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TMI Blog2022 (3) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... the notifications issued there under shall include a reference to the corresponding provisions of the KSGST Act, Rules and the notifications issued there under 3. Brief facts of the case: 3.1. The appellant is engaged in business as a supplier of goods such as Banana Chips, and Sharkaraivaratty. These items are sold without brand name. Jack Fruit chips is made by frying the fruit in edible oil. Potato and Tapioca Chips are also made by frying in edible oil. Salt is applied at the stage of frying. These will be sold as salted chips. If the chips are applied with masala after frying, it becomes masala chips. Banana Chips are made by slicing banana to thin round pieces and fried in edible oil. Salt and turmeric powder are also applied. In case of masala chips, appropriate type of masala is added. Sharkaraivaratty is made by frying, in edible on, thick pieces of banana slices. Thereafter, they are mixed thoroughly in dense syrup of jaggery and thereafter in powder of dried ginger (chukku) and cardamom. As banana chips (salted and masala), jack fruit chips, and Sharkaraivaratty are edible preparations, the contention of the appellant is that first two are savory and sharkaraivaratty i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fruit Chips, Banana Chips and Sharkaraivaratty fall under HSN 2008.19.40 and have to be classified under Entry 40 of Schedule 2 of Notification No. 1 of 2017 and tax at 12% is to be paid. The Advance Ruling IN RE: MR. P.M. SANKARAN [KER/53/2017 Dated 21 June 2019], states that Baked Chips come under HSN 2008 19 40 and taxable at vide Entry 40 of 2nd Schedule, [Notification No. 1/2017/CT(rate) dtd. 28-06-2017 & SRO. No. 360/2017]." From the Ruling, it appears that the applicant himself had conceded that banana chips supplied by him were "baked chips". The Ruling is on the basis of ingredients and classification reported by the applicant and not on an analysis of the products. Relevant enteries of the impugned goods are reproduced below for easy reference:- Entry 40/ Sch. 2 of Notification 1 of 2017 HSN 2008 Fruits, nuts and other edible parts of plants, otherwise prepared of preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included; such as Groundnuts, Cashew nut roasted and salted, Other roasted nuts and seeds, squash of Mango, Lemon, Orange, Pineapple or other fruits. Chapter 20 Chapter Heading Preparations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be classified as NAMKEENS in view of Supplementary Note No. 6 of Chapter 21 of Customs Tariff Act. In this context, Circular Number 113/32/2019-GST [F.NO. 354/131/2019-TRU], DATED 11-10-2019 is relevant. Paragraph 3.4 of the circular states that "However, if the above dried leguminous vegetable is mixed with other ingredients (such as oil, salt etc) or sold as namkeens then the same would be classified under Sub heading 2106 90 as namkeens, bhujia, chabena and similar edible preparations and attract applicable GST rate." 3.6. Further Note No. 1 of Chapter 20 states that the chapter does not cover vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, 8 or 11. I understand that Banana and Jackfruit are classified under Chapter 8 of Customs Tariff Act, with HSN Code 0803 and 0810.90.90 respectively. So, chips and Sahrkaraivaratty are not covered by HSN 2008 and hence do not fall under Entry 40 of Schedule II of Central Tax (Rate) Notification No. 1 of 2017. Entry 2008 19 40 of Customs Tariff Act refers to "Other roasted and fried vegetable products". Bananas and Jackfruit being not vegetables, its chips cannot be classified under this HSN. More ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or sold out of individual choice or taste probably to cater to their particular customers as part of their business method or marketing method. But, these isolated or individual choices or taste for marketing particular goods will not and cannot render such goods as one covered by the words "bakery products". 