TMI Blog2018 (12) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... s plain like a chapatti and unstuffed like Gobhi paratha, Laccha paratha. To us, this is nothing but a plain chapatti and paratha is a misnomer for this food product supplied by the applicant. As such we do not find any difficulty in classifying the product as plain chapatti covered by entry 99A of notification no. of 34/2017 - all the products contain similar/ same ingredients, manufacturing process and all the products are used as staple food item in meal we find no difficulty to arrive at a conclusion that the products are covered by entry no. 99A of notification no. 34/2017. Whether Leavened Flatbreads be treated as ‘as ‘bread’ as mentioned under Entry No. 97 or as Pizza Bread as mentioned under Entry No. 99 of Schedule or as Malt extract, food preparations of flour, groats, meal, starch or malt extract or under any other schedule? - Held that:- As per Webster dictionary the term bread has been defined as a usually baked and leavened food made of a mixture whose basic constituent is flour or meal - Pita is a yeast leavened round flatbread baked from wheat flour, sometimes with a pocket. From the ingredients and the manufacturing chart, we find that applicant uses similar/ sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread] - the impugned the product “Pancakes” is covered under the chapter heading 19059010 under the entry 16 of schedule Ill of GST ACT and liable to tax at appropriate rate. Whether Pizza Base supplied be treated as ‘Pizza Bread’ as mentioned under Entry No. 99 of Schedule / of Rate Notifications or under any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit? - Held that:- The products are manufactured by the Applicant i.e. pizza base using various ingredients including flour, water, sugar, salt, baking powder, yeast, oil etc. After raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. As per entry number 99 of Schedule I to the Central Rate Notifications, the product description is ‘pizza bread’ - The Pizza base is required for manufacture of Pizza. It is not used for any other purpose. The manufacturing process and ingredients are different than bread, chapatti or Roti. It would not be covered under Entry 97 of Rate N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/2017-CentraI Tax (Rate), dated 28 June 2017 and Notification Number 1/2017-State Tax (Rate) No. MGST 1017/C.R. 104/Taxation-1, dated 29 June 2017 (collectively referred to as the Rate Notifications ) if not, whether on facts and circumstances of the case, the Unleavened Flatbreads be classified: (i) as bread as mentioned under Entry No. 97 of Notification Number 02 Number 2/2017- Integrated Tax (Rate), dated 28 June 2017, Notification Number 2/2017-Central Tax (Rate), dated 28 June 2017 and Notification Number 2/2017-State Tax (Rate) No. MGST1017/ C.R. 103(1)/Taxation-1, dated 29 June 2017 (collectively referred to as the Exemption Notifications); or (ii) as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included [other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers wares of heading 1905]on a totally defatted basis not elsewhere specified or included (other than preparations for infants or young children, put up for retail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion; or (ii) Any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit 4. Whether on facts and circumstances of the case, Pancakes supplied be treated as All Goods i.e. Waffles and wafers other than coated with chocolate or containing chocolate; biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread) as mentioned under Entry No. 16 of Schedule III of Rate Notifications, If not whether on facts and circumstances of the case, the Pancakes be classified any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit 5. Whether on facts and circumstances of the case, Pizza Base supplied be treated as Pizza Bread as mentioned under Entry No. 99 of Schedule / of Rate Notifications. If not, whether on facts and circumstances of the case, the Pizza Base be classified any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit At the outset, we would like to make it clear that the provisions of both the CGST Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ads. The baking processes the Applicant uses follow the same basic steps as traditional baking processes used for thousands of years. 1.7. The products are manufactured by the Applicant using various ingredients including atta, maida, water, palmolein oil, salt, sugar, baking powder, wheat gluten etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the bread is packed, the packet is labelled and subsequently stored and transported at -18 Degree Celsius temperature or transported ambient. We have attached herewith the manufacturing process flow as Exhibit 1. Leavened Flatbread information ( Bread Products ) 1.8. The Applicant has been engaged in manufacturing and supplying leavened flatbreads including Naan, Kulcha and variants of these type of leavened breads referred to internationally in different countries as Pitta bread, Chalupa, Corn bread, Leavened Flatbreads and Unfolded Leavened FIatbread. 