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TMI Blog2022 (3) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... in the market that these goods are carbonated with carbon dioxide, due to the very word fizzy appearing in their descriptions. We note that it is a fact that both the goods have been carbonated with carbon di oxide (INS 290). Further, both the goods have INS 211, INS 224, INS 202 as preservatives - carbon di oxide in subject beverages has given them the carbonated effect and the goods are thereby carbonated beverages. The subject goods which consist of water, sugar, sweetener, apple juice concentrate, flavours, aerated with carbon dioxide gas and presented in airtight containers fulfil the criteria to merit consideration for classification at HSN 220210 - also, there is a Tariff item at 22029920 with the description fruit pulp or fruit juice based drinks . Now it is observed that the subject goods having apple juice concentrate 1.9 % [Equivalent to 12.7% Apple Juice Reconstituted] appear to satisfy this description also and prima facie this heading 22029920 cannot be brushed aside as not applicable for subject goods. From reading of Annexure III to the recommendation of the Fitment Committee, it is noted that the Fitment Committee has cited classification of Carbonated beverages wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the said tank with treated water. Melted sugar will be transferred through Stainless Steel pump for further processing. e) Melted sugar shall be passed through sugar filter press, where the suspended impurities (if any) will be removed. The filtered sugar syrup will be then passed through Plate type Heat Exchanger (PHE), where the hot syrup shall be brought down to ambient temperature. Further it will be transferred through transfer pump for processing. f) The final sugar syrup will be transferred to blending tank for further processing. Natural fruit juice concentrate, different flavours, colours & preservatives of food grade quality are mixed in requisite ratios. g) The mixture shall be then transferred to blending tank for further processing and in the said mixture fruit juice, sugar syrup & different flavours/preservatives as mentioned above are mixed with agitator to make the final syrup. h) The final syrup is then transferred through transfer pump for further processing. The same is then transferred to beverage processor, where it is mixed with treated water. i) This ready beverage is transferred for thermal processing to pasteurizer where it is heated at a tem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n alcoholic beer 2202 99 -- Other: 2202 99 10 --- Soya milk drinks, whether or not sweetened or flavoured 2202 99 20 --- Fruit pulp or fruit juice based drink 2202 99 30 --- Beverages containing milk 2202 90 --- Other 8. The applicant submits that Chapter Heading 2202 has been divided into two subheadings, viz. (i) Sub-heading 2202 10 which covers "Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured" and (ii) Sub-heading 2202 99 which covers "other non-alcoholic beverages". Fruit pulp or fruit juice based drinks are specifically covered under Tariff Item No. 2202 99 20 under the sub-heading No. 2202 99 as 'Other non-alcoholic beverages'. Chapter Sub-heading No. 2202 10 covers drinks which are predominantly made up of water, including mineral water and aerated water and are either sweetened or flavoured or both. The applicant submits that drink supplied by them is a "Beverage" but not "Water" and hence cannot be classified under 2202 10 which is for Waters. 9. The applicant has submitted that it intends to sell Ready to Serve Fruit Beverage and it will be clearly highlighted and pointed out on the labels a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell filled with the product and shall occupy not less than 90.0 percent of the water capacity of the container, when packed in the rigid containers. The water capacity of the container is the volume of distilled water at 20ºC which the sealed container is capable of holding when completely filled. 2.3.30 Carbonated Fruit Beverages or Fruit Drinks: 1. Carbonated Fruit Beverages or Fruit Drink means any beverage or drink which is purported to be prepared from fruit juice and water or carbonated water and containing sugar, dextrose, invert sugar or liquid glucose either singly or in combination. It may contain peel oil and fruit essences. It may also contain any other ingredients appropriate to the products. 