TMI Blog2019 (11) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... es of water along with other preservatives which then goes through a carbonation process. The juices are not meant for direct consumption here but are just one ingredient of the drinks - fruit juices and carbonated beverages with fruit drinks are distinct products in the FSSAI regulations and the product of the applicant is not thermally processed fruit juice but covered under Para 2.3.30 of the regulations and Category 14.1.4.1 in the food category system in Appendix A to these regulations. In the instant case, water constitutes around 76% in the products in question. The product is prepared by adding fruit juice, procured by the applicant (as per the letter addressed to the applicant by Food Systems Asia), to RO water. It is evident that this large quantity of water results in diluted product which as per the Explanatory Notes above gets classified under CTH 2202 - In the case at hand, the manufacturing process of the products involves addition of Grape juice (13%) to the filtered sugar solution (86%-76% RO water and 10% Sugar) in a blending tan which is subjected to Mild Thermal Treatment (loss of water by 2 to 3%), cooled to room temperature, to which additives and preservat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the GST Act? The applicant submitted a copy of challan evidencing payment of application fees of ₹ 5, 000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2. The applicant stated that they are going to manufacture beverages with fruit juices and without milk. They understand from the industry that fruit pulp or fruit juice based drinks fall under HSN code 22029020 liable to be taxed at 12%. They state that fruit juice based drinks should be called as Carbonated beverage with fruit juice as per Para 3A definition in FSSAI Act. 3.1 The applicant was extended an opportunity to be heard in person on 28.08.2019 and was heard. They gave a written submission stating that their product is carbonated beverages with fruit juice and furnished a test report on the content. They stated that their product has fruit juice and been carbonated for preservation sake. They state the grape juice content will vary from 10-15%. They also referred to the Supreme Court case in APPY Fizz of Kerala VAT. They stated that the product is under development and the brand name has been finalized. They undertook to submit a detailed manufacturing process with q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It may also contain any other ingredients appropriate to the products. 2. The product may contain food additives permitted in these regulations including appendix A. The product shall conform to the microbiological requirements given in Appendix B. It shall meet the following requirements: (i) Total soluble solids (m/m) - Not less than 10.0 percent (ii) Fruit content (m/m) a. Lime or Lemon juice - Not less than 5.0% b. Other fruits - Not less than 10.0. Percent 3. The product shall have the colour, taste flavor characteristic of the product shall be free from extraneous matter. As per FSSAI Clause 3A in case the quantity of fruit juice is below 10.00 percent, but not less than 5.0 percent. (2.5 percent, in case of lime or lemon), the product shall be called carbonated beverage with fruit juice and in such cases the requirement of TSS (Total soluble solids) shall not apply and the quantity of fruit juice shall be declared on the label. The applicant has contended that it could be evidenced from the above said definition both categories of carbonated beverages of fruit juice or fruit drink are treated as one and the same having the same meaning. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Contains Fruit. 3.8 They also submitted a proposed label for the beverage. The label is for Bovonto s K Juice Grape Grape Flavuored Drink . The product is called as Carbonated Fruit Beverage with ingredients Carbonated water, sugar, grape juice, acidity regulator, preservative, permitted colour and added flavor. 4.1 The applicant vide letter dated 11.09.2019 received on 13.09.2019, furnished additional submissions detailing the manufacturing process with quantities of each raw materials used in the production and modified the queries in the Advance Ruling Application by mentioning/inserting the name of their specific product for clarification. The manufacturing process with the quantities of each raw material is as follows: Product : Grape Based Carbonated Fruit Drink ( 200ml ) Production Capacity : 10,000 liters Processing Flow Chart Prepare the sugar solution (10%) at 75-80 deg Celsius in blending tank (Minimum capacity: 1000 ltrs) Filter the sugar solution using to remove the unwanted impurities Transfer the sugar solution to the silo / tank and Mix pasteurized / aseptically packed, grape juice (13%) Blend it at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Advance Ruling Application already filed. 4.3 They submitted copy of their license issued by FSSAI for manufacture of Carbonated Fruit Beverages and Thermally Processed fruit Juices. A copy of reply received from FSSAI on their query adding fruit juices in carbonated beverages to which the rely was that fruit juices can be infused in carbonated water and the product should comply with Standard 2.23.30 of FSS(Food Product Standards and Food Additives) Regulations, 2011. 5. We have carefully examined the oral and written submissions of the Applicant. We find that the modified questions raised seeking ruling are: 1) Whether their product K Juice Grape fall under category of fruit beverages or fruit based drinks? 