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TMI Blog2020 (2) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... 95 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA. Brief Facts of the Case A. M/s Sun Pharmaceutical Industries Limited (hereinafter referred to as 'Appellant') having its corporate head office at, "SUN HOUSE" Western Express Highway, Goregaon(E), Mumbai-400063 is engaged in the business of manufacturing and trading of pharmaceutical products, nutraceutical and allied products falling under Chapter 28 & 30 of the Customs Tariff Act,1975. B. The Appellant was registered under the erstwhile tax regime, and was discharging excise duty, service tax and Value Added Tax (VAT) on manufacture of pharmaceutical and nutraceutical products. C. Under the current regime, the Appellant is registered as per the GST laws, E. The Appellant is, inter alia, engaged in the manufacture and supply of medicaments and other related products. The Appellant is also engaged in business of marketing and supplying of a nutritional powder/food for special dietary use known as 'Prohance' and 'Prohance-D'. Introduction to "Prohance-D" F. Prohance-D is specially designed to serve as a nutritional benefit for people suffering from Diabetes as the name itself suggest that "D" stands for "Diabetes". Prohance-D is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Prohance-D - Vanilla variant under Tariff item No.2106 90 91 and the applicable rate of GST in respect of the same in terms of Sr No. 46A of Schedule II to Notification No. 1/2017-CT(R) dated 30.06.2017 & the corresponding Notification of relevant State GST Act. Application for Advance Ruling L. At this juncture it is pertinent to refer to the rate notification under GST for the possible classification of the product in question. Notification No.1/2017-Central Tax (Rate) dated 30.06.2017 provides for applicable rates of GST on the supply of goods. SI. No. 46A of Schedule - II to Notification No.1/2017- Central Tax (Rate) dated 30.06.2017 reads as under: Sch. SI. No. Chapter Heading/ Sub-Heading Description of Goods Rate of Tax (CGST) II 46A 2106 90 91 Diabetic foods 6% M. Corresponding notification of relevant State GST Act also provides rate of 6% on the aforesaid item. N. Therefore, "Diabetic Food" of Heading No. 2106 90 91 of the Customs Tariff Act, 1975 (hereinafter referred to as 'CTA') are covered by SI. No. 46A of Schedule II and attract effective GST @12%. O. Further, it shall be noted that SI. No. 12C of Schedule - III to Notification No.1/2017-Central Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alth, vitamins and minerals and maintains cholesterol levels. c) Relying on the information available on internet, it will not be proper/correct to treat / consider the Prohance-D - Chocolate variant as 'diabetic food' as it does not contain high amount of dietary fiber even though it contains gum Arabic and also Prohance-D - Chocolate variant does not contain slow digestion agents. d) Prohance-D - Chocolate variant is not classifiable as 'cocoa preparation' falling under Chapter 18 of the CTA on the ground that the chocolate flavor is used only to attract the end consumer. e) Prohance-D - Chocolate variant is also not classifiable under Chapter 19 of the CTA. e) Prohance - D - Chocolate variant is "Food preparation" classifiable under Chapter Heading No.21.06 as it is meant to be consumed by people by dissolving the same in water or milk. f) Since Prohance - D - Chocolate variant is a combination of various items and could clearly be treated as a 'compound preparation' being in powder form and could be consumed by directly mixing with water or milk. Hence, resulting in a non-alcoholic beverage which is obtained after mixing the powder with water or milk is clearly covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct in question and the function played by the said ingredients. For ease of reference the ingredients as declared on the packaging of the product are extracted as follows: Maltodextrin - It is a polysaccharide that is used as a food ingredient. It is produced from starch by partial hydrolysis and is usually found as a white hygroscopic spray-dried powder. 4. Reliance is placed on HSN explanatory notes to Chapter 17.02 which provides the following explanation - Malto-dextrins (or dextri-maltoses), obtained by the same process as commercial glucose. They contain maltose and polysaccharines in variable proportions. However, they are less hydrolysed and therefore have a lower reducing sugar content than commercial glucose. The heading covers only such products with a reducing sugar content, expressed as dextrose on the dry substance, exceeding 10% (but less than 20%), Those with a reducing sugar content not exceeding 10% fall in heading 35.05. Malto-dextrins are generally in the form of white powders, but they are also marketed in the form of a syrup (see Part (B)). They are used chiefly in the manufacture of baby food and low-calory dietic foods, as extenders for flavouring substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from commercial glucose (e.g., corn syrup), from sucrose or by hydrolysis of inulin, a substance found mainly in the tubers of the dahlia and the Jerusalem artichoke. It occurs in the form of a whitish, crystalline powder or as a viscous syrup (sec Part (B)); it is sweeter than ordinary sugar (sucrose) and is especially suitable for use by diabetics. This heading covers both commercial and chemically pure fructose. 