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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 ..... However, with changing of time and considering the different demands of different class of consumers innovations are made in shapes and sizes also and now Papad comes in different shapes and sizes. 4. The applicant submitted that it does not required any extra effect to do the same with minor variations in proportions of ingredient and the dough is moulded in the desired shapes and size may be round, may be square, may be semi circle, may be hollow circle with bars in between or may be square with bars in between intersecting each other or may be of shape of any instrument, equipment, vehicle, aircraft, animal etc. The shape may vary, the size may vary but the ingredients, the proportion of ingredients, the composition and the recipe remains similar, if not exactly the same. 5. The applicant further submitted that they do not sell the Papad of different shapes and sizes manufactured by it in ready to eat condition. The applicant manufactures Papad of different shapes and size that are in neither fully cooked form nor ready to eat form till reaches the actual consumer. When the consumer desires to consume/ eat, the consumer needs to either fry it or bake it before consumption and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the technology, it has become possible to bring change/ modification in the mindset of the people also that now PAPAD can be in any desired shape and size. Considering the same, the rules of viewing a product and interpretation about its classification also need to be modified and upgraded with the overall advancement of commercial scenario. 13. The applicant has referred a few judicial pronouncements wherein Hon'ble Courts including Hon'ble Supreme Court have resorted to encouragement of development of principles of interpretation according to the changing scenario. In the case of State of Punjab Vs. Amritsar Beverages Ltd. - [2006] 147 STC 657 (SC), Honourable Supreme Court was confronted with the issue of interpretation of a couple of provisions of the Indian Evidence Act and while interpreting the provisions vis-à-vis taking cognizance of technological development, Honourable Supreme Court observed that - Creative interpretation had been resorted to by the court so as to achieve a balance between the age old and rigid laws on the one hand and the advanced technology, on the other. The judiciary always responds to the need of the changing scenario in regard to developm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EVER NAME IT IS KNOWN" and not as only "PAPAD". 15. The applicant has referred the order passed by the Authority for Advance Ruling, Tamilnadu in the case of Subramani Sumathi- Order No. 07/AAR/2019 dtd. 22/01/2019 wherein the issue of classification of PAPAD made of maida was for consideration before Advance Ruling Authority and it has been held therein that the product in question was eligible to be classified as PAPAD under Tariff Heading 19050540. 16. The applicant submitted that issue as to whether PAPAD of different shapes and sizes and also known by different nomenclature, whereby more common nomenclature used is FRYUMS though FRYUMS is a registered brand name of TTK Healthcare Ltd. and not the name of any of product of PAPAD, would be eligible to be considered as and falling under the entry of PAPAD or not has been very well settled far back by Honourable Supreme Court in the case of Shiv Shakti Gold Finger Vs. Assisstant Commissioner, Commercial Tax, Jaipur - (1996) 9 SCC 514 wherein Honourable Supreme Court has clearly observed and held that irrespective of the shape of PAPAD and irrespective of ingredients used, the PAPAD still remains PAPAD. 17. The applicant has ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and execution of the decision of Honourable Karnataka High Court and as per settled legal position, till a judgment is stayed or reversed, it is the authority prevailing and the judicial discipline demands that the said judgment be honoured and followed. The applicant has rely upon the observation made by Honourable Supreme Court in the case of Collector of Customs, Bombay Vs. Krishna Sales (P) Ltd. - AIR 1994 SC 1239 observing that - Mere filing of appeal does not operate as a stay or suspension of the order appealed against. (vi) On the issue of classification and the principles of classification, it would be profitable to refer to the decision of Honourable Supreme Court in the case of Commissioner of Commercial Tax, UP Vs. A. R. Thermosets (P) Ltd. - AIR 2016 SC 321 : (2016) 94 VST 258 (SC) wherein, issue was as to whether BITUMEN EMULSION was eligible to be classified under the entry which read as BITUMEN. The stand of the Revenue was that the concerned entry was restrictive as it used the only word "BITUMEN" while the stand of the assessee was that BITUMEN EMULSION is a different form of BITUMEN, more precisely in liquid form and less hazardous. So, assessee contended i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt and particularly the Apex Court of a country cannot and should not be unsettled or ignored. Precedent keeps the