TMI Blog2021 (8) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... ory notes to HSN have guidance value to classify goods. As per Rule 1 of the General Rules for the Interpretation of CTA, 1975, for legal purposes, classification shall be determined according to the terms of the headings and any relative Section of Chapter Notes. Thus, the classification of the product is required to be determined in accordance with the terms of the headings. As per Chapter Heading11.06, it covers Flour, Meal and Powder of the dried leguminous vegetables of Chapter Heading 07.13 and other specified products. On inspection of the Packets of each product, we find that each of the packet is marked Instant Mix - As the products of the applicant contain Spices and additives in different proportions, which are not mentioned in the Chapter Heading 11.06 or the relevant Explanatory Notes of HSN. The applicant has referred to CBIC Circular No. 80/54/2018-GST dated 31.12.2018, which has inter-alia clarified the applicability of GST on Chhatua or Sattu . The CBIC has clarified in the Circular that the flour of ground pulses and cereals, improved by the addition of very small amounts of additives continues to be classified under HSN Code 1106. On examination of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is printed on back side of the packets - there are no merit to treat the subject goods as flour. As these products are not specifically mentioned under any specific Tariff item, the products merit classification under the residual entry other at HSN 210690. Though the issue involved in that case was regarding admissibility of Sl. No. 28 of Notification No. 3/2006-Central Excise to the Instant Food Mixes (Gota Mix, Khaman Mix, Dal Wada Mix etc.), the fact that in the said Sl. No. 28, the description of goods mentioned against Chapter Heading 2106 included Instant Food Mixes such as Pongal mix, Vadai mix, Pacoda mix, Payasam mix, Gulab Jamun mix, Rava Dosa mix, Idli mix, Dosa mix, Murruku mix, and Kesari mix, supports our view that various Instant Food Mixes (Instant Mix / Ready Mix Flour) being supplied by the applicant are classifiable under HSN 2106. Applicable rate of GST - HELD THAT:- Food preparations not elsewhere specified or included falling under Chapter Heading 2106 are covered under the aforesaid Entry at Sr. No. 23 of Schedule- III of Notification No. 1/2017-Central Tax, as amended, attracting Goods and Services Tax @ 18%, though some of the specific products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised) submitted by them on 2-7-21) is as under: Sr.No. Product Name (A) Dried Leguminous Vegetable Flours (B) Rice Wheat Flours Total Flours (A+B) (%) (C) Additives (D) Spices Total (A+B+C+D) (%) Bengal Gram (Chana Dal) (%) Black Gram (Udad Dal) (%) Green Gram (Moong Dal) /Red Gram (Toor Dal)% Total (%) Rice Flour (%) Refined Wheat Flour (%) Wheat Flour (%) Total (%) Additives (%) Name of Additives Spices (%) Name of Spices 1 Gota Instant Mix Flour 400 gm (including chutney powder of 40 gm) 66.60 66.60 0.00 66.60 25.60 Sugar, Iodised Salt, Raising agent (Sodium bicarbonate INS 500(ii)), Acidity regulator (Citric acid INS 330) 7.80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27.00 60.50 60.50 87.50 12.50 Sugar, Iodised Salt, Raising agent (Sodium bicarbonate INS 500(ii)), Acidity regulator (Citric acid INS 330) Nil N.A. 100.00 7 Dhosa Instant Mix Flour 400 gm 20.00 20.00 59.00 15.50 74.50 94.50 5.50 Iodised Salt, Acidity regulator (Citric acid INS 330), Raising agent (Sodium bicarbonate INS 500(ii)) Nil N.A. 100.00 8 Pizza Instant Mix Flour 400 gm 0.00 75.50 75.50 75.50 24.50 Hydrogenated Vegetable Oil, Acidity regulator (Citric acid INS 330), Raising agent (Sodium bicarbonate INS 500(ii)) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cereal flours other than of wheat or meslin i.e. maize (corn) flour, Rye flour, etc. put up in unit container and,- (a) bearing a registered brand name; or (b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available other than those where any actionable claim or any enforceable right in respect of such right has been voluntarily foregone subject to conditions as in the Annexure 2.5% CGST + 2.5% SGST 59. 1106 Meal and powder of the dried leguminous vegetables of heading 0713 (pulses) other than guar meal 1106 10 10 and guar gum refined split 1106 10 90, of sago or of roots or tubers of heading 0714 or of the products of Chapter 8, put up in unit container and (a) bearing a registered brand name (b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available other than those where any actionable claim or any enforceable right in respect of such right has been voluntarily foregone subject to conditions as in the Annexure 2.5% CGST + 2.5% SGST 6. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the Rate Notification which reads as follows: Explanation . For the purposes of this notification,- (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. 2. The relevant extract of such rules of interpretation of Customs tariff reads as follows: 2(b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. 3. When by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) the heading which provides the most ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y characteristics which are imparted by resins. Paper does not process any of these characteristics. Therefore, applying Rule 3(b) and going by the essential characteristics of such laminated sheets, these goods are more appropriately classifiable under chapter 39. The aforementioned judgement is squarely applicable in the case of the applicant. 6.6 The applicant is further supported in its contention by a circular no. 80/54/2018-GST dated 31.12.2018 issued by the Central Board of Indirect Taxes and Customs wherein the following has been clarified with regard to classification of Sattu and is squarely applicable to this case: 3. Applicability of GST on Chhatua or Sattu: 3.1 Doubts have been raised regarding applicability of GST on Chhatua (Known as Sattu in Hindi Belt). 