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TMI Blog2021 (1) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... the product Fry Snack Foods called Fryums and admissibility of exemption notification under Central Excise regime was examined by the Hon ble Customs, Excise and Gold Appellate Tribunal in the case of T.T.K. Pharma Ltd. v. Collector of Central Excise [ 1992 (8) TMI 183 - CEGAT, NEW DELHI] where it was held that the product Fry Snack Foods called Fryums have been considered as Namkeen and not as Papad . From the photos produced, it can be seen that PAPAD is a thing entirely different and distinct from FRYUMS. Therefore, in common parlance or in market, Fryums are not sold as PAPAD instead of PAPAD sold as papad and Fryums are sold as Fryums. Both the products are different and have their individual identity. Accordingly, in common parlance test, the applicant s product i.e. different shapes and sizes of Papad is not Papad but is Un-fried Fryums - the applicant himself has mentioned the fact in their application that in common parlance their product is popularly known as Fryums in the market - This fact indicates that applicant himself knows that in the market their product is called Fryums and not Papad as such the fact is that in the market Papad is known as Papad and not Fryums . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. Thus, it can be concluded that applicant s product of different shape and sizes is un-fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975. X X X X Extracts X X X X X X X X Extracts X X X X ..... whatever name it is known, except when served for consumption 9. Entry at Sr. No. 96 under Not. No. 02/2017-Integrated Tax (Rate) dated 28.06.2017 which exempts the supplies from the levy of tax reads as under :- 96. 1905 Pappad, by whatever name it is known, except when served for consumption 10. The applicant submitted that from the above it can be noticed that supplies of Papad are exempted from payment of tax irrespective of the nomenclature. Thus, it can be conveniently said that people in different parts of the country know Papad by different names and forms but irrespective of such names and forms a Papad remains papad and is exempted from payment of tax under GST Act. 11. The applicant further submitted that with the changing of time, the market trends and market demands calls for a change. The different classes of people demand for different types of Papad and to meet with the demand the manufactures like applicant resort to the technological development in machineries which may help in meeting with the market demand of manufacturing and supplying of Papads of different shapes and sizes. 12. The applicant submitted that today PAPAD does not resemble the same age o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n but without burdening the record, the applicant would like to point out one observation in the case of M/s. Chaudhary Tractor Company Vs. State of Haryana - [2007] 8 VST 10 (P&H) wherein it has been observed by Honourable High Court that - while construing the provisions of a statute, the principle of 'updating construction' should be adopted. It means that 'a construction that continuously updates' the working of an on-going Act has to be followed. In other words, it means that 'in its application on any date, the language of the Act though necessarily embedded in its own time is nevertheless to be construed in accordance with the need to treat it as current law. 14. The applicant further submitted that traditional PAPAD is known by different nomenclature in different parts of the country e.g. PAPAD, PAPPAD, PAPPADAM, ALAM, KHICHIYA, etc. Similarly, the modern day PAPAD with different shapes and sizes is also known and recognised by different nomenclature in different parts of the country keeping in mind the shape and size thereof e.g. PAPAD, FRYUMS, BHUNGLA, NADDA, GONGO, PONGA, GOLD FINGER, WHITE FINGER, FINGER, NALI, etc. Further, submitted that keeping i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/2015 read with Rectification Application No.31/2015 in First Appeal No.1/2015 Dtd.03/07/2015 reported in 2015 GSTB - II - 405 and in the case of M/s. Swethin Food Products Vs. State of Gujarat - 2016 GSTB - I 296, Honourable Tribunal has clearly held that Fryums are nothing but PAPAD and clearly fall under entry 9(2) in schedule I to the GVAT Act and hence are exempt from payment of tax. (iii) The determination order passed u/s. 80 of the Gujarat Value Added Tax Act, 2003 in the cases of Jay Khodiyar Agency (2007-D-98-103 