TMI Blog2021 (1) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... ld as ready to eat. Hence the applicant s claim that their product fried Fryums are known as papad is totally baseless and misleading. The applicant has relied upon the judgment of Hon ble Supreme Court in the case of Shivshakti Gold Finger [ 1996 (5) TMI 419 - SUPREME COURT ] 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. Thus, the fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of fried 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. In 5(b) above preparation for use after processing has been included and mentioned therein such as cooking, dissolving or boiling in water, milk or other liquids. Obviously, the term such as is purely il ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms 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/81/2020 - - - Dated:- 17-9-2020 - SANJAY SAXENA AND MOHIT AGRAWAL, MEMBER Present for the applicant : Shri Apoorva N Mehta, Advocate. BRIEF FACTS The applicant M/s. Shree Swaminarayan Foods pvt.ltd. located at Survey No.88, P2 Jasdan Rajkot Bhavnagar Highway, Gujarat-360060 are engaged in the manufacture and supply of Fryums and different types of Namkeen/Farsan. The applicant has stated that the aforesaid item prepared from maida is purchased as raw material from market which is in unfried form; that the same is first fried and thereafter various masala powders are applied and packed in small packets for being sold; that the aforesaid fryums are sold by the applicant in different shapes and sizes such as alphabets, rings, stars etc. According to the applicant, it is a settled legal position that Fryums are Pappad and since pappad is tax free/exempt as per tariff item 19059040, the Fryums manufactured and sold by the applicant would also be exempt from payment of any tax. The applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the High Court of Gujarat in the case of State of Gujarat v/s. Mahavir Engineering and Electric Stores with regard to classification of machinery parts i.e. tool-bits and jobber drills . The applicant has asked the following question seeking Advance Ruling on the same: Whether any tax is payable in respect of sale of Fryums manufactured by the applicant? And if the answer is in the affirmative, the rate of tax thereof? 2. The applicant has given additional submission dated 18.08.2020. The applicant has referred to their application for Advance Ruling as also the compilation of various judgements submitted on 27.12.2018 and has stated that though in the case of M/s. Sonal Products, this Hon ble Authority for Advance Ruling had vide order dated 22.02.2019 held that Fryums are not pappad and are classifiable under Tariff Item 21069099 warranting tax at the rate of 18%, the said ruling is contrary to the order dated 22.01.2019 passed by the Tamilnadu Advance Ruling Authority in the case of M/s. Subramani Sumathi wherein it has been held that Fryums are Pappad and are classifiable under Tariff Item 19050540 and that the same are exempted from payment of any tax in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force; that the applicant further submits that whether the relied upon judgements have considered the Customs Tariff Act, 1975 or not is hardly relevant as it is a plain interpretation that fryums are pappad; that even if law is amended or new law is enacted, the said interpretation will still hold the field since the Entry No.96 of Pappad is retained and the product under the earlier law would not become something else simply because there is a new law in place. 4. The applicant has further submitted that the H on ble Karnataka High Court in the case of State of Karnataka v/s. Vasavamba Stores((2010) 60 VST 19 (Karn)) has held that Fryums are Pappad; that it must be noted that the said judgement was in the context of Entry No.40 of Schedule-I to the KVAT Act, 2003 which granted exemption to pappad . In the said judgement, the Hon ble Karnataka High Court relied upon the judgement of Hon ble Supreme Court in the case of Shiv Shakti Gold Finger v/s. Assistant Commissioner, Commercial Taxes(1996) 9 SCC 514 whereas the judgement of Hon ble Supreme Court in the case of Commissioner of Commercial Tax v/s. TTK Health Care ltd.(2007)7 VST 1 (SC) came to be distinguished; th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of sub-heading 2107 which no longer forms part of the tariff and hence the goods falling therein have been included elsewhere including heading 1905 which covers pappad ; that secondly, it is with respect to the interpretation of an exemption notification which referred to the goods falling under 2107 which is not the issue at hand; that lastly, the present issue is concerning the interpretation of the term pappad and not whether the same requires further frying or not and hence whether the same is namkeen or not as was the issue in the said judgement; that the Hon ble Apex Court in the case of Ponds India ltd. v/s. Commissioner of Trade Tax (2008) 15 VST 256 (SC) held that the classification of goods followed by the department for a number of years cannot be departed unless new material or cogent reasons are available for changing the classification; that reference may also be made to Circular No.27/36/86-TRU