14. Reliance is placed on Kirk-Othmer Encyclopaedia of Chemical Technology Volume 23 at page 556-557, which provides the following - Sweeteners ...... Although naturally occurring and yielding ca 4 kcal/g (16.7 kJ/g), the same as sugar, fructose does not cause a fluctuation in blood sugar, ie, glucose levels after ingestion, making fructose a better choice for diabetics (2) Fructose is also more potent than sugar (ca 1.5 times) and therefore can be cost-effective for the food industry........ 15. Fructo-oligosaccharides - They are made up of plant sugars linked in chains, used as a sweetener for food. They also act as food for "good" bacteria in the intestine. 16. Cocoa powder (3.0%) - It is a powder prepared from the seed embedded in the fruit of the cocoa plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as a sugar substitute in both cooking and baking and is calorie-free. Sucralose is 400-700 times sweeter than sugar and does not have a bitter aftertaste. Sucralose is said to have little or no effects on blood sugar and insulin levels. Sucralose may raise blood sugar and insulin levels in people who do not consume artificial sweeteners regularly. However, it probably has no effect on people who regularly use artificial sweeteners. 25. Reliance is placed on HSN explanatory notes to Chapter 29.32 which provides the following explanation - Sucralose (1,6-Dichloro-1,6-dideoxy-b-D-fructofuranosy 1-4-chloro-4-deoxy-a-D-galactopyranoside). Odorless, white to almost white crystalline powder. Artificial sweetener mainly used for medicine and food, especially for the treatment and diet of diabetic patients. 26. Acidity regulator (Citric acid) - It is an organic acid which is derived from plant tissues. It is an important metabolic intermediate, used as an acidifying agent. MEANING OF "FOOD" 27. The term "food" has been defined in Webster's international Dictionary as- "nutritive material absorbed or taken into the body of an organism which serve, for purposes of growth, work or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same would be covered within the meaning of the term "Diabetic foods" as mentioned under Tariff Item No.2106 9091 of the CTA. MEANING OF TERM "DIABETIC FOODS" 36. The term 'Diabetic Food' is not defined under the GST provisions as well as under Harmonized Commodity Description of Coding System (for short referred to as HSN). Further the term 'Diabetic Food' is also neither defined under Chapter notes of any Chapters of CTA nor under the allied law namely Customs Act and Rules made thereunder. In order to understand the ordinary meaning of the term 'Diabetic Food', reference has to be made to the dictionary meanings. 37. The Oxford Dictionary of Food & Nutrition by David A. Bender defines "diabetic foods" as under: "Diabetic foods - Loose term for foods that are specially formulated to be suitable for consumption by people with diabetes mellitus; generally low in carbohydrate (and specially sugar), and frequently containing *sorbitol, xylulose, or sugar derivatives that are slowly or incompletely absorbed." 38. It is submitted that the product in question is a specially designed nutritional powder which substitutes "sugar" by using the Maltodextrin, Fructose, Isomaltulose and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific diseases and disorders and which are presented as such, wherein the composition of these foodstuffs must differ significantly from the composition of ordinary foods of comparable nature, if such ordinary foods exist, and may contain one or more of the following ingredients, namely: - (i) plants or botanicals or their parts in the form of powder, concentrate or extract in water, ethyl alcohol or hydro alcoholic extract, single or in combination; (ii) minerals or vitamins or proteins or metals or their compounds or amino acids (in amounts not exceeding the Recommended Daily Allowance for Indians) or enzymes (within permissible limits); (iii) substances from animal origin; (iv) a dietary substance for use by human beings to supplement the diet by increasing the total dietary intake; (b) (i) a product that is labelled as a "Food for special dietary uses or functional foods or nutraceuticals or