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TMI Blog2022 (3) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ound nuts, cashew nuts and other seeds/nuts - HELD THAT:- It is noticed that as per chapter note 1(a) to chapter 20, the chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in chapter 7, 8 or 11. It means that these items not being processed or preserved by the said processes shall be covered in chapter 20. The processes specified in chapter, 7, 8 or 11 are freeing, steaming, boiling, drying, provisionally preserving and milling. Chapter heading 2008 covers roasted, salted or roasted nuts and fruits such as ground nuts, cashew nuts. other seeds and nuts and these are specifically covered under said heading vide sl. No. 40 of schedule II to notification No. 1/2017-CT (rate) - there remains no doubt that the roasted/salted/roasted and salted ground nuts, cashew nuts and other seeds/nuts shall be appropriately classifiable under heading 2008 of customs tariff. Even otherwise also, heading 2106.90 being a residuary heading shall not stand against a specific heading 2008 as per Rules of interpretation of the tariff. Banana chips, tapioca chips, potato chips, jackfruit chips and sharkara varatty - HELD THAT:- The manufacturing process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r provisions in GST laws f r interpretation of tariff, the contention of the appellant regarding common parlance understanding of a goods does not hold water, as is therefore rejected. All the products that fall under Chapter Heading 2008 of the Customs Tariff Act, 1975 attract GST at the rate of 12 %. - Order No. AAR/18/2021 - - - Dated:- 14-12-2021 - Shyam Raj Prasad, IRS Chief Commissioner Central Tax, Central Excise Customs Thiruvananthapuram Zone And Dr. Rathan U. Kelkar, IAS Commissioner State Goods Service Tax Kerala Authorized Representative: CA Seshadri Nadan 1. The appeal stands filed under Section 100(1) of the GST Act, 2017, by K. PAZHANAN, M/s.S.D. CHIPS having a registered office at 23/92-1, Kallikkad, Pallippuram, Palakkad - 678006, bearing GSTIN 32DHFPP8506K1Z3 (hereinafter also referred as the appellant). The appeal stands filed against the Advance ruling Order No: KER 112/2021 dtd.26/05/2021 pronounced by the Kerala Authority for Advance ruling. 2. At the outset, the provisions of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act) and the Kerala State Goods and Services Tax Act, 2017 (hereinafter referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions as specified in the ANNEXURE Chapter 21 of Customs Tariff Act Supplementary Note No. 5 (b) Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter alia, includes: (b) preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption; HSN 2106 Description of sub heading FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED OR INCLUDED 2106 90 20 Entry Pan masala 2106 90 30 Betel nut product known as Supari Chapter 21 of Customs Tariff Act Supplementary Note No. 6 Tariff item 2106.90.99 includes sweet meat 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 ingredient H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N 0803 90 Entry Other HSN 0803 90 10 Entry Bananas, Fresh HSN 0803 90 10 Entry Other HSN 0810 Other fruit, fresh HSN 0810.90.90 Entry Other (submitted that jack fruit is classifiable under this sub-heading HSN 2008 Description of sub heading Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included HSN 2008 19 40 Other roasted and fried vegetable products 3.4. The contention of the appellant is that the words not elsewhere specified or included is material as Supplementary Note No. 6 of Chapter 21 stipulates that products now under consideration are covered by HSN 2106.90.99. Further HSN 2008 covers only those fruit, nuts and other edible parts of plants, otherwise prepared or preserved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Entry in Custom Tariff Act uses the words roasted and fried . So, it is a cumulative condition. Banana Chips, Jack Fruit Chips and Sharkaraivaratty are made by frying banana/ jack fruit in edible oil. Being fruits and being not ROASTED AND FRIED , these cannot be classified under 2008.19.40. In any case, by HSN Code 0803 and 0810.90.90 respectively and on this primary ground they cannot be classified under HSN 2008. 