TMI Blog2021 (4) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... roduct being not Whey , the plausible CTH will be 0404 90 only and there again the Explanatory notes clearly states that this heading includes products which lack one or more natural milk constituents, to which natural milk constituents are added, whereas in the case at hand, the product do not lack any natural milk constituents nor any natural milk constituents is added to the product. Therefore, the product is not classifiable under either CTH 0402 or 0404. Classifiable under the said tariff item 22029930 or otherwise? - HELD THAT:- Other non-alcoholic beverages, not including fruit or vegetable juice of Heading 20.09 are covered under 2202.99 - Other and as per the explanation at (B)(2), the group covers beverages ready for consumption such as those with a basis of milk. The word beverage , though not defined under CGST Act, 2017, is considered, in common parlance, as a drink that can be consumed directly and the instant product flavored milk can be consumed as it is and hence is a beverage with a basis of milk. Therefore, the product is appropriately classifiable under CTH 2202 99 30. The flavoured milk is classifiable under Tariff Item 2202 99 30 of the First S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consisting of natural milk constituents, not elsewhere specified or included, and vi. Cheese and curd. As per the GST Tariff, Chapter 4 specifically covers Diary products, bird s eggs, natural honey, edible products of animal origin, not elsewhere specified or included'. Further sub-heading 0402 covers Milk and Cream, concentrated or containing added sugar or other sweetening matter including skimmed milk powder.... . The applicant understands that the product in question is goods classifiable under SH No. 04029990, as other milk (and cream). The product in question is, as a matter of fact, partly skimmed milk which is a product falling under Heading No. 04029990, and the product in question not being whole milk or condensed milk, it falls under the category of Other under 8 digit classification code 04029990. The composition of the Flavoured Milk is enclosed herewith and marked as Annexure- B hereto. A perusal of the details about composition would show that common name of the product is Flavoured Milk . Added sugar in this product has been 8%, whereas flavours as required are used but do not exceed 0.150%. Fat content of the product has been on an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under IS: 1165 - 1975 also. These Standards are applied by the Punjab Haryana High Court as could be seen from paras 7 to 10 of the above judgment. Since fat content is minimum 2.5% in the product in question, and it is not more than 26.0%, the product in question is partially skimmed milk in accordance with the above referred Standards. This partly skimmed milk contains added sugar and therefore, it would fall for classification under Heading No.0402 of the Tariff which covers milk and cream, concentrated or containing added sugar or other sweetening matter . Since skimmed milk and whole milk are specifically covered under Tl Nos. 04021010 and 04022910 respectively, partly skimmed milk would fall under the category of Other under Tl 040299, and the most appropriate classification thereof would be Tl 04029990 i.e. other milk and cream. In this regard, a decision of the CESTAT in case of Mehsana District Co-Operative Milk Producers Union Ltd. reported in 2004 (167) ELT 456 may also be considered wherein the Appellate Tribunal has held that Chapter 4 of the Tariff covered all types of milk/milk powder, whether it was whole, partly skimmed or skimmed. Thus, the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling Authority that the commodity flavoured milk is classified under the Tariff heading 04029990. The said Advance Ruling Authority has also taken note of the judgment rendered by Hon ble Allahabad High Court in Gujarat Co-operative Milk Marketing Federation Ltd. (2017(5) GSTL 351). The Hon ble Allahabad High Court has specifically observed that flavoured milk is a form of milk, and it is neither a derivative of milk nor a milk product. The above referred Advance Ruling Authority has therefore held that the product flavoured milk was covered under milk , and would therefore merit classification under Tariff heading 04029990. A copy of this Advance Ruling order No. KAR ADRG 88/2019 dated 26.09.2019 (2019 (30) G.S.T.L 350) and judgement of Hon'ble Allahabad High Court reported in 2017(5) GSTL 351 (All.) are enclosed herewith marked as Annexure-D. In the above premises, the applicant submits that an appropriate order on the present Advance Ruling Application classifying the product flavoured milk under Heading 0402, Sub Heading 04029990 may be made in the interest of justice. Accordingly, the applicant sought the Advance Ruling on the following question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sweetening matter including skimmed milk powder .. . The goods viz. flavoured milk is a partly skimmed milk and not being whole milk or condensed milk therefore, the applicant is of the view that flavoured milk falls under the category of Others and classifiable under tariff item/ HSN code 04029990. 