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TMI Blog2020 (8) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of exemption notification under Central Excise regime was examined by the Hon ble Customs, Excise and Gold Appellate Tribunal (CEGAT, as it was known then) in the case of TTK. PHARMA LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1992 (8) TMI 183 - CEGAT, NEW DELHI ] where it was held that the product Fry Snack Foods called Fryums have been considered as Namkeen and not as Papad . It is observed that Fried Fryums are eatable and used as food articles or eatables and such fried, salted Fryums are found to be commonly known and used as Namkeen . Further it can be seen that Papad even after roasting or frying are known and used as Papad only. Whereas, in commercial or trade parlance also, the Fried Fryums cannot be said to be known as Papad . What will be the classification of Fried Fryum ? - HELD THAT:- Heading 2106 is an omnibus heading covering all kind 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. In 5 (b) above, preparation for use after processing has been included and mentioned therein such as cooking, dissol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Alisha Foods is a partnership Concern having its place of business at 24, MirzaWadi, Ujjain-456006, inter-alia engaged in the. Manufacturing and trading of Fried Fryums, Namkeens and Popcorns which are ready to eat under the brand name of Target & School Times. The Appellant is a registered concern in GST Act, 2017 having GSTIN - 23ABBFA7513N1ZI. 2. That the Appellant filed an application seeking advance ruling under section 97 (2) of CGST Act, 2017 MPGST Act, 2017 and IGST Act, 2017 for correct classification of "Papad and Papad Fryums of different shapes, sizes and varieties (commonly known as Fried Fryums)" manufactured by Appellant and thereafter sold to intra-State and inter-State persons and for determination of HSN Code and GST Applicable rate on such fried fryums. 3. The Ld. Advance Ruling Authority vide order dated 28/11/2019, passed in Appeal No. 20/2019 u/s 98 (2) of CGST Act, 2017, has held as under : * The product fried Fryums' manufactured and supplied by M/s. Alisha Foods (GSTIN 23ABBFA7513N1Z1) is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975. * Goods and Service Tax rate of 18% (CGST 9% + SGST 9% or IGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t containing cocoa; communion wafers, empty cachets of kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products Sub-heading No. 1905 90 40 - Papad Sub-heading No. 1905 90 90 - Others 11. It is submitted that Papad even after roasting or frying are known and used as Papad only. Therefore, after applicability of test of commercial or trade parlance also, the Fryums can only be said to be known as Papad because of similar and identical process of manufacturing of both. Thus the fryums will be covered under Chapter 19 Heading No. 1905 sub heading 1905 90 40 as Papad. The Ld. AAR without even taking into consideration the aforesaid submission has erroneously held that : • The product fried Fryums' manufactured and supplied by M/s. Alisha Foods (GSTIN 23ABBFA7513N1Z1) is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs TariffAct, 1975 • Goods and Service Tax rate of 18% (CGST 9% + SGST 9% or IGST 18%) is applicable to the product fried Fryums' as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under the CGST Act, 2017 and Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dice to above and alternatively it is further submitted that as per SI. No. 46 of Schedule II of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate) dated 30.06.2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017 where in the levy of 12 % is applicable under tariff head 2106 90- the entry reads as under : "Namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form". 16. In light of above it is submitted that Ld. Authority, while passing the advance ruling order for classification of 'fried Fryums' not as papad and its applicability of rate of tax @ 18%, has erred in law and under facts as the classification done by the Ld. Lower authority is contrary to the settled principle of interpretation i.e. while classifying the goods wherever ambiguities have arisen, courts have adopted different tests for arriving to the true meaning and their placement in the Schedule Entries. Generally, the tests adopted are the popular meaning test, common parlance test, trade or commercial parlance test, technical or scientific meaning test, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieties (commonly known as Fryums) manufactured by the applicant and thereafter sold and its FINS code? * What is the applicable rate of CGST payable on such "Papad and papad pipes of different shapes, sizes and varieties (commonly known as Fryums)? 7. GROUNDS OF APPEAL- a) Because the order dated 28/11/2019 passed in Appeal No. 20/2019 u/s 98 (2) of CGST Act, 2017 by the Ld. Advance Ruling Authority is perverse, arbitrary and without application of mind as the authority has failed to appreciate that for classification of a product under GST number of factors has to be taken into consideration such as- statutory fiscal entry, the basic character, function and use of the goods has to be taken into consideration but the Ld. Authority without even taking into consideration the aforesaid factors has passed the order which is erroneous both on facts and in law. b) Because the authority was not justified in classifying the product in question i.e. 'fried Fryums under Tariff Item 2106 90 99 when the same should have been classified under Chapter 19 Heading No. 1905 Sub-heading No. 1905 90 40 relating to Papad. c) Because the Ld. authority has failed to apply the settled principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the matter in revision, it came to be allowed by the High Court and was held that the appellant is not entitled to the exemption. Thus this appeal is allowed by special leave. 3. It is seen that the notification clearly mentions that the word 'pappad' has been used a genus and its species are made from pulses, rice, maida, potato, sago, etc. In the notification the words 'pappad and badi', i.e., mangori have been used while in entry No. 3 of the notification after the words 'letterhead pads' the words 'other stationery articles made of handmade paper' have been used meaning thereby that entry No. 3 is not restricted to only invitation cards, envelopes, file covers, letterhead pads but also includes other stationery articles made of handmade paper. Similarly, the question is: whether the ingredients of pappad are exclusively composed of pulses or maida or rice, etc. When the notification mentions pappad and badi, i.e., mangori it would appear that they did not intend to differentiate between gole or flat pappad made of any ingredient. 