TMI Blog2019 (12) TMI 1577X X X X Extracts X X X X X X X X Extracts X X X X ..... estion is a dairy produce and also an edible product of animal origin, the qualifier that it is not elsewhere specified or included makes it ineligible to be classified under the chapter 4. The product in dispute as it is already specified and included under chapter 22 dealing with goods /items of Beverages, spirits and vinegar makes it ineligible to be classified under chapter 4. Thus, the commodity 'flavoured milk' merits classification under beverage containing milk under tariff heading 2202 90 30. The rate of tax applicable for the said tariff item is 12% GST under entry no. 50 of Schedule II of Notification No.1/2017 - Central (Rate) dated 28.06.2017 as amended - the Ruling of the AAR is in tune with legal position and it needs no interference and the appeal is accordingly dismissed. - AAAR/AP/04(GST)/2019 in Application No. AAAR/10(GST)/2019 - - - Dated:- 9-12-2019 - SRI PEEYUSH KUMAR AND SRI NARESH PENUMAKA MEMBER Authorized Representative : Sri S.Dwarakanath, Advocate Hyderabad ORDER M/s Sri Chakra Milk Products LLP., Door No: 23B-2-29B, Bendapudivari Street, Ramachandra Rao Pet, Eluru -534002, West Godavari District, Andhra Pradesh (hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. The Appellant prays that the Appellate Authority for Advance Ruling to set-aside the order of the Advance Ruling and declare the GST rate on flavoured milk as 5% as per HSN 0402 9990 under Notification No.1/2017 - Central Tax (Rate). 2. Grounds of appeal: 2.1. The appellant (M/s Sri Chakra Milk Products LLP.,) prays that the AAR has erred in holding that Flavored Milk manufactured is classifiable under HSN Code 2202 and not under HSN Code 0402. The said Ruling is illegal and contrary to law and the HSN Codes. 2.2. The appellants states that, for classifying the commodity under the relevant schedule to the Goods and Services Tax Act, attracting different rates of taxes, one has to look to the HSN Codes, prescribed under the Customs Tariff Act, 1975. The Rules for interpretation of First Schedule to the Customs Tariff Act, including the Section, Chapter notes and general explanatory notes of the first schedule, shall so far as may be applied to the interpretation of Notification 1/2017 Central Tax (Rate), dated 28.6.2017. 2.3. The appellant opines that AAR has unnecessarily placed heavy reliance upon the Minutes of the 31' GST Council Meeting in coming to conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --- Other In powder, granules or other solid forms, of a fat content, by weight exceeding 1.5%: 0402 21 00 -- Not containing added sugar or other sweetening matter 0402 29 -- Other: 0402 29 10 --- Whole milk 0402 29 20 --- Milk for babies 0402 29 90 --- Other Other: 0402 91 -- Not containing added sugar or other sweetening matter: 0402 91 10 --- Condensed milk 0402 91 90 --- Other 0402 99 -- Other: 0402 99 10 --- Whole milk 0402 99 20 --- Condensed milk 0402 99 90 --- Other 2.6. The appellant takes the reference of Hon'ble Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugar and different flavors to the milk, which does not change the essential character of milk. It is a substitute for milk and a simple modification of the milk, with no manufacturing process involved. 2.7. The Appellant submits the following process of the flavoured milk. Flavoured milk is a result of standardization of fresh milk according to the fat contents and then heating at certain temperature followed by filtration, pasteurization, and homogenization and then mixing of sugar and various flavours and finally bottling. As per the flow chart (attached), it involves various operations by RMRD team, weighing team, processing team, packing team and warehousing / dispatch teams. The appellant renders flavoured milk of badam. 2.8. The appellant contends that AAR has misplaced reliance upon the following decisions: (1) Decision of Madras High Court in State of Tamilnadu Vs. Tvl. Ganesh Corporation, dated 3.4.2012 wherein it was observed as under: As per the Oxford Dictionary beverage means a type of drink except water . In Webster's 3rd International Dictionary, beverage has been described as liquid for drinking especially such liquid other than water ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er states that AAR had erred in ignoring the decision of the Supreme Court in CCE Vs. Amrit Food (324 ELT 418) on 3.9.2015 which is directly on the point as discussed above and amounts to a binding precedent under Article 141 of the Constitution of India. The appellant opines that AAR ought to have seen that the eight digit code introduced from 28.2.2005 will cover flavoured milk under Sub-Heading-0402 9990. 3. Personal Hearing The Personal Hearing was called on 19`h November 2019, for which the authorized representative Sri S. Dwarakanath, Advocate attended and reiterated the written submission. In addition, the appellant made further submissions citing the following judgments and orders at the time of Personal Hearing and the physical copies of the same are submitted on 25.11.2019 to this authority as under: (1) The decision of Hon'ble Supreme Court in the case of CCE Vs. Amrit Food (324 ELT 418) (SC). (2) The decision of the Advance Ruling Authority, Karnataka in Advance Ruling No. KAR ADRG 88/2019, dated 26.09.2019 in the matter of Karnataka Cooperative Milk Producers Federation Limited, Bengaluru. (3) The decision of the Kerala High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etening matter. 0402 91 Not containing added sugar or other sweetening matter. 0402 99 Other 0402 99 10 Whole milk kg. Nil 0402 99 20 Condensed milk kg. 16% 0402 99 90 Other kg. Nil Further, the classification of the products in question had been changed, vide the basic Notification No. 3/2005-C.E., which is a general exemption notification prescribing effective rate for various excisable goods, and it is under this general exemption notification that Sr. No. 11A has been inserted from 15-6-2007 thereby specifying nil rate of duty for flavoured milk of animal origin as under Sr. No. Notification No. and date Amendments (1) (2) (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red milk' i.e., whether it is to be considered under either 0402 or 2202 90 30 as mentioned above, the issue has been discussed and recorded in the Agenda for 31st GST Council Meeting Volume-II dt: 22.12.2018 as under, clarifying the classification issue. S.No Description HSN Present GST Rate (%) Requested GST Rate (%) Comments 18 Flavoured Milk 2202 12 Clarification on that it is classificable under Chapter 4 1. The Explanatory Notes to HSN describe the goods classifiable under the heading 0402 as under: This heading covers milk (as defined in Note 1 to this Chapter) and cream, whether or not pasteurised, sterilised or otherwise preserved, homogenised or peptonised; but it excludes milk and cream which have been concentrated or which contain added sugar or other sweetening matter (heading 04.02) and curdled, fermented or acidified milk and cream (heading 04.03). The products of this heading may be frozen and may contain the additives referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a beverage is (chiefly in commercial use) a drink other than water. It is a liquid for drinking especially such liquid other than water (as tea, milk, fruit juice, beer) usually prepared (as by flavouring, heating, admixing) before being consumed . The instant product, the flavoured milk is undoubtedly a beverage containing milk. It is moreover, a 'preparation' made as per the description given by the appellant in the flow chart submitted by him. It could be inferred from the above discussion that even though the product in question is a dairy produce and also an edible product of animal origin, the qualifier that it is not elsewhere specified or included makes it ineligible to be classified under the chapter 4. The product in dispute as it is already specified and included under chapter 22 dealing with goods /items of Beverages, spirits and vinegar makes it ineligible to be classified under chapter 4. Thus, the commodity 'flavoured milk' merits classification under beverage containing milk under tariff heading 2202 90 30. The rate of tax applicable for the said tariff item is 12% GST (6% CGST + 6% SGST) under entry no. 50 of Schedule II of Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X
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