health supplements or similar such foods" which is not represented for use as a conventional food and whereby such products may be formulated in the form of powders, granules, tablets, capsules, liquids, jelly and other dosage forms but not parenterals, and are meant for oral admin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) A food business operator may manufacture or sell an article of food for special dietary use in single use packaging or in dosage form, namely, granules, capsules, tablets, pills, jelly, semi-solid and other similar forms, sachets of powder, or any other similar forms of liquids and powders designed to be taken in measured unit quantities with a nutritional or physiological effect; (iv) A food business operator may formulate an article of food for special dietary use in formats meant for oral feeding through a enteral tubes but shall not be used for parenteral use; (v) An article of food for special dietary use shall not include the normal food which is merely enriched or modified with nutrients and meant for mass consumption, intended for improvement of general health for day to day use and do not claim to be targeted to consumers with specific disease conditions and also not include the article of food intended to replace complete diet covered under food for special medical purpose specified in regulation 9. (2) (i) The articles of food for special dietary use shall contain any of the ingredients specified in Schedules I or Schedule II or Schedule III or Schedule IV or Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rich in MUFA. Thus, in this respect, it can be concluded that the product in question is a 'diabetic food' to meet the special dietary requirements of Diabetic people. The Ld. AAR has not disputed the said facts and the conclusion that the product is food which is meant for diabetic persons. 54. In light of the aforesaid submissions, the fact that the product in question is a food product which answers the description of product designed for a person suffering from diabetes and that the product is a partial meal replacement, is not a matter of dispute. The said facts are also been relied on by the Ld. AAR while finding that the product in question assists diabetics in replacing a meal or part of it. For ease of reference the relevant extract of the ruling is extracted as under: "In view of the above it can be said that the subject product, Prohance-D is different from the parent product is as much as it contains extra ingredients as mentioned in (i) to (iv) above, ingredients which along with the other regular ingredients may assist diabetic in replacing a meal or part of it." 55. On this count alone, it is submitted that the portion of the Ruling dated 23.1.2019 passed by Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can sometimes be treated by restricting the consumption of sugars and reducing weight, or by the use of oral drugs which stimulate insulin secretion and/ or enhance the insulin responsiveness of tissues (sulphonylureas and biguandies). It is also treated by injection of insulin to supplement secretion from the pancreas and overcome the resistance. Impairment of glucose tolerance similar to that seen in diabetes mellitus sometimes occur in late pregnancy, when it is known as gestational diabetes. Sometimes pregnancy is the stress that precipitates diabetes, but more commonly the condition resolves when the child is born. Renal diabetes is the excretion of glucose in the urine without undue elevation of the blood glucose concentration. It is due to reduction of the renal threshold which allows the blood glucose to be excreted." 59. The WHO Report defines 'Diabetes' as under:- 2.1 Definition The term diabetes mellitus describes a metabolic disorder of multiple aetiology characterized by chronic hyperglycaemia with disturbances of carbohydrate, fat and protein metabolism resulting from defects in insulin secretion, insulin action, or both. The effects of diabetes mellitus include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts mentioned on the label are actually for the patients who are suffering from diabetics only. 63. The above submission can be explained better by dealing with each and every consequences/effect which can be caused to a diabetic person: Diabetes and coronary heart disease are closely related. Diabetes contributes to high blood pressure and is linked with high cholesterol which significantly increases the risk of heart attacks and cardiovascular disease. Similar to how diabetes affects the heart, high blood pressure and cholesterol raises the risk of strokes. 64. High blood glucose levels can cause damage to all parts of the cardiovascular system. For this reason, there is a close link between diabetes and cardiovascular problems. 