TMI Blog2021 (1) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... izes of Papad is not Papad but is Un-fried Fryums - the Un-fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of Unfried Fryums - HELD THAT:- Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. Chapter Note 6 pertaining to Tariff Item 2106 90 99 also provides inclusive definition and products mentioned therein are illustrative only - Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. The principle of ejusdem generis is applicable in interpreting the CTH No. 1905 whereby the phrase by whatever name it is known , should be read in conjunction with the terms Papad and hence the scope of the term Papad would get limited to only such word which is similar to Papad or such class of individuals. In the instant case the applicant goods un-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Papad of different shapes and sizes. Papad is crunchy snack that is conceptualised as a product that is raw pellet that are neither fully cooked nor ready to eat which can be stored for a longer period and needs to be cooked first either by frying or roasting before consuming as and when required. 3. The Papad turns out to be a papad when the dough is moulded and given the shape, usually a palm size round or may be smaller or bigger. However, with changing of time and considering the different demands of different class of consumers innovations are made in shapes and sizes also and now Papad comes in different shapes and sizes. 4. The applicant submitted that it does not required any extra effect to do the same with minor variations in proportions of ingredient and the dough is moulded in the desired shapes and size may be round, may be squre, may be semi-circle, may be hollow circle with bars in between or may be square with bars in between intersecting each other or may be of shape of any instrument, equipment, vehicle, aircraft, animal etc . The shape may vary, the size may vary but the ingredients, the proportion of ingredients, the composition and the recipe remains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent classes of people demand for different types of Papad and to meet with the demand the manufactures like applicant resort to the technological development in machineries which may help in meeting with the market demand of manufacturing and supplying of Papads of different shapes and sizes. 12. The applicant submitted that today PAPAD does not resemble the same age old traditional round shaped papad. The applicant, due to huge demands in the market able to bring the some changes in shapes and sizes of traditional papad and the same is accepted and appreciated in the market. Due to advancement of the technology, it has become possible to bring change/ modification in the mindset of the people also that now PAPAD can be in any desired shape and size. Considering the same, the rules of viewing a product and interpretation about its classification also need to be modified and upgraded with the overall advancement of commercial scenario. 13. The applicant has referred a few judicial pronouncements wherein Hon ble Courts including Hon ble Supreme Court have resorted to encouragement of development of principles of interpretation according to the changing scenario. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the need to treat it as current law. 14. The applicant further submitted that traditional PAPAD is known by different nomenclature in different parts of the country e.g. PAPAD, PAPPAD, PAPPADAM, ALAM, KHICHIYA, etc. Similarly, the modern day PAPAD with different shapes and sizes is also known and recognised by different nomenclature in different parts of the country keeping in mind the shape and size thereof e.g. PAPAD, FRYUMS, BHUNGLA, NADDA, GONGO, PONGA, GOLD FINGER, WHITE FINGER, FINGER, NALI, etc. Further, submitted that keeping in mind this diversity in the different nomenclature given to same commodity in different parts of the country and to avoid confusions and probable litigation, the entry relating to PAPAD has been deliberately worded as PAPAD, BY WHATEVER NAME IT IS KNOWN and not as only PAPAD . 15. The applicant has referred the order passed by the Authority for Advance Ruling, Tamilnadu in the case of Subramani Sumathi- Order No. 07/AAR/2019 dtd. 22/01/2019 wherein the issue of classification of PAPAD made of maida was for consideration before Advance Ruling Authority and it has been held therein that the product in question was eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Dt:-11/09/2007) and Kansara Trading Co. (2011-D-356-357 Dt:-11/02/2011) wherein FRYUMS have been held to be falling under entry 9(2) in Schedule I to the GVAT Act as PAPAD. (iv) Honourable Gujarat High Court in the case of West Coast Waterbase Pvt. Ltd. Vs. State of Gujarat (2016) 95 VST 370 (Guj.) = 2016 (8) TMI 1077 - GUJARAT HIGH COURT wherein the said principle has been laid down by Honourable High Court that when there is no material change in the entries, the classification adopted in earlier law should continue to prevail and accepted. (v) The applicant submitted that they are aware of the fact that decision of Honourable Karnataka High Court in Karnataka Vs. Vasavamba Stores [2013] 60 VST 19 (Karn.) = 2012 (10) TMI 977 - KARNATAKA HIGH COURT has been carried by State of Karnataka before Honourable Supreme Court. However, as per knowledge of the applicant and subject to verification, Honourable Supreme Court has neither granted any stay on operation and execution of the decision of Honourable Karnataka High Court and as per settled legal position, till a judgment is stayed or reversed, it is the authority prevailing and the judicial discipline