. 97 refer to breads except when served for consumption. Dealer has taken meaning of served for Consumption as in food served in hotel, restaurant etc. However it is clear that 'ready-to-serve' means ready-to-eat'. There is no distinction between 'ready-to-eat foods' and 'ready to serve foods' Food is not necessarily served only in a Hotel. Food is also 'served in a home. Hence dealers contention regarding 'served for consumption is misinterpretation of the term so all the food product like 'Naan, Chalupa, Pita bread, Kulcha will fall under residual entry and would be taxable at 9% CGST and 9% MGST Act. Corn Chips, Corn Taco, Corn Taco strips - Dealer is manufactures of food products like corn chips, corn Taco, Corn Taco strips. Dealer has clarified these products under entry No. 16 of schedule III. Dealer has rightly classified these products. In my opinion the food product like corn chips, Corn Taco & Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entry no.99 (A) as "Khakhra, pain chappati or roti " Manufacturing process- (Chapatti, Roti, Khakhra, Paratha, Paratha rolls, Tortilla, Roti rolls) Mixing (Atta+ water+ palmolein oil+wheat gluten+salt+dimodaanHp-1+ sugar+ baking powder) ¯ Dough dividing ¯ Baking in oven ¯ Online cooling for 25min@15-20c ¯ Online inspection (sorting) ¯ Stacking ¯ Packaging and labelling Blast freezing@-30oto 350c ¯ Metal detection ¯ Packaging ¯ Collation to pallets ¯ Finished goods storage @-18 c ¯ Dispatch in frozen vehicle@-18c * Opinion of Jurisdiction Officer-So far as Indian food stuffs like Roti, Plain Roti is concerned it can be classified under Tariff heading 2106 as per notification no.35/2017 Integrated tax (Rate) Dt. 13/10/2017 under Schedule-I entry no.99 (A) and should be taxed at CGST 2.5% and SGST 2.5% * So if we apply common parlance test to these Indian food stuffs like paratha , Paratha rolls, Roti Rolls , we can identify these food products as plain roti or roti The manufacturing process is same, but ingredients are different than that of plain Roti or Roti. * In my opinion these food products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re ready for consumption. They are not raw or unfinished form. Ready to serve foods should be construed as a fodd which is ready to eat. * The schedule entry no. 97 of Exemption notification refer to breads except when served for consumption. Dealer has taken meaning of served for Consumption as in food served in hotel, restaurant etc. However it is clear that 'ready-to-serve' means ready-to-eat'. There is no distinction between 'ready-to-eat foods' and 'ready to serve foods'. Food is not necessarily served only in a Hotel. Food is also 'served in a home. * Hence dealers contention regarding 'served for consumption' is misinterpretation of the term so all the food product like 'Naan, Chalupa, Pita bread, Kulcha will fall under residual entry i.e. Schedule -III entry n.453 and would be taxable at 9% CGST and 9% MGST Act. III. Corn Chips, Corn Taco, Corn Taco strips - Applicant's interpretation- Dealer is manufactures of food products like corn chips, corn Taco, Corn Taco strips. Dealer has classified these products under entry No. 16 of schedule Ill. Manufacturing process- (Corn chips, Corn taco, Corn taco strips) Mixing (Masa flour+ water+ calcium prop. + citric acid+ ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dule-1 Entry no. 99 (A) 2.5% CGST 2.5% MGST 2. Leavened Flat breads Schedule-III Entry no. 453 (A) 9% CGST 9% MGST i) Naan, ii) Chalupa, iii) Pita Bread iv) Kulcha 3. Corn chips, Corn Taco, Corn Taco Strips Entry No. 16 Schedule III 9% CGST 9% MGST 4. Pancake Entry No. 16 Schedule III 9% CGST 9% MGST 5. Pizza Bread Entry No. 99 Schedule I 2.5% CGST 2.5% MGST 04. HEARING The Preliminary hearing in the matter was held on 03.07.2018, Sh. Pratik Shah, C.A. along with Sh. Ramesh Warungare, Finance head appeared and requested for admission of application as per contentions made their ARA. Jurisdictional Officer Sh. M. R. Shinde, Asstt. Commissioner of State Tax (NAS-VAT-D-009) Nasik appeared and made written submissions. The application was admitted and called for final hearing on 25.07.2018, Pratik Shah, C.A. along with Sh. Nitin Vijai vrgiya, C.A., Ms. Snehal Gadhave, C.A., Sh. Yatin Patel, Managing Director, Sh. ABHAY Mundra, C.A. and Sh. Ramesh Warungare, Finance Head appeared made oral and written submissions. Jurisdictional Officer Sh. M. R. Shinde, Asstt. Commissioner of State Tax (NAS-VAT-D-009) Nasik appeared and made written submissions. 