65. Excess blood sugar decreases the elasticity of blood vessels and causes them to narrow, impeding blood flow. This can lead to a reduced supply of blood and oxygen, increasing the risk of high blood pressure and damage to large and small blood vessels. 66. High blood pressure is a risk factor for heart disease. According to the Centers for Disease Control and Prevention (CDC), 74 percent of adults with diabetes have hypertension. 67. Damage to la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be cured by drug or medicine and hence the same required to be cured or prevented by taking adequate nutritional supplements. The relevant portion of the Schedule J is extracted as under: SCHEDULE J [See Rule 106] DISEASES AND AILMENTS (BY WHATEVER NAME DESCRIBED) WHICH A DRUG MAY NOT PURPORT TO PREVENT OR CURE OR MAKE CLAIMS TO PREVENT OR CURE 1. AIDS 2. Angina Pectoris 3. Appendicitis 4. Arteriosclerosis 5. Baldness 6. Blindness 7. Bronchial Asthma 8. Cancer and Benign Tumour 9. Cataracts 10. Change in colour of the hair and growth of new hair 11. Change of foetal sex by drugs 12. Congenital malformations 13. Deafness 14. Diabetes 15. Diseases and disorders of uterus 16. Epileptic fits and psychiatric disorders 17. Encephalitis 18. Fairness of the skin 19. Form, structure of breast 20. Gangrene 21. Genetic disorders 22. Glaucoma 23. Goitre 24. Hernia 25. High/Low Blood Pressure 26. Hydrocele 27. Insanity 28. Increase in brain capacity and improvement of memory 29. Improvement in height of children/ adults 30. Improvement in size and shape of the sexual organ and in dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple' is totally incorrect and perverse. Thus, it is submitted that the portion of the Ruling dated 23.1.2019 passed by Ld. AAR which is against the appellant is incorrect and accordingly shall be set aside. THE LD. AAR HAS ERRED IN HOLDING THAT THE PROHANCE-D (CHOCOLATE FLAVOUR) DOES NOT CONTAIN HIGH DIETARY SUPPLEMENTS AS REQUIRED IN DIABETIC FOODS. 77. The Ld. AAR in its ruling dated 23.1.2019 has erred in holding that the product in question is not a 'diabetic food' by placing heavy reliance on the information obtained from the "internet". 78. It is submitted that the finding of the Ld. AAR is totally erroneous. This is for the reason that the guidelines under FSSAI Act and regulations prescribes that a product containing at least 6g fiber per 100g is rich in fiber. Therefore, it is submitted that the product in question containing fiber (FOC/insulin/Acacia gum) content of 8.1 g per 100g powder, is no doubt a rich in fiber content as per the Sr No. 14 to the Schedule I of the Food Safety and Standards (Advertising and Claims) Regulations, 2018. 79. On this count alone, it is submitted that the portion of the Ruling dated 23.1.2019 passed by the Ld. AAR to the extent of rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of rejecting the classification of the product in question under Tariff Item No. 2106 90 91 as 'Diabetic foods' being an unreasoned order and shall be set aside. THE LD. AAR ERRED IN CLASSIFYING THE PRODUCT IN QUESTION AS A "COMPOUND PREPARATION FOR MAKING NON-ALCOHOLIC BEVERAGE". 85. The Ld. AAR has erred in holding that the product in question is a "Compound preparation for making non-alcoholic beverages" based on observation that food preparation is meant to be consumed by dissolving the same in water or milk. Based on the observation that the product being a combination of various items could clearly be treated as a 'compound preparation' and the product being in powder form could be consumed by direct mix with water or milk. 86. It is submitted that the above finding is totally incorrect. Having solely been based on the observation that the product being a powder is to be mixed in water or milk and consumed. 87. The term 'Compound preparation' has neither defined under GST provisions nor under the HSN Chapter notes. The Ld. AAR has also failed to provide any detailed reasoning for the classification of the product as a 'compound preparation'. The sole basis for cat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e then only the same would be classifiable as a 'beverage'. Further the aforesaid decisions also held that if the product has nutritional value assigned to it and the principle function of the product is to provide nutrition and nourishment, then it shall rightly be qualified as a 'food' product and not as a 'beverage'. 94. It is submitted that merely for the reason that a product can be consumed as a drink after dilution with water, cannot be a basis for classification under Chapter 21 as a preparation for beverage. The said product even if is to be consumed after mixing in water/milk in the liquid form would still be a food replacement in liquid form and not a beverage. 