3.7. Further, in p. BASHEER VERSUS STATE OF KERALA [1993] 91 STC (291)], it was held by Honourable High Court of Kerala that the products such as banana chips, tapioca chips, murukku, pakkavada, etcare fried food articles. Relevant portion of the judgement is reproduced below for easy reference: - 3.7.1. We are of the view that the approach and conclusion of the sales Tax Appellate Tribunal is erroneous in law. It is now well-settled that bakery products being a word of everyday use, must be construed in its popular sense, meaning that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it and it is to be constructed as understood in common parlance . The words bakery products should be unders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e where applicant himself had raised the query whether Banana Chips, Chakka Chips, Cheema Chakka Chips, Chembu Chips, Kappa Chips, Sharkaraivaratty, KovakkaiVattal and PavakkaiVattal are classifiable under HSN Code 2008 19 40 - Other roasted and fried vegetable products and is liable to GST at the rate of 12% as per Sl. No. 40 of Schedule II of Notification No.01/2017 Central Tax (Rate), dated 28.06.2017. This query was answered by the Authority for Advance Ruling in favour of the applicant. 3.8.1. Applicant had submitted a list of commodities as Namkeens items. They query raised was whether the Namkeens Items Achappam, Avalose Podi, Cheeda, Diamond Cuts (Hot), Kuzhalappam, Murukku and Thatta are classifiable under HSN Code 2106 90 and is liable to GST at the rate of 12 % as per Sl. No. 46 of Schedule II of Notification No. 01/2017 Central Tax (Rate), dated 28.06.2017 of those put up in unit container and, (a) bearing a registered brand name; or (b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available. The rate of GST is 5% as per Sl. No. 101 A of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) Notification 1 of 2017? Query 4: Whether salted and masala chips of Potato and Tapioca are classifiable as Namkeens and when sold without a brand name can they be classified under HSN 2106.90.99 and taxed under Entry 101 A of Schedule I of Central Tax (Rate) Notification 1 of 2017? 3.13. Unfortunately, without adverting to above stated facts and legal position, Learned Authority for Advance Ruling held that all the products involved in the application are TAXABLE UNDER Entry 40 or Schedule 2 of Central Tax (Rate) Notification No. 1 of 2017. 4. GROUNDS OF APPEAL 4.1. Order of Learned Authority for Advance Ruling, Kerala, in so far as it is prejudicial to the appellant, is opposed to facts and law of the case. Learned Authority for Advance Ruling failed to consider the facts and legal aspects stated in the application for advance ruling. Supplementary. Note No. 6 in Chapter 21 of Customs Tariff Act says Tariff item 2106.90.99 includes sweetmeats commonly Known as Misthans or Mithai or called by any other name. They Also includeproducts commonly known as Namkeens , mixtures , Bhujia , Chabena or called by any other name. such products remain classified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter like Chapter 20 does not arise. Similarly, Sharkaraivaratty and Halwa are sweetmeats by application of common parlance test and Supplementary Note No. 6 of Chapter 21, as is evident from the words 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 . Therefore, Sharkkaraivaratty and Halwa, made with jaggery as sweetener, are also sweetmeats. Neither the Customs Tariff Act nor the GST laws lay down that sweetmeats should be prepared only with sugar as the sweetener. Jaggery is a commonly used sweetener. This submission is fortified by Supplementary Note 6 in Chapter 21 as well as the press release dated 29/09/2017 of CBIC containing an FAQ relating to GST Rates. Hence, the question of including Sharkkaraivaratty and Halwa under HSN 2008 does not arise. Relevant portion of FAQ is extracted below:- What is the HS Code and GST rate on chena products, halwa. barfi {i.e. khoya product), laddu? Products like halwa, barfi (i.e. Koya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (tomato ketchup and other tomato sauces). Therefore a product made out of fruit or vegetable need not necessarily fall under Chapter 20 if they are included under any other chapter by specific inclusion. 4.11. For these amongst other grounds that may be raised and evidence adduced at the time of hearing, it is prayed that Honourable Appellate Authority for Advance Ruling may kindly hold that sharkkaraivaratty, halwa, chips made of banana (salted, masala or made from raw or ripe banana), jackfruit, tapioca, chembu, potato and kovakkai and pavakkai vattal are classifiable under HSN 2106.90.90 and liable for tax under Entries 101 and 101 A of Schedule I of Notification No. 1/2017-Central Tax (R), Dtd.28-6-2017. 4.12. In addition to the above the appellant also submitted the following before the authority Supplementary Note No.5 (b) of Chapter 21 of Customs Tariff Act states that Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter aha, includes preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption. Supplementary Note No. 6 of Chapter 21 of Customs Tariff Act sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.90.99. 