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TMI Blog2023 (7) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... nd based on the Harmonised System of Nomenclature Codes. [HSN Codes]. The classification of the subject product namely; 'Dhathri Dahasamini has to be determined keeping in view the principles mentioned above Admittedly, the product is predominantly made of ingredients falling under Heading 1211 of the Customs Tariff Act. Heading 1211 covers plants and parts of plants of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purposes, fresh or chilled. As per the list of ingredients of the product given by the applicant, it is seen that there is only one ingredient; i.e; Chukku [Ginger: 0910 11 20 - Dried, unbleached] which falls under Chapter 9 of the First Schedule to the Customs Tariff Act; 1975 and all the other ingredients fall under Heading 1211 of Chapter 12 of the First Schedule to Customs Tariff Act, 1975. The subject product; Dhathri Dahasamani contains only one ingredient namely; Chukku [Ginger: 0910 11 20 - Dried, unbleached] that fall under Chapter 9 and the percentage of the ingredient is only 8%. The subject product is primarily a mixture of Karingali, Pathimukam and Ramacham falling under Heading 1211; which together constitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the product Dhathri Dahasamani to be rightfully classifiable under HSN 0910 91 00 instead of classifying Linder HSN 2106 90 50 and therefore tax rate is under entry number 44 of schedule I prescribed by notification number 1/2017-CT(R) dated 28.06.2017 as amended? 3.2. If not classifiable as above, is not the product to be classifiable under HSN 2103 90 40 and therefore tax rate is under entry No. 44 of schedule I prescribed by notification No. 1/2017-CT(R) dated: 28,06.2017 as amended? 4. Contentions of the Applicant: 4.1. The applicant submits that they are the sole distributor of various herbal ayurvedic products produced by M/s. Warriers Hospital and Panchakarma Centre, Velanchira, Kayamkulam, Alappuzha. The products are manufactured under drag license number DL/No.24/25D/O4, issued by the Deputy Drugs Controller ASU and State Licensing Authority, Government of Kerala and renewed up to 31 December 2023. 4.2. It is submitted by the applicant that one of the products distributed by them, viz, Dhathri Dahasamani , which is used as a flavour and taste component in drinking water is presently sold by classifying under HSN 2106 90 50 and is subjected to tax at the rate CGST 9%, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The mixtures of two or more of the products of different headings are to be classified in heading 0910. The addition of other substances to the products of headings 0904 to 0910 [or to the mixtures referred to in paragraph (a) or (b) above] shall not affect their classification provided the resulting mixtures retain the essential character of the goods of those heading. Otherwise, such mixtures are not classified in this Chapter, those constituting mixed condiments or mixed seasonings are classified in heading 2103 . 4.5. The product Dhathri Dahasamani' contains certain ingredients that come under the definition of spice as well as certain other substances. As per the Chapter Note 1(b) of Chapter 9, the addition of other substances to spices will not affect the classification provided the resulting mixture retains the essential character of spices. In the case of the product Dhathri Dahasamani' it retains the essential characteristics of the spice ingredients ie; dry ginger (chukku), naruneendi and karungali, even though it contains certain other substances. Therefore, the addition of such substances shall not affect the classification of the product. Therefore, following t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condiment. The derived essence of a combination of various items in the mixture only is dissolved within water and the water is consumed and not the mixture as such and hence the product cannot be included in the category of food. Chapter Note (1)(b) of Chapter 9 is reproduced as follows; Note No. 1 Mixtures of the products of headings 0904 to 0910 are to be classified as follows; (a) .................................. (b) The mixtures of two or more products of different headings are to be classified in heading 0910. The addition of other substances to the products of headings 0904 to 0910 [or to the mixtures referred to in paragraph (a) or (b) above] shall not affect their classification provided the resulting mixtures retain the essential character of the goods of those heading. Otherwise, such mixtures are not classified in this Chapter/those constituting mixed condiments or mixed seasonings are classified in heading 2103. 