TMI Blog2021 (1) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... and not fried or baked whereas applicant product sold 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product of different shape and sizes is 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/77/2020 - - - Dated:- 17-9-2020 - SANJAY SAXENA AND MOHIT AGRAWAL MEMBER Present for the applicant : Shri Ishwarkumar Ramjibhai Jivani BRIEF FACTS OF THE CASE: M/s. J K Papad Industries, Plot No.268-270, Sarthi Industrial Park, NH No.8, Sanki, Surat, Gujarat- 394315 (herein after referred to as the applicant for the sake of brevity) is a partnership firm and registered under GST Act, 2017- 24AAOFJ8306Q1ZP 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 marketing of Papad of different shapes and sizes. Papad is crunchy snack that is conceptualised as a product that is raw pellet yet semi-cooked/un-cooked which can be stored for a longer period and needs to be cooked first either by frying or roasting befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 28.06.2017 which exempts the supplies from the levy of tax, reads as under:- Sl. No. Chapter/Heading/ Subheading / Tariff item Description of goods 96. 1905 Pappad, by whatever name it is known, except when served for consumption 6.2 Entry at Sr. No. 96 under Notification No.02/2017-Integrated Tax (Rate) dated 28.06.2017, which exempts the supplies from the levy of tax, reads as under:- Sl. No. Chapter/Heading/ Subheading / Tariff item Description of goods 96. 1905 Pappad, by whatever name it is known, except when served for consumption 6.3 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. 6.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaving Mills Ltd. Vs. Union of India [1988] 68 STC 421 (SC), relying upon the observation made by Apex Court itself in another judgment in the case of Senior Electric Inspector v. Laxminarayan Chopra [1962] 3 SCR 146, Honourable Supreme Court observed that in a modern progressive society it would be unreasonable to confine the intention of a legislature to the meaning attributable to the word used at the time the law was made and, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations, if the words are capable of comprehending them. 6.7 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 fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as PAPAD and it has been held by Honourable Karnataka High Court that FRYUMS fall under the entry of PAPAD irrespective of their shapes and sizes and irrespective of the ingredients used. (ii) Even the Highest Fact Finding Authority of the State of Gujarat i.e. Honourable Gujarat Value Added Tax Tribunal has considered the issue about classification of PAPAD of 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 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 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. As per the knowledge of the applicant and subject to verification, both the above decisions have not been challenged by the State of Gujarat further or at least there is no adverse decision till dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nothing but PAPAD of different shapes and sizes. 6.14 The applicant further 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). 6.15 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication, entry which is beneficial to the assessee requires to be applied. 6.17 Lastly, the applicant has submitted that while classifying any product under any HSN code what is to be classified is product as per nomenclature and not as per brand name or trade mark. The word, FYRUMS is trade mark owned by T.T. Narsimhan which represents particular shape of PAPAD (photo of the trade mark named FRYMUS is attached with the application) and it is not a new product itself. The same is also proved by the fact that the word PAPAD is being found in Oxford Dictionary and the word FRYMUS is not found in Oxford Dictionary. If they take an example of toothpaste, in India at many places people use Colgate instead of toothpaste. But, while classifying the product toothpaste, one needs to classify under the category of toothpaste and not in anywhere else not specified as the word Colgate is not found in HSN category of tooth paste. Also it is very well accepted by the Customs authorities while exporting goods that the papad is classified under the HSN code 1905 90 40. 6.18 The applicant further submitted that thus, considering the overall facts and circumstances of the case vis-a-vis th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e up of Cereals, Flour, Starch etc.. The Papad and Papad products manufactured by them are mainly composed of cereals, flour, starch out of total ingredients in papad and papad product. So, the applicant is of the view that its products fall in the Chapter 19 of the First Schedule to the Customs Tariff Act, 1975. RECORDS OF PERSONAL HEARING: 8. The authorised representative of the applicant appeared for personal hearing. The applicant reiterated the submissions already made in the application. They reiterated the facts submitted along with the application. 8.1 Further, the applicant has furnished the Additional submission dated 17.08.2020 at the time of personal hearing, as below: (i) The CGST member of Advance Ruling Authority of Tamilnadu has already taken a view that the product for which the applicant is seeking the ruling is classified as papad only under the HSN 1905. This view is also to be taken by the CGST member of Advance Ruling Authority of Gujarat as the both the members represent central government so they cannot have different stand on the same issue and product. So my submission is that the AAR ruling of Tamilnadu is binding on CGST member of AAR o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 11. It is observed that the Explanation (iii) and (iv) of the Notification No. 01/2017-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. 