TMI Blog2021 (12) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... od product as such it is made from the dough based on flour like wheat flour, rice flour, starch, corn flour and cereal flour. Therefore, the products of the appellant fall under the Chapter Heading 1905. However, the question still remains whether the products of the appellant can be termed as Papad. The product Papad is an eatable item, originated and mainly consumed in India. Therefore, there is no mention of the product Papad in the Explanatory Notes of the HSN. The term Papad has neither been defined in the Customs Tariff Act, 1975 nor under the CGST Act, 2017 or the Notifications issued there under. Fryums is brand name of a company and not the generic name of the impugned product, therefore it would not be logical to hold that the appellant s product is Fryums . However, in general public, Fryums is popular word for 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. Similarly, calling product in question of different shapes and sizes by Fryums does not change the basic character of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Tariff Act, 1975 as classified by the GAAR. The product different shapes and sizes Papad involved in the present case merit classification under Tariff heading No. 19059040 of the Customs Tariff Act, 1975. As it is already held that the product in question is classifiable under CTH No. 1905 of the Customs Tariff Act, 1975, the said CTH No. 1905 is covered under entry No. 16 of Schedule-III of Notification No. 1/2017-CT (Rate) dated 28.06.2017 and accordingly chargeable to 18% {9% CGST +9% SGST} rate of Goods and Services Tax. - GUJ/GAAAR/APPEAL/2021/30 - - - Dated:- 2-11-2021 - J. P. GUPTA AND SEEMA ARORA, MEMBER Present for the appellant : Advocate Apurva N Mehta At the outset we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 and Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act, 2017 and the GGST Act, 2017 ) are in pari materia 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 to the CGST Act, 2017 would also mean reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017, or the Notifications issued under the CGST Act, 2017/ GGST Act, 2017/ IGST Act, 2017. It is 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. It is also observed that in market, Papad commonly are sold in ready to cook condition and not fried or baked form whereas appellant s product are sold in market as fried Fryums in ready to eat and not ready to cook condition. In terms of Gujarati language, it can be said that cooked or fried Fryums are served as Farsan and not as Papad , whereas cooked or fried Papad is served as only Papad . Hence Papad even after roasting or frying are known and used as Papad only whereas the fried Fryums with masala are known as Fryums only. Therefore, in commercial or trade parlance also, the fried Fryums with masala cannot be said to be known as Papad . Both the products are different and have their individual identity. Accordingly, in common parlance test, the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gy innovation and different demand of different class of customer Papad comes in different shapes and sizes. The dough remains the same with minor variations in proportion of ingredients and the dough is moulded in the desired shape and size may be round, square, semi circle, hollow circle with bars in between or may be square with bars in between intersecting each other or may be of the shape of any instrument, equipment, vehicle, aircraft, animal, etc. The different shapes and sizes are obtained with the help of a die and there is no difference in either the ingredients used or in the process of manufacture. 10. The appellant has submitted that the principal raw materials for their papad products are rice flour, corn flour, wheat flour, superfine wheat flour, cereal flour, tapioca starch, potato starch, salt, water and flavor as the case maybe. Similar raw-materials including pulses, salt, water etc. are used for making papad. 11. The appellant has submitted that as per their understanding their product in question i.e. Papad of different shapes and sizes papad in ready to eat condition seems squarely eligible to be classified under Chapter Tariff Heading 1905 and covers u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that considering the ingredients used and the process followed for manufacture of product read with Chapter Headings and Tariff entries, the products manufactured by them should merit classification under tariff heading 1905 90 40 as PAPAD . 15. The appellant has placed reliance on the Ruling passed by the Authority for Advance Rulings, Tamilnadu in Subramani Sumathi Order No. 7/AAR/2019 Dt:22/01/2019 wherein the issue of classification of PAPAD made of maida was for consideration before Advance Ruling Authority and it has been held therein that the product in question was eligible to be classified as PAPAD under Tariff Heading 19050540. 