95. It is submitted that the merely because the recommend used of the product is with "water" after making it into a semiliquid form for consumption, the said product does not looses its original identity and become beverage or non-alcoholic beverage. Hence the classification of the product as a compound preparation for non-alcoholic beverage is erroneous. 96. Further, reference is invited to The Food Safety and Standards (Food Products and Food Additives) Regulations, 2011, wherein under Appendix A to the regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribe that it should be consumed as prescribed by the dietician. Hence, the product in question cannot be called a 'beverage' which in its common understanding can be consumed in unrestricted quantitates for pleasure. Hence, the classification of the product in question as a compound preparation for non-alcoholic beverage is erroneous. 101. Thus, it is submitted that the product in question is a 'food preparation' rightly classifiable as 'Diabetic foods' under Tariff Item No.2106 90 91 of the CTA. Hence, it is submitted that the Ld. AAR has erred in classifying the product in question as 'Compound preparations for non-alcoholic beverages', in light of the fact that the said product would not form a 'beverage' after mixing with water and would continue to remain as 'food' alone in liquid/semi-solid form. 102. Once it is clear that the product in question is not a 'beverage' at all, then the question of categorizing the product in question as "compound preparation for making of non-alcoholic beverage" will not arise at all. THE PRODUCT IN QUESTION HAVING BEEN HELD TO BE FOOD CANNOT BE SUBSEQUENTLY BE CLASSIFIED AS 'COMPOUND PREPARATION FOR MAKING A NON-ALCOHOLIC BEVERAGE' 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and advertising - a product that bears a Supplement Facts panel may still be a beverage if it also bears statements that the product is intended to "refresh" or "rehydrate" because such statements represent the product for use as beverage. Product name - Product or brand names that use conventional food terms such as "beverage," "drink," "water," or "soda" represent the product as a beverage. Product packaging - Packaging is used to market a product as well as to contain, hold, and preserve the product. Packaging can convey messages about how the product is to be used. Serving size and recommended daily intake - Even if a product is not expressly represented as an alternative to a beverage, when the practical result of the labeled serving size and/or total recommended daily intake is that the product is used as a beverage or replaces beverages that serve as ordinary sources of drinking fluid, FDA would generally consider the product to be represented for use as a beverage. Recommendations and directions for use - Dietary supplements are defined as products that, among other requirements, are intended to supplement the diet. (See section 201 (ff) (1) of the FD&C Act [21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conventional foods to be total. Moreover, the dietary supplement provisions of the FD&C Act (added by DSHEA) are premised on the concept of dietary supplements as products that are marketed and consumed for nutrition and health benefits, and specifically authorize supplements to be marketed for those purposes (see section 403(r)(6) of the FD&C Act [21 U.S.C. 343(r)(6)1). Other representations about a product - Other representations about a product include, for example, representations in publicly available documents, such as statements made in filings with government agencies such as the U.S. Securities and Exchange Commission or the U.S. Patent and Trademark Office. 107. The above guidelines provide that a powdered premix products and liquid concentrates can also be "dietary supplements". The relevant extract of the guidance is extracted as under: Powdered premix products that are intended to be added to water or other liquids have long been marketed as dietary supplements. If properly labeled as a dietary supplement, a product of this type is unlikely to be confused with beverage mixes or used as a substitute for a beverage mix. Powdered premixes may bear directions recommen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parlance any food engineered to suit the needs of a diabetic person is referred to as a diabetic food. Through various judicial pronouncements of the Hon'ble Supreme Court in the past it has been established that "in all its forms" shall have an impliedly wide meaning, placing reliance on the case of Indian Carbon Ltd. vs. Supdt. Of Taxes reported at AIR 1972 SC 154 = 1971 (8) TMI 184 - SUPREME COURT the court read down Section 14 (i) of the Central Sales Tax Act, 1956 and held that coke in all its forms shall include petroleum coke as well. Further in the case of Mineral Sales Corpn. v. C.S.T. reported at [46 STC 208(AII)] = 1980 (2) TMI 240 - ALLAHABAD HIGH COURT the Hon'ble court observed that the phrase "in all forms" has a wider connotation than the phrase "of all kinds" and shall imply all the various forms in which a thing manifests itself. 