2. The product may contain food additives permitted in these regulations including Appendix A. The product shall conform to the microbiological requirements given in Appendix B. It shall meet the following requirements:- (i) Total Soluble solids (m/m) Not less than 10.0 percent (ii) Fruit content (m/m) (a) Lime or Lemon juice Not less than 5.0 percent (b) Other fruits Not less than 10.0 percent 3. The product shall have the colour, taste & flavour characteri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Beverages or Fruit Drinks', after clause 3, the following clause shall be inserted, namely:- "3A. In case the quantity of fruit juice is below 10.0 per cent. but not less than 5.0 per cent. (2.5 per cent. in case of lime or lemon), the product shall be called 'carbonated beverage with fruit juice' and in such cases the requirement of TSS (Total Soluble Solids) shall not apply and the quantity of fruit juice shall be declared on the label". 17. The applicant submits that Carbonated Fruit Beverages or Fruit Drinks having characteristics as explained above, having quantity of fruit juice below 10% but not less than 5% shall be called carbonated beverage with fruit juice. The applicant stated that since their product does not qualify to be a carbonated beverage/drink originally as per its other characteristics also, hence it cannot be classified as carbonated beverage with fruit juice. 18. The applicant submits that their said understanding is premised on the decision by Hon'ble Supreme Court in case of Commissioner of Central Excise, Bhopal v. Parle Agro Pvt. Ltd. reported in 2008 (226) E.L.T. 194 (Tri. - Del.). The issue that arose for consideration before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed a certificate of the Institute of Chemical Technology regarding the product and the finding of the court is significant for the case, held as follows: The above technical opinion clearly mentioned that carbon dioxide is used for preservation purpose only. Before the Committee of Commissioners the entire process of manufacture of the product was explained along with all relevant orders and certificates of Food Safety Authorities. It was stated that the Experts in their opinions and certifications have mentioned that product is commercially and technically distinct from products which have classified as 'aerated branded soft drinks'. The certifications which were relied by the appellant indicate that in the case of 'Appy Fizz' the product does not undergo aeration or carbonation; the product is thermally processed with CO2 which help in preserving the Apple Juice concentrate which is otherwise perishable in nature. We, thus, conclude that orders of Food Safety Authority and expert opinion regarding process of manufacture relied by the appellant were relevant materials and Clarification Authority and High Court erred in law in discarding these materials. 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus the rationale for classification of the product under the Indirect Tax tariff is settled by the Court as far the entries with S.No. 48 in Schedule II and S.No. 12 in Schedule V of GST Tariff mentioned above are concerned. 26. Further, applicant submits that the Hon'ble Apex Court has already clearly laid with regard to a similar product that the product is not carbonated, it is thermally processed with CO2 for which help in preserving the Apple Juice concentrate. In case of applicant also, its product shall be a Ready to Serve Fruit Beverage and will be classified under FSSAI regulation no 2.3.10 instead of 2.3.30. Thus when its products are not 'Carbonated Beverages of Fruit drink' as per FSSAI but rather is a Ready to Serve Fruit Beverage which is thermally processed and being manufactured with CO2 being used only for preservation purposes, it cannot be classified under FSSAI Regulation 2.3.30 27. The applicant submits that 'carbonated beverage with fruit juice' are also carbonated fruit beverage/drink just with an exception regarding the quantity of fruit juice which can be below 10% but not less than 5% as defined in the FSSAI regulations. Since, the product of applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4] 30. The applicant submits that it has been laid down quite clearly that common parlance understanding of a product is an extension of general principle of interpretation of statue. Since no definition of fruit juice based drink has been given in the Tariff Schedule hence its popular meaning and the perception amongst the customers shall be relevant criteria for determination. Hence the products Apple Cola Fizzy and Malt Cola Fizzy are 'fruit juice based drinks' classifiable under HSN 2202 99 20. 31. The applicant has submitted that with recent amendment brought in GST Rate Schedule wherein GST Rate has been brought at entry 12B of the Notification No. 8/2021-Central Tax (Rate) dated the 30th September, 2021 with rate of tax at 28% and also under entry 4B of notification under Compensation Cess with rate at 12% under GST. The said rate has been brought at HSN 2202 with description as under: 4B. 2202 Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice 12% 32. The applicant further states that it clearly specifies that under HSN 2202 all beverages which are fruit juice based drinks or are Fruit Beverages are not covered under the given classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act. 39. We have carefully considered all the submissions made by the applicant. 