1.9. While manufacturing these leavened flatbreads, the Applicant uses various raw materials such as maida, tandoori atta, atta, water, rice flour, oil, yeast, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yrup, oil etc. Upon raw material intake, the ingredients go through various processes including mixing, dough dividing, baking on a hot plate on both sides and cooling. After the cooling process, the pancake is packed and labelled and subsequently stored and transported at - 18 Degree Celsius temperature. These products are similar to cakes included in entry number 16 of Schedule III to the Rate Notifications. We have attached herewith the manufacturing process flow as Exhibit 1. Pizza bread information 1.17. The Applicant manufactures and supplies Pizza bread which is also called Pizza base. The products are manufactured by the Applicant using various ingredients including flour, water, sugar, salt, baking powder, yeast, oil etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the pizza bread is packed and labelled and subsequently stored and transported at- 18 Degree Celsius temperature. We have attached herewith the manufacturing process flow as Exhibit I. Questions before AAR 2.1. The Applicant has approached the Hon ble authority to determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers to present the application before this Hon ble Authority on the following, among other grounds, each of which is taken in separately and without prejudice to the others. 1. Applicants interpretation of law or facts with regards to Question No. 1 Whether on facts and circumstances of the case, the Unleavened Flatbreads be treated as Khakra, plain chapatti or roti under Entry No. 99 A of Schedule I of Notification 01/2017-lntegrated Tax (Rate) dated 28 June 2017, Notification Number 1/2017-CentraI Tax (Rate), dated 28 June 2017 and Notification Number 1/2017-state Tax (Rate) No. MGST1017/ C.R. 104/Taxation-1, dated 29 June 2017 (collectively referred to as the Rate Notifications ) If not, whether on facts and circumstances of the case, the Flatbreads be classified: (i) as bread as mentioned under Entry No. 97 of Notification Number 02 Number 2/2017 Integrated Tax (Rate), dated 28 June 2017, Notification Number 2/2017-Central Tax (Rate), dated 28 June 2017 and Notification Number 2/2017-State Tax (Rate) No. MGST10171 C.R. 103(1)/Taxation-1, dated 29 June 2017 (collectively referred to as the Exemption Notifications ); or (ii) as Malt extract, food pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm Kharkhra, Plain Chapatti or Roti would need to be understood as known in common parlance. Meaning of the term Khakhra, Plain Chapatti or Roti 1.4. Given the fact that the terminology Khakhra, Plain Chapatti or Roti are region specific terms, the dictionary meaning of the same is not available. Thus, we would need to refer to Wikipedial to understand the meaning of the same. (i) Khakhra: a thin cracker, made from mat bean, wheat flour and oil . (ii) Plain Chapatti: an unleavened flatbread, made from whole of flour known as atta salt and water (iii) Roti: a flatbread made from stone ground whole meal flour, traditionally known as atta 1.5. In this regard, we wish to submit that the Applicant follows similar processes while manufacturing unleavened flatbreads. The products are manufactured by the Applicant using various ingredients including atta, maida, water, palmolein oil, salt, sugar, baking powder, wheat gluten etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling, After the cooling process, the unleavened flatbread is packed and labelled and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e test. These are; No meaning has been attributed in the statute There is an open market for such goods The above position has been succinctly encapsulated by the Hon ble Bombay High Court in the case of Pharm Aromatic Chemicals v MCGM (1997 (95) ELT 203 Bom) = 1994 (2) TMI 320 - BOMBAY HIGH COURT . The Bombay High Court commented: Various principles or tests have been evolved by the Supreme Court from time to time for interpretation of items of taxable goods. One of the well-known principles of interpretation is that words of everyday use must be construed not in the scientific or technical sense but as understood in the common parlance 1.10. Another test akin to the common parlance test is the commercial parlance test . According to this test, items in taxing statutes should be judged and analysed on the basis of how these expressions are used in the trade or industry or in the market or, in other words how these are dealt with by the people who deal in them. Though the common parlance or commercial parlance tests are the generally accepted tests, various other tests have been evolved from time to time to interpret items of taxing statutes. One of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain goods may be put to certain uses by different persons. That, however, should not entitle the revenue to apply different rates of tax to the sales of same goods by different persons depending upon the use to which they will be put by the purchasers. Basis the above observations, it is humbly submitted that the word Plain Chapatti or Roti should be interpreted in light of the end-use made by consumers. 1.16. It is, humbly submitted that people use plain chapatti, roti or variants of these type of unleavened flatbreads as the staple underlying carrier in one s meal. It is usually accompanied by protein or vegetables and sauce. 1.17. In the light of above mentioned discussion and given the fact that the Applicant uses similar ingredients and processes as those used for manufacturing Chapatti or Roti, the Applicant strongly believes that the range of unleavened flatbreads manufactured and supplied by them should be classified as Plain Chapatti or Roti and should accordingly be levied to GST. 1.18. Without prejudice to the above mentioned submission, in case the unleavened flatbreads manufactured by the Applicant does not qualify as Plain Chapatti or Roti within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpretation of law 2.1. The Department of Revenue, Ministry of Finance, has issued a notification number 02/2017-CentraI Tax (Rate) dated 28 June 2017 providing exemptions on intra-state supplies of the description of which is specified in the schedule appended to the said notification from the whole of the central tax leviable thereon under the section 9 of Central Goods and Service Tax Act, 2017 (12 of 2017). Similar notifications have been issued under Integrated Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017. 