demands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason for departing from the classification adopted, accepted and followed for years. Ponds India Ltd. Vs. Commissioner of Trade Tax, Lucknow (2008) 15 VST 256 (SC) = 2008 (5) TMI 46 - SUPREME COURT . (viii) There has to be consistency in law and needs the finality of the proceedings at some point of time. If the same issue of classification is dealt with in different manner with every change of law without any substantial change in the entry, the commercial market dealing with the particular commodity will be in tumultuary and the same shall be deleterious to public at large. The principle of finality of litigation is based on a sound firm principle of public policy. In the absence of such a principle great oppression might result under the colour and pretence of law inasmuch as there will be no end to litigation. The doctrine of res-judicata has been evolved to prevent such anarchy. It would also nullify the doctrine of stare decisis a well established valuable principle of precedent which cannot be departed from unless there are compelling circumstances to do so. The judgments of the court and particularly the Apex Court of a country cannot and should not be unsettled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr. No. 96 under Notification No. 02/2017-CT (Rate) dated 28.06.2017 and thus attracts NIL rate of tax under IGST, CGST and SGST. 20. The applicant given an additional submission wherein they have submitted that the Papad products are manufactured in various size and shapes as per the requirement of the customer. Further, diverse shapes are obtained with the help of a die and there is no difference in either the ingredients used or in the process of manufacture. For ready reference, a pictorial representation providing overview of papad product manufacturing process is reproduced hereunder: Raw materials consisting of wheat flour, superfine wheat flour, rice flour, starch, corn flour, cereal flour, potato starch, chana, potato lentils, papad khar, bicarb, vegetables like Blended in a steering/ mixture machine with water and oil to make a dough Dough is passed through various die to form various shapes Product is dried through various stages (also includes sun drying in some cases)/ processes to maintain moisture level at a specific per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that in GST regime, the Customs Tariff has become relevant for the purpose of determination of classification for any supply of goods wherever the rate schedule is aligned with Customs Tariff. From perusal of Customs Tariff Act, 1975 read with interpretation Rules judicial precedent; they understand that the classification in Customs is driven by the ingredients used in the products. Predominant content in the product would help in determining appropriate classification. In the case of Manilal Commodities Pvt. Ltd. Vs. Collector of Customs [1992-59-ELT-189-Tribunal] = 1991 (2) TMI 276 - CEGAT, BOMBAY , the Honourable Tribunal was of the view that the classification on the basis of predominant contents is generally accepted as proper test. Further, Honourable Allahabad High Court in the case of Commissioner of Customs, C.G.O. Vs. Sonam International [2012-275-ELT-326-ALL] = 2010 (10) TMI 120 - ALLAHABAD HIGH COURT upheld that assessment of goods with regard to payment of customs duty is to be made based on contents involved. The Chapter Notes in the Customs Tariff also prescribe the content or ingredients of products in order to include or exclude specific produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor of Central Excise 1993 (63) ELT 446 (Tribunal) = 1992 (8) TMI 183 - CEGAT, NEW DELHI . 30.1 The applicant submitted that Honourable AAR has missed out to consider the most important factor in the said judgment. If the judgment is examined then it is noticed that Entry for consideration before Honourable CEGAT was Papad, Idli-Mix, Vada-Mix, Dosa-Mix, Jalebi-Mix, Gulabjamun-Mix or Namkeens such as Bhujia, Chabena . Hence, it can be seen that at relevant time PAPAD and NAMKEEN were in same entry. So, there was no occasion for Honourable CEGAT to consider and differentiate between PAPAD and NAMKEEN. Subsequently, the entries were changed and then came into existence two different entries for PAPAD and NAMKEEN. So, the applicant most respectfully submits that this judgment cannot be relied upon as a precedent in order to classify PAPAD sold by the applicant because the entry in question before Honourable CEGAT and entry in question in present application of the applicant are completely different and more specifically when Honourable CEGAT had no occasion to consider two entries separately as PAPAD and NAMKEEN were covered under same entry. 30.2 The applicant further submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Added Tax Act, 2003 holding that they were not related to Customs Tariff Act and at the same time place strong reliance upon the decision of Honourable Supreme Court rendered under the MP Commercial Tax Act, 1994 which evidently was not under or related to the Customs Tariff Act and decision of CEGAT which dealt with an entry which by far is not close to the entry currently under the GST Act. 32. The applicant submitted that at the cost of repetition, they once again here submits that on one hand Honourable Supreme Court deals with an entry which is completely different from the present entry under the GST Act while on other hand order of determination u/s. 80 of the Gujarat Value Added Tax Act, 2003 in the case of Jay Khodiyar Agency (2007-D-98-103 Dt:-11/09/2007) and Kansara Trading Co. (2011-D-356-357 Dt:-11/02/2011), Honourable GVAT Tribunal in the case