16. The appellant has submitted that today PAPAD does not resemble the same age old traditional round shaped papad anymore. Today, due to huge change in the market demand, huge change in the taste buds of the masses and huge change in the technology, they are able to bring some change in the shapes and sizes of traditional papad and the same is accepted and appreciated in the market. Due to advancement of technology, it has become possible to bring change / modification in the mindset of the people also that now PAPAD does not resemble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t nomenclature in different parts of the country e.g. PAPAD, PAPPAD, PAPPADAM, APLAM, KHICHIYA, etc. Similarly, the modern day PAPAD with different shapes and sizes is also known and recognized by different nomenclature in different parts of the country e.g. PAPAD, FRYUMS, BHUNGLA, NADDA, GONGO, PONGA, GOLD FINGER, WHITE FINGER, FINGER, NALI, etc. Specifically keeping in mind the different nomenclature given to same commodity in different parts of the country and to avoid probable litigations, the entry relating to PAPAD has been deliberately worded as PAPAD, BY WHATEVER NAME IT IS KNOWN and not as only PAPAD . 18. The appellant has submitted that for various shapes and size of Papad, one more common nomenclature used is FRYUMS though FRYUMS is a registered brand name of TTK Healthcare Ltd. and not the name of any of product of PAPAD, would be eligible to be considered as and falling under the entry of PAPAD or not has been very well settled far back by Honourable Supreme Court in the case of Shiv Shakti Gold Finger Vs. Assisstant Commissioner, Commercial Tax, Jaipur (1996) 9 SCC 514 wherein Honourable Supreme Court has clearly observed and held that irrespective of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sification should not have any impact so far when the entries remain similar if not exactly the same. Under the erstwhile VAT Act if a product is considered as PAPAD then the product does not seize to be a PAPAD merely because VAT Act is no more in existence and has been replaced by GST Act. The said principle has been laid down by Honourable High Court that when there is no material change in the entries, the classification adopted in earlier law should continue to prevail and accepted. { West Coast Waterbase Pvt. Ltd. Vs. State of Gujarat (2016) 95 VST 370 (Guj.)} 21. The appellant has submitted that the decision of Honourable Karnataka High Court in State of Karnataka Vs. Vasavamba Stores [2013] 60 VST 19 (Karn.) has been carried by State of Karnataka before Honourable Supreme Court. However, as per their knowledge and subject to verification, Honourable Supreme Court has neither granted any stay on operation and execution of the decision of Honourable Karnataka High Court. As per settled legal position, till a judgment is stayed or reversed, it is the authority prevailing and the judicial discipline demands that the said judgment be honoured and followed. Reliance h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... YUMS is sole right and authorization of TTK Healthcare Ltd. only. Thus, M/s. TTK Healthcare Ltd. owns the right to sell PAPAD manufactured by it under the brand name of FRYUMS . So, FRYUMS is not a distinct type of product but it is PAPAD sold under the brand name of FRYUMS owned by TTK Healthcare Ltd. Hence, for the purpose of classification, the issue cannot be that whether a product is FRYUMS or PAPAD or whether FRYUMS can be considered or classified as PAPAD because there is no such product with the name of FRYUMS and hence there remains only one product i.e. PAPAD. 26. The appellant has submitted that Honourable Authority for Advance Ruling (AAR) has passed an order in the case of M/s. Sonal Products on 22/02/2019 wherein it has been held that un-fried Fryums falls under Tariff Heading 21069099 and taxable at 18%. In the said order it has been recorded that thus, the appellant themselves have submitted that fried, salted or spiced Fryums are commonly known and used as Namkin . The appellant has submitted that in their case, this is neither their case nor submission. 27. Further, the appellant has submitted that the ruling of Hon ble AAR given in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 there is conflict between two entries one leading to an opinion that it comes within the purview of the tariff entry and another the residuary entry, the former should be preferred. (vi) The another 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. Applying the said principle while classifying the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... YUMS would be classified under the entry of COOKED FOOD or RESIDUARY ENTRY . Thus, there was no occasion for Honourable Supreme Court to consider the issue of classification of FRYUMS under entry of PAPAD. (iv) The observation that shape of appellant s product is different from PAPAD and hence cannot be considered as PAPAD is not true and correct and most importantly not well founded. Further, submitted that the observation of AAR that when a customer asked for PAPAD shopkeeper gives traditional round shape PAPAD but it is equally true that when asked FANCY Papad shopkeeper gives appellant like product. Therefore, it cannot be said that products of the appellant do not pass the common parlance test. Further, applicant has submitted that one of the common parlance test is that in the marriage functions and social functions products similar to that of appellant are served along