2) What is the rate of tax and HSN code for their product name? 3) Is there any persevered percentage of fruit or pulp in the beverages to call them as carbonated fruit beverages or drinks under the GST Act? Section 97(2) of the CGST Act / Tamil Nadu GST Act (TNGST) gives the scope of Advance Ruling Authority, i.e., the question on which the Advance Ruling can be sought. For ease of reference, the section is reproduced as under: 97 (2) the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Processed Fruits Juices 1. Thermally Processed Fruits Juices (Canned, Bottled, Flexible and/or Aseptically Packed) means unfermented but fermentable product, pulpy, turbid or clear, intended for direct consumption obtained by a mechanical process from sound, ripe fruit or the flesh thereof and processed by heat, in an appropriate manner, before or after being sealed in a container, so as to prevent spoilage. The juice may have been concentrated and later reconstituted with water suitable for the purpose of maintaining the essential composition and quality factors of the juice. It may contain salt. One or more of the nutritive sweeteners may be added in amounts not exceeding 50 g/ kg but not exceeding 200g/ kg in very acidic fruits except in case of Apple Juice, Orange Juice (reconstituted from concentrate), Grape Juice, Pineapple Juice (reconstituted from concentrate). It is seen from the above that as per the classification of FSSAI, Fruit juices are unfermented but fermentable product obtained by a mechanical process from sound, ripe fruit or the flesh thereof and processed by heat, in an appropriate manner, before or after being sealed in a container, so as to prevent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trated fruit juice (food category 14.1.2.3) with water, or in limited situations by water extraction of the whole fruit. Examples include orange juice, apple juice, black currant juice, lemon juice, and orange mango juice and coconut water. And 14.1.4.1 Carbonated water-based flavoured drinks Includes water-based flavoured drinks with added carbon dioxide with nutritive, non-nutritive and/or intense sweeteners and other permitted food additives. Includes gaseous (water-based drinks with added carbon dioxide, sweetener, and flavour), and sodas such as colas, pepper-types, root beer, lemon-lime, and citrus types, both diet/ light and regular types. These beverages may be clear, cloudy, or may contain particulate matter (e.g. fruit pieces). Includes so-called energy drinks that are carbonated and contain high levels of nutrients and other ingredients. Therefore, it is seen from above that fruit juices and carbonated beverages with fruit drinks are distinct products in the FSSAI regulations and the product of the applicant is not thermally processed fruit juice but covered under Para 2.3.30 of the regulations and Category 14.1.4.1 in the food category system in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , pasteurisation (prolonged or flash ), electric sterilisation in machines fitted with electrodes, sterilisation by filtration, preservation under pressure using carbon dioxide, refrigeration, chemical sterilisation (e.g., by means of sulphur dioxide, sodium benzoate), treatment with ultra-violet rays or ion exchangers. As a result of these various treatments the fruit or vegetable juices may consist of clear, unfermented liquids. Certain juices, however (in particular those obtained from pulpy fruits such as apricots, peaches and tomatoes) still contain part of the pulp in finely divided form, either in suspension or as a deposit. Provided they retain their original character, the fruit or vegetable juices of this heading may contain substances of the kinds listed below, whether these result from the manufacturing process or have been added separately : (1) Sugar. (2) Other sweetening agents, natural or synthetic, provided that the quantity added does not exceed that necessary for normal sweetening purposes and that the juices otherwise qualify for this heading, in particular as regards the balance of the different constituents (see Item (4) below). (3) P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssified under CTH 2202. Chapter 2202 of Customs Tariff covers 2202 WATERS, INCLUDING MINERAL WATERS AND AERATED WATERS, CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER OR FLAVOURED, AND OTHER NON-ALCOHOLIC BEVERAGES, NOT INCLUDING FRUIT OR VEGETABLE JUICES OF HEADING 2009 2202 10 - Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured : 2202 10 10 --- Aerated waters 2202 10 20 --- Lemonade 2202 10 90 --- Other - Other: 2202 91 00 -- Non alcoholic beer 2202 99 -- Other : 2202 99 10 --- Soya milk drinks, whether or not sweetended or flavoured 2202 99 20 --- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (natural or artificial) (2) Beverages such as lemonade, Orangeade, cola, consisting of ordinary drinking water, sweetened, flavoured with fruit juices/ compound extracts and often aerated with Carbon-di-oxide gas and presented in bottles or other airtight containers. In the case at hand, the manufacturing process of the products involves addition of Grape juice (13%) to the filtered sugar solution (86%-76% RO water and 10% Sugar) in a blending tan which is subjected to Mild Thermal Treatment (loss of water by 2 to 3%), cooled to room temperature, to which additives and preservatives as per the formulation and coloring flavoring agent are added. This is mixed well by circulation for 3hrs carbonated at 20 deg Celsius (0.61%) which is chilled and filled at 2-4 deg Celsius, capped 86 shrink wrapped. These are sold as Carbonated Fruit Beverage . These beverages fall squarely under the category mentioned in the Para (A) (2) of the Explanatory Notes above. That is they are classifiable under CTH 220210. Further, to be classified as fruit pulp or fruit juice under CTH 22029020, the main ingredient of the product is to be the fruit pulp or juice, which is not the case at hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ater and Category 14.1.1.2 as table waters and soda waters which are different from Carbonated Fruit Beverages or Fruit Drinks of Para 2.3.30 and Category 14.1.4.1 of FSSAI regulations. As discussed in Para 6.2 above, the applicants product is classified under Para 2.3.30 of FSSAI and not para 2.10.6. It is evident that the carbonated water described in Para 2.10.6 of FSSAI regulations are the Aerated Waters covered under CTH 22021010. Therefore, the applicant s product is not classifiable as Aerated Waters under CTH 22021010 and the product commercially named as K juice Grape is classifiable under CTH 22021090- Other as it contains the Grape fruit juice with added natural and artificial flavours. 7. Sl.No 12 of Schedule IV of Notification No.1/2017-Central Tax (Rate) as amended and Sl.No.12 of Schedule IV of Notification No.II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended states as below where the goods are taxable to 14% CGST and 14% SGST: S. No. Chapter/Heading/Sub-heading/Tariff item Description of Goods 12 2202 10 All goods [ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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