of M/s. Avadh Food Products Vs. State of Gujarat First Appeal No.1/2015 read with Rectification Application No.31/2015 in First Appeal No.1/2015 Dt;-03/07/2015 reported in 2015 GSTB II 405 and in the case of M/s. Swethin Food Products Vs. State of Gujarat 2016 GSTB I 296, Honourable Karnataka High Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residuary entry which itself says that Food preparations not elsewhere specified or included. So, tariff heading 1905 90 40 is specific heading for classification of products of applicant. This aspect has not been considered in the decision of Sonal Product. Amongst numerous judgments on this principle, it would be profitable to refer Bradma of India Ltd. Vs. State of Maharashtra 140 STC 17 (SC) = 2005 (2) TMI 518 - SUPREME COURT wherein it has been held that -A specific entry in the schedule to a taxing statute would override a general entry. But, resort has to be had to the residuary heading only when a liberal construction of the specific heading cannot cover the goods in question. It is well-settled that if there are two entries-one general and the other special, the special entry should be applied for the purpose of levying tax. The general entry should give way to the special entry. The ratio decidendi in the case of Mauri Yeast India Pvt.Ltd. Vs. State of UP 2008 (225) ELT 321 (SC) = 2008 (4) TMI 101 - SUPREME COURT is that If there is conflict between two entries one leading to an opinion that it comes within the purview of the tariff entry and another the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding classification of Papad of different shapes and sizes. The applicant in his submission has tried to equate un-fried Fryums with Papad under Tariff Item as 1905 90 40. 40. It is observed that the Explanation (iii) and (iv) of the Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 provides, as follows :- Explanation. - For the purposes of this notification, - (i) (ii) (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. 41. What is Papad has not been defined or clarified under Customs Tariff Act, 1975, the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act, 2017), the Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the GGST Act, 2017 ), Integra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind of the law maker; it is an attempt to discover the intention of the Legislature from the language used by it, keeping always in mind, that the language is at best an imperfect instrument for the expression of actual human thoughts. [(See Oswal Agro Mills Ltd. (supra)]. 42.1 The applicant claimed that the manner of determining classification has undergone complete change and common parlance test cannot be the sole test for determining classification of a product cannot be accepted as such higher judicial authorities in their judgment has ruled that common parlance test is the standard for interpreting terms in the taxing statutes. 43. It needs to be, therefore, examined whether different shapes and size of Un-fried Fryums would be covered by the term Papad , as understood in common parlance and as decided by higher judicial authorities. 44. The issue of proper classification of the product Fry Snack Foods called Fryums and admissibility of exemption notification under Central Excise regime was examined by the Hon ble Customs, Excise and Gold Appellate Tribunal (CEGAT, as it was known then) in the case of T.T.K. Pharma Ltd. v. Collector of Central Excise [199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s expression or to make the notification otios. The words such as is only illustrative and not exhaustive. So long as the item satisfies the term Namkeen, the benefit of notification cannot be denied on the ground that it requires to be fried before use. There is no such understanding placed in the notification with regard to the frying of the item. Even if that be so, then the same would apply to all other items which are namkeens like Papad, Idli-mix, Dosa-mix, Jalebi-mix etc. which are required to be fried before they can be eaten. [underlining supplied] 44.1 Thus, in the aforesaid decision, the product Fry Snack Foods called Fryums have been considered as Namkeen and not as Papad . 44.2 The applicant has contended that in the above case entry for consideration before Honourable CEGAT was Papad, Idli-Mix, Vada-Mix, Dosa-Mix, Jalebi-Mix, Gulabjamun-Mix or Namkeens such as Bhujia, Chabena ; that at relevant time PAPAD and NAMKEEN were in same entry. So, there was no occasion for Honourable CEGAT to consider and differentiate between PAPAD and NAMKEEN. Subsequently, the entries were changed and then came into existence two different entries for PAPAD and NAMKEEN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t includes sweets, batasha, mishri, shrikhand, rabari, doodhpak, tea and coffee but excludes ice-cream, kulfi, ice-candy, cakes, pastries, biscuits, chocolates, toffees, lozenges and mawa. That the item cooked food is inclusive definition which indicates by illustration what the legislatures intended to mean when it has used the term cooked food . Reading of the above inclusive part of the definition shows that only consumables are sought to be included in the term cooked food . In the case of fryums there is no dispute that the dough/base is a semi-food. There is also no doubt that in the case of fryums a further cooking process was required. It is not in dispute that the fryums came in plastic bags. These fryums were required to be fried depending on the taste of the consumer. In the circumstances we are of the view that fryums were like seviyan. Fryums were required to be fried in edible oil. That oil had to be heated. There was certain process required to be applied before fryums become consumable. In these circumstances the item fryums in the present case will not fall within the term cooked food under Item 2 Part I of Schedule II to the 1994 Act. It will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also known by different nomenclature, whereby more common nomenclature used is FRYUMS would be eligible to be considered as and falling under the entry of PAPAD or not has been very well settled. This fact indicates that applicant himself knows that in the market their product is called Fryums and not Papad as such the fact is that in the market Papad is known as Papad and not Fryums . 