2.2. The Schedule Entry No. 97 of the above mentioned notification provides the exemption on supply of Bread (branded or otherwise), except when served for consumption and pizza bread classifiable under Chapter Harmonized System of Nomenclature (HSN) 1905. The said notification does not define the term bread and pizza bread . However, it has mentioned that the 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). Reference to Customs Tariff Act, 1975 (51 of 1975) It is now pertinen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the common parlance. This position has been upheld by the Hon ble Supreme Court in the case of M/s. United Offset Process Pvt. Ltd. V ACC, Bombay Ors. (1989 Supp.(1) SCC 131] = 1988 (10) TMI 39 - SUPREME COURT OF INDIA . The Apex Court commented: If there is no meaning attributed to the expressions used in the particular enacted statute then the items in the customs entries should be judged and analysed on the basis of how these expressions are used in the trade or industry or in the market or, in other words, how these are dealt with by the people who deal in them, provided that there is a market for these types of goods. This principle is well known as classification on the basis of trade parlance. This is an accepted form of construction. It is a well-known principle that if the definition of a particular expression is not given, it must be understood in its popular or common sense viz. in the sense how that expression is used everyday by those who use or deal with those goods. The copy of the judgment is attached as Exhibit 4. 2.9. The Apex Court has laid down as to when the common parlance test can be used. It has provided that the following conditions need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submit that these leavened flatbreads are generally being used in various regions across the country and are regularly referred to it as bread. Thus, the commercial name for these leavened flatbreads may vary depending upon region where the supply is intended. 2.14. On the basis of the above discussion, it is humbly submitted that the above mentioned food items manufactured and supplied by the Applicant are known as bread in commercial parlance as well. Thus, the same should be exempted from GST. Leavened flatbreads not served for consumption 2.15. The Schedule Entry No. 97 of Exemption Notification refer to the breads (branded or otherwise) except when served for consumption. Further, the meaning of the word served for consumption is not defined anywhere including under Customs Tariff Act, 1975. Hence, in this case also, one has to place reliance on the common parlance to understand the said phrase. 2.16. The phrase Served for consumption in common parlance indicates served in hotels, restaurants, eating houses and meant for immediate consumption. In this regard, the Applicant wishes to submit the fact that it does not serve any of its leavened flatbreads f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lassification under below mentioned entry considering the facts and circumstances of the case (i) Entry No. 99 of Schedule of Rate Notification, which stands for Pizza Bread; or (ii) Entry No. 13 of Schedule Ill of Rate Notification, which stands for Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers wares of heading 1905]on a totally defatted basis not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers wares of heading 1905); or (iii) Any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit. Applicants interpretation of facts or law with regards to Question No. 3 Whether on facts and circumstances of the case, Corn Chips, Corn Taco and Corn Taco Strips supplied be treated as Wafers under Entry No. 16 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to the phrase Waffles and Wafers in the chapter notes, heading notes etc. Dictionary meaning of the term Wafers 3.4 The Webster Dictionary has defined the term wafers as a thin crisp cracker. In this regard, we wish to draw your kind attention towards the Exhibit 1 wherein we have provided additional information on the manufacturing process for Corn Chips, Corn Taco and Corn Taco Strips. The products are manufactured by the Applicant using various ingredients including masa flour, water, small quantities of cellulose gum, citric acid, guar gum etc. Upon raw material intake, the ingredients go through various processes including mixing, dough dividing, baking and cooling. After the cooling process, the products are packed and labelled and subsequently stored and transported at -18 Degree Celsius temperature. 3.5 In case of supply of Corn Chips, Corn Taco and Corn Taco Strips, we wish to bring to your kind attention that the process of making such products involves both baking as well as the use of masa flour, water, small quantities of cellulose gum, citric acid, guar gum etc. Further, customers in the foodservice channel and, in some cases, the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aco and Corn Taco Strips are normally sold in the section dealing with wafers and such snacks. 3.13 In the light of the above grounds, wafers would include products such as Corn Chips, Corn Taco and Corn Taco Strips. End-user test 3.14 As discussed in the foregoing paragraphs, the user test can be used to determine the appropriate classification of a product. 3.15 The use of wafers is as an snack. It is generally enjoyed by consumers as a tasty interlude between meals. Corn Chips, Corn Taco and Corn Taco Strips are similarly used as snacks that can be enjoyed in between meals. 3.16 It is also worthwhile noting that these products are on sale on online platforms in the same category that wafers like Lays, Kurkure etc. are sold. Hence, it can be inferred that users perceive such products as Wafers and consume them in the same fashion as they consume any other wafers. 