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TMI Blog2021 (12) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... lant has raised the following question for advance ruling in the application for Advance Ruling filed by it. "Whether any tax is payable in respect of sale/ supply of Fryums manufactured by the applicant ? And if answer is in affirmative, the rate of tax thereof "? 4. The appellant has submitted that they are engaged in the business of manufacturing and supply of Fryums and different type of Namkeen/Farsan. Fryums are "Papad" of different shapes and sizes in ready to eat form. Fryums prepared from maida, in un-fried form, is purchased by the appellant from the market as raw material. The same is first fried and various masala powders are applied and packed in small packets for being sold in market. The aforesaid fryums are sold by the applicant in different shapes and sizes such as alphabets, rings, stars etc. 5. The appellant has submitted that it is a settled legal position that Fryums are papad and since Papad is tax free/exempt as per tariff item 19059040, the Fryums manufactured and sold by the applicant would also be exempt from payment of any tax. Entry at S.No. 96 of the Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017 speaks of 'Papad by whatever name calle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind 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. In view of the foregoing, the GAAR ruled as follows :- Question: whether any tax is payable in respect of sale/ supply of Fryums manufactured by the applicant? And if the answer is in affirmative, the rate of tax thereof? Answer: The product '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. Goods and Services Tax rate of 18% (CGST 9% + GGST 9% or IGST 18%) is applicable to the product 'fried Fryums' as per Sl. No. 23 of Schedule III of Notification No. 1/2017Central 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. 7. Aggrieved by the aforesaid advance ruling, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... names and forms a Papad remains papad and is exempted from payment of tax under the GST Act. The aforesaid entry do not make any distinction between fried or un-fried papad. The only category of papad excluded by Entry at Sr. No. 96 is when it is served for consumption. It is settled legal position that served for consumption means served in hotel, eating house and meant for consumption at the place itself which is not the case in present matter. [Reference of a determination order dated 20.08.2006 in the case of M/s. Gaylord Restaurant.] 13. The appellant has submitted that in GST regime, for determination of classification of goods, the 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. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts: * 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, unless a contrary intention appears, an interpretation should be given to the words used to take in n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s matter, M/s. TTK Healthcare Ltd. was also one of the petitioners. In the said judgment, the Hon'ble Karnataka High Court relied upon the judgment of Hon'ble Supreme Court in the case of Shiv Shakti Gold Finger v/s Assistant Commissioner, Commercial Tax [1996] 9 SCC 514 whereas the judgment of Hon'ble Supreme Court in the case of Commissioner of Commercial Tax v/s TTK Health Care Ltd. [2007] 7 VST 1 (SC) came to be distinguished. The applicant has submitted that the Hon'ble Supreme Court in the case of TTK Health Care Ltd. (Supra) has held that Fryums are not cooked food. The said decision is not applicable to the present case as the issue herein is not as whether Fryums are cooked food or not but is as to whether Fryums are papad or not. 19. 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parlance test as well as the user test leads to the conclusion that the products in question are nothing but PAPAD of different shapes and sizes. In this regard 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). 23. The appellant has submitted that a particular classification once accepted and adopted for years in a particular law cannot be change merely on account of repeal of said Act and replaced by new Law unless there is material 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). 24. The appellant has submitted that they deal with the product in the market and disturbance in the classifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amun-Mix or Namkeens such as Bhujia, Chabena". Hence at the 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. (ii) The AAR has relied upon the judgment of the Hon'ble Supreme Court in the case of Commissioner of Commercial Tax, Indore Vs. M/s. TTK Healthcare Ltd.2007 (211) ELT 197 (SC). It is to submit that 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. The Hon'ble Karnataka High Court in the case of Vasavamba Stores (supra) has rightly observed that the Apex Court has nowhere stated that fryums are not papad. Hence, Honourable AAR has completely erred in placing reliance upon the said judgment in the case of Sonal Products. (iii) The AAR had not taken into consideration the determination order passed u/s 80 of Gujarat Valuation Added Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusions arrived at by the learned AAR in the case of the present appellant on the following grounds: (i) The appellant has never referred to its products as FRYUMS but mentioned its product as either PAPAD or PAPAD product. They have submitted that there is no such word as FRYUMS but it is the brand name of TTK Healthcare Ltd. given to its products similar to their product. Hence, the observation of the learned AAR is erroneous as far as mentioning and recognizing the product as UNFRIED FRYUMS. (ii) The decision of T.T.K. Pharma Ltd. Vs. Collector of Central Excise -1993 (63) ELT 446 (Tribunal) is not applicable in the appellant's case because the consideration for entry before Hon'ble CEGAT was, "Papad, Idli-Mix, VadaMix, Dosa-Mix, Jalebi-Mix, Gulabjamun-Mix or Namkeens such as Bhujia, Chabena". In the relevant time Papad and Namkeens were 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 as a precedent in order to classify PAPAD sold by the appellant because the entry in question before Honourable CEGAT and entry in question in present application of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be required to be reclassified. Therefore, basis adopted by the learned GAAR is unjustifiable and most importantly far from the basic principles of classification. (vi) The observation of GAAR that the judgment of Honourable Supreme Court relied upon by the appellant in the case of Shiv Shakti Gold Finger Vs. Asst. Commissioner, Commercial Taxes, Jaipur -(1996) 9 SCC 514 is not applicable to the appellant case. The principal laid down in the said judgment squarely applies to the case of appellant. (vii) The observation of the learned GAAR that as the SLP before Honourable Supreme Court is preferred against the judgment of Honourable Karnataka High Court in the case of State of Karnataka Vs. Vasavamba Stores -(2013) 60 VST 19 (Karn.). This judgment cannot be taken into consideration leads to one presumption that this judgment is directly and squarely applicable to the case of the appellant. (viii) The AAR has conveniently avoided mentioning the following judgment: Collectot of Customs, Bombay Vs. Krishna Sales (P) Ltd.