with traditional round shape PAPAD. Thus, the persons using this product do not differentiate between the products similar to appellant and traditional round shape PAPAD because both the products are known, understood, recognized and used as PAPAD. (v) The observation of GAAR that looking to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and current law then merely because there is change in law classification cannot be disturbed. Under GVAT Act, the entry was Khakra, papad and Papad Pipes, considering this entry, the GVAT tribunal has held that the product similar to that of appellant to be eligible for classification under said entry as PAPAD. It is evident that there is no material change in the entry under the GVAT Act and GST Act. Thus the judgments and determination orders passed under the GVAT Act and relied upon by the appellant, being on the same products and being in relation to similar entry, are required to be followed. The AAR has not referred the judgement of Hon ble High Court of Gujarat in the case of West Coast Waterbase Pvt. Ltd. Vs State of Gujarat- 2016 (95) VST 370(Guj.). (x) The learned AAR has held that the judgment relied upon by the appellant are inapplicable on the ground that they belong to earlier laws i.e. VAT Act and also they are not in relation to First Schedule of Customs Tariff and on the other hand the learned AAR places reliance upon the judgments which are under the Sales Tax Act which was prior even to VAT Act and on the Tariff entries prior to 2005 i.e. old entries. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf says that Food preparations not elsewhere specified or included. So, tariff heading 1905 90 40 is specific heading for classification of products of appellant. In this regard, the appellant has placed reliance on the decision of M/s. Bradma of India Ltd. Vs. State of Maharashtra 140 STC 17 (SC) and Mauri Yeast India Pvt. Ltd. Vs. State of UP 2008 (225) ELT 321 (SC). (xiv) The appellant has submitted that another 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. Applying the said principle by no means it can be said that appellant s product is eligible to be classified under heading 2106 because by no stretch of imagination the product of the appellant can be equated with either Misthan or Mithai or Namkeen or Chabena or Bhujia . Thus, heading 2106 90 99 even as general entry is not capable of including the product of the appellant and 1905 90 40 is the only entry and most specific entry where the product manufactured by the appellant would fall. (xv) The various issues and decisions relied upon by the appellant have neither been controverted nor distingui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has submitted that they are engaged in the business of manufacturing and trading of Papad of different shapes and sizes in ready to eat form. Papad in ready to cook/un-fried form is purchased by the appellant from the market. The same is first fried and various masala powders are applied and packed in small packets for being sold in market . The shape and size may vary but the ingredients, the proportion of ingredients, the composition and the recipe remains similar, if not exactly the same. The said product Papad of different shapes and sizes that are ready to eat condition eligible to be classified under Chapter Tariff Heading- 1905 of Customs Tariff Act, 1975 accordingly, vide entry at Sr. No. 96 under Not. No. 02/2017CT (Rate) dated 28.06.2017 product in question is exempted from the levy of Goods and Services Tax. 34. To decide the classification of the product in question i.e. PAPAD of different shapes and sizes in ready to eat form, it would be prudent to know what PAPAD is, what the main ingredients of PAPAD are and how it is manufactured. The term PAPAD has not been defined in the CGST Act, 2017, therefore we resort to the common sense and meaning that sense by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Now, we discuss the appropriate classification of the impugned product i.e. different shapes and sizes of PAPAD in ready to eat form. The appellant claims that their product merit classifiable under CTH No. 1905 of the Customs Tariff Act, 1975. We refer relevant chapter Note, headings, HSN Explanatory Notes to examine the appellant s claim. Chapter 19 of Custom Tariff Act, 1975 covers all the products which are prepared of cereals, flour, starch or milk and pastrycook s product. CTH No. 1905 of the Custom Tariff Act, 1975 is as: 1905 BREAD, PASTRY, CAKES, BISCUITS AND OTHER BAKERS WARES, WHETHER OR NOT CONTAINING COCOA; COMMUNION WAFERS, EMPTY CACHETS OF A KIND SUITABLE FOR PHARMACEUTICAL USE, SEALING WAFERS, RICE PAPER AND SIMILAR PRODUCTS 1905 90 Other : 1905 90 10 --- Pastries and cakes 1905 90 20 --- Biscuits not elsewhere specified or included 1905 90 30 --- Extruded or expanded products, savoury or salted 1905 90 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cereal flour and all these products are covered under Chapter 10 and 11 of Customs Tariff Act. The said product can be categorized as crispy savoury food product as such it is made from the dough based on flour like wheat flour, rice flour, starch, corn flour and cereal flour. Therefore, the products of the appellant fall under the Chapter Heading 1905. However, the question still remains whether the products of the appellant can be termed as Papad. The product Papad is an eatable item, originated and mainly consumed in India. Therefore, there is no mention of the product Papad in the Explanatory Notes of the HSN. The term Papad has neither been defined in the Customs Tariff Act, 1975 nor under the CGST Act, 2017 or the Notifications issued there under. 