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TMI Blog2021 (10) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Tariff Act, 1975. CTH No. 2106 of Customs Tariff Act, 1975 covers the Food preparations not el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Services Tax rate of 18% (CGST 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 28.10.2020. 8. The appellant, in the grounds 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dt:28/06/2017 which exempts the supplies from the levy of tax, reads 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 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 Allahab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pretation according to the changing scenario and placed reliance on the following judgments: In the case of State of Punjab Vs. Amritsar Beverages Ltd. [2006] 147 STC 657 (SC), 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 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, un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S fall under the entry of PAPAD irrespective of their shapes and sizes and irrespective of the ingredients used. In this matter M/s. TTK Healthcare Ltd. was also one of the petitioners. 18. 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 M/s. Swethin Food Products 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 sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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). 23. The appellant has submitted that they deal with the product in the market and disturbance in the classification may lead to an anomalous situation for the assessee having business throughout the country. Further, they 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in same entry. Subsequently, the entries were changed and then came into existence two different entries for PAPAD and NAMKEEN. The said judgement cannot be relied upon in as much as the entry in question before Honourable CEGAT and entry in question in present application of the appellant 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. (iii) The judgment of Honourable 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) The observation of the learned GAAR that the judgments of GVAT Tribunal and orders u/s. 80 of the GVAT Act which were submitted and relied upon by the appellant are not applicable as they have been delivered under the GVAT Act which is not in existence anymore and they are not related to First Schedule of Customs Tariff is completely unlawful and far from the settled principles of law in as much as classification cannot be disturbed or changed merely because the governing law has changed. It is very well settled 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 because by no stretch of imagination the product of the appellant can be equated with either Misthan or Mithai or Namkeen or Chabena or Bhujia . As such the product of the appellant 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 appellant and 1905 90 40 is the only entry and most specific entry where the product manufactured by the appellant would fall. (xiii) 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 (Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evy of Gods and Service Tax. 32.1 To decide the classification of the product in question i.e. PAPAD of different shapes and sizes, it would be prudent to know what PAPAD is, what the main ingredients of PAPAD are and how it is manufactured. The term PAPAD has not been defined in the CGST Act, 2017 therefore we resort to the common sense and meaning that sense by which the people are conversant. It is observed that traditionally when we talk about the PAPAD, in the first instance an image of thin round shape flatbread appears in mind. Traditionally PAPAD is thin 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 manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable would be arrived at on the basis of notifications issued under GST by respective governments. 35. Now, we discuss the appropriate classification of the impugned product i.e. different shapes and sizes of PAPAD. The appellant claims that their product merit classifiable under CTH No. 1905 of Custom Tariff Act, 1975. We refer relevant chapter Note, headings, HSN Explanatory Notes to examine the appellant s claim. Chapter 19 of Custom Tariff Act, 1975 covers all the products which are prepared of cereals, flour, starch or milk and pastrycook s product. CTH No. 1905 of the 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 expand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the appellant, it is seen that the impugned product are manufactured from the wheat flour, superfine wheat flour, rice flour, starch, corn flour, cereal flour and all these products are covered under Chapter 10 and 11 of Customs Tariff Act. The said product can be categorized as crispy savoury food product as such it is made from the dough based on flour like wheat flour, rice flour, starch, corn flour and cereal flour. Therefore, the products of the appellant fall under the Chapter Heading 1905. However, the question still remains whether the products of the appellant can be termed as Papad. The product Papad is an eatable item, originated and mainly consumed in India. Therefore, there is no mention of the product Papad in the Explanatory Notes of the HSN. The term Papad has neither been defined in the Customs Tariff Act, 1975 nor under the CGST Act, 2017 or the Notifications issued there under. 38. We find that for determination of the correct classification of any product ingredient used in the manufacture of the said product are decisive factor. In the case of Manilal Commodities Pvt. Ltd. Vs. Collector of Customs [1992-59-ELT-189-Tribunal], the Honourable Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure from language used by it, keeping in mind, that language is at best imperfect instrument for expression of actual human thoughts - In absence of statutory definition in precise terms, it is construction of words, entries and items in taxing statutes in terms of their commercial or trade understanding, or according to their popular meaning - It operates on standard of average reasonable person who is not expected to be aware of technical details of goods - It is construction in sense that people conversant with subject-matter of statute, attribute to it - Rigid interpretation in terms of scientific and technical meanings is to be avoided - However, when legislature has provided a statutory definition of particular entry, word or item in specific, scientific or technical terms, then, interpretation ought to be in accordance with that meaning and not according to common parlance. [paras 18, 31, 34] 40.2 The Hon ble Supreme Court of India in case of CCE, Nagpur v. Shree Baidyanath Ayurved Bhawan Ltd. [2009 (237) E.L.T. 225 (S.C.)] has held that, Common parlance test continues to be one of the determinative tests for classification of a product whether medicament or cosme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in general public i.e. as PAPAD and Fryums . 41.1 It may be easier for the people to say whether a product is or is not Papad than to define what Papad is. However, when one refers to the product Papad , the product which comes into mind generally has the following main characteristics (i) The ingredients of Papad are flours, mainly of pulses, rice, sago and other cereals in which edible oil, salt, Papad khar, asafoetida and other spices (black pepper etc.) are added. (ii) The Dough is prepared from the ingredients. The dough is divided in small pieces, out of which thin, wafer like product is made, which is called Papad. (iii) Papad can be eaten either after roasting or after frying, but not in uncooked form. (iv) Papad becomes crispy after roasting or frying. People savor the Papad, only when Papad is crispy. (v) Papad is an accomplishment to Indian meal. 41.2 We have seen the samples of appellant s products, which are in various sizes and shapes. The pictures of these products are reproduced herein below for ease of reference. 42.1 The appellant has submitted that main ingredients of their products different shape and size Papa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ingredient, uses and common parlance test is decisive factor and not the name. The appellant has relied upon the decision of the various courts in their support. (a) Hon ble Supreme Court of India in 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. (b) In the case of State of Karnataka Vs. Vasavamba Stores [2013] 60 VST 19 (Karn.), Honourable Karnataka High Court has clearly dealt with the issue whether Fryums in an uncooked/unfried form sold would qualify as PAPAD and it has been held by Honourable Karnataka High Court that FRYUMS fall under the entry of PAPAD irrespective of their shapes and sizes and irrespective of the ingredients used. (c) In 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 M/s. Swethin Food Products Vs. State of Gujarat 2016 GSTB I 296, Honourable Tribunal has clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied or included means under this heading all types of foods preparation are covered which are not covered under the specific heading of tariff. 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 or Mithai or called by any other name. They also include products commonly known as Namkeens , mixtures , Bhujia , Chabena or called by any other name. Such products remain classified in these sub-headings irrespective of the nature of their ingredients. We find that Rule 3(a) of General Rule of Interpretation of the first schedule of Tariff states that the heading which provides the most specific description shall be preferred to heading providing a more general description. Hence the rule of interpretation for classification is that when a product is eligible to be classified under specific entry then classification under general entry should n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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