TMI Blog2019 (10) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... 9000 which is related to the products having constituents of natural milk, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included - In the instant case, the Flavoured Milk is made out of milk (pasteurized / standardized) added with sugar, colour and flavour Therefore predominant part of the product is milk and naturally contain the constituents of natural milk. The said heading does not cover flavoured products. The applicant has relied upon the description of FSSAI on Flavoured Milk . Though the said Act deals with food safety and standards, it contains, under Schedule-11, The Milk and Milk Products Order, 1992. in accordance to which, under Section 2(f) milk means milk of cow, buffalo, sheep, goat, or a mixture thereof either raw or processed in any manner and includes pasteurised, sterilized, recombined, flavoured, acidified, skimmed, toned, double toned, standardised or full cream milk - thus, Milk includes pasteurised, sterilized and flavoured milk. Therefore, the product of the applicant is covered under Milk . The flavoured milk is not a water based drink whereas the tariff heading 2202 deals with water based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oured milk shall be subject to heat treatment. c. Flavoured milk, if dried or concentrated, then dried or concentrated product on addition of prescribed amount of water shall give a product conforming to the requirements of Flavoured milk. d. The applicant states that as per Harmonised System of Nomenclature, Chapter 4 covers Diary products,- i. Milk (i.e. Full Cream Milk, and partially or completely skimmed milk) ii. Cream iii. Butter milk, Curdled milk and cream, yogurt, kephir and other fermented acidified milk and cream iv. Whey v. Products consisting of natural milk constituents, not elsewhere specified or included vi. Cheese and curd. e. The applicant also states that Chapter 4 does not cover,- i. Food preparations based on diary products ii. Products obtained from milk by replacing one of more of the natural constituents (eg. Butyric fat) by another substance (eg. oleic fats) iii. Ice creams and other edible ice iv. Medicaments v. Casein, milk albumin and hardened casein f. The applicant states that the composition of the Flavoured Milk, as per the test reports issued by Independent Laboratory Institu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diary products falling under Chapter 4 as per Chapter Note 22. the same cannot be classified under Chapter 22. 6. The applicant has cited the rules prescribed under the Customs Tariff Act, 1975 applicable for classification of the goods and stated that as per rule 1, one has to see the chapter notes for determining the classification. Chapter 4 specifically covers Diary produce, bird s eggs, natural honey, edible products of animal origin, not elsewhere specified or included. As per note 1 of Chapter 4, milk means full cream milk or partially or completely skimmed milk. The applicant again refers to the note 4 of the Chapter Notes. 6.1 The applicant states that flavoured milk is made up for milk added with sugar and permitted flavours. The reason for adding sugar and flavour is to improve the shelf life and increase the taste. The essential constituents of the milk have not changed even after adding sugar and permitted flavours and still retains its essential character of milk. The applicant hence feels that flavoured milk is required to be classified under Chapter 4 only. 6.2 The applicant states that National Diary Research Institute, Bangalore has also confirmed that f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant further states that Chapter 22 does not cover:- a. Liquid diary products of Chapter 4 b. Products of this Chapter prepared for culinary- purpose and thereby rendered unsuitable for consumption as beverages c. Medicaments of heading 30.03 or 30.04 d. Perfumery or toilet preparations. 8.2 The applicant states that they believe that flavoured milk could not fall under chapter 22 as liquid diary products of chapter 4 are specifically excluded from the purview of chapter 22 as per chapter note. 8.3 Tariff Item 2202 99 30 covers beverages containing milk . The applicant states that the term beverage is not defined in the GST Act. As per the dictionary meaning, beverage means a drink other than water . The term beverage is a wider term which covers everything right from fruit juices, alcohol, milk, soft drinks, etc. 8.4 As per rule 3(a) of the Customs Interpretation Rules, the heading which provides the most specific description shall be preferred to headings providing a more general description . In the instant case, heading for Chapter 22 is Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or fl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has held that mere addition of Vitamins A and D to the milk pasteurized, would not make the milk any less pasteurized milk and by such addition milk retains its natural characteristics. PERSONAL HEARING: / PROCEEDINGS HELD ON 29.04.2019. 12. Sri. Lokesh Reddy, Chartered Accountant and duly authorised representative of the applicant appeared for personal hearing proceedings held on 29.04.2019 reiterated the facts narrated in their application and also submitted copies of judgements that they intend to rely on. Further the applicant were requested to submit the process of manufacture of flavoured milk and normal milk. The applicant vide their letter dated 03.05.2019, submitted the flow charts related to the aforesaid manufacturing activity. 13. FINDINGS DISCUSSION: 13.1 We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by Sri. Lokesh Reddy, C.A. and authorised representative of the applicant during the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts. 13.2 At the outset, we would like to state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are reproduced below for ease of reference.- (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 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. Accordingly we make a reference to the Section Notes and Chapter Notes of the relevant Chapters of the Customs Tariff and also the corresponding Explanatory Notes. 13.6 Milk and Milk products are classified in Chapter 4 as under: Tariff Item Description of goods 0401 Milk and cream, not concentrated nor containing added sugar or other sweetening matter 0402 Milk and cream, concentrated or containing added sugar or other sweetening matter 0403 Buttermilk. Curdled milk and cream ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be examined is whether the instant product is specified or included elsewhere or not. 13.8 In this regard, we draw attention to The Food Safety and Standards Act, 2006 , as the applicant has relied upon the description of FSSAI on Flavoured Milk . Though the said Act deals with food safety and standards, it contains, under Schedule-11, The Milk and Milk Products Order, 1992. in accordance to which, under Section 2(f) milk means milk of cow, buffalo, sheep, goat, or a mixture thereof either raw or processed in any manner and includes pasteurised, sterilized, recombined, flavoured, acidified, skimmed, toned, double toned, standardised or full cream milk. It could be seen from above that Milk includes pasteurised, sterilized and flavoured milk. Therefore, the product of the applicant is covered under Milk . 13.9 Now we proceed to examine the alternate / competing entry under Chapter 22 under tariff heading 2202, which reads as under Tariff Item Description of goods 2202 Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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