Dt:-11/09/2007) and Kansara Trading Co. (2011-D-356-357 Dt:-11/02/2011) wherein FRYUMS have been held to be falling under entry 9(2) in Schedule I to the GVAT Act as PAPAD. (iv) Honourable Gujarat High Court in the case of West Coast Waterbase Pvt. Ltd. Vs. State of Gujarat - (2016) 95 VST 370 (Guj.) wherein the said principle has been laid down by Honourable High Court that when there is no material change in the entries, the classification adopted in earlier law should continue to prevail and accepted. (v) The applicant submitted that they are aware of the fact that decision of Honourable Karnataka High Court in State of Karnataka Vs. Vasavamba Stores - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and substantial change in the entry to depart from the previous classification which was adopted earlier. In the present case, the products in question have been classified as PAPAD since many years and there is no substantial change in the entry under the GST Law as compared to erstwhile Gujarat Value Added Tax Act, 2003. So, there appears to be no valid reason for departing from the classification adopted, accepted and followed for years. Ponds India Ltd. Vs. Commissioner of Trade Tax, Lucknow - (2008) 15 VST 256 (SC). (viii) There has to be consistency in law and needs the finality of the proceedings at some point of time. If the same issue of classification is dealt with in different manner with every change of law without any substantial change in the entry, the commercial market dealing with the particular commodity will be in tumultuary and the same shall be deleterious to public at large. The principle of finality of litigation is based on a sound firm principle of public policy. In the absence of such a principle great oppression might result under the colour and pretence of law inasmuch as there will be no end to litigation. The doctrine of res-judicata has been evolve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their shapes, sizes, ingredients, form and nomenclature is entitled to be classified under the Tariff Heading No. 1905 and more precisely 19059040 as " PAPAD by whatever name it is known, except when served for consumption" as specified at Sr. No. 96 under Notification No. 02/2017-CT (Rate) dated 28.06.2017 and thus attracts NIL rate of tax under IGST, CGST and SGST. 20. The applicant given an additional submission wherein they have submitted that the Papad products are manufactured in various size and shapes as per the requirement of the customer. Further, diverse shapes are obtained with the help of a die and there is no difference in either the ingredients used or in the process of manufacture. For ready reference, a pictorial representation providing overview of papad product manufacturing process is reproduced hereunder: Raw materials consisting of wheat flour, superfine wheat flour, rice flour, starch, corn flour, cereal flour, potato starch, chana, potato lentils, papad khar, bicarb, vegetables like ¯ Blended in a steering/ mixture machine with water and oil to make a dough ¯ Dough is passed through various die to form various shapes ¯ Product is dried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 26. The applicant further submitted that in GST regime, the Customs Tariff has become relevant for the purpose of determination of classification for any supply of goods wherever the rate schedule is aligned with Customs Tariff. From perusal of Customs Tariff Act, 1975 read with interpretation Rules & judicial precedent; they understand that the classification in Customs is driven by the ingredients used in the products. Predominant content in the product would help in determining appropriate classification. In the case of Manilal Commodities Pvt. Ltd. Vs. Collector of Customs [1992-59-ELT-189-Tribunal], the Honourable Tribunal was of the view that the classification on the basis of predominant contents is generally accepted as proper test. Further, Honourable Allahabad High Court in the case of Commissioner of Customs, C.G.O. Vs. Sonam International [2012-275-ELT-326-ALL] upheld that assessment of goods with regard to payment of customs duty is to be made based on contents involved. The Chapter Notes in the Customs Tariff also prescribe the content or ingredients of products in order to include or exclude specific products within a given Chapter Heading. 