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TMI Blog2024 (12) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly incorporates milk and milk products. For example milk food for babies, by normal standards, is not milk. However, it is treated as falling in 0402. Thus, the test propounded by the 1st respondent that only plain milk is to be treated as falling under 0402 is not correct. The finding of the 1st respondent that flavoured milk goes out of this entry by addition of Badam flavour also cannot be accepted. Though the entry speaks only of milk containing added sugar or other sweetening matter, flavoured milk cannot be taken out of tariff heading 0402 merely because of addition of 0.5% of Badam flavour. Whether beverage is any type of drink except water and as such any milk drink, would fall within 2202? - HELD THAT:- The entries, under this chapter heading, enumerate water, mineral water, aerated water and other beverages which can be made only by using water. Except entry 2202 90 90, Tender coconut water , water is an essential part of the beverages mentioned therein. Applying the principle of Nocitur a Sociis, the placement of Tariff Item 2202 90 30 in the same tariff heading would mean that entry 2202 99 30, would cover beverages which contain milk as well as water. Sweetened m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to as 2202). The 1st respondent had accordingly passed orders, by way of an order in Original No. 14/2023-24 GST-AC (SS)-2023-24, dated 03.10.2023. In this order the 1st respondent noticed that the petitioner was earlier classifying flavoured milk under 2202 and had deliberately tried to pass it off as a product falling under 0402, to evade tax. On this basis the 1st respondent not only raised a demand for shortfall of tax but also a penalty under Section 122(2) (b) and Section74 of the Central GST act, and corresponding Sections of APGST Act and Integrated GST Act. This order is assailed before this Court, by way of this Writ Petition. 2. Heading 0402 99 90 reads as follows: 8. 0402 Milk and cream, concentrated or containing added sugar or other sweetening matter, including skimmed milk powder, milk food for babies (other than condensed milk) 2.50% 2.50% 5% Tariff item 2202 90 30, reads as follows: 50 2202 99 30 Beverages containing milk 6% 6% 12% 3. The 1st respondent applying the general rules for interpretation of the Customs Tariff Act, 1975, held as follows: The description of goods under Chapter Heading No.0401/0402 under GST Tariff and that of CH 2202 are to be compared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons given for such change, the petitioner would have to be treated as having deliberately avoided payment of proper tax and consequently, the provisions of Section 122 (2) (b) read with Section 74 of the GST Act would be applicable, making the petitioner liable to pay penalty under these two provisions, on the short fall of tax paid. 6. The petitioner, relying upon the Food Safety and Standards (Food Products Standards Food additives) Regulations, 2011 contends that flavoured milk would fall within the meaning of Milk set out in 0402. The petitioner would contend that the Tariff Heading, claimed by the petitioner, includes milk containing sugar or other sweetening matter, and since flavoured milk, processed by the petitioner, consists of approximately 90.5% of milk and 9% of sugar apart from 0.5% of artificial natural flavorings and permitted colour, the same would fall within the meaning of milk under the said Tariff Heading. The petitioner contends that 2202 beverages containing milk would not cover flavoured milk . The contention of the petitioner is that firstly, flavoured milk would fall within 0402 as flavoured milk is predominantly milk with some sweetening matter added t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fying flavoured milk under 0402. This change of classification is said to have been done as the petitioner had realized that it had classified flavoured milk under the wrong tariff entry. The description of the relevant entries during Pre and Post GST Regime are as follows: Chapter Heading Description during Pre-GST Regime (Central Excise Tariff Act) Description during Post-GST Regime (GST Tariff) First Schedule of Section-I Tariff Item-0401 Milk and cream, not concentrated nor containing added sugar or other sweetening matter. Milk and cream, not concentrated nor containing added sugar or other sweetening matter. First Schedule of Section-I Tariff Item-0402 Milk and cream, concentrated or containing added sugar or other sweetening matter. Milk and cream, concentrated or containing added sugar or other sweetening matter including skimmed milk powder, milk food for babies (other than condensed) 11. The primary finding of the 1st respondent, to remove flavoured milk from tariff heading 0402 99 90 is that flavoured milk, with the addition of Badam flavour, ceases to be milk and becomes a special drink. Entry 0402 at the cost of repetition, reads as follows: First Schedule of Section-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tened milk. In a case where sweetened milk is to be sold, after bottling the same, it would fall within the meaning of Milk containing added sugar or other sweetening matter, under 0402. This drink could also be called a beverage, containing milk, falling under 2202. The entry, in 0402, is the special entry and the entry, under 2202, is the general entry and would have to give way to entry 0402. The same principle would apply to flavoured milk. 15. The Hon ble High Court at Madras, in it s judgement, dated 31.10.2023, in W.P. No. 16608 and 16613 of 2020, in the case of M/s Parle Agro Pvt. Limited Vs. Union of India, after reviewing the law and the changes in the tariff entries, had come to the conclusion, on similar lines, that flavoured milk would fall under 0402 and not under 2202. We are fortified, in our conclusion, by this judgment. 16. The 1st respondent also sought to levy penalty against the petitioner, on the ground that the petitioner had deliberately sought to evade payment of tax, in terms of Section 122 (2) (b) read with Section 74 of the Central GST Act and other related Acts. In view of the fact that this Court is of the view that flavoured milk cannot be treated to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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