dated 04.08.1986 wherein it has been clarified that papad shall be rightly classifiable under heading No.19.05 of the Central Excise Tariff; that thus fryums have been treated as pappad by the revenue since number of years and hence it would not be justifiable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that of fryums is flour, oil, spices and starch, thus confirming the concurrence of the ingredients to a great extent with minor differences in the final product. (4) The activity/service in respect of which an Advance Ruling has been sought is an ongoing activity. Further, a case against the applicant has already been booked by the CGST officers of the Preventive HQ, Rajkot for evasion of GST. The applicant has supplied Fryums worth ₹ 84,20,00,641/- during the period from 01.07.2017 to 31.05.2018, thus evading the GST amounting to ₹ 5,78,40,077/-. However, the applicant still continues with the practice of tax evasion on the supply of fryums and therefore the quantum of tax evasion shall increase proportionately. The applicant has fraudulently classified their product Fryums under Tariff item code No.19059040 i.e. as Pappad, so as to claim Tax exemption vide entry No.96 of Notification No.02/2017-Central Tax(Rate) dated 28.06.2017. (5) The Concerned Officer is of the opinion that the applicant are not eligible for the benefit of exemption as per Entry No.96 of Notification No.02/2017-Central Tax(Rate) dated 28.06.2017, therefore fryums manufactured by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notifications issued under the CGST Act, 2017/GGST Act, 2017/IGST Act, 2017. 13. It is now well settled principle of interpretation of statute that the word not defined in the statute must be construed in its popular sense, meaning that sense which people conversant with the subject matter with which the statute is dealing would attribute to it . It is to be construed as understood in common language. In the case of Indo International Industries v. Commissioner of Sales Tax, U.P. [1981 (8) E.L.T. 325 (S.C.)], Hon ble Supreme Court has held as follows : 4. It is well settled that in interpreting Items in statutes like the Excise Tax Acts or Sales Tax Acts, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product under the residuary product under the heading Edible preparations not elsewhere specified or included which carries nil rate of duty, the question of raising any demand or of Excise duty may not arise. However, as arguments have been adduced with regard to the Notification No. 12/90, dated 20-3-1990, it would be proper for us to give finding in regard to the same. 7. 8 The Sl. No. 8 reproduced above mentions about various goods coming within sub-heading 2107.91. It has given illustration to the items Namkeens such as Bhujiya, Chabena. Now the question is as to whether these namkeens given in the notification is a general one including all types of namkeens or only to the type given therein like Bhujiya, Chabena by illustration. The learned Collector has interpreted the word such as to mean namkeen should be of a kind of Bhujiya and Chabena. Although it is not in dispute that the item in question is a namkeen. As can be seen from the various items given in Sl. No. 8 namely Papad, Idli-mix, Vada-mix, Dosa-mix, Jalebi-mix, Gulabjamun-mix are all of a type which cannot be eaten straightaway but it requires to be fried. Chabena also comes in a type of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mkeen or not so that assessee can get benefit of the exemption from payment of duty. The assessee (M/s. TTK Pharma) in the case had claimed that their product Fryums is a Namkeen and not claimed as Papad where as in the exemption entry Papad, Idli-Mix, Vada-Mix, Dosa-Mix, Jalebi-Mix, Gulabjamun-Mix or Namkeens such as Bhujia, Chabena both the product i.e. Papad and Namkeen were exempted. The assessee (M/s. TTK Pharma) emphasised that his product is Namkeen. It is amply clear that M/s. TTK Pharma was well aware about the nature of the product that their product Fryums cannot be defined as Papad instead of it is correctly called as Namkeen . The assessee (M/s. TTK Pharma) in this case knows that if they claimed their product Fryums as Papad they will not get covered under the said specific entry of exemption Notification. The assessee in the said case has correctly defined their product Fryums as Namkeen. Therefore, in this case the issue was to interpretation of goods covered under the exemption entry irrespective of tariff heading so that the assessee can get the benefit of duty and also in the case, assessee did not make any argument with regard to the tariff headin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e I . [underlining supplied] In this case, Hon ble Supreme Court was of the view that fryums were like seviyan . 