4.15. Further in para 29 of the judgment in H.P.L. Chemicals Ltd. v. Commissioner of Customs, Chandigrah (2006) 2006 taxmann.com 42 (SC), if Revenue is resorting to a classification different from that of the assessee, burden of proof is on the Revenue. In the impugned order, learned Authority has not adduced any reasons for not classifying chips made from bananas, tapioca, jack fruit, potato, chembu, kovakka and pavakka and sharkkarai varatty as NAMKEEN. As the products sold are salted preparations (savouries/snacks) and sweet meats, as under stood in common parlance, FOOD SAFTY AND STANDARDS (FOOD PRODUCTS STANDARDS AND FOOD ADDITIVES) REGULATIONS, 2011 by CSTAT, it is prayed that this Honourable Kerala Appellate Authority for Advance Ruling may kindly classify the products under HSN 2106.90.99 and Entry 101 A/ 101 of Schedule I of Central Tax (Rate} Notification 1 of 2017. 5. PERSONAL HEARING: The appellant was afforded an opportunity of personal hearing via virtual media on 02/11/2021. authorized representative of the appellant CA Sheshadrinadhan appeared before the authority and reiterated the contentions raised in the appeal memorandum. They also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving or boiling in water, milk or other liquids), for human consumption. Supplementary Note No. 6 of Chapter 21 of Customs Tariff Act states that HSN 2106 90 99 includes sweet meats commonly known Misthans or Mithai or called by any other name. They also include products commonly known as Namkeens , mixture , Bhujia , Chabena or called by any other name and remain classified in these subheading irrespective of the nature of their ingredients. So, NAMKEENS and SWEETMEATS are specifically included in HSN 2106.90.99 and hence cannot be classified under any other Chapter. 6.4. The appellant has also referred to Supplementary Note No. 6 of chapter 21 in their favour, which provides as under: Tariff item 2106.90.99 includes sweet meat 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 ingredient . The appellant has submitted that Supplementary Note No. 6 in Chapter 21 makes HSN 2106.90.99 a specific entry. So, chips made from banana (ripe as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n heading 21.03 or 21.04, containing more than 20% by weight of sausage, meat, meat offal, blood fish or crustaceans molluscs or other aquatic invertebrates, or any combination thereof (chapter 16) 6. Yeast put up as medicament or other products of heading 30.03 or 30.04; or 7. Prepared enzymes of heading 35.07. From the plain reading of the contents of chapter 21, it reveals that it includes the food preparations which are not elsewhere specified in the customs tariff. Those food preparations not specified or included elsewhere in the tariff being preparations for use either directly or after processing for human consumption are to be classified under this heading 2106. Further the heading 2106 specifically excludes the preparations made from fruit, nuts or other edible parts of plants of heading20.08, provided that the essential character of the preparations is given by Such fruit, nuts or other edible parts of plants. Therefore, it is evident that the entry 2106.90 is a residuary entry in respect of edible preparations and hence the edible preparations shall be classified under this entry only if the same are not classifiable under any of the other specific entrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il, salt, flavours, spices or other additives. (2) 'Peanut butter , consisting of a paste made by grinding roasted ground-nuts, whether or not containing added salt or oil. (3) Fruit (including fruit-peel and seeds) preserved in water, in syrup, in chemicals or in alcohol. (4) Fruit pulp, sterilised, whether or not cooked. (5) Whole fruits, such as peaches (including nectarines), apricots, oranges (whether or not peeled or with the stones or pips removed) crushed and sterilised, whether or not containing added water or sugar syrup but in a proportion insufficient to render them ready for direct consumption as beverages. When rendered ready for direct consumption as beverages by addition of a sufficient quantity of water or of sugar syrup, these products fall in heading 22.02. (6) Cooked fruit. However, fruit cooked by steaming or boiling in water and frozen remains in heading 08.11. (7) Stems, roots and other edible parts of plants (e.g., ginger, angelica, yams, sweet potatoes, hop shoots, vine leaves, palm hearts) conserved in syrup or otherwise prepared or preserved. (8) Tamaring pods in sugar syrup. (9) Fruit, nuts, fruit-peel and other edible parts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified or included; such as Ground nuts, Cashew nuts, roasted, salted or roasted and salted, Other roasted nuts and seeds, squash of mango, lemon, Orange, Pineapple or other fruits. 