4.10. The above chapter note specifies that that if the mixtures of spice ingredients do not retain the essential character of spices as a result of addition of other substances with them, such mixtures are classified under the Heading 2103. Therefore, the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling water in the prescribed measure the resultant drinking water will be slight dark coloured with a unique flavour. The product is used to enhance the flavour and taste of drinking water; 7.4. It is stated by the applicant that at present the product is supplied by classifying it under the CTH 2106 90 50 of Chapter 21 of the First Schedule to the Customs Tariff Act, 1975 and subject to tax at the rate of 18% [CGST - 9% and SGST - 9%]. 7.5. The Explanation (iii) (iv) appended to the Notification No. 01/2017 -Central Tax (Rate) dated 28.06.2017 reads as follows; (iii) Tariff item , subheading 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 Schedule to the Customs Tariff Act, 1975 (51 of 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 this notification. 7.6. In view of the above explanation, the rules for interpretation of the First Schedule of the Customs Tariff Act, 1975 including the Section and Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing principles for the 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 determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the broad description of the article fits in. with the expression used in the Tariff. Moreover, the functional utility and pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, oil or milk. Hence it is claimed that the products in question cannot be classified under sub-heading 2108.90 of CET. 3. The matter has been examined. Spices are specifically covered under Chapter 9 of Central Excise Tariff and mixed condiments and mixed seasonings under heading 21.03 of Central Excise Tariff. Heading 21.08 of CET on the other hand is a residuary entry which refers to edible preparations not a elsewhere specified or included . While there are no definitions available for spices and mixed condiments and mixed seasonings in the Central Excise Tariff, the Explanatory Notes to the HSN give the following description of these products. Spices Spices i.e. a group of vegetable products (including seeds etc.), rich in essential oils and aromatic principles and which because of their characteristic taste are mainly used as condiments. Spices (including mixed spices) containing added substances of other Chapters, but themselves having flavouring or seasoning properties, remain in this Chapter provided the added quantity does not affect the essential character of the mixture as a spice, (Vol. I Page 61) Condiments / Seasonings Mixed condiments and mixed seasonings contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easonings. On the other hand, products like instant samber mix, instant rasam mix, instant spiced bhath mix (bisibelebath) or instantkharabhath mix consisting of dal or rice flakes or sooji along with spices and other substances and which can be made up into food preparations by simply mixing and boiling/cooking in water would merit classification as miscellaneous edible preparations of heading 2108 of Central Excise Tariff. 5. In view of the above, board desires that classification of each product be decided on merit having regard to discussions herein above. 7.10. The classification of the subject product namely; 'Dhathri Dahasamini has to be determined keeping in view the principles mentioned above Admittedly, the product is predominantly made of ingredients falling under Heading 1211 of the Customs Tariff Act. Heading 1211 covers plants and parts of plants of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purposes, fresh or chilled. As per the list of ingredients of the product given by the applicant, it is seen that there is only one ingredient; i.e; Chukku [Ginger: 0910 11 20 - Dried, unbleached] which falls under Chapter 9 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng it to boiling water for giving flavour, aroma or taste to the boiled water and not for the consumption of the product by adding boiled water. Hence as per common parlance understanding also the product is used for flavouring boiled water. 7.14. Accordingly, applying the principles of Rule 3 of the General Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975; the ratio of the above-referred judgment of the Hon'ble Supreme Court and the clarification of the Board in Circular dated 30.04.1996 extracted above, the product Dhathri Dahasamini which is predominantly a mixture of condiments/seasonings that is added to boiling water mainly for its aromatic, flavouring or seasoning properties merits classification under Heading 2103 90 40 - Mixed condiments and mixed seasoning of the First Schedule of the Customs Tariff Act, 1975. 7.15. In the light of the discussion above, it is concluded that the product, Dhathri Dahasamini' is appropriately classifiable under Heading 2103 90 40 of the First Schedule to the Customs Tariff Act, 1975 and liable to GST at the rate of 12% (6% - CGST + 6% SGST] as per entry at SI.No. 44 of Schedule II of Notification No, 01/ ..... 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