3.7.2."We are of the view that the Appellate Tribunal was in error in holding that the words "bakery products" will take within its fold anything dealt with or marketed or connected with the bakery. In order to say that particular goods are covered by the said word, those goods should be understood in their natural, ordinary or common parlance as bakery goods. So viewed, we are of the opinion that the mere fact that banana chips, tapioca chips, murukku, achappam, pakkavada and mixture were sold or marketed by the dealer, who is really a baker, cannot be covered by the entry 'bakery products" within the meaning of those words as occurring in the Kerala General Sales Tax Act. This is so especially in the context and collocation of words occurring in the First Schedule to the Kerala General Sales Tax Act " 3.8. ADVANCE RULING NO.KER/66/2019 dated SEPTEMBER 30, 2019, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PRODUCTS STANDARDS AND FOOD ADDITIVES) REGULATIONS, 2011, it is stated that that banana chips and similar fried products such as Chiwda, Bhujia, Dalmoth, Kadubale, Kharaboondi, Spiced and fried dals, sold by any name are traditional foods ie., Snacks of Savouries (Fried Products). 3.12. Based on the position stated above, the following queries were raised before Honourable Authority for its Ruling: - Query 1: Whether Jack Fruit Chips and Banana Chips (salted and masala varieties) made out of raw as well as ripe banana and sold without BRAND NAME are classifiable as NAMKEENS and are covered by HSN Code 2106.90.99 and taxable under Entry 101 A of Schedule of Central Tax (Rate) Notification 1 of 2017? Query 2: Whether Sharkaraivaratty sold without BRAND NAME is classifiable as SWEET MEATS and covered by HSN Code 2106.90.99 and taxable under Entry 101A of Schedule of Central Tax (Rate) Notification L of 2017? Query 3: Whether Roasted and salted / salted / roasted preparations such as of Ground-nuts, Cashew nut and other seeds are NAMKEENS and when sold without a brand name can they be classified under HSN 2106.90.99 and taxed under Entry 101 A of Schedule of Central Tax (Rate) Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applying salt, masala and the like. As the term "NAMKEEN" is not defined under CGST Act, common parlance test ought to have been applied. That common parlance meaning has to be applied is clear from the wordings of Supplementary Note No. 6 of Chapter 21 "commonly known as 'Misthans" or 'Mithai" or called by any other name. They also include products commonly known as "Namkeens", "mixtures", "Bhujia", "Chabena" or called by any other name. Such products remain classified in these sub-headings irrespective of the nature of their ingredients". Therefore chips made from banana, jackfruit, tapioca, chembu and potato and kovakkai and pavakkai vattal are NAMKEENS and classifiable under HSN 2106.90.99 and Entry 101 A of Schedule 1 of Central Tax (Rate) Notification 1 of 2017. 4.5. Supplementary Note No. 6 in Chapter 21 makes HSN 2106.90.99 a specific entry. So, chips made from banana (ripe as well as raw), tapioca, jack fruit, potato and chembu and kovakka and pavakka vattal, ought to have been held as NAMKEENS and liable for tax under Entry No. 101 A of Central Tax (Ratel Notification No. 1/2017 dated 27/06/2017. So, the question of including them under any other Chapter like Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashew nut, other roasted nuts and seeds, SQUASH of Mango, Lemon, Orange, Pineapple or other fruits. As what is sold is not a "NUT or "SQUASH" of any fruit, this entry is not attracted. 4.8. By applying the principles of para 3.3 and 3.4 of Circular Number 113/ 32 /2019 - GST [F.NO. 354/131/2019-TRU], dated 11-10-2019, Sharkkaraivaratty and Halwa chips of banana, jackfruit, tapioca, chembu, potato, kovakkai and pavakkai vittal and similar preparations are namkeen. In Paragraph 3.4 of the Circular, it is stated that "However, if the above dried leguminous vegetable is mixed with other ingredients (such as oil, salt etc) or sold as namkeens then the same would be classified under Sub heading 2106 90 as namkeens, bhujia, chabena and similar edible preparations and attract applicable GST ratsse." 4.9. It is also highlighted that GST Rate for the fruits or tubers [Banana (HSN 0803), Jackfruit (HSN 0810.90.90), Potato (HSN 0701) and tapioca (HSN 0714.90.90)] GST Rate is NIL and they attract 5% GST when sold as ready to eat food preparations. 4.10. Chapter 21 includes items processed out of vegetables like tomato, soya etc., as can be seem from 2103.20.00 (tomato ketchup and other tomat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processed out of vegetables like tomato, soya etc., HSN 2103.20.00. Therefore, a product made out of fruit or vegetable need not necessarily fall under Chapter 20 if they are included under any other chapter by specific inclusion. 