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TMI Blog2021 (6) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... GAAR/R/60/2020 dated 30.7.2020. 3. The appellant has raised the following question for advance ruling in the application for Advance Ruling filed by it. "Under which tariff Heading PAPAD of different shapes and sizes manufactured/ supplied by the appellant would attract CGST and SGST"? 4. The appellant has submitted that they are engaged in the business of manufacturing and trading of "Papad" of different shapes and sizes which is raw pellet that are neither fully cooked nor ready to eat and needs to be cooked first either by frying or roasting before consuming. The Papad turns out to be a papad when the dough is moulded and given the shape, usually a palm size round or may be smaller or bigger. 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 appellant has submitted that with changing of time and considering the different demands of different class of consumers innovations are made in shapes and sizes also and now Papad comes in different shapes and sizes. The Papad of different shape and size are not ready and suitable for human consumption till they are fried/baked as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fried Fryums' manufactured and supplied by applicant is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975. Goods and Services Tax rate of 18% (CGST 9% + GGST 9% or IGST 18%) is applicable to the product 'Un-fried Fryums' as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. 6. Aggrieved by the aforesaid advance ruling, the appellant has filed the present appeal. 7. During the course of personal hearing held on 15.12.2020, the appellant reiterated the submissions made in the appeal dated 29.08.2020. 8. The appellant in the ground of appeal has submitted that they are in the business of manufacturing and trading of "Papad" of different shapes and sizes. The Papad, turns out to be a papad when the dough is moulded and given the shape, usually a palm size round or may be smaller or bigger. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 High Court in the case of Commissioner of Customs, C.G.O. Vs. Sonam International [2012-275-ELT-326- ALL] upheld that assessment of goods with regard to payment of customs duty is to be made based on contents involved. The Chapter Notes in the Customs Tariff also prescribed the contents or ingredient of the products in order to include or exclude specific products within a given Chapter Heading. Moreover, Explanatory Notes to Chapter 19 of Harmonized Commodity Description & coding system by World Customs Organization specifies that Chapter 19 covers preparation, generally used for food, which are made either directly from the cereals of Chapter 10, from the products of Chapter 11 or from food flour, meal and powder of vegetable origin of other Chapters. 13. The appellant has submitted that considering the ingredients used and the process followed for manufacture of product read with Chapter Headings and Tariff entries, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Honourable Supreme Court observed that -in a modern progressive society it would be unreasonable to confine the intention of a legislature to the meaning attributable to the word used at the time the law was made and, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations. * In the case of M/s. Chaudhary Tractor Company Vs. State of Haryana -[2007] 8 VST 10 (P&H) wherein it has been observed by Honourable High Court that -while construing the provisions of a statute, the principle of 'updating construction' should be adopted. It means that 'a construction that continuously updates' the working of an on-going Act has to be followed. In other words, it means that 'in its application on any date, the language of the Act though necessarily embedded in its own time is nevertheless to be construed in accordance with the need to treat it as current law. 16. The appellant has submitted that traditional PAPAD is known by different nomenclature in different parts of the country e.g. PAPAD, PAPPAD, PAPPADAM, APLAM, KHICHIYA, etc. Similarly, the modern day PAPAD with different shapes and size ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the GVAT Act as PAPAD. 19. The appellant has submitted that merely because the law has changed from VAT to GST, the classification 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. In this regard 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.)} 20. 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 revers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns that the product which is sold by TTK Healthcare Ltd. in the name and style of "FRYUMS" 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. 25. The appellant has submitted that the decision of Honourable Authority for Advance Ruling (AAR) given in the case of M/s. Sonal Products on 22/02/2019 cannot be relied upon as a precedent in order to classify PAPAD sold by them because the entry in question before Honourable CEGAT in the case of M/s. T.T.K. Pharma Ltd. Vs. Collector of Central Excise -1993 (63) ELT 446 (Tribunal) and entry in question in present application are completely different and more specifically when Honourable CEGAT had no occasion to consider tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 he 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 function and social function 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 photograph provided by the appellant it is evident that the shape of products of appellant and shape of PAPAD is different and hence both are distinct commodities. The appellant has submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable because the commodity in the said judgment is different from commodity of appellant. The appellant has submitted that the judgment of Hon'ble Supreme Court was relied upon by them on the principle of interpretation laid down by Hon'ble Supreme Court and not on the commodity. In this case Hon'ble Supreme Court held that narrow interpretation as sought by Revenue could not be done because bitumen is a generic expression which would include different types of bitumen in any form. Similarly, in the present case of the appellant, PAPAD is a generic expression which would include different types of PAPAD irrespective of its form, shape, size and ingredients. (x) The GAAR has placed reliance on the decision of Madhya Pradesh Advance Ruling Authority in Alisha Foods. The said ruling does not apply to the case of appellant on following grounds :(a) The product referred therein and answered therein is FRYUMS while appellant has never mentioned that its product is FRYUMS but mentioned as different shapes and sizes of PAPAD. (b) The product in question before MP Advance Ruling Authority was FRIED FRYUMS in ready to eat condition whereas the appellant products are PAPAD and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Commissioner of Central Excise, Banglore Vs. T.T.K. Pharma Ltd. -2005 (190) ELT 214 (Tribunal) relied upon by the appellant was not relied upon. 27. The appellant has submitted that Considering the overall facts and circumstances of the