40. We find that for determination of the correct classification of any product ingredient used in the manufacture of the said product are decisive factor. 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 predominant contents is generally accepted as proper test. Further, Honourable Allahabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot according to common parlance. [paras 18, 31, 34] 41.2 The Hon ble Supreme Court of India in case of CCE, Nagpur v. Shree Baidyanath Ayurved Bhawan Ltd. [2009 (237) E.L.T. 225 (S.C.)] has held that, Common parlance test continues to be one of the determinative tests for classification of a product whether medicament or cosmetic. What is important to be seen is how the consumer looks at a product and what is his perception in respect of such product. The user s understanding is a strong factor in determination of classification of the products . 41.3 We find that the appellant has submitted that the impugned product of different shapes and sizes PAPAD are known by different nomenclature in different parts of the country whereby more common nomenclature used is FRYUMS though FRYUMS is a registered brand name of TTK Healthcare Ltd. and not the name of any of product of PAPAD. Whereas the GAAR in its ruling has held that the 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 are known in the mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) Papad is an accompaniment to Indian meal. 42.2 The appellant has submitted that main ingredients of their products different shape and size Papad are wheat flour, superfine wheat flour, rice flour, starch, corn flour, cereal flour, potato starch, tapioca starch and flavours etc. The main ingredient of PAPAD and impugned products of the appellant (different shape and size Papad) are more or less similar. 42.3 The manufacturing process of the products under consideration has been submitted by the appellant. It has been submitted that ingredients are mixed in machine with water and oil, dough is prepared and passed through die of different shapes and size to manufacture different shapes and size of papad and then dried through various stages. Thereafter, the appellant product is fried and masala powder is applied. The product of the appellant, thus prepared, is thin and wafer like product. At this stage, the product is ready to eat for consumption. Though, traditionally Papad has been prepared manually, in round shape. However, when ingredients and process are similar in case of PAPAD and impugned product, then the product in question is nothing but a kind of PAPAD irr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I 405 and in M/s. Swethin Food Products Vs. State of Gujarat 2016 GSTB I 296, Honourable Tribunal has clearly held that Fryums are nothing but PAPAD falling under entry 9(2) in schedule I to the GVAT Act and exempt from payment of tax. 44. The above decisions are squarely applicable in the instant case as such the impugned product having different shapes and size PAPAD as compared to round shape Papad however are similar to Papad in respect of the ingredient, manufacturing process and use. 45. The appellant has contended that their product covers under Entry number 96 of Notification No.2/2017 Central Tax (Rate) Dt:-28/06/2017 which exempts the supplies from the levy of tax, reads as under:- 96. 1905 Papad, by whatever name it is known, except when served for consumption 46.1 We find that the entry No. 96 of the Notification No. 02/2017-CT (Rate) dated 28.06.2017 covers only such type of Papad products which are supplied in ready to cook condition because such type of un-cooked Papad cannot be served for consumption without applying the process either of Roasting or Frying . Whereas the appellant s pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduct in question different shapes and size Papad merit classification under CTH No. 21069099 of Customs Tariff Act, 1975 on the grounds 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 products i.e. different shapes and sizes of Papad is not Papad but is fried Fryums . In the aforementioned paras, we have already discussed that the Fryums is a brand name and not a generic name of the product therefore, impugned product different shapes and size of papad , known as Fryums, is nothing but Papad. 48. We find that CTH No. 2106 of Customs Tariff Act, 1975 covers the Food preparations not elsewhere specified or included means under this heading all types of foods preparation are covered which are not covered under the specific heading of tariff. It is important to refer to Chapter Notes of Heading #21 wherein under clause 5 (b) it is stated that Heading 2106 includes preparations for use, either d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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