4.14. It is further submitted by the appellant that application of Rule 2(a) of the General Rules for the interpretation of Import Tariff by Learned Authority for Advance Ruling is unwarranted for the following reasons:- 4.14.1 Application of Rule 2 was made by disregarding Rule 1 of the General rules of Interpretation. Supplementary Note 6 of Chapter 21 established that chips made from banana, tapioca, jack fruit, potato, chembu, kovakka and povakka and sharkkarai varatty are Namkeens / Sweetmeats that it takes into its fold fruits, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included. It is submitted that the words "not elsewhere specified or included" is material as Supplementary Note No. 6 of Chapter 21 stipulates that products now under consideration are covered by HSN 2106.90.99. 4.15. Further in para 29 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2106.90 Namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, other than those put up in unit container and, (a) bearing a registered brand name; or (b) bearing a brand name on which an actionable claim or any enforceable right in respect of such brand name has been voluntarily foregone, subject to the conditions as specified in the ANNEXURE 6.3. The appellant has relied upon Supplementary Note No. 5 (b) of chapter 21 to claim classification under heading 2106.90, which provides as under: "Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter alia, includes: (b) preparation for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption". The appellant has contended that Supplementary Note No. 5 (b) of Chapter 21 of Customs Tariff Act states that Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter alia includes preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption. Supplementary Note No. 6 of Chapter 21 of Customs Tariff Act s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der HS Code 2706, are sweetmeats and attract 5% GST." 6.5. We find that Chapter 21 of the Customs tariff covers "Miscellaneous edible preparations" and the relevant entries of heading 2106 are as under: 21.06 - Food preparations not elsewhere specified or included. 2106.10 - Protein concentrates and textured protein substances 2106.90 other The explanatory notes to the heading 2106 further excludes: (a) preparation made from fruits, nuts or other edible parts of plants of heading 20.8, provided that the essential character that the preparation is given by such fruits, nuts or other edible parts of plants (heading 20.8) Similarly the chapter note 1 to chapter 21 provides as under: *1. - This chapter does not cover 1. Mixed vegetables of heading 07.12 2. Roasted coffee substitutes containing coffee in any proportion (heading 09.01): 3. Flavored tea (heading 09.02) 4. Spices or other products of heading 09.04 to 09.10 5. Food preparations, other than the products described in heading 21.03 or 21.04, containing more than 20% by weight of sausage, meat, meat offal, blood fish or crustaceans molluscs or other aquatic invertebrates, or any combi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of plants prepared or preserved by other processes not provided for in chapter 7,8 or 11 or elsewhere in the Nomenclature. 7. Products of heading 07.14, 11.05 or 11.06 (other than flour, meal and powder of the products of Chapter 8), which have been prepared or preserved by processes other than those specific in Chapter 7 or 11. 8. Fruit preserved by osmotic dehydration. Further the explanatory notes to heading 2008 reads as follow:- This heading covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapter or in the preceding headings of this Chapter. It includes, inter alia: (1) Almonds, ground-nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives. (2) 'Peanut butter", consisting of a paste made by grinding roasted ground-nuts, whether or not containing added salt or oil. (3) Fruit (including fruit-peel and seeds) preserved in water, in syrup, in chemicals or in alcohol. (4) Fruit pulp, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on natural honey), of heading 17.04. The heading further excludes mixtures of plants, parts of plants, seeds or fruit (whole, cut crushed, ground or powdered of spices falling in different Chapters (e.g., Chapters 7, 9, 11, 12) not consumed as such, but of a kind used either directly for flavouring beverage or for preparing extracts for the manufacture of beverages (Chapter 9 or heading 21.06). 