05. OBSERV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des the - Corn Chips, Corn Taco and Corn Taco Strips to its customers and distributors. The products are manufactured by the Applicant using various ingredients including masa flour, water, small quantities of cellulose gum, citric acid, guar gum etc. Upon raw material intake, the ingredients go through various processes including mixing, dough dividing, baking and cooling. After the cooling process, the products are packed, the packets are labelled and subsequently stored and transported at -18 Degree Celsius temperature. Upon receipt of these products, the customer or end consumer fries the product, which is similar to products such as wafers. D) Pancake's includes - 'pancakes', a flat cake, often thin and round, prepared from a starch-based batter that may contain milk baked on a hot surface such as a griddle or frying pan. The pancakes manufactured by using of ingredients like wheat flour, water, sugar, salt, milk, syrup, oil etc. Upon raw material intake, the ingredients go through various processes including mixing, dough dividing, baking on a hot plate on both sides and cooling. After the cooling process, the pancake is packed and labelled and subsequently stored and transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905]on a totally defatted basis not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905) under Entry No. 13 of Schedule III of Rate Notification or (iii) Any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit. With respect to this question applicant submits that the company is engaged in the manufacturing trading and exporting of bakery products i.e. on Unleavened Flat Brads such as plain chapatti and variants of chapatti such as Tortilla, Tortilla wraps, roti rolls, wraps, roti, chapatti and paratha and paratha wraps. During the course of final hearing applicant was instructed to provide products, detailed list of ingredients, manufacturing process chart, purchase order, invoice etc. Applicant has submitted all those details. We have gone through the details as above and we find that the ingredients used to manufacture these products, the manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g process and the product itself. We find that these products are nothing but simple chapatti. We agree with the contention of the applicant that various types of Unleavened Flat breads are called by different names by different users depending upon the regions where the food is consumed. This can be explained by citing common example such as chapatti is called phulka or roti is called bhakari (in Maharashtra) and Rotla (in Gujrat). In view of this we agree to the contention that the products such as Tortilla wraps. Roti rolls, paratha and paratha wraps are covered by the scope of entry 99A of notification 34/2017. During the course of hearing, revenue officer has strongly opposed the contention of the applicant that paratha or paratha wraps are covered by the scope of entry 99A cited supra. However the officer in the additional submissions on 25/07/2018 submitted that in view of common parlance test food stuffs like paratha, paratha rolls, roti rolls, can be identified as plain roti or roti and thus opined that these food products would be covered under entry99A and taxable @2.5% each. We find that the food product paratha as is available in hotels and restaurants is plain, fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me manufacturing process is followed as is applicable for manufacturing of bread and therefore these product be classified as Bread within the meaning of entry no. of 97 of the exemption notification. In this regard, we find that the term mentioned above have not been defined under the Act or the notifications, we therefore refer to Dictionary or Wikipedia to understand these expressions. Bread- Wikipedia: Bread is a staple food prepared from a dough of flour and water usually by baking. Bread may be leavened by processes such as reliance on naturally occurring sourdough microbes, chemicals, industrially produced yeast, or high-pressure aeration. Commercial bread commonly contains additives to improve flavor, texture, color, shelf life, nutrition, and ease of manufacturing. Indian breads are a wide variety of flatbreads and crepes which are an integral part of Indian cuisine. Definition of 'naan' (COLLINS ENGLISH DICTIONARY) Naan or naan bread is a type of bread that comes in a large, round, flat piece and is usually eaten with Indian food. Source: Wikipedia Naan is a leavened oven-baked flatbread found in the cuisines mainly of Middle East, Central Asia and Indian subcontin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to refer to the principals as referred above. Having regard to the principles laid down by the Supreme Court in case of M/s. Ramawatar cited supra we find that while classifying the product under fiscal statute the resort has to be to their popular meaning or meaning attached to them by those dealing in them or to their commercial sense. Viewing the above products we find that large number of consumers of this product would not regard them as roti, chapatti or as the case may be bread in the ordinary sense. It is our common experience in a restaurant or hotel that a person receiving orders specifically invite attention of the customer about whether he wants Naan, Kulcha, Roti etc. to be served with curry. In view of this we agree with the contention of the officer that by applying common parlance test, common man would not say Naan or Kulcha as a bread. Since we do not find any specific entry for products mentioned in this question and their variants they would be covered under entry no 453 of schedule III of the notification. In spite of ours above finding we agree with the contention of the applicant with regard to exception provided entry no.97 of exemption notification "w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Middle Fast, with a follow inside like pocket, which can be filled with food. Also called: Arab bread