12. What is Papad has not been defined or clarified under the 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, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uage 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)]. 12.3 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. 13. 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 [1993 (63) E.L.T. 446 (Tribunal)]. In this case, the Hon ble Tribunal, inter alia, observed as follows:- 6. A reading of these sub-headings makes it clear that the product is not a Prasad or Prasadam, Sterilised or pasteurised miltone. Therefore, it will not come within the sub-headings 2107.10 or 2107.20. As the item is not put in a unit container and ordinarily intended for sale, it will not come within the Heading 2107.91. Therefore, the product has to be br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be fried before they can be eaten. [underlining supplied] 13.1 Thus, in the aforesaid decision, the product Fry Snack Foods called FRYUMS have been considered as Namkeen and not as Papad . 14. In the case of Commercial Tax, Indore v. T.T.K. Health Care Ltd. [2007 (211) E.L.T. 197 (S.C.)], the issue before the Hon ble Supreme Court was regarding tax rate of FRYUMS under M.P. General Sales Tax Act, 1958/M.P. Commercial Tax Act, 1994. In this case, Hon ble Apex Court observed, as follows: - 12. In the present case we have quoted the definition of the term cooked food . It is an inclusive definition. It 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n common parlance or in market, FRYUMS are not sold as PAPAD instead of PAPAD sold as Papad and FRYUMS are sold as FRYUMS . Both products are different and having 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 . 15.2 Further, the applicant himself has mentioned the fact in their application that in common parlance their product is popularly known as Fryums in the market. The applicant fact which is mentioned in the application is reproduced as under, The issue as to whether PAPAD of different shapes and sizes 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 . 16. The applicant has relied upon the judgment of Hon ble Supreme Court in the case of Shivshakti Gold Finger, wherein the Hon ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ujarat 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 above cases 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 existing after inception of GST Act. (ii) Commissioner of Commercial Tax, UP Vs. A. R. Thermosets (P) Ltd. AIR 2016 SC 321: (2016) 94 VST 258 (SC): 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. 19. The applicant has also 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 and stated that the AAR ruling of Tamilnadu is binding on CGST member of AAR of Gujarat and he cannot take different view in this matter. 19.1 We have perused the aforesaid Order of the Authority for Advance Ruling, Tamilnadu and find that in this case, the issue of classifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e product. 21. In view of the above discussion, we come to the conclusion that the Un-fried FRYUMS are not classifiable as Papad under Tariff Item 1905 90 40. 22. The next issue which arises for consideration is appropriate classification of Un-fried FRYUMS . 22.1 Chapter Heading 2106 of the First Schedule to the Customs Tariff Act, 1975 is relevant here, which is reproduced below:- 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 90 11 ----Sharbat kg. 2106 90 19 ----Other kg. 2106 90 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o consideration, we hold that the product different shapes and sizes un-fried FRYUMS manufactured and supplied by the applicant is appropriately classifiable under Tariff Item 2106 90 99. 23. 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 elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods] falling under Heading 2106. Therefore, Goods and Services Tax rate of 18% (CGST 9% + GGST 9% or IGST 18%) is applicable to the product Un-fried FRYUMS as per Sl. No. 23 of Schedule III of the Notification No.1/2017-Central 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uarely applicable in the applicant case. In view of the said Rulings, 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 classification under Tariff Heading 21069099 of the Custom Tariff Act, 1975, attracting GST @ 18% (CGST 9% + GGST 9% or IGST 18%). 26. In light of the foregoing, we rule as under:- RULING Question 1: Under which Tariff Heading, the product dealt in by the applicant, i.e. PAPAD of different shapes and sizes are eligible to be classified? Answer : The product of different shape and sizes manufactured and supplied by applicant is un-fried FRYUMS and not Papad and is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975. Question 2 : What is the applicable rate of SGST and CGST on supply of such Papad of different shapes and sizes? Answer : Goods and Services Tax rate of 18% (CGST 9% + GGST 9% or IGST 18%) is applicable to the product Un-fried FRYUMS as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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