4. Under those circumstances it appears that the interpretation given by the High Court is not correct and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld to include Fryums. h) Reliance is placed on case of Agrawal Tyre Stores v. Commissioner of Sales Tax, Madhya Pradesh as reported in (2014) 25 STJ 329 (MP), wherein Hon'ble Court held that "the words in any entry of the Schedules of an Act must be given wide import so as to take within its fold all varieties of articles indicated therein. It is not possible to give a limited or restricted meaning to the words used in any Entry" i) Because the Ld Authority erred in law in classifying the product i.e. "Papad and papad pipes" of different shapes, sizes and varieties (commonly known as Fryums) under residuary entry i.e. under serial No. 23 of Notification No.1/2017-Central Tax (Rate) and thereby levying GST @ 18 %. that when there is specific entry in the schedule i.e. entry no. 96 of Notification No. 02/2017 -CT (Rate), dated 28.06.2017 which covers papad in its ambit. Reliance is placed in the case of Union of India v. Garware Nylons Ltd. (2015) 27 STJ 545 (SC), wherein the Hon'ble Supreme Court relied on its own judgment in the case of Dunlop India Ltd. as reported in AIR 1977 SC 597, wherein it is held that when an article, by all standards, has a reasonable claim to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, it is the sense in which they understand it which constitutes the definitive index of legislative intention"." k) Because even if two views are possible, the view which is favorable to assessee must be accepted while constructing the provision / entries of a taxing statue. Further, a provision or entry of a taxing statue can be reasonably interpreted in two ways that interpretation which is favorable to the assessee has to be accepted. I) Because in the instant case, the product in question Fried Fryums are made of Maida, Sugar and Vanaspathi, Edible Salt, preservatives and dried in oven. They become edible only after frying in oil. Thus the ingredients and the process is similar to Papad. Papad even after roasting or frying are known and used as 'Papad' just like the un-fried Fryums or fried Fryums can only be classified as papad because the process and ingredients of both are similar. Therefore fried fryums are covered and classifiable under chapter 19 heading 1905 sub heading 1905 05 40. That it is further submitted that Fryums is papad with different size and shape as held by Hon'ble High Court in case of Shiv Shakthi Gold Finger v. Asstt. CCT [CA No. 7094 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that not only does this rule of construction resolve the conflicts between the general provision in one statute and the special provision in another, it also finds utility in resolving a conflict between general and special provisions in the same legislative instrument too and observed that: "9 …We reach the same result by applying another well-known rule of construction that general provisions yield to special provisions. The learned Attorney-General seemed to suggest that while this rule of construction is applicable to resolve the conflict between the general provision in one Act and the special provision in another Act, the rule cannot apply in resolving a conflict between general and special provisions in the same legislative instrument. This suggestion does not find support in either principle or authority. The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and Judges but springs from the common understanding of men and women that when the same person gives two directions one covering a large number of matters in general and another to only some of them his intention is that these latter directions sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Gagan Tiwari Advocate. After hearing the appellant has expressed his satisfaction through a letter and asked for decision. 9. DISCUSSION AND FINDINGS • We have carefully gone through the submissions made by the appellant in their application as well as the submission made at the time of personal hearing. • As per the written submission made by the appellant at the time of personal hearing the main issue involved in the case is regarding classification of fried fryums and GST rate applicable on it. • The appellant in his submission has tried to equate fried fryums with "papad" under tariff item as 1905 90 40. • Here it is important to observe the explanation (iii) and (iv) of the notification no.1/2017-Central Tax (Rate) dated 28.6.2017which provides as follows :- "Explanation - for the purposes of this notification,- (i)………. (ii)………. (iii) "tariff item", "sub heading", "heading" and "chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the first schedule to the Customs Tariff Act, 1975 (51 of 1975 ). (iv) The rules for the interpretation of the First Schedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd or of Excise duty may not arise. However, as arguments have been adduced with regard to the Notification No. 12/90 dated 20-03-1990, it would be proper for us to give finding in regard to the same. 7…….. 8……… The SLNo .8 reproduced above mentions about various goods coming within sub heading 2107.91. It has given illustration to the items Namkeens such as Bhujia, Chabena. Now the question is whether these namkeens given in the notification is a general one including all types of namkeens or only to the type given therein like Bhujia, Chabena by illustration. The learned Collector has interpreted the word, such as" to mean namkeen should be of a kind of Bhujiya and Chabena. Although it is not in dispute that the item in question is a Namkeen. As can be seen from various items given in Sl. No. 8 namely Papad, Idli-mix, Vada-mix, Dosa-mix, Jalebi-mix, Gulab jamun-mix are all of a type which cannot be eaten straight away but it requires to be fried. Chabena also comes in type of item which requires to be chewed like Potato chips or fried Channa Masala or various types of fried masala dais. There can be any number of examples of namkeens in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote 5 and 6 of Chapter 21 provides as follows- "5. heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter-alia includes (a)…………….. (b) Preparations for use, either directly or after processing (such as cooking dissolving or boiling in water, milk or other liquids), for human consumption; (c)…………….. (d)…………….. "6. Tariff item 2106 90 99 so includes sweet meats commonly known as `Misthans' or `Mithai' or called by any other name. They also include products commonly known as `Namkeen', 'Mixtures', `Bhujia', `Chabena' or called by any other name. Such products remain classified in these sub-headings irrespective of the nature of their ingredients." • Thus, Heading 2106 is an omnibus heading covering all kind 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. In 5 (b) above, preparation for use after processing has been included and mentioned therein such as cook ..... X X X X Extracts X X X X X X X X Extracts X X X X
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