3.17 Hence, it is humbly submitted that even on the basis of the end-use based test, Corn Chips, Corn Taco and Corn Taco Strips products manufactured by the Applicant should be classified as wafers under Chapter 1905 32 90 subject to GST accordingly. Contextual interpretation 3.18 Snacks s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Pancake should get classified under the entry number 16 of Schedule III of the Rate Notifications which stands for All goods ie. Waffles and Wafers other than coated with coated with chocolate or containing chocolate; biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread). 4.2 The term cake has not been defined in the Rate Notification. However, it is mentioned that the tariff item, sub-heading, heading and chapter shall mean respectively a tariff item, subheading, heading and chapter as specified in the first schedule to the Customs Tariff Act, 1975 (51 of 1 975) Reference to Customs Tariff Act 1975 51 of 1975 It is now pertinent to understand the clarification as provided under the Customs Tariff Act, 1975 to understand the meaning of the term Pancake. However, the said term has not been defined anywhere in Customs Tariff Act, 1975. Thus, it is necessary to refer to meaning of Pancake as known in common parlance as the said term is not defined under Customs Tariff Act, 1975. Dictionary meaning of term Pancakes 4.4 In this connection, we re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should get classified under the entry number 99 of Schedule / of the Rate Notifications 5.2 The term Pizza Bread has not been defined in the Rate Notification. However, it is mentioned that the 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). 5.3 The products are manufactured by the Applicant using various ingredients including flour, water, sugar, salt, baking powder, yeast, vegetable oil etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the pizza bread is packed and labelled and subsequently stored and transported at -18 Degree Celsius temperature. Reference to Customs Tariff Act, 1975 (51 of 1975) 5.4 It is now pertinent to understand the clarification as provided under the Customs Tariff Act, 1975 to understand the meaning of the term pizza bread. However, the said term has not been defined anywhere in Customs Tariff Act, 1975. Thus, it is necessary to refer to meaning of pizza bread as known in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Water 2. Atta 3. Glycerine 3. Water 4. Wheat Gluten 4. Vanaspati Ghee 5. Salt 5. Palmolein Oil 6. Sugar 6. Glycerine 7. Yeast 7. L-Cysteine HCI 8. Baking Powder 8. Salt 9. Kalonji Seed 9. Powerflex 10. Hydroxypropyl Methyl Cellulose 10. Dimodaan 11. Ultrasoft 11. Sugar 12. Calcium Propionate 12. Sodium Acid Pyro Phosphate 13. Kalonaji Oil 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rice Flour 5. Salt 5. TBBI 6. Dimodaan Hp-1 6. Yeast 7. Sugar 7. Salt 8. Baking Powder 8. Sugar 9. Gluten List of Ingredients Pizza Bread Corn Chips S. No. Ingredients S. No. Ingredients 1. Maida 1. Masa flour Water 2. Water 2. Water 3. Glycerine 3. Cal.Prop 4. Wheat Gluten 4. Citric Acid 5. Salt 5. Cellulose Gum 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. Flour treatment agent 14. Detam List of Ingredients Leavened Flatbread-Pita Bread Corn Taco S. No. Ingredients S. No. Ingredients 1. Tandoori Atta 1. Masa flour 2. Atta 2. Water 3. Water 3. Cal. Prop 4. Wheat Gluten 4. Citric Acid 5. Salt 5. Cellulose Gum 6. Yeast 6. Guar Gum Leavened Flatbread-Chalupa Leavened Flatbread-Kulcha S. No. Ingredients S. No. Ingredients 1. Maida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raw Material Storage Premixing and sieving Mixing Oven Bake Online Cooling @ 24C Online inspection Stacking Packaging Metal Detection CCP Spiral blast Freezing @ -30 to 35 C Packaging Collection to pellets Finished Goods Storage-Cold Room @ -18 C Dispatch Additional submission to Advance Ruling application submitted by applicant on 23 May 2018 We, Signature International Foods India Private Limited (the Applicant or Company ) a private limited company incorporated under the provisions of the Companies Act, 1956 holding GST registration number 27AACCH2133E1Z3, have filed an advance ruling application on 23 May 2018 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onclusion with respect to the classification of the bakery products under consideration. After reviewing the letter issued by the learned Nodal Officer, we have observed that their interpretation on the classification of bakery products such as Wafer Product, Pancakes and Pizza Bread are in consensus with the Applicant. However, the Applicant has different views to the opinions expressed by the learned ----------------------------------------------------- Nodal Officer on the classification of some namely, Paratha, Paratha Rolls, Roti Rolls and all variants of leavened flatbreads. We have further observed that the learned Nodal Officer has not provided views on some variants of unleavened flatbreads included in the application of advance ruling such as Tortilla, Tortilla Wraps, Wraps, Paratha Wraps and other variants of leavened flatbreads such as leavened flatbreads and unfolded leavened flatbreads. Without prejudice to submissions made in the advance ruling application, the Applicant wishes to make an additional submission providing a responses to the views provided by the learned Nodal Officer on variants of unleavened flatbreads and all types of leavened flatbrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atha Rolls, Tortilla Wraps, Tortilla, Wraps, Paratha Wraps are the same or similar to Plain Chapatti or Roti. 1.5 At this juncture, it is also important to note the ruling of the Apex Court of India in the case of M/s. O K Play (India) Limited V. Commissioner of Central