law predictable and the law declared by Apex Court, being the law of the land, is binding on all courts/tribunals and authorities in India in view of Article 141 of the Constitution. The judicial system "only works if someone is allowed to have the last word" and the last word so spoken is accepted and religiously followed. The doctrine of stare decisis promotes a certainty and consistency in judicial decisions and this helps in the development of the law. Besides providing guidelines for individuals as to what would be the consequences if he chooses the legal action, the doctrine promotes confidence of the people in the system of the judicial administration. Even otherwise it is an imperative necessity to avoid uncertainty, confusion. Judicial propriety and decorum demand that the law laid down by the highest Court of the land must be given effect to. Union of India (UOI) and Ors. vs. S.P. Sharma and Ors. (2014) 6 SCC 351: MANU/SC/0191/2014. 18. The applicant further submitted that assessee is the person who deals with the product day in day out and who is more c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the specific requirement 21. The applicant submitted that principal raw materials for papad products are: rice flour, corn flour, wheat flour, super fine wheat flour, cereal flour, tapioca starch, potato starch, salt, water and flavor, as the case may be. Similar raw-materials including pulses, salt, water etc. are used for making papad. Most of the said raw materials are either exempted from GST or subject to 5%/12% GST. 22. The applicant submitted that papad product, manufactured by above process with the ingredients stated above is then either sold to others entities who specialize in providing the process of frying and roasting these products; or are sold as such to the consumer or exported in the same condition without frying. The papad product is normally consumed after frying or roasting. 23. The applicant submitted that they do not sell the Papad of different shape and size manufactured by it in ready to eat condition. They manufacture Papad of different shape and size that are in neither fully cooked form nor ready to eat form till it reaches the actual consumer. When the consumer desires to consume/eat, the consumer needs to either fry it or bake it before consumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, generally used for food, which are made either directly from the cereals of Chapter 10, from the products of Chapter 11 or from food flour, meal and powder of vegetable origin of other Chapters. 28. The applicant submitted that considering the ingredients used and the process followed for manufacture of product read with Chapter Headings and Tariff entries, the products manufactured by applicant should merit classification under tariff heading 1905 90 40 as 'papad'. 29. The applicant further submitted that apart from above, they would humbly like to bring to kind notice of Honourable AAR that there is no such word as "FRYUMS". The word "FRYUMS" is a brand name of the product manufactured and marketed by TTK Healthcare Ltd. which means that the product which is sold by TTK Healthcare Ltd. in the name and style of "FRYUMS" is sole right and authorisation of TTK Healthcare Ltd. only. Thus, TTK Healthcare Ltd. owns the right to sell PAPAD manufactured by it under the brand name of "FRYUMS". So, "FRYUMS" is not a distinct type of product but it is PAPAD sold under the brand name of "FRYUMS" owned by TTK Healthcare Ltd. Hence, for the purpose of classification the issue cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered as PAPAD or not. The issue for consideration before Honourable Court was whether FRYUMS would be classified under the entry of "COOKED FOOD" or "RESIDUARY ENTRY". Thus, there was no occasion for Honourable Supreme Court to consider the issue of classification of FRYUMS under entry of PAPAD. Hence, Honourable AAR has completely erred in placing reliance upon the said judgment in the case of Sonal Products. 31. The applicant submitted that in the case of Sonal Products, the applicant therein had placed reliance upon a couple of Determination Orders passed u/s. 80 of the Gujarat Value Added Tax Act, 2003 but the same were not taken into consideration by Honourable AAR. In para 14 of the order of Sonal Products, Honourable AAR has observed that "Determination Orders under section 80 of the Gujarat Value Added Tax Act, 2003 were not pertaining to classification under First Schedule to the Customs Tariff Act". Hence, Honourable AAR has deemed it fit not to place reliance upon them though they have been rendered exactly on the issue involved and exactly on the products involved. 31.1 The applicant further submitted that with due respect and without any offence, they would li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar entries were involved and with due respect, not to the decisions where entries for consideration were completely different. 33. The applicant submitted that in the case of Sonal Products, the products have been held to be classifiable under Chapter Heading 2106 90 99 i.e. under the residuary entry. 