39. The applicant is before us for Classification of the following goods: i. Apple Cola Fizzy ii. Malt Cola Fizzy 40. The applicant cites Food Safety and Standard (Food products standards and food additives) Regulations, 2011 and refers to the meaning of Thermally processed fruit juices and carbonated fruit beverages or fruit drinks as referred in said Food safety and standards regulations, 2011. 41. We hold that the burden of Classification is on Revenue. However, Revenue has neither appeared for personal hearing nor submitted its comments on the applicant's application. 42. Prior to proceeding with our discussion on the Classification of said goods, we find it prudent to place on record the position of law and thereby our thought process in subject matter: i. We hold that Classification of goods under GST is based on Tariff aligned with the HSN. The General Interpretative Rules for GST Tariff Classification are to be sequentially followed as the way to classify the goods. We are to classify wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 545 (del) has held that in Interpretation of statutes, for Conflict of views between two Central Government Ministries -In such case, view taken by Ministry that is primarily responsible for policy in question, should prevail. By applying the same ratio, we find it in compliance to judicial discipline and in consonance to the laid ratio decidendi as cited, that in matters of GST Classification, we comply with the General Rules of Interpretation for GST Classification and GST Scheme of Law. Further we note that the reference to HSN explanatory Notes has persuasive value. What we intend to express is that GST Scheme of law shall be complied with for GST Classification. Part 2: 46. The facts on record for the subject goods are as follows: a. Both the goods are Apple Juice based beverages with apple juice concentrate 1.9% [Equivalent to 12.7% Apple Juice Reconstituted] b. Both goods have carbon dioxide (INS 290) c. Both goods have preservatives (INS211, INS224, INS202) 47. Further, in a common parlance sense, we note that the names of both the goods have the word ' fizzy' which gives a reasonable impression in the market that these goods are carbonated with carbon dioxide, du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial). (2) Beverages such as lemonade, orangeade, cola, consisting of ordinary drinking water, sweetened or not, flavoured with fruit juices or essences, or compound extracts, to which citric acid or tartaric acid are sometimes added. They are often aerated with carbon dioxide gas, and are generally presented in bottles or other air tight containers. (B) Other non-alcoholic beverages, not including fruit or vegetable juices of heading 20.09. This group includes, inter alia : (1) Tamarind nectar rendered ready for consumption as a beverage by the addition of water and sugar and straining. (2) Certain other beverages ready for consumption, such as those with a basis of milk and cocoa. 50. On reading the Tariff 2202, along with the Explanatory Notes to HSN for sub-heading -220210, we note the following, as tabulated in the Table: Tariff 2202 read with its Explanatory Notes Subject Goods Ingredients Our Findings 1. Waters including aerated waters containing added sugar/ sweetening matter or flavoured. Water, Sugar We find the Tariff 2202 satisfied. 2. Flavoured with fruit juices or essences, or compound extracts. Apple juice concentrate(1.9%) equivalent to 12.7% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving fruit juice content of not less than 5% procured from domestic manufacturers 4. The issue regarding separate classification was earlier examined during the 28th GST Council meeting but the fitment Committee did not agree with the proposal keeping in mind the domestic fruit processing Industry 5. Fitment Committee does not recommend any reduction in present GST rate 54. We note that the GST Council has agreed to the above recommendation as per the Minutes of the Meeting, the relevant para is reproduced as follows: 34.31 From item Nos. 43 to 57 of Annexure-III, the Council had no objection and approved the recommendation of Fitment Committee. The Hon'ble Minister from Uttar Pradesh raised the issue about item at Sl. No. 58 of Annexure III i.e. Extra Neutral Alcohol (ENA). 55. Further, GST council meeting held on 13th Sept. 2021, in the Press Release has issued following clarification: '5. Carbonated Fruit Beverages of Fruit Drink and Carbonated Beverages with Fruit Juice attract GST rate of 28% and Cess of 12%. This is being prescribed specifically in the GST rate schedule.' 56. From reading of Annexure III to the recommendation of the Fitment Committee, We note that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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