Excise, Delhi-III, Gurgaon = 2005 (2) TMI 114 - SUPREME COURT OF INDIA wherein it was mentioned that it is important to bear in mind that functional utility, design, shape and predominant usage have also got to be taken into account while determining the classification of an item . These aid and assistance of the Apex Court of India would be more important than the names used in the trade or common parlance in the context of Classification. A copy of the same is enclosed as Annexure 2. The size, shape and weight of the unleavened flatbreads produced by the Company are the same or similar and the predominant usage or function of the unleavened flatbreads is as an underlying carrier in one s meal. 1.6 Additionally, the learned Nodal Officer has mentioned that common man cannot say Paratha or Roti Rolls as plain Roti, Roti. In this regard, we wish to submit that the learned Nodal Officer has applied nomen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lieves that the same shall be classified as Plain Chapatti or Roti under Entry No, 99A of Rate Notification. Manufacturing process Test 5. The learned Nodal Officer has further mentioned that the manufacturing process of unleavened flatbreads such as Roti Rolls, Paratha and Paratha Rolls are different than Plain Roti or Roti. In this regard, we wish to mention that the Applicant has already submitted manufacturing flow charts in respect of all variants of unleavened flatbread in its original application. 6. The range of unleavened flatbreads manufactured by the Company, including Roti, Roti Rolls, Paratha, Tortilla, Tortilla Wraps and Wraps are produced on the same production line using the same or similar production methods and processes. The flow chart included in the original application shows that the Applicant follows the same or similar processes for all variants of unleavened flatbreads. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the unleavened flatbread is packed and labelled and subsequently stored and transported at -18 Degree Celsius tempe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17-Central Tax (Rate), dated 28 June 2017 and Notification Number 2/2017-State Tax (Rate) No. MGST 1017/C.R. (103)(1)/Taxation-1, dated 29 June 2017 (collectively referred to as the Exemption Notifications ),it was further mentioned that: food products like Naan, Pita Bread, Kulcha. Leavened Bread can be sewed for consumption. These food products are ready for consumption They are not raw or unfinished form. Ready to serve foods should be construed as a food which is ready to eat. The Schedule Entry No. 97 refers to bread except when served for immediate consumption. However, it is clear that ready to serve means ready to eat . There is no distinction between them Food is not necessarily served only in Hotel. Food is also served at home. Hence, dealers contention regarding served for immediate consumption is misinterpretation of the term 2.3. Basis the review of the submissions of learned Nodal Officer, we wish to submit that the learned Nodal Officer has made classification on the basis of: a. Common Parlance Test; b. Ingredient Test; and c. Manufacturing process Test. 2.4. At the outset, we wish to reiterate our submissions made in the application for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied as Bread within the meaning of Entry No. 97 of Exemption Notification. Leavened Flatbread - Naan 2.9. The learned Nodal Officer has further mentioned that Naan cannot fall under Entry No. 97 of Exemption Notification as it is commonly used as Roti in South Asia region. By applying common parlance test, common man cannot say Naan as a bread. It is used as a Roti, eaten with curry in South Asia. So, in my opinion Naan cannot be held as leavened flatbread and treated as exempted product. In my opinion the food products ie. Naan would be covered under residual entry and taxable at 9% in CGST and MGST . 2.10. In this connection, we wish to highlight the fact that the learned Nodal Officer has not considered manufacturing process test and ingredient test while determining classification of Naan, as made applicable for some variants of unleavened flatbreads. 2.11. In fact, it shall be observed that they have given utmost importance to the End User Test while determining the classification of Naan. The Applicant believes that the customer and end consumer considers naan to be a bread. This point is strongly supported by the fact that naan is included under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factured and supplied by the Applicant. 2.17. Moreover, the Applicant has discharged GST liability for leavened flatbread to the extent of 2.5% of CGST and MGST on a conservative basis. Leavened flatbreads not served for immediate consumption 2.18. While denying the exemption under Entry No. 97 of Exemption Notification, it was further mentioned that food products like Naan, Pita Bread, Kulcha, Leavened Bread can be served for consumption. These food products are ready for consumption. They are not raw or unfinished form. Ready to serve foods should be construed as a food which is ready to eat. The Schedule Entry No. 97 refers to bread except when served for immediate consumption. However, it is clear that ready to serve means ready to eat . There is no distinction between them. Food is not necessarily served only in Hotel. Food is also served at home. Hence, dealers contention regarding served for immediate consumption is misinterpretation of the term . 