3.2 Chhatua or Sattu is a mixture of flour of ground pulses and cereals. HSN code 1106 includes the flour, meal and powder made from peas, beans or lentils (dried leguminous vegetables falling under 0713). Such flour improved by the addition of very small amounts of additives continues to be classified under HSN code 1106. If unbranded, it attracts Nil GST (S. No. 78 of notification No. 2/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Circulars issued by the Board. Similar is the view taken by this Court in the case of Collector of Central Excise, Bombay v. Kores [India] Ltd. 1997 (89) ELT 441 (SC). 6.8 The applicant further points out that for the same products Kitchen Xpress Overseas Limited had filed application for determination under Section 80 of the Gujarat Value Added Tax Act, 2003 (herein after referred to as the Vat Act ). The relevant entry for consideration before the determining authority was Entry 12(ii) of Schedule I to the Vat Act which read as Flour of cereals and pulses except maize flour . The learned determining authority by order no. 2010/D/171-177/No. 356-359 dated 12.8.2010 held that instant flour mixes such as gota flour, khaman flour, dalwada flour, dahiwada flour, idli flour, dhokla flour and dosa flour were classifiable under Entry 12(ii) of the Vat Act. 6.9 The applicant has submitted that determination orders passed under the Vat Act which was the legislation preceding the GST Acts are relevant for the purpose of deciding classification under the GST Acts. The applicant relies upon the judgement of Hon. Gujarat High Court in the case of West Coast Waterbase Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Tamil Nadu (1989) 2 SCC 285; (b) State of Uttar Pradesh v/s Deepak Fertilizers Petrochemical Corporation Ltd. (2007) 10 SCC 342. 7.2 The applicant clarifies that they are aware of the technical criteria for flour to be classifiable under heading 1101/1102 as contained in General Chapter Note 2(B) of the HSN. The applicant submits that the flour mixes containing rice/wheat flour fulfill such criteria. Presuming for the sake of argument that the criteria is not fulfilled, even then such flour mix will be classifiable under the following entry: S.No. Chapter / Heading /Sub-heading / Tariff item Description of Goods Rate of tax 103A. 2302 Bran, sharps and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants [other than aquatic feed including shrimp feed and prawn feed, poultry feed and cattle feed, including grass, hay and straw, supplement and husk of pulses, concentrates and additives, wheat bran and de-oiled cake] ; 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Illustration .- A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately; 8.3 Thus if two or more supplies are naturally bundled in the ordinary course of business then they are composite supply ; otherwise they are mixed supply . In the instant case, the chutney powder/kadhi chutney powder is naturally bundled along with the gota flour mix. They are meant for consumption together in ordinary course. Therefore, this supply being composite supply, the classification would be in the heading for the principal supply i.e. flour under heading 1106. 8.4 Alternatively, presuming for the sake of argument that the supply of gota/methi gota instant flour mix with chutney powder is mixed supply and not composite supply , the classification of chutney powder is under Entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already given herein before. The applicant says that the sole fact that the same is supplied separately for enhancing quality of the preparation cannot make it a separate supply. 9.2 Alternatively, in any case, supply of instant khaman mix flour along with masala pack is a composite supply and therefore taxable at the applicable rate of tax for the principal supply i.e. khaman mix flour. The masala pack is a mixture of chana dal flour along with sodium bicarbonate. It can only be used for making the khaman. The masala pack is therefore naturally bundled in the ordinary course of business along with supply of khaman and therefore in any case the composite supply is taxable at the rate of 2.5% CGST + 2.5% SGST. 10. The applicant vide their additional submission dated 28-6-21 submitted that Instant mix flour of idli/dhosa manufactured by Ramdev Food Products pvt.ltd. is nothing but idli/dhosa batter for the simple reason that a batter is a flour from which idli/dhosa is prepared; that similarly instant mix flour products of idli/dhosa is a flour from which idli/dhosa is prepared; that as there is no specific entry for idli/dhosa batter along with roasted gram and chutney powder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ingredients of their products given in Annexure-B is correct. However, they have re-arranged the same in a more logical way in Annexure-B(revised), hence Annexure-B submitted earlier stands revised. B. Question on which Advance Ruling sought: (a) What is the applicable rate of tax under the GST Acts on supply of instant mix flours for gota, khaman, dalwada, dahiwada, idli, dhokla, dhosa, pizza, methi gota and handvo? (b) What is the applicable rate of tax under the GST Acts on supply of instant mix flour for gota/methi gota along with chutney powder/kadhi chutney powder? (c) What is the applicable rate of tax under the GST Acts on supply of khaman along with masala pack? Personal hearing 12. Shri Manan Shah, C.A. and Shri Hardik Bhatt, Manager appeared on 306-21and reiterated the contents of the application. FINDINGS 13. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and GGST Act, 2017 are in parimateria and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per Rule 1 of the General Rules for the Interpretation of CTA, 1975, for legal purposes, classification shall be determined according to the terms of the headings and any relative Section of Chapter Notes. Thus, the classification of the product is required to be determined in accordance with the terms of the headings. As per Chapter Heading11.06, it covers Flour, Meal and Powder of the dried leguminous vegetables of Chapter Heading 07.13 and other specified products. On inspection of the Packets of each product, we find that each of the packet is marked Instant Mix . On examination of the list of ingredients we find that Spices and additives apart from flour of dried leguminous vegetables, rice and wheat are contained in different proportions. The Spices and additives contained in these products include Sugar, Iodised Salt, Red Chili Powder, Garam Masala, Black Pepper, Coriander, Ajwain , Fennel, Raising agent(Sodium bicarbonate INS 500(ii)), Acidity Regulator (INS 330) means Citric Acid etc. The proportion of Spices and additives contained in these products ranges from 5% to 33.4%. The proportion of Spices and additives is 11% in Khaman Flour, 33.4% in Gota Flour, 8% in Dalwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of gluten, generally not exceeding 10%. The heading also covers swelling (pregelatinised) flours which have been heat treated to pregelatinise the starch. They are used for making preparations of heading 19.01, bakery improvers or animal feeds or in certain industries such as the textile or paper industries or in metallurgy (for the preparation of foundry core binders). Flours which have been further processed or had other substances added with a view to their use as food preparations are excluded (generally heading 19.01). This heading also excludes flours mixed with cocoa (heading 18.06 if they contain 40% or more by weight of cocoa calculated on a totally defatted basis, or heading 19.01, if less) 11.02 Cereal flours other than of wheat or meslin. This heading covers flours (i.e. the pulverised products obtained by milling the cereals of chapter 10) other than flours of wheat or meslin. Products of the milling of rye, barley, oats, maize (corn) (including whole cobs ground with or without their husks) grain sorghum, rice or buckwheat are classified in this heading as flours if they fulfil the requirements as to starch content and ash content set out in paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y small quantities to improve or enrich the flours and the resultant product still remain classified in those Chapter Headings. The proportion of Spices and other additives contained in these products ranges from 5.5% to 29.25%. The proportion of Spices and other additives is 7% in Idli Instant mix flour, 12.5% in Dhokla Instant mix flour, 5.5% in Dhosa Instant mix flour, 21% in Handvo Instant mix flourand 24.50% in Pizza Instant mix flour. It is also evident from the recipe submitted by the applicant that the Spices and additives have been added to the flours with a view to their use as food preparations. As such, in view of the Explanatory Notes of the HSN, these products are excluded from the Chapter Heading 1101 and 1102. 20. The applicant has also contended that their Instant mix flours of Idli and Dhosa are nothing but idli/dhosa batter for the simple reason that batter is a flour from which idli/dhosa is prepared; that there is a specific entry for idli/dhosa batter along with roasted gram and chutney powder and is classifiable under heading no.2106 with GST @5%. In this regard, we find that entry referred to by the applicant appears at Entry No.100A of Schedule-I of Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics(appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter 38). . 23. The subject 10 products of Mix Flour/ Instant Mix Flour are preparations for use, after processing, such as cooking, carrying out the detailed procedure for cooking as mentioned on the packets of all the said products, then ready for human consumption. The applicant submitted that the products are not in ready to consume form but needs to be subjected to further processing and cooking for conversion into ready to eat food . We find that Chapter Heading 2106 is not confined to processed or semi processed food, cooked or semi cooked food, preserved food and ready to eat food. In fact, a food preparation which is not elsewhere specified in the HSN, gets covered under HSN 2106. On the packets of all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded, entry at Sr. No. 23 of Schedule - III reads as follows - S.No. Chapter/ Heading/ heading/ item Sub-Tariff Description of Goods 23. 2106 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] 26.2 Thus, Food preparations not elsewhere specified or included falling under Chapter Heading 2106 are covered under the aforesaid Entry at Sr. No. 23 of Schedule- III of Notification No. 1/2017-Central Tax, as amended, attracting Goods and Services Tax @ 18% (CGST 9% + SGST 9%), though some of the specific products of Chapter Heading 2106 excluded from this entry are covered under different entries of Schedule-I or Schedule-II, attracting Goods and Services Tax @ 5% or 12%. None of the aforesaid 10 products of various Instant Mix / Ready Mix Flour being supplied by the applicant are the products which have been excluded from the entry at afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a supply of such principal supply; and (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. 28.2 composite supply and mixed supply are as follows: 2(30) composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration .- Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply; 2(74) mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Illustration .- A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied ..... X X X X Extracts X X X X X X X X Extracts X X X X
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