112. Accordingly, it is submitted that the product in question is rightly classifiable under Tariff Item No. 2106 9091 as 'Diabetic foods' and not under Tariff Item No. 2106 9050 as 'Compound preparation for non-alcoholic beverage'. SPECIFIC ENTRY REGARDING SPECIFIC ITEM TO BE PREFERRED TO A GENERAL ENTRY - "PROHANCE -D" IS CLASSIFIABLE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coholic beverages. These preparations can be obtained by compound vegetable extracts of heading 13.02 with lactic acid, tartaric acid, citric acid, phosphoric acid, preserving agents, foaming agents, fruit juices, etc. The preparations containing (in whole or in part) the flavoring ingredients which characterized a particular beverage. As a result, the beverage in question can usually be obtained simply by diluting the preparation with water, wine or alcohol, with or without the addition, for example, of sugar or carbon dioxide gas. Some of these products are specially prepared for domestic use; they are also widely used in industry in order to avoid the unnecessary transport of large quantity of water, alcohol, etc. As presented, these preparations are not intended for consumption as beverages and thus can be distinguished from the beverages of Chapter 22." 119. In the case of Commissioner of C.Ex., Mysore v. Anurag Foods & Appliances Ltd, reported at 2009 (234) E.L.T. 641 (Tri. - Chennai) = 2008 (9) TMI 636 - CESTAT, CHENNAI it was held that Residuary entry is to be preferred only after it is exhaustively shown that the product was not covered in any specific heading. 120. Tari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - D (CHOCOLATE)" IS CLASSIFIABLE UNDER TARIFF ITEM NO. 2106 9091 OF THE CTA. 128. In the alternative, if both of the entries under consideration are found to be "specific in nature", the classification of the product shall be subject to Rule 3 (b) and Rule 3(c) of the General Rules of Interpretation which states as under: RULE 3 When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings ore to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (a) Mixtures, composite goods consisting of different materials or made up of different components, and foods put up in sets for retail sale, which cannot be classified by reference to 3(2), shall be classified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure under sub-heading No. 6807.10, which speaks of goods in which Rockwool, Slagwool and products thereof are manufactured by use of more than 25% by weight of blast furnace slag. It is not in dispute that the goods in question are those goods in which more than 25% by weight of one or more of red mud, press mud or blast furnace slag is used. If that be the case, then, in a classification dispute, an entry which is beneficial to the assessee requires to be applied and the same has been done by the adjudicating authority, which has been confirmed by the Tribunal. 135. In the said case, both the competing entries dealt with the same product i.e "Slagwool" but with certain different specification. The latter of the two entries was specifically introduced on a later date with a lower rate of duty payable on the same. In analysing the appropriate classification of the slagwool in question, the Tribunal was of the view that in such type of disputes about competing entries, an entry which is beneficial to the assessee requires to be applied. 136. In the present matter, the two entries under consideration is Tariff Item No. 9050 which covers "Compound preparation for making non-alcoholic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to Rule 4 of the General Rules of Interpretation which states as under: Rule 4 Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin. 143. The same principles was laid down in the case of Collector of Central Excise, Bombay. v. K.W.H. Heliplastics Ltd reported in 1998 (97) E.L.T. 385 (S.C.) = 1998 (1) TMI 71 - SUPREME COURT which states as under: "7. Under such circumstances, it would have been more appropriate for the Tribunal to have applied Rules of Interpretation of the Excise Tariff, Rule 4 whereof provides that the goods which cannot be classified in accordance with Rules 1, 2 and 3 of the Rules, they shall be classified under heading appropriate to the goods to which they ore most akin. 8. Apparently, Rules 1, 2 and 3 are not applicable for resolving the dispute and, as such, what was required to be done by the Tribunal in the present case was, to find out the relationship of goods manufactured by the respondents with the description of goods under disputed headings of the classification list, as contended by the parties. The relationship of goods w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DER TARIFF ITEM NO. 2106 9091 OF CTA 147. In the alternative, the Tariff Item No. 2106 90 50 and Tariff Item No. 2106 90 91 are parts of different sub-headings. The Heading "Compound preparation for making non-alcoholic beverages" figures under three dash "---" at 2106 90 50, whereas "Diabetic Food" figures under four dash "----" at 2106 9091 as a sub-classification under 'other' figure under three dash "---" with both 'other' and Compound preparation for making non-alcoholic beverages being sub classified under "Other" figuring under single dash "-" at 2106 90. 