2.19. In this connection, we wish to reiterate our submissions made in the application of advance ruling from Para 2.15 till 2.19 in Annexure III wherein we have discussed in detail about the fact that the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st: In the light of above additional submissions, we wish to put forth our contentions below: Classification of products as per submissions made in the application of advance ruling Treat this submissions as the statement of responses to the submissions made by the learned Nodal Officer In case classification of leavened flatbread is not acceptable to your office, request you to consider the request of treating it as Pizza Bread after giving due regard to the manufacturing test and ingredient test. Should your office require any additional information / documentation in order to enable your office to arrive at a final conclusion, we shall be glad to furnish the same, 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- It is submitted that, Issue on which advance ruling is required: M/s. Signature International Foods India Pvt. Ltd. is the company engaged in the business of trading and exporting bakery product including flat breads. The dealer has been engaged in manufacturing and supplying of the unleavened flat breads, which include plain chappati, Roti, Paratha Wraps, Tortilla wraps, wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are filled with various ingredients such as chicken, pork, chopped onion, etc. So in view of the manufacturing process and type of ingredient used in it so the Chalupa could not fall under entry No.97. It would be covered under residuary entry and taxable at 9% in CGST and MGST Act. Naan-- A typical Naan recipe involves mixing white flour with salt, a yeast culture and enough yogurt to make smooth, elastic enough. The dough is kneaded for few minutes. Then dough is divided into balls which are flattered and cooked. The Naan can be said to be a Leavened Bread as that are made from natural leavened like yeast, yogurt and butter milk. So this product Naan can t fall under entry 97 as it is commonly used as Roti in South Asia region. By applying common parlance test to this product, common man can t say Naan as a bread. It is used as a Roti, eaten with curry in South East Asia. So in my opinion Naan cannot be held as leavened bread and treated as exempted product. In my opinion the food products i.e. Naan would be covered under residuary entry and taxable at 9% in CGST and MGST. Pita bread and Kulcha - Pita bread Kulcha are leavened bread. But dealer himself appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99 (A) 2.5% CGST 2.5% MGST ii) Paratha, Paratha Rolls, Roti Rolls Residual 9% CGST 9% MGST 2. Leavened Flat breads Residual 9% CGST 9% MGST i) Naan, ii) Chalupa, iii) Pita Bread iv) Kulcha 3. Corn chips, Corn Taco, Corn Taco Strips Entry No. 16 Schedule III 9% CGST 9% MGST 4. Pancake Entry No. 16 Schedule III 9% CGST 9% MGST 5. Pizza Bread Entry No. 99 Schedule I 2.5% CGST 2.5% MGST Additional submissions made by concern officer on 25.07.2018 The dealer has been engaged in manufacturing and supplying of the unleavened flat breads, which include plain chappati, Roti, Paratha Wraps, Tortilla wraps, wraps, Roti Rolls. The dealer also trader in manufacturing of bread products, Pancake, Pizza Bread, wafers, corn chips, corn taco, corn taco strips. The dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Opinion of Jurisdiction Officer In Leavened flat breads such as Naan, Chalupa, Pita bread, Kulcha, unfold leavened flat breads are also manufactured sold by the dealer. A) Chalupa - A chalupa is speciality of south central Mexico. Traditional Chalupas are small, thick, boat shaped fried masa (maize) topped only with red salra(salad), green salra, chopped onion, cheese and shredded chicken. These are filled with various ingredients such as chicken, pork, chopped onion, etc. So in view of the manufacturing process and type of ingredient used in it, the Chalupa could not fall under Entry no-97 of Exemption notification. It cannot be classified as a bread. In my opinion this chalupa would be covered under Schedule- Ill entry no,453 i.e. residuary entry and taxable at 9% in CGST and MGST. B) Naan - A typical Naan recipe involves mixing wheat flour with salt, a yeast culture and enough yogurt to make smooth, elastic enough. The dough is kneaded for few minutes. Then dough is divided into balls which are flattered and cooked. So this product Naan can t fall under entry no.97 of Exemption notification as it is commonly used as roti in South ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dispatch in frozen vehicle @.18 0 Opinion of Jurisdiction Officer- Dealer has rightly classified these products. In my opinion the food product like corn chips, Corn Taco Corn Taco strips also fall under chapter heading 1905, Entry No. 16 schedule III having tax rate @9% CGST SGST. IV. Pancake - Applicant s interpretation- Dealer has classified Pancake as a cake which is commonly known to everyone and treated the same under Entry no. 16 of Schedule-III of CGST Act. Manufacturing process- (Pan cake) Mixing (Wheat flour+ water+ sugar+ salt+ sodium bicarbonate+ sodium acid pyrophosphate+ citric acid+ calcium propionate+ milk+ sunflower oil+ golden syrup + vanilla flavour + whey powder+ detam) Baking in oven Online cooling @ 24 o c Online inspection (sorting) Metal detection Spiral blast freezing @-30 to 35c Packaging Collation to pallets Finished goods storage @ -18 C Dispatch in frozen vehicle@-18 C Opinion of Jurisdiction Officer-- Pancake is flat cake, thin round prepared from starch bared butter that contains eggs, milk, butter. Pancake are known as ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dra, C.A. and Sh. Ramesh Warungare, Finance Head appeared made oral and written submissions. Jurisdictional Officer Sh. M. R. Shinde, Asstt. Commissioner of State Tax (NAS-VAT-D-009) Nasik appeared and made written submissions. 