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TMI Blog2019 (12) TMI 1577X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts including flavoured milk. The appellant submits that flavoured Milk is obtained by adding sugar and different flavours to milk which does not change the essential character of milk. He states that it is a substitute for milk and a simple modification of milk which involves no manufacturing process. The appellant submits the process of obtaining flavoured milk as follows: "The process of the flavoured milk is standardization of fresh milk according to the fat contents and then heating at certain temperature followed by filtration, pasteurization, and homogenization and then mixing of sugar and various flavours and finally bottling. As per the flow chart, it involves various operations by RMRD team, weighing team, processing team, packing team and warehousing / dispatch teams and thereby it is a preparation and no more it is fresh milk after adding flavours. The appellant obtains flavoured milk of badam". The appellant in his plea to the AAR, A.P had raised following question. (a) What is the rate of GST applicable on outward supply of "Flavoured Milk"? The Authority for Advance Ruling, A.P, had ruled that 'flavoured milk' is classifiable under tariff item 2202 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditives referred to in the General Explanatory Note to this Chapter. The heading also covers reconstituted milk and cream having the same qualitative and quantitative composition as the natural products. 2. Flavoured milk is classifiable under HS code 2202. 3. Fitment Committee does not recommend issuance of such clarification. However, the Explanatory note to HSN Code 0402 actually reads as under: "MILK AND CREAM, CONCENTRATED OR CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER". 2.4. The appellant contends that explanatory note, as extracted against Serial No.18 for flavoured milk in the Minutes is not factually correct and the appellant is categorical about the same. After due verification, the appellant is certain that the above extract as appearing in the Minutes as well as the impugned Ruling is erroneous and not truly contained in the Explanatory Note to HSN 0402. Therefore, no credibility can be acceded to the Minutes or the reliance placed on the same in the impugned Ruling. 2.5. The appellant also states that, undoubtedly, flavoured milk will squarely fall within the scope of HSN 0402. It is more specific entry rather than HSN 2202 which deals with beverages, sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion are the mix of milk as well as milk powder, as far as milk, viz., flavoured milk is concerned, it is covered by sub-Heading 0401.11 and, skimmed milk powder and milk powder are covered by 0401.12 and 0401.13 respectively. The appellant states that the observations of Supreme Court are clear to the effect that the products of milk would be covered by this chapter and addition of sugar or other sweetener would not make a difference. Flavoured Milk is obtained by adding sugar and different flavors to the milk, which does not change the essential character of milk. It is a substitute for milk and a simple modification of the milk, with no manufacturing process involved. 2.7. The Appellant submits the following process of the flavoured milk. Flavoured milk is a result of standardization of fresh milk according to the fat contents and then heating at certain temperature followed by filtration, pasteurization, and homogenization and then mixing of sugar and various flavours and finally bottling. As per the flow chart (attached), it involves various operations by RMRD team, weighing team, processing team, packing team and warehousing / dispatch teams. The appellant renders flavoured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered by the Commissioner in the proper perspective when the matter comes up for hearing before the Commissioner on 16-8-2007. The petition stands disposed of in the above terms. It is clear that there is no law laid down by the Gujarat High Court in the said decision. The matter was left to be decided by the Central Government on the representation to be filed by the assessee therein. 2.9. The appellant further states that AAR had erred in ignoring the decision of the Supreme Court in CCE Vs. Amrit Food (324 ELT 418) on 3.9.2015 which is directly on the point as discussed above and amounts to a binding precedent under Article 141 of the Constitution of India. The appellant opines that AAR ought to have seen that the eight digit code introduced from 28.2.2005 will cover flavoured milk under Sub-Heading-0402 9990. 3. Personal Hearing The Personal Hearing was called on 19`h November 2019, for which the authorized representative Sri S. Dwarakanath, Advocate attended and reiterated the written submission. In addition, the appellant made further submissions citing the following judgments and orders at the time of Personal Hearing and the physical copies of the same are s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other 0402 99 10 Whole milk kg. Nil 0402 99 20 Condensed milk kg. 16% 0402 99 90 Other kg. Nil Further, the classification of the products in question had been changed, vide the basic Notification No. 3/2005-C.E., which is a general exemption notification prescribing effective rate for various excisable goods, and it is under this general exemption notification that Sr. No. 11A has been inserted from 15-6-2007 thereby specifying nil rate of duty for flavoured milk of animal origin as under Sr. No. Notification No. and date Amendments (1) (2) (3) 1. 3/2005-Central Excise dated the 24th February, 2005[G.S.R. 95(E), dated the 24th February, 2005] In the said notification, in the Table, after S. No. 11 and the entries relating thereto, the following S. No. and entries shall be inserted, namely :- (1) (2) (3) (4) "11A 2202 90 30 Flavoured milk of animal origin Nil" Thus, when we look into the turn of events over a period of time during the Central Excise regime, the goods under dispute had been finally placed under Chapter 22 with a specific entry mentioned as "flavoured milk of animal origin" with classification parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under HS code 2202. 3. Fitment Committee does not recommend issuance of such clarification. In this regard this authority opines that the contention of the appellant that too much of reliance being placed on the Agenda of the 31st GST Council Meeting volume-II dated: 22.12.2018 clarifying the HSN code and rate of tax of flavoured Milk by the AAR is presumptuous of nature. Moreover the appellant's argument that the extract of the clarification given in the minutes of the GST Council Meeting is not contained in the explanatory note to HSN 0402 and therefore no credibility can be acceded to the minutes is erroneous. The very purpose of mentioning the specific entry of 'Flavoured Milk' in the minutes of GST Council Meeting is meant to give clarification. The appellant has referred to the decision of the Advance Ruling Authority, Karnataka in Advance Ruling No. KAR ADRG 88/2019, dated 26.09.2019 in the matter of Karnataka Cooperative Milk Producers Federation Limited, Bengaluru. In this context we proceed to examine whether the flavoured milk can be covered under chapter 4 or in its competing entry under chapter 22. Chapter 4 deals with "Goods of Dairy produce; birds' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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