6.9. It is noticed that as per chapter note 1(a) to chapter 20, the chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in chapter 7, 8 or 11. It means that these items not being processed or preserved by the said processes shall be covered in chapter 20. The processes specified in chapter, 7, 8 or 11 are freeing, steaming, boiling, drying, provisionally preserving and milling. Chapter heading 2008 covers roasted, salted or roasted nuts and fruits such as ground nuts, cashew nuts. other seeds and nuts and these are specifically covered under said heading vide sl. No. 40 of schedule II to notification No. 1/2017-CT (rate). Hence there remains no doubt that the roasted/salted/roasted and salted ground nuts, cashew nuts and other seeds/nuts shall be appropriately classifiable under heading 2008 of customs tariff. Even otherwise also, heading 2106.90 being a residuary heading shall not stand against a specific heading 2008 as per Rules of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2017 reads as follows; Explanation:- (1) In this Schedule, tariff item, heading, sub-heading and Chapter shall mean respectively a tariff item, heading, sub-heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (2) The rules for the interpretation of the First Schedule to the said Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of above table. 6.12. In view of the above legal provisions, the rules for interpretation of the First Schedule to the Customs Tariff Act, 1975 including the Section and Chapter Notes and the General Explanatory Notes are squarely applicable for interpretation of the GST Tariff/ Rate Schedule. Hence, the contention of the appellant in this regard is baseless and is accordingly rejected. The General Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975 are as follows: Rule 1: The titles of Sections, Chapters and sub chapters are provided for case of references only; for legal purposes, classification shall be determined according to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the above rules shall be classified under the heading appropriate to the goods to which they are most akin. 6.13. By applying the rules for interpretation of the tariff, specially rule 1, 2 and 3 of the same, it is evident that the impugned goods are appropriately classifiable under heading 2008 and not under heading 2106. Rule 2(a) provides that any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance....according to which the chips of jackfruit, potato, banana or tapioca gets also appropriately classifiable under. heading 2008 along with specifically covered goods viz. Roasted and salted nuts under examination (which is covered by Rule 3(a) of the said rules for interpretation). Further, chapter 21 covers Miscellaneous edible preparations, whereas chapter 20 specifically covers Preparations of vegetables, fruits, nuts or other parts of plants. Hence, when there is a specific entry providing for the most specific description in the heading 2008 to the impugned products over the residuary heading description of heading 2106.90, the said impugned goods is held appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no other heading expressly or by necessary implication applies. (3) In the case of Commissioner of Central Excise v. M/s. Wockhardt Life Sciences Ltd. reported in 2012 (277) E.L.T. 299 (S.C.); the Hon'ble Supreme Court, inter alia, laid down the following principles for classification of goods; There is no fixed test for classification of a taxable commodity. This is probably the reason why the common parlance test or the Commercial usage test is the most common. Whether a particular article will fall within a particular Tariff heading or not has to be decided on the basis of the tangible material or evidence to determine how such an article is understood in 'common parlance' or in 'commercial world' or in 'trade circle' or in its popular sense meaning. It is they who are concerned with it and it is the sense in which they understand it that constitutes the definitive index of the legislative intention, when the statute was enacted. However, there cannot be a static parameter for the correct classification of a commodity. The process of manufacture of a product and the end use to which it is put, cannot necessarily be determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 read as follow; Sl. No. Chapter/ Heading / Sub-Heading / Tariff Item Description of goods 40 2008 Fruits, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included; such as Ground-nuts, Cashew nu, roasted, salted or roasted and salted, Other roasted nuts and seeds, squash of Mango, Lemon, Orange, Pineapple or other fruits. On a plain reading of the above entry, it is evident that all the products that fall under Chapter Heading 2008 of the Customs Tariff Act, 1975 attract GST at the rate of 12 % [6% CGST + 6% SGST]. In view of the observations as above, the following orders are issued; ORDER Q I. Whether banana chips (made out of both raw as well as ripe banana) said without BRAND NAME are classifiable as NAMKEENS and are covered by HSN code 2106.90.99 and taxable under Entry 101A of Schedule I of Central Tax (Rate) Notification No. l of 2017? No. The Banana C ..... 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