05. OBSERVATIONS We have perused the records on file and gone through the facts of the case and the submissions made by the applicant and the department. We find that:- 1. The Applicant, a private limited company, holding the GST registration number (GSTIN ) 27AACCH2133E1Z3 with effect from 01 July 2017, is located in Nashik, Maharashtra. The company is engaged in the business of, inter alia, manufacturing, trading and exporting bakery products which includes flatbreads. The Applicant supplies products to customers and distributors in India and in overseas markets including the Middle East, South East Asia, Africa and Australia. Applicant supplies two types of flatbreads like Unleavened and leavened flatbreads to retailers, canteens, airlines, hotels, hospitals, schools, restaurants, wholesalers, distributors and other food service operators located in India and overseas. The details of manufacturing process and ingredients required are in shor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , salt, milk, syrup, oil etc. Upon raw material intake, the ingredients go through various processes including mixing, dough dividing, baking on a hot plate on both sides and cooling. After the cooling process, the pancake is packed and labelled and subsequently stored and transported at - 18 Degree Celsius temperature. These products are similar to cakes included in entry number 16 of Schedule III to the Rate Notifications. E) Pizza bread includes -- Pizza bread which is also called Pizza base. The products are manufactured by the Applicant using various ingredients including flour, water, sugar, salt, baking powder, yeast, oil etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the pizza bread is packed and labelled and subsequently stored and transported at - 18 Degree Celsius temperature. Applicant has approached this authority and has raised questions as above with a request to classify the products. The Central Point of discussion in this application is the applicability of entry No.99A of Schedule to the Notification No. 1/2017 - IGST Act dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al hearing applicant was instructed to provide products, detailed list of ingredients, manufacturing process chart, purchase order, invoice etc. Applicant has submitted all those details. We have gone through the details as above and we find that the ingredients used to manufacture these products, the manufacturing process chart, the packaging and the storage of the products are substantially same. We find that the various ingredients used for manufacturing which are common and forming more than 80% by weight are Atta, Maida and water. The other ingredients are palmoleine oil, salt, sugar, backing powder, wheat butane etc. By resorting to this fact, applicant has laid much stress that these products are covered by the scope entry No.99A and squarely covered by the description khakara plane chapatti or roti vide notification no. 34/2017 dated 13/10/2017. Per contra the concerned officer for Revenue submitted that so far as Indian food stuffs like roti, plain roti are concerned it can be classified under Tariff heading 2016 and thus are covered under entry 99A and should be taxed @ 2.5% each under CGST and SGST Act. However, with respect to food stuffs such as paratha, paratha w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25/07/2018 submitted that in view of common parlance test food stuffs like paratha, paratha rolls, roti rolls, can be identified as plain roti or roti and thus opined that these food products would be covered under entry99A and taxable @2.5% each. We find that the food product paratha as is available in hotels and restaurants is plain, folded or stuffed. By applying the common parlance test we understand paratha as different and distinct food commodity from roti, chapatti etc. The product before us is examined from this view point. The product is plain like a chapatti and unstuffed like Gobhi paratha, Laccha paratha. To us, this is nothing but a plain chapatti and paratha is a misnomer for this food product supplied by the applicant. As such we do not find any difficulty in classifying the product as plain chapatti covered by entry 99A of notification no. of 34/2017. In the light of above discussion and for the given facts that all the products contain similar/ same ingredients, manufacturing process and all the products are used as staple food item in meal we find no difficulty to arrive at a conclusion that the products are covered by entry no. 99A of notification no. 34/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a wide variety of flatbreads and crepes which are an integral part of Indian cuisine. Definition of naan (COLLINS ENGLISH DICTIONARY) Naan or naan bread is a type of bread that comes in a large, round, flat piece and is usually eaten with Indian food. Source: Wikipedia Naan is a leavened oven-baked flatbread found in the cuisines mainly of Middle East, Central Asia and Indian subcontinent . MERRIAM WEBSTER DICTIONARY : a round flat leavened bread especially of the Indian subcontinent THE FREE DICTIONARY BY FARLEX: A flat, leavened bread of northwest India, made of wheat flour and baked in a tandoor. Source: Wikipedia KULCHA: Kulcha is a type of mildly leavened flatbread that originated in the Indian subcontinent. It is a Punjabi variation of naan. Recipe Kulcha is made from maida flour, water, a pinch of salt and a leavening agent (yeast or old kulcha dough), mixed together by hand to make a very tight dough. In order to classify the products under a fiscal statue and in the absence of any such definition we are of the opinion that it would be a normal understanding thereof that would govern the classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this we agree with the contention of the officer that by applying common parlance test, common man would not say Naan or Kulcha as a bread. Since we do not find any specific entry for products mentioned in this question and their variants they would be covered under entry no 453 of schedule III of the notification. In spite of ours above finding we