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TMI Blog2021 (4) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... le to be classified under chapter 4 - the commodity flavoured milk merits classification under beverage containing milk under tariff heading 2202 90 30. The rate of tax applicable for the said tariff item is 12% GST (6% CGST + 6% SGST) under entry no. 50 of Schedule II of Notification No.1/2017 Central (Rate) dated 28.06.2017 as amended. The Ruling of the AAR is in tune with legal position and it needs no interference and the appeal is accordingly dismissed. - AAAR/AP/01(GST)/2021 - - - Dated:- 9-4-2021 - SRI PEEYUSH KUMAR AND SRI NARESH PENUMAKA, MEMBER Authorized Representative : CA. Manoranjan Behera (Under Section 101 of the Central Goods and Service Tax Act and the Andhra Pradesh Goods and Service Tax Act). At the outset, we would like to make it clear that the provisions of both the CGST Act and the APGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the APGST Act. The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Andhra Prades ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely misconstrued the process of making flavoured milk and thereby naming it as a preparation and not milk. Hence, the impugned ruling is per se based on a wrong understanding of fact and since not tenable. We are reinstating Para-8.2 of the impugned ruling for better appreciation of facts. The applicant informed that the process of the flavoured milk is standardization of fresh milk according to the fat contents and then heating at certain temperature followed by filtration, pasteurization, and homogenization and then mixing of sugar and various flavours and finally bottling. As per flow chart, it involves various operations by RMRD team, weighing team, processing team, packing team and warehousing dispatch teams and thereby it is a preparation and no more it is fresh milk after adding flavours . Flavoured milk alike normal milk undergoes the same procedure i.e filtration pasteurization and homogenization. It is a common phenomenon followed by the milk industry to maintain the quality and hygiene of milk and to keep it fit for human consumption. Filtration is the process to remove unwanted external particles which might deteriorate the quality of milk, making it unh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period 2015-2018. We further submit that as understood in business meeting AGENDA is a document prepared before conducting meeting and is circulated to the participants of the meeting listing out the various issues/matters to be discussed in the meeting. And minutes is a document which is prepared post meeting, recording the decision taken on the matters proposed in the agenda. We referred the decision taken by the GST Council in its 31st meeting but failed to get any information about the classification of flavoured milk. Nevertheless, the appellant submits that the advance ruling Authority deciding the matter relying merely on the inclusion of the impugned issue in the agenda of the 31st GST Council meeting was arbitrary and whimsical. The appellant hastens to add that the issue was never taken up in the said council meeting as it is evident from the copy of the final decision enclosed. Therefore, the appellant submits that inference being redundant and smacked revenue bias is untenable. 3. That, the flavoured milk is not a water based drink whereas the tariff heading 2202 deals with water based beverages and other non-alcoholic beverages. Therefore, it could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he palatability. 7. That, the learned A uthority for Advance Ruling Karnataka in the case of Karnataka Co-operative Milk Producers Federation Ltd. has held vide its ruling dated 26.09.2019 that: The only relevant entry under tariff heading 2202 is 2202 99 30 that covers beverages containing milk . The word beverage , though not defined under CGST Act 2017, is considered, in common parlance, as a drink that can be consumed directly and the instant product flavoured milk can also be consumed as it is and hence can be considered as a beverage. Also, since it does not contain any alcohol, it is covered under non-alcoholic beverage, as per the note 3 to the Chapter 22 of the Customs Tariff Act, which reads as under: 3. For the purpose of heading 2202, the term non-alcoholic beverages means beverages of an alcoholic strength by volume not exceeding 0.5% The instant product flavoured milk is undoubtedly a beverage and the alcoholic content is absent which means that the alcoholic content is less than 0.5% by volume. 13.10. The flavoured milk is not a water based drink whereas the tariff heading 2202 deals with water based beverages and other non-alcohol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanging the basic characteristic of milk. As mentioned in the website of World Health Organization, Flavouring agents which are added to food to improve aroma or taste make up the greatest number of additives used in foods. Food additives are substances added to food to maintain or improve its safety, freshness, taste, texture, or appearance. An excerpt from The Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 is reproduced here for better understanding of the subject. (4) Food additive means any substance not normally consumed as a food by itself and not normally used as a typical ingredient of the food, whether or not it has nutritive value, the intentional addition of which to food for a technological (including organoleptic) purpose in the manufacture, processing, preparation, treatment, packing, packaging, transport or holding of such food results, or may be reasonably expected to result (directly or indirectly), in it or its by-products becoming a component of or otherwise affecting the characteristics of such foods. The term does not include contaminants or substances added to food for maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r containing added sugar or other sweetening matter. 0402 Milk and cream, concentrated or containing added sugar or other sweetening matter. 0402 91 Not containing added sugar or other sweetening matter. 0402 99 Other 0402 99 10 Whole milk kg. Nil 0402 99 20 Condensed milk kg. 16% 0402 99 90 Other kg. Nil Further, the classification of the products in question had been changed, vide the basic Notification No. 3/2005-C.E., which is a general exemption notification prescribing effective rate for various excisable goods, and it is under this general exemption notification that Sr. No. 11A has been inserted from 15-6-2007 thereby specifying nil rate of duty for flavoure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning milk As there is ambiguity in the classification of the instant product, flavoured milk i.e., whether it is to be considered under either 0402 or 2202 90 30 as mentioned above, the issue has been discussed and recorded in the Agenda for 31st GST Council Meeting Volume II dt: 22.12.2018 as under, clarifying the classification issue. S.No Description HSN Present GST Rate (%) Requested GST Rate (%) Comments 18 Flavoured Milk 2202 12 Clarification on that it is classificable under Chapter 4 1. The Explanatory Notes to HSN describe the goods classifiable under the heading 0402 as under: This heading covers milk (as defined in Note 1 to this Chapter) and cream, whether or not pasteurised, sterilised or otherwise preserved, homogenised or peptonised; but it excludes milk and cream which have been concentrated or which contain added sugar or other sweetening matter (heading 04.02) and curdled, fermented or acidified milk and cream (headin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question is mentioned elsewhere or not. Chapter 22 dealing with goods /items of Beverages, spirits and vinegar carries the following entry as under. CHAPTER 22 Beverages, spirits and vinegar Tariff Item Description of goods Unit Rate of duty (1) (2) (3) (4) 2202 99 30 Beverages containing milk 1 12% Now we proceed to examine whether flavoured milk can be considered a beverage containing milk. In common parlance, a beverage is (chiefly in commercial use) a drink other than water. It is a liquid for drinking especially such liquid other than water (as tea, milk, fruit juice, beer) usually prepared (as by flavouring, heating, admixing) before being consumed . The instant product, the flavoured milk is undoubtedly a beverage containing milk. It is moreover, a preparation which was proved supra, substantiating the present argument. It could be inferred from the above discussion that even though the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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