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TMI Blog2021 (10) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... . It has been submitted that ingredients are mixed in machine with water and oil, dough is prepared and passed through die of different shapes and size to manufacture different shapes and size of papad and then dried through various stages. The product of the appellant, thus prepared, is thin and wafer like product. At this stage, the product is not ready for consumption. Though, traditionally Papad has been prepared manually, in round shape. However, when ingredients and process are similar in case of PAPAD and impugned product, then the product in question is nothing but a kind of PAPAD irrespective of their shape and sizes. The products of the appellant has found its use as an alternative to regular round shaped Papad or as an additional variety of Papad in the Indian meal, especially the meals served during the community functions. The caterers, who prepare the meals for the community functions, as well as the people in general, consider such products as a different type or variety of Papad only - the applicant s products of different shapes and sizes of papad, whose pictures are reproduced above, are nothing but Papad, classifiable under Tariff Item 1905 90 40 of the Customs T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for Advance Ruling filed by it. "Under which tariff Heading PAPAD of different shapes and sizes manufactured/ supplied by the appellant would attract CGST and SGST"? 4. The appellant has submitted that they are engaged in the business of manufacturing and trading of "Papad" of different shapes and sizes which is raw pellet that are neither fully cooked nor ready to eat and needs to be cooked first either by frying or roasting before consuming. The Papad turns out to be a papad when the dough is moulded and given the shape, usually a palm size round or may be smaller or bigger. The shape and size may vary but the ingredients, the proportion of ingredients, the composition and the recipe remains similar, if not exactly the same. The appellant has submitted that 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. The Papad of different shape and size are not ready and suitable for human consumption till they are fried/baked as deemed fit and as and when deemed fit by the consumer. The appellant further submitted that their product "Papad" of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 9% + GGST 9% or IGST 18%) is applicable to the product 'Un-fried Fryums' as per Sl. No. 23 of Schedule III of Notification 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. 6. Aggrieved by the aforesaid advance ruling, the appellant has filed the present appeal. 7. During the course of personal hearing held on 15.12.2020, the appellant reiterated the submissions made in the appeal dated 27.08.2020. 8. The appellant in the ground of appeal has submitted that they are in the business of manufacturing and trading of "Papad" of different shapes and sizes. The Papad, turns out to be a papad when the dough is moulded and given the shape, usually a palm size round or may be smaller or bigger. The dough remains the same with minor variations in proportion of ingredients and the dough is moulded in the desired shape and size may be round, square, semi circle, hollow circle with bars in between or may be square with bars in between intersecting each other or may be of the shape of any instrument, equipment, vehicle, aircr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11. The appellant further submitted 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 the GST Act. 12. The appellant has submitted that in GST for determination of classification of goods Custom Tariff Act, 1975 is relevant and the classification in Customs is driven by the ingredients used in the products. Predominant content in the product helps in the determination of the classification of the products. 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 prescribed the contents or ingredient of the products in order to include or exclude specific products within a gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The judiciary always responds to the need of the changing scenario in regard to development of technologies. It uses its own interpretative principles to achieve a balance when Parliament has not responded to the need to amend the statute having regard to the developments in the field of science. * In the case of M/s. J. K. Cotton Spinning and Weaving Mills Ltd. Vs. Union of India - [1988] 68 STC 421 (SC), relying upon the observation made by Apex Court itself in another judgment in the case of Senior Electric Inspector v. Laxminarayan Chopra [1962] 3 SCR 146, Honourable Supreme Court observed that -in a modern progressive society it would be unreasonable to confine the intention of a legislature to the meaning attributable to the word used at the time the law was made and, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations. * 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 &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. State of Gujarat -2016 GSTB -I 296, Honourable Tribunal has considered the issue about classification of PAPAD of different shapes and sizes and clearly held that Fryums are nothing but PAPAD falling under entry 9(2) in schedule I to the GVAT Act and exempt from payment of tax. 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. 