27. The applicant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant submitted that Honourable AAR has missed out to consider the most important factor in the said judgment. If the judgment is examined then it is noticed that Entry for consideration before Honourable CEGAT was "Papad, Idli-Mix, Vada-Mix, Dosa-Mix, Jalebi-Mix, Gulabjamun-Mix or Namkeens such as Bhujia, Chabena". Hence, it can be seen that at relevant time PAPAD and NAMKEEN were in same entry. So, there was no occasion for Honourable CEGAT to consider and differentiate between PAPAD and NAMKEEN. Subsequently, the entries were changed and then came into existence two different entries for PAPAD and NAMKEEN. So, the applicant most respectfully submits that this judgment cannot be relied upon as a precedent in order to classify PAPAD sold by the applicant because the entry in question before Honourable CEGAT and entry in question in present application of the applicant are completely different and more specifically when Honourable CEGAT had no occasion to consider two entries separately as PAPAD and NAMKEEN were covered under same entry. 30.2 The applicant further submitted that if the judgment of Honourable Supreme Court in the case of Commissioner of Commercial Tax, Indore Vs. M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or related to the Customs Tariff Act and decision of CEGAT which dealt with an entry which by far is not close to the entry currently under the GST Act. 32. The applicant submitted that at the cost of repetition, they once again here submits that on one hand Honourable Supreme Court deals with an entry which is completely different from the present entry under the GST Act while on other hand order of determination u/s. 80 of the Gujarat Value Added Tax Act, 2003 in the case of Jay Khodiyar Agency (2007-D-98-103 Dt:-11/09/2007) and Kansara Trading Co. (2011-D-356-357 Dt:-11/02/2011), Honourable GVAT Tribunal in the case of M/s. Avadh Food Products Vs. State of Gujarat -First Appeal No.1/2015 read with Rectification Application No.31/2015 in First Appeal No.1/2015 Dt;-03/07/2015 reported in 2015 GSTB -II -405 and in the case of M/s. Swethin Food Products Vs. State of Gujarat -2016 GSTB -I 296, Honourable Karnataka High Court in the case of State of Karnataka Vs. Vasavamba Stores -[2013] 60 VST 19 (Karn.)and Honourable Supreme Court in the case of Shiv Shakti Gold Finger Vs. Assisstant Commissioner, Commercial Tax, Jaipur -(1996) 9 SCC 514 deal with an entry identical to the entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... radma of India Ltd. Vs. State of Maharashtra -140 STC 17 (SC) wherein it has been held that -A specific entry in the schedule to a taxing statute would override a general entry. But, resort has to be had to the residuary heading only when a liberal construction of the specific heading cannot cover the goods in question. It is well-settled that if there are two entries-one general and the other special, the special entry should be applied for the purpose of levying tax. The general entry should give way to the special entry. The ratio decidendi in the case of Mauri Yeast India Pvt.Ltd. Vs. State of UP -2008 (225) ELT 321 (SC) is that -If there is conflict between two entries one leading to an opinion that it comes within the purview of the tariff entry and another the residuary entry, the former should be preferred. 35. The applicant further submitted that yet another principle of rule of interpretation and classification is noscitur a sociis which means that meaning of a word is to be judged by the company it keeps. Applying the said principle while classifying the product of the present applicant, by no means it can be said that it is eligible to be classified under heading 2106 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m", "sub-heading" "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). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification." 41. What is 'Papad' has not been defined or clarified under Customs Tariff Act, 1975, the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the 'CGST Act, 2017), the Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the 'GGST Act, 2017'), Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the IGST Act, 2017 or the Notifications issued under the CGST Act, 2017/GGST Act, 2017/IGST Act, 2017. 41.1 It is now well settled principle of interpretation of statute that the word not defined in the statute must be construed in its popular sense, meaning 'that sense which people conversant with the subject matter with which the statute is dealing would attribute to it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that common parlance test is the standard for interpreting terms in the taxing statutes. 