- AIR 1994 SC 1239 and M/s. Kalyani Global Engineering Pvt. Ltd. Vs. Asstt. Commissioner of Commercial Tax-SCA No. 7391/2016 datd 04.08.2016. (ix) The observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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, size and ingredients. (xii) The GAAR has placed reliance on the decision of Madhya Pradesh Advance Ruling Authority in Alisha Foods. The said ruling does not apply to the case of appellant because the product referred therein and answered therein is FRYUMS while appellant has never mentioned that its product is FRYUMS but mentioned as different shapes and sizes of PAPAD. (xiii) The learned GAAR has completely misconstrued the principles of classification in sheer ignorance of the submissions of the appellant. The appellant has submitted that the first and foremost rule of interpretation and classification is that when a product is eligible to be classified under specific entry then classification under general entry should not be preferred. It is equally settled that resort to residual entry has to be made with extreme caution and that too only when no other provision expressly or by necessary implication applies to the goods in question. The appellant's product is papad whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . -2005 (190) ELT 214 (Tribunal) relied upon by the appellant was not discuss. 29. 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 served for consumption" as specified at serial number 96 under Notification No.2/2017 -Central Tax (Rate) Dt:28/06/2017 and thus attracts NIL rate of tax under the IGST, CGST and SGST. 30. The appellant has prayed the following: [1] The impugned order dated 17/09/2020 passed by the learned Gujarat Authority for Advance Ruling, may kindly be quashed and set aside. [2] It may kindly be held that products manufactured and supplied by the appellant would be classifiable as PAPAD and PAPAD Products as per Entry at Sr. No. 96, Tariff Item 1905 of Not. No. 02/2017-CT (Rate) dated 28.06.2017 as well as Notification No. 02/2017- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manually, therefore it was easy for them to manufacture the Round Shape PAPAD. In the modern era, by 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. 35. 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 the their product different shape and size Papad are also wheat flour, superfine wheat flour, rice flour, starch, corn flour, cereal flour, potato starch, salt, and flavour etc. The main ingredient of PAPAD and impugned product are more or less similar. The main difference appears to be of ancillary used to give both the product different colour and taste according to demand of customers otherwise there is no difference in the ingredient used for manufacturing of PAPAD and impugned product i.e. different shapes and sizes of papad. 36. We find that the classification of goods under GST regime has to be done in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuits; waffers and wafers 1905.31 -- Sweet biscuits 1905.32 -- Waffles and wafers : 1905.40 - Rusks, toasted bread and similar toasted products 1905.90 - Other : The heading includes the following product : (1) to (14) ______________ (15) Crispy savoury food product, for example, those made from a dough based on flour, meal or powder of potatoes, or maize (corn) meal with addition of a flavouring consisting of a mixture of cheese, monosodium glutamate and salt , fried in vegetable oil, ready for consumption. 38. From the above, the following are deduced : * This chapter covers the product which are made either directly from the cerelars of chapter 10, from the products of chapter 11 * Crispy savoury food product made from a dough based on flour and meal. 39. From the ingredient of the product in question as submitted 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 bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of interpretation of statutes for deciphering mind of law maker - It is attempt to discover intention of legislature 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]" 41.2 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Both the products i.e. "PAPAD" and product in question are same except they are known by different name in general public i.e. as "PAPAD" and "Fryums". 42.1 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 accompaniment to Indian meal. 42.2 The appellant has submitted that main ingredients of their products 'different shape and size Papad' are wheat flour, superfine wheat flour, rice flour, starch, corn flour, cereal flour, potato sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 44. The above decisions are squarely app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 28.06.2017. Accordingly, the applicant's product in question 'different shapes and size of fried with masala papad' are covered under Schedule-III of entry No. 16 of Notification No. 1/2017-CT (Rate) dated 28.06.2017 which attract GST rate @18 % {CGST 9% + SGST 9%} . The relevant entry No. 16 of Noti. No. 1/2017-CT (Rate) dated 28.06.2017 is reproduced as under: 16 1905 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[other than pizza bread, khakhra, plain chapatti or roti, bread, rusks, toasted bread and similar toasted products. 47. Gujarat Authority of Advance Ruling in their ruling has ruled that the product in question 'different shapes and size Papad' merit classification under CTH No. 21069099 of Customs Tariff Act, 1975 on the grounds 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. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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