6.8. Further the entry at Sl. No. 40 of Schedule II to Notification No. 1/20017-CT (rate) dated 28.06.2017 read as follows: Sl. No. Chapter/ heading/ sub-heading /Tariff item Description of goods 40 2008 Fruits, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirits, not elsewhere specified or included; such as Ground nuts, Cashew nuts, roasted, salted or roasted and salted, Other roasted nuts and seeds, squash of mango, lemon, Orange, Pineapple or other fruits. 6.9. It is noticed that as per chapter note 1(a) to chapter 20, the chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in chapter 7, 8 or 11. It means that these items not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceding headings of this Chapter. When according to chapter notes and description of tariff items, the products are classifiable under specific headings of Chapter 20, they cannot be classified under Heading 2105 as food preparations not elsewhere specified or included or under Chapter claimed by the appellant. 6.11. The appellant had raised a contention that Application of rule 2(a) of the general rule of interpretation of the import tariff by the learned authority for advance ruling is unwarranted. In this regard, reference is made to the provisions of Notification 1/2017 CT (rate) dated 28-6-2017 which specifies about tax rate of goods and classification applicable to them. The Explanation appended to the Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 reads as follows; "Explanation:- (1) In this Schedule, tariff item, heading, sub-heading and Chapter shall mean respectively a tariff item, heading, sub-heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (2) The rules for the interpretation of the First Schedule to the said Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. Rule 4: Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. " 6.13. By applying the rules for interpretation of the tariff, specially rule 1, 2 and 3 of the same, it is evident that the impugned goods are appropriately classifiable under heading 2008 and not under heading 2106. Rule 2(a) provides that any reference to goods of a given material or substance shall be taken to include a reference to goods con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld appropriate as against heading 2005 20 00 as far as classification is concerned. This instead re-enforces the decision taken in this case by the lower authority. 6.15. Moreover, we rely upon the following case laws: (1) Hon'ble Supreme Court in the case of CCE v. Jayant Oil Mills Pvt. Ltd. reported in 1989 (40) E.L.T. 287 (S.C.) observed, inter alia, as follows; "It is well settled that resort could not be had to the residuary item if the product comes within the ambit of any other tariff item." (2) In the case of Western India Plywoods Ltd. v. Collector of Customs reported in 2005 (188) E.L.T. 365 S.C. the Hon'ble Supreme Court, inter alia, held that; "Application of residuary item only when no other heading expressly or by necessary implication applies." (3) In the case of Commissioner of Central Excise v. M/s. Wockhardt Life Sciences Ltd. reported in 2012 (277) E.L.T. 299 (S.C.); the Hon'ble Supreme Court, inter alia, laid down the following principles for classification of goods; * There is no fixed test for classification of a taxable commodity. This is probably the reason why the 'common parlance test' or the 'Commercial usage test' is the mos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding classification of roasted/salted/roasted and salted Cashew nuts, Ground nuts, and other nuts, there are specific headings under Chapter 20 that covers the products. Accordingly, roasted /salted / roasted and salted Cashew nuts are held classifiable under Tariff Heading 2008 19 10, and other roasted/ salted / roasted and salted nuts and seeds are classifiable under 2008 19 20 of the Customs Tariff Act, 1975. 6.18. In the light of the discussion above, it can be seen that the impugned products are classifiable under different Tariff Items of Heading 2008 of Chapter 20 of the Customs Tariff Act, 1975. Regarding rate of GST applicable to the said goods, the entry at Sl. No. 40 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 read as follow; Sl. No. Chapter/ Heading / Sub-Heading / Tariff Item Description of goods 40 2008 Fruits, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included; such as Ground-nuts, Cashew nu, roasted, salted or roasted and salted, Other roasted nuts and seeds, squash of Mango, Lemon, Orange, Pin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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