or Greek bread CAMBRIDGE DICTIONARY a round or oval flat bread that is hollow and can be filled with other food OXFORD ENGLISH LIVING DICTIONARY; Flat, hollow, slightly leavened bread which can be split open to hold a filling. With regards to Pita bread applicant is of the opinion that the product is bread covered by the scope of entry no. 97 of exemption notification. As per Webster dictionary the term bread has been defined as a usually baked and leavened food made of a mixture whose basic constituent is flour or meal. On the contrary as per definition and meaning given above Pita is a yeast leavened round flatbread baked from wheat flour, sometimes with a pocket. From the ingredients and the manufacturing chart, we find that applicant uses similar/ same ingredients and same manufacturing process as that of bread. The Hon. Bombay High Court in case Commissioner of Sales Tax Vs Aggarwal and Co. (1983 (12) ELT 116) = 1982 (11) TMI 159 - BOMBAY HIGH COURT held that a general term used for any commodity in a fiscal statute covers that commodity in all its forms. As there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the rate notification referred above. Same is reproduced along with the details of tariff head as per Customs Tariff Heading as below: Entry -16 'All goods i.e. Waffles and wafers other than coated with chocolate or containing chocolate, biscuits; Pastries and cakes (other than pizza bread, khakra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread]. The details of tariff head as below, S.No. Chapter/Heading/Sub-heading Tariff item Description as per Schedule Heading Description in Custom Tariff Entire Customs Tariff Heading with sub Heading and Tariff Item 1 2 3 4 5 16. 1905 Pastry, cakes, biscuits and other bakers wares, whether or not containing cocoa; communion wafers, empty cachets of a kind suitable for pharmaceutic al use, sealing wafers, rice paper and similar products[other than pizza bread, khakhra, plain chapatti or roti, bread, rusks, toasted bread and similar toasted products BREAD, PASTRY, CAKES, BISCUITS AND OTHER BAKERS' WARES, WHETHER OR NOT CONTAINING COCOA; COMMUNION WAFERS, EMPTY CACHETS OF KIND SUITABLE FOR PHARMACEU TICAL USE, SEALING WAFERS, RICE PAPER AND SIMILAR PRODUCTS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dle or frying pan. The pancakes are manufactured by using ingredients like wheat flour, water, sugar, salt, milk, syrup, oil etc. Similarly we find that cake is an item soft sweet food made from a mixture of flour, fat, eggs, sugar, and other ingredients, baked and sometimes iced and decorated. Thus we find that pancakes are similar to cakes. There is no much difference between cake and pancakes. As mentioned above while dealing with pita bread and relying on Bombay High Court decision in case of Commissioner of Sales Tax Vs Aggarwal and Co. (1983 (12) ELT 116) = 1982 (11) TMI 159 - BOMBAY HIGH COURT we hold that entry 'cakes', cover pancakes also. We find that, Cake is mentioned under the chapter heading 1905 of customs and tariff Act 1975. The product cake is mentioned in the entry 16 under the head of "All Goods "i.e. waffles and wafers other than coated with chocolate or containing chocolate, biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread]. Therefore, we are of the view that the impugned the product "Pancakes" is covered under the chapter heading 19059010 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/2017-Integrated Tax (Rate), dated 28 June 2017, Notification Number 2/2017-CentraI Tax (Rate), dated 28 June 2017 and Notification Number 2/2017-State Tax (Rate) No. MGST1017/C.R. 103(1)/Taxation-1, dated 29 June 2017 (collectively referred to as the 'Exemption Notifications'); or (ii) as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included [other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905]on a totally defatted basis not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905) under Entry No. 13 of Schedule III of Rate Notification or (iv) Any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit Answer: - The Unleavened Flatbreads products such as plain chapatti, Tortilla, Tortilla Wraps, roti, Roti rolls , Wraps, Paratha and Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doughs for the preparation of bakers' wares of heading 1905]on a totally defatted basis not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers ' wares of heading 1905)" under Entry No. 13 of Schedule III of Rate Notification; or (ii) Any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit Answer :- The products like Corn Chips, Corn Taco and Corn , Taco Strips would be treated as 'wafer' under Entry No. 16 of Schedule III of Rate Notifications and it would be liable for taxes @ 18 9% CGST and 9% MGST Question 4:- "Whether on facts and circumstances of the case, Pancakes supplied be treated as All Goods i.e. Waffles and wafers other than coated with chocolate or containing chocolate; biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread) as mentioned under Entry No. 16 of Schedule Ill ofRate Notifications. If not, whether on facts and circumstances of the case, the Pancakes be classified any other Schedule Ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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