33.1 The applicant submitted that the ruling has relied upon common parlance test to conclude the classification. It is important to note that effective 2005, India has adopted 8digit classification coding. Further, the manner of determining classification has undergone complete change and common parlance test cannot be the sole test for determining classification of a product. 33.2 The applicant further submitted that with respect to classification in Heading 2106, it is important to refer to Chapter Notes of Heading #21 wherein under clause 5 (b) it is stated that Heading 2106 includes preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption and under clause 6 it has been stated that Tariff item 2106 90 99 includes sweet meats commonly known as "Misthans" of "Mithai" or called by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can neither be consumed by human in the form it is sold which means that is not ready to eat product for human consumption. Thus, heading 2106 90 99 even as general entry is not capable of including the product of the applicant and 1905 90 40 is the only entry and most specific entry where the product manufactured by the applicant would fall. 36. The applicant submitted that with due respect and without any offence, the applicant would like to submit that these all aspects never came for consideration before Honourable Advance Ruling Authority in the case of Sonal Products and thus decision of Sonal Products is silent on the important aspects and rules of interpretation. Personal Hearing 37. The authorised representative of the applicant appeared for personal hearing. The applicant reiterated the submissions already made in the application. They reiterated the facts submitted along with the application. They submitted the additional reply and showed the samples of product manufactured by them. Findings and Discussion 38. We have considered the submissions made by the Applicant in their application for advance ruling. We also considered the issue involved, on which advance ruli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in statutes like the Excise Tax Acts or Sales Tax Acts, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted. ........." 42. This view was upheld by Hon'ble Supreme Court in the case of Oswal Agro Mills Ltd. v. Collector of Central Excise [1993 (66) E.L.T. 37 (S.C.)]. While reiterating the principle that in absence of statutory definitions, they have to be construed according to their common parlance understanding, Hon'ble Supreme Court, in the case of Commissioner of Central Excise v. Connaught Plaza Restaurant (P) Ltd. [2012 (286) E.L.T. 321 (S.C.)], has referred to various decisions on the subject and observed as follows :- Common Parlance Test : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification No. 12/90, dated 20-3-1990, it would be proper for us to give finding in regard to the same. 7. ...... 8 ......... The Sl. No. 8 reproduced above mentions about various goods coming within sub-heading 2107.91. It has given illustration to the items Namkeens such as Bhujiya, Chabena. Now the question is as to whether these namkeens given in the notification is a general one including all types of namkeens or only to the type given therein like Bhujiya, Chabena by illustration. The learned Collector has interpreted the word 'such as' to mean namkeen should be of a kind of Bhujiya and Chabena. Although it is not in dispute that the item in question is a namkeen. As can be seen from the various items given in Sl. No. 8 namely Papad, Idli-mix, Vada-mix, Dosa-mix, Jalebi-mix, Gulabjamun-mix are all of a type which cannot be eaten straightaway but it requires to be fried. Chabena also comes in a type of item which requires to be chewed like Potato chips or fried Channa Masala or various types of fried masala dals. There can be any number of examples of namkeens in the form of Chabena which are mostly taken as a side dish. It can also be preferred to be eaten after sweetmea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee (M/s. TTK Pharma) in this case knows that if they claimed their product Fryums as Papad they will not get covered under the said specific entry of exemption Notification. Further, applicant has claimed that assessee M/s. TTK Pharma sold their product Papad under the brand name of 'Fryums' then why before CEGAT they did not make argument/claimed that their product 'Fryums' is actually a "Papad" and not Namkeens. The assessee in the said case has correctly defined their product Fryums as Namkeen. Therefore, by coming in to existence of two different entries of "Papad" and "Namkeen" the classification of the product cannot be changed. Hence in view of the above discussion applicant contention that there was no occasion for Honourable CEGAT to consider and differentiate between PAPAD and NAMKEEN is baseless and misleading because Hon'ble CEGAT has taken account each and every aspect of the product "Fryums" and then considered the said Product "Fryums" as "Namkeen" and not "Papad". 44.3 In the case of Commercial Tax, Indore v. T.T.K. Health Care Ltd. [2007 (211) E.L.T. 197 (S.C.)], the issue before the Hon'ble Supreme Court was regarding tax rate of 'Fryums' under M.P. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not mentioned this fact because it is crystal clear that Papad is a distinct commodity and it cannot be equated with the Fryums. In terms of Gujarati language, it can be said that cooked or fried Fryums are served as "Farsan" and not as "Papad", whereas cooked or fried Papad is served as only "Papad". Hence 'Papad' even after roasting or frying are known and used as 'Papad' only. Therefore, in commercial or trade parlance also, the 'Un-fried Fryums' cannot be said to be known as 'Papad'. This can be understood by visualizing the photograph of both the product i.e. "Papad" and "Fryums". PAPAD FRYUMS 45.1 From the above photos, 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". 45.2 Further, the applicant himself has mentioned the fact in their application that in common parlance their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng dal Papad" and "Udad dal papad". Therefore, main ingredients of both the Product i.e. "Fryums" and "Papad" are not same but are different. Further, the manufacturing processes of both the product have also some differences. In Fryums as claimed by applicant that some sort of moisture are maintained at specific temperature whereas Papad are required to be completely dried in sun light otherwise "Papad" will become rotten if some moisture remains in Papad and cannot be useful for consumption. 48. The applicant has contended that classification in Custom Tariff Act is driven by the ingredients used in the products. Predominant content in the product would help in determining appropriate classification. The applicant this contention is totally wrong as such only ingredients of the product itself cannot be deciding factor for the classification of goods. For proper and correct classification not only ingredient of the product but use of the product, common parlance test and marketability of the product is equally a deciding factor. This fact can be understood by an illustration. If only ingredients of the product are the deciding factor of classification then classification would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into consideration that once an appeal is filed before this Court and the same is entertained, the judgment of the High Court or the Tribunal is in jeopardy. The subject matter of the lis unless determined by the last Court, cannot be said to have attained finality. Grant of stay of operation of the judgment may not be of much relevance once this Court grants special leave and decides to hear the matter on merit. 51. The applicant has placed reliance on following case laws of VAT regime: (i) M/s. Avadh Food Products Vs. State of Gujarat and M/s. Swethin Food Products Vs. State of Gujarat. These case laws are not applicable in the instant case because facts of the case are different from the applicant and the issue of applicant is to be decided in terms of GST Act, whereas the said case law pertains to VAT Act, which is not in existing after inception of GST Act. (ii) 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). The Determination Orders under Section 80 of the Gujarat Value Added Tax Act, 2003 were not pertaining to clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products remain classified in these sub-headings irrespective of the nature of their ingredients." 52.4 Thus, Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. Chapter Note 6 pertaining to Tariff Item 2106 90 99 also provides inclusive definition and products mentioned therein are illustrative only. 52.5 The applicant has contended that 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. The said principal of rule of interpretation noscitur a sociis is not applicable. In the instant case the most appropriate rule of interpretation which is to be used while interpreting the phrase 'by whatever name it is known' is the legal principle of Ejusdem Generis. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. The words 'ejusdem generis' mean 'of the same kind or nature'. Ejusdem generis is a rule of interpretati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 54. We also refer to the following Rulings of Advance Authority, which are squarely applicable in the instant case: (i) Gujarat Advance Authority in case of M/s. Sonal Product G {Advance Ruling No. GUJ/GAAR/R/2019/03, dated 22-2-2019} has held that, "Papad and Papad Pipes - Classification of - Products commonly known as unfried Fryums having different shape, sizes and varieties and made from raw materials such as maida floor, starch powder, rice powder, poha, salt, soda by-carb, baking powder, food colour, water and plastic bags for packing - Word 'Papad' not defined either under Customs Tariff or under Central Goods and Services Tax Act, 2017/Gujarat Goods and Services Tax Act, 2017/Integrated Goods and Services Tax Act, 2017 or Notifications issued thereunder, therefore, its meaning to be construed in its popular sense as understood in common language - The product is commonly known as 'namkeen' and not as 'papad' and appropriately classifiable under Tariff Item 2106 90 99 of Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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