agree with the contention of the applicant with regard to exception provided entry no.97 of exemption notification when served for immediate consumption means served for immediate consumption. We also agree with the applicant that the product does not use chicken, pork chopped onion etc. while manufacturing or supplying these products. Now we turn to another product - CHALUPA : MERRIAM WEBSTER DICTIONARY Definition of chalupa a fried corn tortilla sometimes shaped like a boat and usually filled with a savory mixture(as of meat, vegetables, or cheese) OXFORD ENGLISH LIVING DICTIONARY: A fried tortilla in the shape of a boat, with a spicy filling Source: Wikipedia CHALUPA : A chalupa (Spanish pronunciation: is a specialty of south-central Mexico, including the states of Puebla, Guerrero, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per definition and meaning given above Pita is a yeast leavened round flatbread baked from wheat flour, sometimes with a pocket. From the ingredients and the manufacturing chart, we find that applicant uses similar/ same ingredients and same manufacturing process as that of bread. The Hon. Bombay High Court in case Commissioner of Sales Tax Vs Aggarwal and Co. (1983 (12) ELT 116) = 1982 (11) TMI 159 - BOMBAY HIGH COURT held that a general term used for any commodity in a fiscal statute covers that commodity in all its forms. As there is no difference in the conventional bread and pita bread with respect to ingredients and manufacturing process, we hold that Pitta bread would squarely fall under entry 97 of the exemption notification. Que: 3. Whether on facts and circumstances of the case, Corn Chips, Corn Taco and Corn Taco Strips supplied be treated as wafer under Entry No. 16 of Schedule III of Rate Notifications If the same is not classifiable as wafer , whether on facts and circumstances of the case, the Corn Chips, Corn Taco and Corn Taco Strips be classified. (i) as Malt ex-tract, food preparations of flour, groats, meal, starch or malt extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in Custom Tariff Entire Customs Tariff Heading with sub Heading and Tariff Item 1 2 3 4 5 16. 1905 Pastry, cakes, biscuits and other bakers wares, whether or not containing cocoa; communion wafers, empty cachets of a kind suitable for pharmaceutic al use, sealing wafers, rice paper and similar products[other than pizza bread, khakhra, plain chapatti or roti, bread, rusks, toasted bread and similar toasted products BREAD, PASTRY, CAKES, BISCUITS AND OTHER BAKERS WARES, WHETHER OR NOT CONTAINING COCOA; COMMUNION WAFERS, EMPTY CACHETS OF KIND SUITABLE FOR PHARMACEU TICAL USE, SEALING WAFERS, RICE PAPER AND SIMILAR PRODUCTS 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 19051000 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . And therefore these products would be classifiable under chapter 1905 3290 and liable to tax at @ 9% each under CGST and SGST Act. Que 4: Whether on facts and circumstances of the case, Pancakes supplied be treated as All Goods i.e. Waffles and wafers other than coated with chocolate or containing chocolate; biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread) as mentioned under Entry No. 16 of Schedule III of Rate Notifications. If not, whether on facts and circumstances of the case, the Pancakes be classified in any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit Pan cakes: This term is also not defined under the act and therefore we refer to Wikipedia which defines the term as below: Pancakes , is a flat cake, often thin and round, prepared from a starch-based batter that may contain milk baked on a hot surface such as a griddle or frying pan. The pancakes are manufactured by using ingredients like wheat flour, water, sugar, salt, milk, syrup, oil etc. Similarly we find that cake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that, the impugned product Pizza base IS covered under entry 99 of schedule I of GST Act and would be liable to tax rate at appropriate rate. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) No. GST-ARA-26/2018-19/B-91 Mumbai, dt. 20.08.2018 Question 1:- Whether on facts and circumstances of the case, the Unleavened Flatbreads be treated as Khakra, plain chapatti or roti under Entry No. 99 A of Schedule / of Notification No. 01/2017-lntegrated Tax (Rate) dated 28 June 2017, Notification Number 1/2017-Central Tax (Rate), dated 28 June 2017 and Notification Number 1/2017-State Tax (Rate) No. MGST1017/ C.R. 104/Taxation-1, dated 29 June 2017 (collectively referred to as the Rate Notifications ) If not, whether on facts and circumstances of the case, the Unleavened Flatbreads be classified: (i) as bread as mentioned under Entry No. 97 of Notification Number 02 Number 2/2017-Integrated Tax (Rate), dated 28 June 2017, Notification Number 2/2017-CentraI Tax (Rate), dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks fit Answer :- The product Leavened Flatbreads stated in application such as Naan, Kulcha and Chalupa are not covered by the expression bread as mentioned under Entry No. 97 of Exemption Notifications but they would be covered under residual entry 453 of schedule Ill of GST ACT and they would be liable for taxes @ 18 %( 9% CGST and 9% MGST ). However Pita Bread is covered by the expression bread as mentioned under Entry No. 97 of Exemption Notifications. Question 3:- Whether on facts and circumstances of the case, Corn Chips, Corn Taco Corn, Taco Strips supplied be treated as wafer under Entry No. 16 of Schedule III of Rate Notifications If the same is not classifiable as wafer , whether on facts and circumstances of the case, the Corn Chips, Corn Taco and Corn Taco Strips be classified (i) as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers wares of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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