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TMI Blog2019 (11) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... se, saffron, cardamom etc. The applicant stated that (i) adding flavours to milk does not change essential character of milk; (ii) flavoured milk is a substitute for milk (iii) it is a simple preparation of milk; (iv) no manufacturing process is involved nor does milk change its composition in any way and opined that the commodity milk and milk products are enumerated in Chapter 4 and they want clarification that under which tariff item / HSN code is applicable to the above said flavoured milk. Under the GST provisions the interpretation of the said Notification is to be under the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). Thus, 'flavoured milk' is classifiable under tariff item 2202 9930 of the First Schedule to the Customs Tariff Act,1975 as a beverage containing milk under HS code 2202. The rate of tax applicable for the said tariff item is 12% GST (6% CGST + 6% SGST) under entry no. 50 of Schedule II of Notification No.1/2017 - Central (Rate) dated 28.06.2017 as amended. - AAR No. 28/AP/GST/2019 - - - Dated:- 15-7-2019 - D. RAMESH, AND S. NARASIMHA REDDY, MEMBER Represented by: Sri. Phani Raja Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forwarded to the jurisdictional officers with a copy marked to the State Tax authorities, Assistant Commissioner (State Tax), Narasarao peta Circle, to offer their remarks as per Section 98 (1) of CGST/APGST Act 2017. The jurisdictional officers concerned responded that there are no proceedings passed or pending relating to issue on which Advance Ruling is sought by the applicant. 6. Applicant's Interpretation of Law And Facts: The applicant is of the view that mere adding of sugar and different flavours to milk does not change essential character of milk; flavoured milk or milk shake is consumed as a substitute for milk; and it is a simple preparation of milk; no manufacturing process is involved nor does milk changes its composition in any way and classification of flavoured milk falls under Chapter 4 of the Customs Tariff Act, 1975 and sought clarification on the applicable HSN code under the said Chapter by providing extract of the same. 7. Record of Personal Hearing: Sri. Phani Raja Kumar Boggaram, authorized representative of the Applicant appeared for personal hearing on 16.04.2019 and they reiterated the submission already made in the application. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable rate of GST is 18% (9% CGST and 9% SGST) on all goods except the goods specified in the schedules I, II, IV, V, VI of the said Notification. Further, for interpretation of the said notification, the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as FS to CTA, 1975 ) are to be applied. 8.2 Before applying the said interpretation, we examine the detailed process chart furnished by the claimant in regard to the preparation of flavoured milk . The applicant informed that the process of the flavoured milk is standardisation of fresh milk according to the fat contents and then heating at certain temperature followed by filtration, pasteurisation, and homogenisation and then mixing of sugar and various flavours and finally bottling. As per the flow chart, it involves various operations by RMRD team, weighing team, processing team, packing team and warehousing / despatch teams and thereby it is a preparation and no more it is fresh milk after adding flavours. The applicant did not provide any details what are the flavours they are using in the preparations. As seen from their website [http: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RIB- BANG] = 2008 (5) TMI 588 - CESTAT, BANGALORE , it is recorded that; 4. We have carefully considered the submissions, it is an undisputed fact that the appellants were adding flavours to the milk and the Commissioner (A) after seeing the ingredients has considered the item to be beverage containing milk falling under Chapter 22 as against classification under Chapter 4 - 'Milk and Milk Products'. The item cannot be used as milk per se in view of the addition of flavour added to it and it has to be considered as a beverage. This is our prima facie finding. The Hon'ble High Court of Gujarat, in the case of M/s. KAIRA DIST. CO-OP. MILK PRODUCERS' UNION LTD Vs. UOI [2015-320-ELT-408-(Guj)] = 2007 (8) TMI 707 - GUJARAT HIGH COURT dealt the issue of classification of flavoured milk, which is as follows: Quote [Order per : M.S. Shah, J. (Oral)]. - What is challenged in this petition under Article 226 of the Constitution of India is the constitutional validity of the Central Government Notification No. 28/2007-Central Excise, dated 15-6-2007, particularly Serial No. 1 in the table in so far as in column No. 2, code 2202 90 30 is give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0402 99 20 Condensed milk kg. 16% 0402 99 90 Other kg. Nil 2.3 Simultaneously with bringing into operation the above Tariff Amendment Act, the Central Government has issued various Notifications thereby maintaining the effective rates as they stood for various products till 28-2-2005 once again signifying that the objective of the above Tariff Amendment Act was not to change scope of any Chapter or to change classification of the excisable goods, nor was the objective to change the rate structure of the excisable goods. 2.4 According to the department, as per the show cause notice dated 16-04-2007, the Flavoured milk falls in Chapter 22 under Tariff Item No. 2202 90 30. CHAPTER 22 Beverages, spirits and vinegar Tariff Item Description of goods Unit Rate of duty (1) (2) (3) (4) 2202 Waters, including mineral waters and aerated waters, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al origin. As the product in question was classified as flavoured milk under SH No. 0401.11 of the Tariff as it stood till 28-2-2005 and since it is not disputed by the Revenue even at this stage that Amul Kool/Amul Kool Cafe is flavoured milk, the respondents would now treat the goods as chargeable to nil rate of duty from 15-6-2007. However, in the process, the petitioners right to establish classification of these goods under Chapter 4 of the Tariff as dairy produce has been defeated because the classification of this product is shown under this Notification as 2202 90 30. 2.7 The petitioners submission is that Section 5A of the Central Excise Act empowers the Central Government to exempt excisable goods of any specific description from the whole or any part of the duty of excise leviable thereon. The power is thus, to grant exemption of excisable goods of any specified description, but not to decide a classification of any excisable goods by way of a notification issued under this Section. The Central Government could have very well prescribed nil rate of duty for flavoured milk of animal origin without referring to its classification in the said Notification, but having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy of the proceedings arising from the show-cause notice, it will be open to the petitioners to make a request before the Commissioner of Central Excise to adjourn the hearing suitably so as to await the decision of the Central Government on the representation. We are sure that such a request will be considered by the Commissioner in the proper perspective when the matter comes up for hearing before the Commissioner on 16-8-2007. 5. The petition stands disposed of in the above terms. 6. Liberty to apply in case of difficulty. 7. Direct service is permitted. Unquote. The above, decisions relate to the Central Excise regime. However, the interpretation and Ratio Decidendi is applicable to the very goods under GST also. In fact many dairy companies approached GST Council seeking clarification on the classification of flavoured milk. The matter recorded in the Agenda for 31st GST Council Meeting (Volume-2) dated 22.12.2018, in this regard is as follows: S. No. Description HSN Present GST Rate (%) Requested GST Rate (%) Comments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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