8. In terms of explanation (iii) and (iv) to Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, tariff heading, 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 and the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall be applied for the interpretation and classification of goods. 8.1 The relevant chapter notes of CTH 0402 and 0404 and the Explanatory Notes are examined as under: CTH 0402 : 0402 MILK AND CREAM, CONCENTRATED OR CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER 0402 10 -In powder, granules or other solid forms, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Milk and cream, concentrated or containing added sugar or other sweetening matter (+). 0402.10 -In powder, granules or other solid forms, of a fat content, by weight, not exceeding 1.5% -In powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5% : 0402.21 --Not containing added sugar or other sweetening matter 0402.29 --Other -Other : 0402.91 --Not containing added sugar or other sweetening matter 0402.99 --Other This heading covers milk (as defined in Note I to this Chapter) and cream, concentrated (for example, evaporated) or containing added sugar or other sweetening matter, whether liquid, paste or solid (in blocks, powder or granules) and whether or not preserved or reconstituted. Milk powder may contain small quantities of starch (not exceeding 5% by weight), added, in particular, to maintain the reconstituted milk in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, expressed as anhydrous lactose, calculated on the dry matter (heading 17412). (d) Food preparations based on natural milk constituents but containing other substances not allowed in the products of this Chapter (in particular, heading 19.01). (e) Albumins (including concentrates of two or more whey proteins, containing by weight more than 80% whey proteins, calculated on the dry matter) (heading 35.02) or globulins (heading 35.04). 8.2 From the above, the following are deduce: Milk , to be covered in this chapter are full cream milk or partially or skimmed milk Beverages consisting of milk flavoured with cocoa or other substances (heading 22.02) are not covered under CTH 0402 CTH 0404 90 covers fresh or preserved products consisting of milk constituents, which do not have the same composition as the natural product, provided they are not more specifically covered elsewhere 9. From the constituents of the product as furnished by the applicant, it is seen that the product consists of Standardized Milk (92.00%) without removal of Fat content thereon, which is sweetened with around 8% of sugar to which color 0.08% and flavor in kesar Badam M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was skimmed milk or partially skimmed milk or full skimmed milk. The aforesaid judgement is not applicable in the instant Advance Ruling case because the said judgement is with regard to decide the nature of skimmed milk or partially skimmed milk or full skimmed milk whereas in the case at hand is to decide the classification of Beverage containing milk . Further, the other Act cannot be considered to decide the classification under the GST Tariff which is aligned with Custom Tariff because the purpose and objective of the other Act i.e. PFA (Prevention of Food and Adulteration Act) are different from the Custom Tariff Act. The standards of PFA cannot be considered to decide the classification of any product under GST Act because objective and purpose of both the Act are different and both cannot be mixed to decide the particular issue of one Act. When this is the fact, there appears to be no relevance to import the ingredients from another legislation/Act. Constitution Bench of the Apex Court in Hari Khemu Gawali Vs. Deputy Commissioner of Police, Bombay and Another [AIR 1956 SC 559], has stated : It has been repeatedly said by this Court that it is not safe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... waters, containing added sugar or other sweetening matter or flavoured -Other : 2202.91 --Non-alcoholic beer 2202.99 --Other This headings covers non-alcoholic beverages, as defined in Note 3 to this Chapter not classified under other headings, particularly heading 20.09 or 