case vis-à-vis the entries in question and the settled law on the subject, the product i.e. PAPAD of different shapes and sizes manufactured and supplied by the appellant, irrespective of their shapes, sizes, ingredients, form and nomenclature is entitled to be classified under the Tariff Heading No.1905 and more precisely 1905 90 40 as "PAPPAD by whatever name it is known, except when served for consumption" as specified at serial number 96 under Notification No.2/2017 -Central Tax (Rate) Dt:-28/06/2017 and thus attracts NIL rate of tax under the IGST, CGST and SGST. 28. The appellant has prayed the following: [1] The impugned order dated:-30/07/2020 passed by the learned Gujarat Authority for Advance Ruling, may kindly be quashed and set aside. [2] It may kindly be held that products of the appellant are nothing but PAPAD and PAPAD Products eligible and entitled to be classified under Tariff Heading 1905 90 40 and taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PAD. In the modern era, by the advent of technology, the product is being manufactured by machines and dies of different shape and size is used in the machine. Therefore, with the help of dies of various size and shapes, it is convenient to manufacture the different shape and sizes of PAPAD. 33.1 The ingredients of the PAPAD varies but by and large main ingredient are as cereal flour, pulse flour, soya flour, rice flour, salt, Papad Khar and Asafoetida. The appellant has submitted that main ingredients of their product 'different shape and size Papad' are also wheat flour, superfine wheat flour, rice flour, starch, corn flour, cereal flour, potato starch, chana, potato lentils, papad khar, bicarb, vegetables like tomato, salt, water , food, colour etc. The main ingredient of PAPAD and impugned product are more or less similar. The main difference appears to be of ancillary used to give both the product different colour and taste according to demand of customers otherwise there is no difference in the ingredient used for manufacturing of PAPAD and impugned product i.e. different shapes and sizes of papad. 33.2 The manufacturing process of PAPAD has been taken from the internet and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under : This chapter covers a number of preparations, generally used for food, which are made either directly from the cereals of chapter 10, from the products of chapter 11 or from food flour , meal and powder of vegetables origin of other chapters (Cereal flour, groats and meal, starch, fruit vegetables flour, meal and powder) or from the goods of headings 04.01 to 04.04. The chapter also covers pastrycooks products and biscuits even when not containing flour, starch or other cereal products. CTH No. 1905 of HSN are as under: The heading includes the following product : (1) to (14) ______________ (15) Crispy savoury food product, for example, those made from a dough based on flour, meal or powder of potatoes, or maize (corn) meal with addition of a flavouring consisting of a mixture of cheese, monosodium glutamate and salt, fried in vegetable oil, ready for consumption. 36. From the above, the following are deduced: * This chapter covers the product which are made either directly from the cereals of chapter 10, from the products of chapter 11 * Crispy savoury food product made from a dough based on flour and meal. 37. From the ingredient of the product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of "Papad" which are popular in trade/common parlance are covered under the said entry. As we have already discussed in the above para that term "Papad" has not been defined in GST Act, 2017, therefore, we take the recourse of trade/common parlance test so that Papad can be defined. In the matters of classification of goods under taxation statutes, all the judicial forums, including the Apex Court, have stressed upon the importance of the identity of the goods in common parlance and there is a plethora of case laws which hold that for classification of goods under statutes for taxation of commercial supplies thereof, the primary test is their identity in the market, or in other words, their common parlance in the market. The Hon'ble Supreme Court in the case of CCE, New Delhi v. Connaught Plaza Restaurant (P) Ltd. [2012 (286) E.L.T. 321 (S.C.)] has held that, "Classification - Common parlance test - It is extension of general principle of interpretation of statutes for deciphering mind of law maker - It is attempt to discover intention of legislature from language used by it, keeping in mind, that language is at best imperfect instrument for expression of actual human thoughts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant'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 the product and the product in question remains papad. We accept that traditionally PAPAD is round shaped but the PAPAD is ready to cook product and can be consumed after roasting or frying in oil and consumed as snacks with the Indian meal or soup. Similarly, the product in question of different shape and size is a ready to cook product and can be consumed after roasting or frying in oil and consumed as snack. Further cereal flour of Chapter 10 and 11 of Customs Tariff Act, 1975 are the ingredients of both the product. Both the products i.e. "PAPAD" and product in question are same except they are known by different name in general public i.e. as "PAPAD" and "Fryums". 41.1 It may be easier for the people to say whether a product is or is not 'Papad' than to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e crispy when these products are fried or roasted. 42.5 The products of the appellant has found its use as an alternative to regular round shaped Papad or as an additional variety of Papad in the Indian meal, especially the meals served during the community functions. The caterers, who prepare the meals for the community functions, as well as the people in general, consider such products as a different type or variety of Papad only. 42.6 Therefore, we are of the view that applicant's products of different shapes and sizes of papad, whose pictures are reproduced above, are nothing but Papad, classifiable under Tariff Item 1905 90 40 of the Customs Tariff Act, 1975. 43. Now, the question which arises is, would it be judicious to stick that the product which are having Round shape, manufactured by using ingredient of cereal flour only are PAPAD and the products having the same characteristic and uses but shape and size is different cannot be termed as "PAPAD". We find that for classification of product, the ingredient, uses and common parlance test is decisive factor and not the name. The appellant has relied upon the decision of the various courts in their support. (a) Hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-CT (Rate) dated 28.06.2017. 46. Gujarat Authority of Advance Ruling in their ruling has ruled that the product in question 'different shapes and size Papad' merit classifiable 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 "Un-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. 47. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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