43. It needs to be, therefore, examined whether different shapes and size of 'Un-fried Fryums' would be covered by the term 'Papad', as understood in common parlance and as decided by higher judicial authorities. 44. The issue of proper classification of the product 'Fry Snack Foods called Fryums' and admissibility of exemption notification under Central Excise regime was examined by the Hon'ble Customs, Excise and Gold Appellate Tribunal (CEGAT, as it was known then) in the case of T.T.K. Pharma Ltd. v. Collector of Central Excise [1993 (63) E.L.T. 446 (Tribunal)]. In this case, the Hon'ble Tribunal, inter alia, observed as follows:- 6. A reading of these sub-headings makes it clear that the product is not a Prasad or Prasadam, Sterilised or pasteurised miltone. Therefore, it will not come within the sub-headings 2107.10 or 2107.20. As the item is not put in a unit container and ordinarily intended for sale, it will not come within the Heading 2107.91. Therefore, the product has to be brought under the residuary sub-heading 2107.99 as 'Other' carrying nil rate of duty. As we have classifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid decision, the product 'Fry Snack Foods called Fryums' have been considered as 'Namkeen' and not as 'Papad'. 44.2 The applicant has contended that in the above case entry for consideration before Honourable CEGAT was "Papad, Idli-Mix, Vada-Mix, Dosa-Mix, Jalebi-Mix, Gulabjamun-Mix or Namkeens such as Bhujia, Chabena"; that at relevant time PAPAD and NAMKEEN were in same entry. So, there was no occasion for Honourable CEGAT to consider and differentiate between PAPAD and NAMKEEN. Subsequently, the entries were changed and then came into existence two different entries for PAPAD and NAMKEEN. The applicant said argument is not tenable as such applicant is interpreting the aforesaid judgement as per their convenience because in the said case Hon'ble CEGAT was to decide whether the said Product i.e. "Fryums" can be equate with Namkeen or not so that assessee can get benefit the exemption from payment of duty. The assessee (M/s. TTK Pharma) in the case had claimed that their product "Fryums" is a Namkeen and not claimed as "Papad" where as in the exemption entry "Papad, Idli-Mix, Vada-Mix, Dosa-Mix, Jalebi-Mix, Gulabjamun-Mix or Namkeens such as Bhujia, Chabena" both the prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in dispute that the 'fryums' came in plastic bags. These 'fryums' were required to be fried depending on the taste of the consumer. In the circumstances we are of the view that 'fryums' were like seviyan. 'Fryums' were required to be fried in edible oil. That oil had to be heated. There was certain process required to be applied before 'fryums' become consumable. In these circumstances the item 'fryums' in the present case will not fall within the term 'cooked food' under Item 2 Part I of Schedule II to the 1994 Act. It will fall under the residuary item "all other goods not included in any part of Schedule I". [underlining supplied] 44.4 In this case, Hon'ble Supreme Court was of the view that 'fryums' were like 'seviyan'. 45. The applicant in their application has submitted that such 'different shapes and sizes un-fried Papad is not a cooked food and actually it is ready to cook food. This is a fact that when a person goes in the shop for purchase of Papad, shopkeeper shows him different types of Papad like 'Moong dal Papad' 'Udad dal Papad', 'Chaval ke Papad' etc. but shopkeeper never shows different shapes and sizes like round, square, semi-circle, hollow circle with bar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not ready to eat but can be consumed only after being fried by ultimate consumer, is specifically classifiable as 'papad' under Tariff Item 1905 05 40 of GST Tariff which is exempt from CGST/SGST vide Sl. No. 96 of Notification No. 2/2017-C.T. (Rate) as amended and Notification No. II(2)/CTR/532 (d-5)/2017 vide G.O. (Ms) No. 63." In the said Ruling the Advance Authority was to decided the classification of "Papad" made from "Maida" i.e. fine wheat flour and not the classification of "Fryums". Accordingly, the facts of the said Ruling of the Advance Authority are totally different. Therefore, the said Ruling of Advance Authority is not applicable in the applicant case. Further, as per Section 103 of the CGST Act, 2017 any Advance Ruling is binding on the Applicant who has sought it and on the concerned officer or the jurisdictional officer in respect of the Applicant. Accordingly, AARs Ruling as cited above can't be relied upon in the present case of the Appellant. 