22.01. (A) Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured. This group includes, inter alia: (1) Sweetened or flavoured mineral waters (natural or artificial). (2) Beverages such as lemonade, orangeade, cola, consisting of ordinary drinking water, sweetened or not, flavoured with fruit juices or essences, or compound extracts, to which citric and or tartaric acid are sometimes added. They are often aerated with carbon dioxide gas, and are generally presented in bottles or other airtight containers (B) Other non-alcoholic beverages, not including fruit or vegetable Juices of heading 20.09. This group includes, inter alia : (1) Tamarind nectar rendered ready ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, dated 15-6-2007, particularly Serial No. 1 in the table insofar as in column No. 2, code 2202 90 30 is given to Flavoured milk of animal origin while giving the said item exemption from duty. The dispute is about the flavoured milk being produced by the petitioners under the brand name Amul Kool/Amul Kool Cafe. 2. Mr. Paresh M. Dave for the petitioners has submitted as under :- 2.1 Earlier under the six digit code system prevailing till 27-02-2005, the flavoured milk made by the petitioners was falling under Entry 0401.11 which read as under :- CHAPTER 4 DAIRY PRODUCE; EDIBLE PRODUCTS OF ANIMAL ORIGIN, NOT ELSEWHERE SPECIFIED OR INCLUDED Notes :- 1. The expression, Milk means full cream milk or partially or completely skimmed milk. 2 Heading No. Sub-heading No. Description of goods Rate of duty (1) (2) (3) (4) 04.01 0401.11 Flavoured milk, whether sweetened or not, put up in unit containers and ordinaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of goods Unit Rate of duty (1) (2) (3) (4) 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 90 30 Beverages containing milk 1 16% Mr. Dave further states that only items like Milkis and Swerve (Vanana) being made by other foreign producers can be considered as beverages containing milk because over and above milk, they contain many other ingredients and milk is only one of the ingredients. On the other hand, Amul Kool and Amul Kool Kafe are only skimmed milk with sugar and flavour and therefore they fall only under Chapter 4 providing for dairy produce where note 1 specifically defines milk as including skimmed milk. 2.5 The Notification dated 15-6-2007 reads as under :- In exercise of the powers conferred by sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is thus, to grant exemption of excisable goods of any specified description, but not to decide a classification of any excisable goods by way of a notification issued under this Section. The Central Government could have very well prescribed nil rate of duty for flavoured milk of animal origin without referring to its classification in the said Notification, but having prescribed these goods as falling under classification Code No. 2202 90 30 under this Notification, the Central Government has decided classification of the product by virtue of Notification under Section 5A of the Act, and therefore also, this action is also ultra vires the powers conferred upon the Government under Section 5A of the Act. The petitioners submission is that if this Notification had been issued without indicating Tariff Item No. 2202 90 30, it would have been open to the petitioners to contend that the petitioners were entitled to exemption from excise duty for the entire period from 28-2-2005 to 14-6-2007 by contending that the flavoured milk is only milk with sugar and flavour and is not beverage containing milk as such. Hence, it would have been open to the petitioners to contend that the fla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the classification of flavoured milk. The matter recorded in the Agenda for 31st GST Council Meeting (Volume-2), dated 22-12-2018, in this regard is as follows : S.No. Description HSN Present GST Rate (%) Requested GST Rate (%) Comments 18 Flavoured Milk 2202 12 Clarification on that it is classifiable under Chapter 4 1. The Explanatory Notes to HSN describe the goods classifiable under the heading 0402 as under : This heading covers milk (as defined in Note 1 to this Chapter) and cream, whether or not pasteurised, sterilised or otherwise preserved, homogenised or peptonised; but it excludes milk and cream which have been concentrated or which contain added sugar or other sweetening matter (heading 04.02) and curdled, fermented or acidified milk and cream (heading 04.03). The products of this heading may be frozen and may contain the additives referred to in the General Explanatory Note to this Chapter. The heading also covers reconstitute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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