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TMI Blog2021 (6) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... the people in general, consider such products as a different type or variety of Papad only - applicant s products of different shapes and sizes of papad, whose pictures are reproduced, are nothing but Papad, classifiable under Tariff Item 1905 90 40 of the Customs Tariff Act, 1975. Would it be judicious to stick that the product which are having Round shape, manufactured by using ingredient of cereal flour only are PAPAD and the products having the same characteristic and uses but shape and size is different cannot be termed as PAPAD ? - HELD THAT:- Reliance can be placed in the case of M/S. SHIV SHAKTI GOLD FINGER VERSUS ASSTT. COMMISSIONER, COMMERCIAL TAXES, JAIPUR [ 1996 (5) TMI 419 - SUPREME COURT ] where it was held that irrespective of the shape of PAPAD and irrespective of ingredients used, the PAPAD still remains PAPAD - the decision is squarely applicable in the instant case as such the impugned product having different shapes and size PAPAD as compared to round shape Papad however are similar to Papad in respect of the ingredient, manufacturing process and use. Further, in entry No. 96 of Notification No. 02/2017-CT (Rate) dated 28.06.2017, the description of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the SGST Act. 2. The present appeal has been filed under Section 100 of the CGST Act, 2017 and SGST Act, 2017 by M/s. Piyush Jayantilal Dobariya (hereinafter referred to as Appellant) against the Advance Ruling No. GUJ/GAAR/R/60/2020 dated 30.7.2020. 3. The appellant has raised the following question for advance ruling in the application 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 small ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovides 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: Under which tariff Heading PAPAD of different shapes and sizes manufactured/ supplied by the appellant would attract CGST and SGST? Answer: The product Un-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 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 15.12.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Allahabad High Court in the case of Commissioner of Customs, C.G.O. Vs. Sonam International [2012-275-ELT-326- ALL] upheld that assessment of goods with regard to payment of customs duty is to be made based on contents involved. The Chapter Notes in the Customs Tariff also prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt 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 new facts and situations. In the case of M/s. Chaudhary Tractor Company Vs. State of Haryana [2007] 8 VST 10 (P H) wherein it has been observed by Honourable High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /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 similar if not exactly the same. Under the erstwhile VAT Act if a product is considered as PAPAD then the product does not seize to be a PAPAD merely because VAT Act is no more in existence and has been replaced by GST Act. In this regard the said principle has been laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted 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, 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/s. TTK Healthcare Ltd. owns the right to sell PAPAD manufactured by it under the brand name of FRYUMS . So, FRYUMS is not a distinct type of product but it is PAPAD sold under the brand name of FRYUMS owned by TTK Healthcare Ltd. Hence, for the purpose of class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication 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 considered as PAPAD is not true and correct and most importantly not well founded. Further, submitted that the observation of AAR that when a customer asked for PAPAD he gives traditional round shape PAPAD but it is equally true that when asked FANCY Papad shopke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 that the judgment of Hon ble Supreme Court was relied upon by them on the principle of interpretation laid down by Hon ble Supreme Court and not on the commodity. In this case Hon ble Supreme Court held that narrow interpretation as sought by Revenue c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 (Tribunal) relied upon by the appellant was not relied upon. 27. The appellant has submitted that Considering the overall facts and circumstances of the case vis- -vis the entries in question and the settled law on the subject, the product i.e. PAPAD of differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... APAD 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 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. 33.1 The ingredients of the PAPAD varies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 expanded products, savoury or salted 1905 90 40 --- Papad 1905 90 90 --- Other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. Sonam International [2012-275- ELT-326-ALL] upheld that assessment of goods with regard to payment of customs duty is to be made based on contents involved. The main ingredients of the appellant product are flour, like wheat flour, rice flour, starch, corn flour and cereal flour and in the Ch. 19 of the Custom tariff Act 1975 all the product which are made of either directly from the cereals of chapter 10, from the products of chapter 11 or from food flour are covered. 39. We find that the appellant contends that their impugned product falls under the entry No. 96 of Not. No. 02/2017- CT (rate) dated 28.06.2017 which attracts NIL rate of GST. The relevant entry No. 96 of Not. No. 2/2017-CT (Rate) dated 28.06.2017 is reproduced as under: S. No Chapter / Heading / Sub-heading / Tariff item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on parlance test continues to be one of the determinative tests for classification of a product whether medicament or cosmetic. What is important to be seen is how the consumer looks at a product and what is his perception in respect of such product. The user s understanding is a strong factor in determination of classification of the products . 40.3 We find that the appellant has submitted that the impugned product of different shapes and sizes PAPAD are known by different nomenclature in different parts of the country whereby more common nomenclature used is FRYUMS though FRYUMS is a registered brand name of TTK Healthcare Ltd. and not the name of any of product of PAPAD. Whereas the GAAR in his ruling has held that the different shapes and sizes like round, square, semi-circle, hollow circle with bars in between or square with bars in between intersecting each other or shape of any instrument, equipment, vehicle, aircraft, animal type Papad are known in the market as Fryums and not PAPAD ; that Papad is a distinct commodity and it cannot be equated with the Fryums. We have visited the website of M/s. TTK Foods (http://ttkfoods.com/products) and found that the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence. 42.1 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 starch, chana, potato lentils, papad khar, bicarb, vegetables like tomato, salt, water , food, colour etc. The main ingredient of PAPAD and impugned products of the appellant (different shape and size Papad) are more or less similar. 42.2 The manufacturing process of the products under consideration has been submitted by the appellant. It has been submitted that ingredients are mixed in machine with water and oil, dough is prepared 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. 42.3 As s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 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 applicable in the instant case as such the impugned product having different shapes and size PAPAD as compared to round shape Papad however are similar to Papad in respect of the ingredient, manufacturing process and use. 45. Further, in entry No. 96 of Notification No. 02/2017-CT (Rate) dated 28.06.2017, the description of the product is PAPAD by whatever name called . To understand the term whatever name called the principle of Noscitur a sociis is to be applied. As per the said principle, the meaning of an unclear word or phrase must be determined by the words that surround it. In other terms, the meaning of a word must be judged by the company that it keeps. Therefore, in this entry, only a product called by name of PAPAD would not be covered but all types of product which are similar to PAPAD in respect of ingredient, manufacturing process, use and common parlance would be covered ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is that when a product is eligible to be classified under specific entry then classification under general entry should not be preferred. We find that in the case at hand, the product different shapes and sizes Papad is Papad of different shapes and size and find specific entry at CTH No. 19059040, therefore as per rule of interpretation, the product is to be classified under CTH No. 19059040 only and not under CTH No. 21069099 of the Customs Tariff Act, 1975 as classified by the GAAR. 48. Taking all these aspects into consideration as discussed above, we hold that the product different shapes and sizes Papad involved in the present case merit classification under Tariff heading No. 19059040 of the Customs Tariff Act, 1975. As we have already held that the product in question is classifiable under CTH No. 1905 of the Customs Tariff Act, 1975, the said CTH No. 1905 is covered under entry No. 96 of Notification No. 02/20178-CT (Rate) dated 28.06.2017 and accordingly chargeable to NIL rate of Goods and Services Tax. 49. In view of the foregoing, we modify the Advance Ruling No. GUJ/GAAR/R/60/2020 dated 30.07.2020 of the Gujarat Authority for Advance Ruling in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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