19. The appellant has submitted that merely because the law has changed from VAT to GST, the classification should not have any impact so far when the entries remain similar if not exactly the same. Under the erstwhile VAT Act if a product is considered as PAPAD then the product does not seize to be a PAPAD merely because VAT Act is no more in existence and has been replaced by GST Act. In this regard 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. {West C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the classification may lead to an anomalous situation for the assessee having business throughout the country. Further, submitted that it is very well settled position of law that in the case of classification, the entry most beneficial to the assessee needs to be adopted {Commissioner of Central Excise, Bhopal Vs. Minwool Rock Fibers Ltd. -2012 (278) ELT 581}. 24. The appellant has further submitted 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 authorization of TTK Healthcare Ltd. only. Thus, M/s. 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 that whether a product is "FRYUMS" or PAPAD or whether FRYUMS can be considered or classified as PAPAD because there is no such product with the name of FRYUMS and hence there remains onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in the case of Commissioner of Commercial Tax, Indore Vs. M/s. T.T.K. Healthcare Ltd. -2007 (211) ELT 197 (SC) is not applicable in the present case as such at no point of time there was any question before Honourable Supreme Court as to whether the product FRYUMS could be 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. (iv) The observation that shape of appellant's product is different from PAPAD and hence cannot be considered as PAPAD is not true and correct and most importantly not well founded. Further, submitted that the observation of AAR that when a customer asked for PAPAD he gives traditional round shape PAPAD but it is equally true that when asked FANCY Papad shopkeeper gives appellant like product. Therefore, it cannot be said that products of the appellant do not pass the common parlance test. Further, applicant has submitted that one of the common parlance test is that in the marriage function and socia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle of law that if the entries are similar in earlier law and current law then merely because there is change in law classification cannot be disturbed. Thus the judgments and determination orders passed under the GVAT Act and relied upon by the appellant, being on the same products and being in relation to similar entry are required to be followed. (ix) The observation of the learned GAAR that the judgment of Honourable Supreme Court in the case of Commissioner of Commercial Tax, UP Vs. A. R. Thermosets (P) Ltd. -AIR 2016 SC 321 is not applicable because the commodity in the said judgment is different from commodity of appellant. The appellant has submitted that the judgment of Hon'ble Supreme Court was relied upon by them on the principle of interpretation laid down by Hon'ble Supreme Court and not on the commodity. In this case Hon'ble Supreme Court held that narrow interpretation as sought by Revenue could not be done because bitumen is a generic expression which would include different types of bitumen in any form. Similarly, in the present case of the appellant, PAPAD is a generic expression which would include different types of PAPAD irrespective of its form, shape, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) The various issues and decisions relied upon by the appellant have neither been controverted nor distinguished nor dealt with and no reasons have been advanced for the same. As such the learned AAR is completely silent on the issue regarding creative interpretation in light of advancement of technology and advancement of market trends, not considered the decision of Advance Ruling Authority of Tamilnadu in the case of Subramani Sumathi Order No. 07/AAR/2019 dated 21/01/2019 which was relied upon by the appellant; the decision of CESTAT in the case of Commissioner of Central Excise, Banglore Vs. T.T.K. Pharma Ltd. -2005 (190) ELT 214 (Tribunal) relied upon by the appellant was not relied upon. 27. The appellant has submitted that Considering the overall facts and circumstances of the case vis-à-vis the entries in question and the settled law on the subject, the product i.e. PAPAD of different shapes and sizes manufactured and supplied by the appellant, irrespective of their shapes, sizes, ingredients, form and nomenclature is entitled to be classified under the Tariff Heading No.1905 and more precisely 1905 90 40 as "PAPPAD by whatever name it is known, except when serve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian wafer and served as an accomplishment to Indian meal or as a snack. The appellant has submitted that due to advancement of technology, PAPAD does not resemble the same age old traditional round shaped papad anymore but now PAPAD can be in any desired shape and size. We agree with the said argument of the appellant that it is not necessary that to call or consider a product "PAPAD", the shape should only be "Round". In the old era, usually PAPAD was manufactured manually, therefore it was easy for them to manufacture the Round Shape PAPAD. In the modern era, by the advent of technology, the product is being manufactured by machines and dies of different shape and size is used in the machine. Therefore, with the help of dies of various size and shapes, it is convenient to manufacture the different shape and sizes of PAPAD. 