46. The applicant has referred to Advance Ruling in the case of Subramani Sumathi- Order No. 07/AAR/2019 dtd. 22/01/2019 wherein Tamilnadu Authority of Advance Ruling held that , Papad - Maida Vadam/Papad made of wheat flour, added sugar and vanaspathi and sun dried being unfinished or semi-finished product which is not ready to eat but can be consumed only after being fried by ultimate consumer, is specifically classifiable as papad under Tariff Item 1905 05 40 of GST Tariff which is exempt from CGST/SGST vide Sl. No. 96 of Notification No. 2/2017-C.T. (Rate) as amended and Notification No. II(2)/CTR/532 (d-5)/2017 vide G.O. (Ms) No. 63. In the said Ruling the Advance Authority was to decided the classification of Papad made from Maida i.e. fine wheat flour and not the clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flour then Dosa and Idli cannot be called as Fryums . Therefore the applicant contention that only ingredient of the products is deciding factor for classification is based on wrong perception and lead to wrong classification of the product. 49. The applicant has relied upon the judgment of Hon ble Supreme Court in the case of Shivshakti Gold Finger wherein the Hon ble Supreme Court examined the matter under Rajasthan Sales Tax Act, whether Gol Papad manufactured out of Maida, Salt and Starch are Papad or not. It was held that size or shape is irrelevant and that Papad of all shapes and sizes are covered under the entry Papad . 49.1 However, in the case of Shivshakti Gold Finger, Hon ble Supreme Court has not examined the issue of Un-fried Fryums . Therefore, the said case is not found to be applicable in the facts of the present case. 50. The applicant has also relied upon the judgement of Hon ble High Court of Karnataka in the case of State of Karnataka Vs. Visavamba Stores and Others, wherein the issue involved was whether the Fryums can be treated as Pappad under Entry 40 of the I Schedule to the KVAT Act. 50.1 The State of Karnataka has filed Special Leave Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Commissioner of Commercial Tax, UP Vs. A. R. Thermosets (P) Ltd. AIR 2016 SC 321: (2016) 94 VST 258 (SC) = 2016 (9) TMI 410 - SUPREME COURT . In this case, Hon ble Supreme Court of India has decided the issue of classification of BITUMEN EMULSION, whereas in the instant case, issue pertains to determination of classification of un-Fried Fryums. Therefore, this case law is not applicable in the instance case. 52. Therefore, the Un-fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. 52.1 The next issue which arises for consideration is appropriate classification of Unfried Fryums . 52.2 Chapter Heading 2106 of the First Schedule to the Customs Tariff Act, 1975 is, as follows :- HS Code Description of goods Unit (1) (2) (3) 2106 Food preparations not elsewhere specified or included 2106 10 00 -Protein concentrates and textured protein substances kg. 2106 90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. Chapter Note 6 pertaining to Tariff Item 2106 90 99 also provides inclusive definition and products mentioned therein are illustrative only. 52.5 The applicant has contended that principle of rule of interpretation and classification is noscitur a sociis which means that meaning of a word is to be judged by the company it keeps. The said principal of rule of interpretation noscitur a sociis is not applicable. In the instant case the most appropriate rule of interpretation which is to be used while interpreting the phrase by whatever name it is known is the legal principle of Ejusdem Generis. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. The words ejusdem generis mean of the same kind or nature . Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. The principle of ejusdem generis is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued under the GGST Act, 2017 or IGST Act, 2017. 54. We also refer to the following Rulings of Advance Authority, which are squarely applicable in the instant case: (i) Gujarat Advance Authority in case of M/s. Sonal Product G {Advance Ruling No. GUJ/GAAR/R/2019/03, dated 22-2-2019} = 2019 (3) TMI 930 - AUTHORITY FOR ADVANCE RULING, GUJARAT has held that, Papad and Papad Pipes - Classification of - Products commonly known as unfried Fryums having different shape, sizes and varieties and made from raw materials such as maida floor, starch powder, rice powder, poha, salt, soda by-carb, baking powder, food colour, water and plastic bags for packing - Word Papad not defined either under Customs Tariff or under Central Goods and Services Tax Act, 2017/Gujarat Goods and Services Tax Act, 2017/Integrated Goods and Services Tax Act, 2017 or Notifications issued thereunder, therefore, its meaning to be construed in its popular sense as understood in common language - The product is commonly known as namkeen and not as papad and appropriately classifiable under Tariff Item 2106 90 99 of Customs Tariff Act, 1975 and not under Tariff Item 1905 90 40 ibid - Product liable ..... 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