148. Reference in this regard in invited to the Rule 6 of the general rule of interpretation which states that the sub-headings can be compared at the same level. For ease of reference the rule is extracted as under: Rule 6 For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related Sub-heading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this Rule the relative Section and Chapter Notes also apply, unless the context othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaration also being supported by the FSSAI license, the Ld. AAR should have on this count alone classified the product in question as a 'Diabetic food' classifiable under Tariff item No. 2106 90 91. 155. In view of the above, the impugned Advance Ruling dated 23.01.2019 is liable to be modified to the extent it proposes to classify the product under Tariff Item No. 2106 90 50 and dismisses the rightful classification under Tariff Item No. 2106 90 91. PRAYER 156. In view of the foregoing, it was prayed as under: - (a) Modify the portion of impugned Advance ruling No. GST-AAR-88/2018-19/3-10 dated 23.01.2019 = 2019 (7) TMI 95 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA which is against the appellant and allow the appeal, with consequential reliefs to the Appellant; (b) Declare that the product 'Prohance-D' as a "Diabetic food" is classifiable under Tariff Item No. 2106 90 91 if the CTA and liable to GST @12%; and (c) Pass such other order or orders as may be deemed fit and proper in the facts and circumstances of the case. Personal Hearing 157. A personal Hearing in the matter was conducted on 14.10.2019, which was attended by Shri R. Nambirajan, on behalf of the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a diabetic food. Though they agreed with the contention of the appellant that it will not be classifiable under Chapter 18-19 of the Tariff as 'Cocoa and Cocoa preparation, they instead classified the product under Chapter heading 2106 of the CT under 'food preparations not elsewhere specified or included' under the specific heading 21069050 having description 'Compound preparation for making non-alcoholic beverages'. The AAR denied classification of the product as a 'diabetic food' on the grounds that it is advertised as to provide energy, immune health, heart health, vitamins and minerals and has various other health benefits and therefore to treat the same as 'diabetic foods' will not be proper. It also held that, as per information available on the inter-net diabetic food, diabetic food' means something which should contain high amount of dietary fiber and some slow digestion agents and as the impugned product does not have any extra fiber, it has no substance which helps in slowing down of food. Thirdly, it has reasoned that Prohance-D Chocolate variant is only different from the parent product in that it contains some extra ingredients like Isornaltulose, Gum Arabic, Inulin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diabetic patient would go for the Prohance-D variant. This makes it very clear that that the product is formulated for diabetic patients, is targeted at that particular segment and therefore, can be termed as a 'diabetic food'. 163. Let us have a look at the explanatory notes given in the HSN. Under the Heading 2106, the following is given: - "The heading includes (1) to (8) ... (9) Sweets, gums and the like (for diabetics in particular) containing synthetic sweetening agents (e.g. Sorbitol) instead of sugar." This heading 2106 does cover food intended for diabetic patients. It is true that the heading 2106 also covers 'Compound preparation for making nonalcoholic beverages' under which heading is the product classified by the AAR. Heading 2106 covers both the descriptions and the Explanatory Notes to the HSN do not make it clear as to which product category the explanatory note given above applies. It is only under Customs Tariff Act that the category for 'diabetic foods' is carved out under the Heading 2106. But the very fact that the explanatory note explains what a diabetic food gives an indication as to what is intended to be covered by it. The intention is that foods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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