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TMI Blog2021 (8) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... under the aforesaid Entry at Sr. No. 23 of Schedule- III of Notification No. 1/2017-Central Tax, as amended, attracting Goods and Services Tax @ 18%, though some of the specific products of Chapter Heading 2106 excluded from this entry are covered under different entries of Schedule-I or Schedule-II, attracting Goods and Services Tax @ 5% or 12%. None of the aforesaid 7 products of various Instant Mix / Ready Mix Flour being supplied by the applicant are the products which have been excluded from the entry at aforesaid Sr. No. 23 of Schedule III or which have been specifically included in any other entry of other Schedule of Notification No. 1/2017-Central Tax, as amended or in any of the entries of Notification No. 2/2017-Central Tax. - GUJ/GAAR/R/32/2021 (In Application No. Advance Ruling/SGST&CGST/2020/AR/20) - - - Dated:- 30-7-2021 - SANJAY SAXENA AND ARUN RICHARD, MEMBER Present for the applicant : Shri Divyang Panchal, CA A. BRIEF FACTS The applicant is a supplier of Pulses, Flours, Namkeen, Mix Flours and other food products including Khaman Flour, Gota Flour, Dalwada Flour, Dahiwada Flour, Dhokla Flour, Idli Flour and Dosa Flour, supplied in a unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucts: (a) Company purchases food grains and pulses from open market. (b) Such pulses are sorted and cleaned and then send to grinding machine. (c) Pulses are grinded into flour in grinding machine for e.g. where Grams is purchased, it results into gram flour by following grinding process. In certain cases, the applicant purchases grinded flour directly from the vendors. (d) Now, certain spices are mixed in flour and such mixed flour is packed in various packings. (e) At last, a small packet of spices necessary to prepare food item is supplied in pouch with packing of flour for added taste. (f) Mixed flour (commercially known as Instant Mix Flour ) are sold in open market or through distributors to consumers. (g) End consumer of such instant mix flour is required to follow certain food preparation process before such product can be consumed as etable. (h) Hence, instant mix flour cannot be consumed as it is, but it is required to follow certain cooking procedures before consumption. Thus, the product manufactured and sold by the applicant is not ready to eat but can be said as ready to cook . 7. The applicant further submitted that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Black Gram Dal, Iodised Salt, Raising Agent [(INS 500(ii)], Acidity Regulator (INS 330). 7 Dosa Flour (in powder form)- Rice, Black Gram Dal, Refined Wheat Flour, Iodised Salt, Raising Agent [(INS 500(ii)], Acidity Regulator (INS 330). 10. The Percentage-wise break-up of the flours and other ingredients are as follows: Sr. No. Product Chana Dal Udad dal Moong Dal Total of leguminous flours Suji flour Wheat flour Rice flour Total of Rice flours/ Wheat flours Total flours Spices and other ingredients 1 Gota Flour 67% - - 67% 6% - - 6% 73% 27% 2 Khaman Flour 73% - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or any enforceable right in respect of such brand name has been voluntarily foregone. 13. The applicant further submitted that the composition and ingredients contained in the different types of Flours does not contain the Maize Flour or Wheat Flour. The applicant, therefore, sells this flour under the HSN code 1106 and, hence, the GST is charged @ 2.5% CGST and 2.5% SGST. 14. Further, it may be appreciated that as per legal interpretation 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. 15. The applicant further submitted that under the above facts and circumstances, the applicable tariff schedule shall be HSN Code 1106 with applicable GST Rate of 5% (2.5% CGST + 2.5% SGST). In support of view of applicability of HSN Code 1106 and taxability @5% (2.5% CGST + 2.5% SGST), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in vat regime (relied on Tax Determination Orders passed under VAT Act as mentioned herein above) 2 Khaman Flour 3 Dalwada Flour 4 Dahi-wada Flour 5 Dhokla Flour 6 Idli Flour 7 Dosa Flour The applicant concludes that above varieties of flours falls under HSN Code 1106. 17. The applicant further submitted that the said flour cannot be treated as Ready to eat which can be classified under the heading 2106 on the following reasons: (a) The said mixed flour sold to customers are not in form of ready to eat. (b) For preparing various Indian dishes, one has to not only carry out mixing process but also need to add spices, condiments and flavours etc. and other things as may be required. The recipe of preparing various Indian dishes by using the said mixed flours is also described on packet itself. In nutshell, for preparing Indian dishes, one has to carry out process prescribed on food packet such as boiling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant s case. 20. The applicant has submitted the additional submission dated 16-6-21- as follows: (i) Product manufactured and supplied by applicant is merely flour of farsan dishes and not ready to eat food preparation: The product Khaman Flour, Gota Flour, Dalwada Flour, Dahiwada Flour, Dhokla Flour, Idli Flour and Dosa Flour are in the form of instant mix of flour grains, which is then used to prepare farsan and other similar dishes. (ii) The Flour of the Farsan such as Khaman, Dahi Wada, Gota, Dal Wada, Dhokla etc. should not be taxable at a rate higher than the rate at which ready to eat prepared farsan is taxable : The product in question is sold in the packet along with the packet of sauce, by using which the consumer can prepare the farsan/ namkeen