20. The applicant in their application has submitted that such different shapes and sizes of Fryums are fried and masala powder is added. Actually, it is a fact that when a person goes to the shop for purchase of Papad, shopkeeper shows him different types of Papad like Moong dal Papad Udad dal Papad , Chaval ke Papad etc. but shopkeeper never shows different shapes and sizes like round, square, semi-circle, hollow circle with bars in between or square with bars in between intersecting each other or shape of any instrument, equipment, vehicle, aircraft, animal type Papad. Also in the market Papad commonly are sold in ready to cook condition and not fried or Baked form whereas applicant s product is sold in market as fried Fryums i.e. ready to eat and not ready to cook. Whereas, when customer asks for the Fryums from the shopkeeper, then he shows all such type of different shape and size of Fryums as mentioned above. The applicant has not mentioned this fact because it is crystal clear that Papad is a distinct commodity and it cannot be equated wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ruling Authority is not applicable in the applicant case. Further, as per Section 103 of the CGST Act, 2017 any Advance Ruling is binding on the Applicant who has sought it and on the concerned officer or the jurisdictional officer in respect of the Applicant. Accordingly, AARs Ruling as cited above can t be relied upon in the present case of the Appellant. 24. Further it is state that the main ingredient of their product i.e. so called Papad of different shapes and sizes i.e. Fryums is wheat flour, superfine wheat flour, whereas main ingredient of Papad is batter of Pulses i.e. Moong dal, Udad Dal, black pepper and not of wheat Flour and Maida. In the market most popular papad are of Moong dal Papad and Udad dal papad . Therefore, main ingredients of both the Product i.e. Fryums and Papad are not same but are different. Further, the manufacturing processes of both the products also have some differences. In Fryums some sort of moisture are maintained at specific temperature and then Fryums are fried and applied with Masala and put in a unit container for sale whereas Papad are required to be completely dried in sun light otherwise Papad will become rotten if some m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court or the Tribunal is in jeopardy. The subject matter of the lis unless determined by the last Court, cannot be said to have attained finality. Grant of stay of operation of the judgment may not be of much relevance once this Court grants special leave and decides to hear the matter on merit. 28. The applicant has placed reliance on following case laws of VAT regime: (i) M/s. Avadh Food Products Vs. State of Gujarat and M/s. Swethin Food Products Vs. State of Gujarat. These case laws are not applicable in the instant case because facts of the case are different from the applicant and the issue of applicant is to be decided in terms of GST Act, whereas the said case law pertains to VAT Act, which is not in existence after inception of GST Act. (ii) 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). The Determination Orders under Section 80 of the Gujarat Value Added Tax Act, 2003 were not pertaining to classification under First Schedule to the Customs Tariff Act, 1975 and therefore are not applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kg. --- Other 2106 90 91 ---- Diabetic foods kg. 2106 90 92 ---- Sterilized or pasteurized millstone kg. 2106 90 99 ---- Other kg. 30. Chapter Note 5 and 6 of Chapter 21 provides, as follows 5. Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter alia includes: (a) (b) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption; (c) (d) (e) (f) (g) (h) (i) 6. Tariff item 2106 90 99 includes sweet meats commonly known as Misthans or Mithai or called by any other name. They also include products commonly known as Namkeens , Mixtures , Bhujia , Chabena or called by any other name. Such products remain classified in these sub-headings irrespective of the nature of their ingredient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y other name' appearing in Item (a) of clause (iii) of Section 2 (14) of the Income Tax Act has to be read ejusdem generis with the earlier expressions i.e. municipal corporation, notified area committee, town area committee, town committee. 34. The phrase by any other name and by whatever name it is known have a proximate purpose in a statute and hence the principle laid down by the P H High Court supra will apply on all squares. Therefore, in the instant Case the goods Papad cannot be termed as Fryums hence applicant goods is to be classified under Heading No. 2106 and not under Heading No. 1905 of the Customs Tariff Act, 1975. 35. Taking all these aspects into consideration, we hold that the product different shapes and sizes of fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. 36. Sl. No. 23 of Schedule III of Notification No.1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No.41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . 38. The above Rulings of Advance Authority are squarely applicable in the applicant s case. In view of the said Rulings, it can be concluded that applicant s product of different shapes and sizes is Fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classification under Tariff Heading 21069099 of the Custom Tariff Act, 1975(51 of 1975). 39. In view of the foregoing, we rule as under :- RULING Question : Whether any tax is payable in respect of sale of Fryums manufactured by the applicant? And if the answer is in the af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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