33.1 The ingredients of the PAPAD varies but by and large main ingredient are as cereal flour, pulse flour, soya flour, rice flour, salt, Papad Khar and Asafoetida. The appellant has submitted that main ingredients of their product 'different shape and size Papad' are also wheat flour, superfine wheat flour, rice flour, starch, corn flour, cereal flour, po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Custom Tariff Act, 1975 is as: 1905 BREAD, PASTRY, CAKES, BISCUITS AND OTHER BAKERS' WARES, WHETHER OR NOT CONTAINING COCOA; COMMUNION WAFERS, EMPTY CACHETS OF A KIND SUITABLE FOR PHARMACEUTICAL USE, SEALING WAFERS, RICE PAPER AND SIMILAR PRODUCTS 1905 90 Other : 1905 90 10 --- Pastries and cakes 1905 90 20 --- Biscuits not elsewhere specified or included 1905 90 30 --- Extruded or expanded products, savoury or salted 1905 90 40 --- Papad 1905 90 90 --- Other The General NOTES of HSN of Ch. 19 are as under : This chapter covers a number of preparations, 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 vegetables origin of other chapters (Cereal flour, groats and meal, starch, fruit vegetables flour, meal and powder) or from the goods of headings 04.01 to 04.04. The chapter also covers pastrycooks products and biscuits even when not containing flour, starch or other cereal products. CTH No. 1905 of HSN are as under: 1905 BREAD, PASTRY, CAKES, BISCUITS AND OTHER BAKERS' WARES, WHETHER OR NOT CONTAINING COCOA; COMMUNION WAFERS, EMPTY CACHETS OF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs, C.G.O. Vs. Sonam International [2012-275ELT-326-ALL] upheld that assessment of goods with regard to payment of customs duty is to be made based on contents involved. The main ingredients of the appellant product are flour, like wheat flour, rice flour, starch, corn flour and cereal flour and in the Ch. 19 of the Custom tariff Act 1975 all the product which are made of either directly from the cereals of chapter 10, from the products of chapter 11 or from food flour are covered. 39. We find that the appellant contends that their impugned product falls under the entry No. 96 of Not. No. 02/2017- CT (rate) dated 28.06.2017 which attracts NIL rate of GST. The relevant entry No. 96 of Not. No. 2/2017-CT (Rate) dated 28.06.2017 is reproduced as under: S.No Chapter/Heading/Sub-heading/Tariff item Description of Goods 96. 1905 Papad, by whatever name it is known, except when served for consumption 40.1 From the above entry, it can be deduced that all types of "Papad" which are popular in trade/common parlance are covered under the said entry. As we have already discussed in the above para that term "Papad" has not been defined in GST Act, 2017, therefore, we take the reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lature in different parts of the country 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. Whereas the GAAR in his ruling has held that the different shapes and sizes like round, square, semi-circle, hollow circle with bars in between or square with bars in between intersecting each other or shape of any instrument, equipment, vehicle, aircraft, animal type Papad are known in the market as "Fryums" and not "PAPAD"; that Papad is a distinct commodity and it cannot be equated with the Fryums. We have visited the website of M/s. TTK Foods (http://ttkfoods.com/products) and found that the company manufactures ready to fry extruded products (papads) and sells under the brand name Fryum's. Therefore, it can be said that "Fryums" is brand name of a company and not the generic name of the impugned product, therefore it would not be logical to hold that the appellant's product is "Fryums". However, in general public, "Fryums" is popular word for different shapes and sizes like round, square, semi-circle, hollow circle with bars in between or square with bars in between intersecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation has been submitted by the appellant. It has been submitted that ingredients are mixed in machine with water and oil, dough is prepared and passed through die of different shapes and size to manufacture different shapes and size of papad and then dried through various stages. The product of the appellant, thus prepared, is thin and wafer like product. At this stage, the product is not ready for consumption. Though, traditionally Papad has been prepared manually, in round shape. However, when ingredients and process are similar in case of PAPAD and impugned product, then the product in question is nothing but a kind of PAPAD irrespective of their shape and sizes. 42.3 As submitted by the appellant, when the consumer desires to eat the said products of the appellant, the said products are required to be fried or roasted before consumption. Thus, these products are not meant to be eaten without frying or roasting. 42.4 The products under consideration become crispy when these products are fried or roasted. 42.5 The products of the appellant has found its use as an alternative to regular round shaped Papad or as an additional variety of Papad in the Indian meal, especially the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Notification No. 02/2017-CT (Rate) dated 28.06.2017, the description of the product is "PAPAD by whatever name called". To understand the term "whatever name called" the principle of "Noscitur a sociis" is to be applied. As per the said principle, the meaning of an unclear word or phrase must be determined by the words that surround it. In other terms, the meaning of a word must be judged by the company that it keeps. Therefore, in this entry, only a product called by name of PAPAD would not be covered but all types of product which are similar to PAPAD in respect of ingredient, manufacturing process, use and common parlance would be covered irrespective of their shape and size and even name. As such, the appellant's product is similar to the traditional round shaped Papad in all respect, therefore, we are of the view that the impugned product i.e. different shapes and sizes of papad is eligible to be covered under entry No. 96 of Notification No. 02/2017-CT (Rate) dated 28.06.2017. 46. Gujarat Authority of Advance Ruling in their ruling has ruled that the product in question 'different shapes and size Papad' merit classifiable under CTH No. 21069099 of Customs Tariff Act, 1975 ..... 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