47. The applicant has claimed that the main ingredient of their product i.e. so called Papad of different shapes and sizes is wheat flour, superfine wheat flour, rice flour, starch, corn flour, cereal flour, potato st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amined the issue of 'Un-fried Fryums'. Therefore, the said case is not found to be applicable in the facts of the present case. 50. The applicant has also relied upon the judgement of Hon'ble High Court of Karnataka in the case of State of Karnataka Vs. Visavamba Stores and Others, wherein the issue involved was whether the Fryums can be treated as Pappad under Entry 40 of the I Schedule to the KVAT Act. 50.1 The State of Karnataka has filed Special Leave Petitions (C) No. 29023-29083/2013 in the Hon'ble Supreme Court against the said judgment of Hon'ble High Court of Karnataka. The Hon'ble Supreme Court has granted leave to the said Special Leave Petitions. Therefore, the aforesaid judgment of the Hon'ble Karnataka High Court is in jeopardy, in view of the judgment of Hon'ble Supreme Court in the case of Union of India v. West Coast Paper Mills Ltd. [2004 (164) E.L.T. 375 (S.C.)], wherein it has been held as under - "14. Article 136 of the Constitution of India confers a special power upon this Court in terms whereof an appeal shall lie against any order passed by a Court or Tribunal. Once a Special Leave is granted and the appeal is admitted the correctness or otherwise of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns not elsewhere specified or included 2106 10 00 -Protein concentrates and textured protein substances kg. 2106 90 -Other : --- Soft drink concentrates : 2106 90 11 ----Sharbat kg. 2106 90 19 ----Other kg. 2106 90 20 ---Pan masala kg. 2106 90 30 ---Betel nut product known as "Supari" kg. 2106 90 40 ---Sugar-syrups containing added flavouring or colouring matter, not elsewhere specified or included; lactose syrup; glucose syrup and malto dextrin syrup kg. 2106 90 50 ---Compound preparations for making non-alcoholic beverages kg. 2106 90 60 ---Food flavouring material kg. 2106 90 70 ---Churna for pan kg. 2106 90 80 ---Custard powder kg. ---Other 2106 90 91 ----Diabetic foods kg. 2106 90 92 ----Sterilized or pasteurized millstone kg. 2106 90 99 ----Other kg. 52.3 Chapter Note 5 and 6 of Chapter 21 provides, as follows - "5. Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter alia includes : (a) …… (b) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption; (c) …… (d) …… (e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be read ejusdem generis with the earlier expressions i.e. municipal corporation, notified area committee, town area committee, town committee." 52.7 The phrase 'by any other name' and 'by whatever name it is known' have a proximate purpose in a statute and hence the principle laid down by the P&H High Court supra will apply on all squares. Therefore, in the instant Case the goods "Papad" cannot be termed as "Fryums" hence applicant goods is to be classified under CTH No. 2106 and not under CTH No. 1905 of Custom tariff Act, 1975. 52.8 Taking all these aspects into consideration, we hold that the product 'different shapes and sizes un-fried Fryums' is appropriately classifiable under Tariff Item 2106 90 99. 53. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 covers "Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Papad of different shapes and not in respect of Fryums and hence not applicable - Since Heading 2106 ibid covers all kind of edible preparations not elsewhere specified and items and processes specifically mentioned therein are only illustrative, Fried Fryums are appropriately classifiable under Tariff Item 2106 90 99 ibid - Said goods chargeable to GST @ 18% (9% CGST + 9% SGST) - Section 9 of Central Goods and Services Tax Act, 2017" 54.1 The above Rulings of Advance Authority are squarely applicable in the applicant case. In view of the said Rulings, it can be concluded that applicant's product of different shape and sizes is "un-fried Fryums" and it cannot be called as "Papad" as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975. 55. In view of the foregoing, we rule as under :- RULING Question: Under which tariff Heading PAPAD of different shapes and sizes manufactured/ supplied by the applicant would attract CGST and SGST? Answer : The product 'Un-fried Fryums' manufactured and supplied by applicant is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975. Go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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