dish following the instruction on the packet and can consume it. Farsan/nmkeen are itself taxable under the tariff 210692 @12% (6%+6%) and the Dosa, Idli instant preparation such as batter is taxable under the heading 2106 at the rate of 5% (2.5%+2.5%) therefore, its preparation and raw material cannot be taxed at a higher rate than the resultant product. The product is carrying its essential raw mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct are known as Farsan Flour . Hence the most similar and relevant classification for their product falls under HSN 1106. (v) Products under consideration are known as flour of farsan/namkeen in common parlance: The product under consideration is identified as flour in the market. Therefore, considering it any sort of instant or ready to eat food preparation will be different than its actual identification. Hence the classification should be under chapter 11, more specifically 1106 and should be charged by rate of 5% (2.5%+2.5%). (vi) The basic character of the products remains Flour even after addition of spices and salt in very small amount of quantity: The product under consideration contains very small amount of the quantity of Spices and Salt and even after adding such flavours to the products the nature and identification of product remains as Flours only. In fact, the Flour of Khaman, Gota, Dhokla etc. cannot be considered as any instant ready to eat or consume food and also cannot be considered as any sort of food preparation. Rather, the more correct classification for it is as Flour under the tariff heading 1106 under rule 3(b) of the Custom Tar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the applicant and the revenue. 25. We find that the Applicant has filed the Application for Advance Ruling on 28-5-20 and Revenue initiated enquiry against the applicant on 17-7-20 and after initiation of inquiry, Revenue s first letter/notice was issued on 30-7-20. Vide the first proviso to Section 98(2) of CGST Act, the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of applicant under any provision of the Act. Revenue did not bring anything on record that enquiry was initiated prior to the date of application, either that subject questions are already pending or decided in any proceeding in the case of applicant. We hold that Ruling is not vitiated if Revenue initiates enquiry after the date of the filing of Application. We find no bar in the Act to dismiss the application on this ground. In absence of any specific provision to dismiss application when Revenue initiate enquiry post filing of application, it would not be legal and proper to dismiss the application without Ruling. 26. We hold that Classification of goods under GST is based on HSN. The customs Tariff i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 0714 or of the products of Chapter 8: (A) Flour, meal and powder of the dried leguminous vegetables of heading 0713: 28. As per Rule 1 of the General Rules for the Interpretation of CTA, 1975, for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. Thus, the classification of the product is required to be determined in accordance with the terms of the headings. As per Chapter Heading11.06, it covers Flour, Meal and Powder of the dried leguminous vegetables of Chapter Heading 07.13 and other specified products. On inspection of the Packets of each product, we find that each of the packet is marked Instant Mix , but for the packet of Khaman Instant Mix is not marked. On examination of the list of ingredients and preparation of cooking mentioned in the khaman flour packet, it is similar to the other products. Therefore, it appears that the said product too falls under the category of Instant Mix . On examination of the list of ingredients we find that Spices and other ingredients apart from flour of dried leguminous vegetables, rice and wheat are contained in different proportions. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where specified or included. The Explanatory Notes of HSN for Chapter Heading 2106 provides as follows :- Provided that they are not covered by any other heading of the Nomenclature, this heading covers : A) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption. B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.)with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics(appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter38). . 30.1 The subject 7 products of Mix Flour / Instant Mix Flour are preparations for use, after processing, such as cooking, carrying out the detailed procedure for cooking as mentioned on the packets of all the said 7 products, then ready for human consumption. The applicant submitted that the products are not ready to eat but can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escription of goods mentioned against Chapter Heading 2106 included Instant Food Mixes such as Pongal mix, Vadai mix, Pacoda mix, Payasam mix, Gulab Jamun mix, Rava Dosa mix, Idli mix, Dosa mix, Murruku mix, and Kesari mix, supports our view that various Instant Food Mixes (Instant Mix / Ready Mix Flour) being supplied by the applicant are classifiable under HSN 2106. APPLICABLE RATE OF GOODS AND SERVICES TAX: 33. The various Instant Mix / Ready Mix Flour being supplied by the applicant are classifiable under HSN 2106 and in precise subheading 2106 90. 33.1 Vide Notification No. 1/2017-Central Tax (Rate) dated 28-6-17, as amended, entry at Sr. No. 23 of Schedule - III reads as follows - S.No. Chapter/ Heading/ Sub-heading/ Tariff item Description of Goods 23. 2106 Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods] 33.2 Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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