TMI Blog2021 (1) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Excise regime was examined by the Hon ble Customs, Excise and Gold Appellate Tribunal in the case of T.T.K. Pharma Ltd. v. Collector of Central Excise [ 1992 (8) TMI 183 - CEGAT, NEW DELHI] where it was held that the product Fry Snack Foods called Fryums have been considered as Namkeen and not as Papad . From the photos produced, it can be seen that PAPAD is a thing entirely different and distinct from FRYUMS. Therefore, in common parlance or in market, Fryums are not sold as PAPAD instead of PAPAD sold as papad and Fryums are sold as Fryums. Both the products are different and have their individual identity. Accordingly, in common parlance test, the applicant s product i.e. different shapes and sizes of Papad is not Papad but is Un-fried Fryums - the applicant himself has mentioned the fact in their application that in common parlance their product is popularly known as Fryums in the market - 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 . Therefore, the Un-fried Fryums are not classifiable as Papad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. Thus, it can be concluded that applicant s product of different shape and sizes is un-fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975. - GUJ/GAAR/R/65/2020 - - - Dated:- 17-9-2020 - SANJAY SAXENA AND MOHIT AGRAWAL, MEMBER Present for the applicant : Shri Nishant Shukla Adv. M/s. Jayant Food Products, Plot No. 336/1, Aji GIDC, Nr. Swati Enterprise, Rajkot a company having GSTIN: 24AABFJ5006G1ZW filed an application for Advance Ruling under Section 97 of CGST Act, 2017 and Section 97 of the GGST Act, 2017 in FORM GST ARA-01 discharging the fee of ₹ 5,000/- each under the CGST Act and the SGST Act. 2. The applicant is engaged in the business of manufacturing and trading of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the levy of tax reads as under :- 96. 1905 Pappad, by whatever name it is known, except when served for consumption 9. Entry at Sr. No. 96 under Not. No. 02/2017-Integrated Tax (Rate) dated 28.06.2017 which exempts the supplies from the levy of tax reads as under :- 96. 1905 Pappad, by whatever name it is known, except when served for consumption 10. The applicant submitted that from the above it can be noticed that supplies of Papad are exempted from payment of tax irrespective of the nomenclature. Thus, it can be conveniently said that people in different parts of the country know Papad by different names and forms but irrespective of such names and forms a Papad remains papad and is exempted from payment of tax under GST Act. 11. The applicant further submitted that with the changing of time, the market trends and market demands calls for a change. The different 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 machinerie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be given to the words used to take in new facts and situations, if the words are capable of comprehending them.. Various Honourable High Courts have also followed the same principle of updated interpretation but without burdening the record, the applicant would like to point out one observation in the case of M/s. Chaudhary Tractor Company Vs. State of Haryana [2007] 8 VST 10 (P H) wherein it has been observed by Honourable High Court that - while construing the provisions of a statute, the principle of 'updating construction' should be adopted. It means that 'a construction that continuously updates' the working of an on-going Act has to be followed. In other words, it means that 'in its application on any date, the language of the Act though necessarily embedded in its own time is nevertheless to be construed 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 differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f different shapes and sizes in relation to respective entry 9(2) in Schedule I of the GVAT Act wherein the entry in question was [Khakhra, papad, papad pipes]. 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 Dtd.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 Tribunal has clearly held that Fryums are nothing but PAPAD and clearly fall under entry 9(2) in schedule I to the GVAT Act and hence are exempt from payment of tax. (iii) The determination order passed u/s. 80 of the Gujarat Value Added Tax Act, 2003 in the cases of Jay Khodiyar Agency (2007-D-98-103 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.) wherein the said principle has been laid down by Honourable High Court that when there is no material cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (vii) The applicant submitted that a particular classification once accepted and adopted for years cannot be overturned merely because the law under which a product was classified in a particular manner has repealed and is replaced by a new law. There has to be material and substantial change in the entry to depart from the previous classification which was adopted earlier. In the present case, the products in question have been classified as PAPAD since many years and there is no substantial change in the entry under the GST Law as compared to erstwhile Gujarat Value Added Tax Act, 2003. So, there appears to be no valid 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). (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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to be adopted. 19. The applicant submitted that thus considering the overall facts and circumstances of the case vis-a-vis the entries in question and the settled law on the subject, PAPAD of different shapes and sizes manufactured and supplied by the applicant irrespective of their shapes, sizes, ingredients, form and nomenclature is entitled to be classified under the Tariff Heading No. 1905 and more precisely 19059040 as PAPAD by whatever name it is known, except when served for consumption as specified at 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 whea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to eat condition seems squarely eligible to be classified under Chapter Tariff Heading 1905. 25. The applicant submitted that from the above, it can be noticed that supplies of Papad are exempted from payment of tax irrespective of the nomenclature. Thus, it can be conveniently said that people in different parts of the country know Papad by different names and forms but irrespective of such names and forms a Papad remains papad and is exempted from payment of tax under the GST Act. 26. The applicant further submitted 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], the Honourable Tribunal was of the view that the classification on the basis of predomi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll under Tariff Hearing 2106 90 99 and taxable at 18%. However, Honourable Advance Ruling Authority did have opportunity to come across certain facts and certain law in the case of M/s. Sonal Products. 30.1 The applicant submitted that in the case of Sonal Products, Honourable AAR has referred and relied upon the judgment of Honourable Customs Excise and Gold Appellate Tribunal (CEGAT) in the case of M/s. T.T.K. Pharma Ltd. Vs. Collector of Central Excise 1993 (63) ELT 446 (Tribunal). 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court dealt with entry of COOKED FOOD under the MP Commercial Tax Act, 1994 which evidently was not under or related to the Customs Tariff Act. 31.2 So, the learned AAR had completely erred in ruling out the applicability of Determination Orders passed u/s. 80 of the Gujarat Value 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. St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification under general entry should not be preferred. It needs to be appreciated that in case of present applicant, the product is squarely eligible to be classified under 1905 90 40 as PAPAD while 2106 is 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) 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) is that If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions under the GGST Act. 39. As per the written submission made by the applicant, the main issue involved in the case is regarding 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deciphering the mind 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The applicant sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fall under the residuary item all other goods not included in any part of Schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 classification of Fryums . Accordingly, the facts of the said Ruling of the Advance Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention 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 Petitions (C) No. 29023-29083/2013 in the Hon ble Supreme Court against the said judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 -Other : --- Soft drink concentrates : 2106 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of M/s. Sonal Product G {Advance Ruling No. GUJ/GAAR/R/2019/03, dated 22-2-2019} 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 to GST @ 18% (CGST 9% + GGST 9% or IGST 18%) under Serial No. 23 of Schedule III of Notification Nos. 1/2017-C.T. (Rate) as amended and 1/2017-S.T. (Rate) as amended . (ii) Madhya Pradesh Advance Authority in case of M/s. Alisha Foods reported in ELT 2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
