TMI Blog2022 (9) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not fermented and hence the question of reducing the said strength does not arise. Hence the impugned product is neither a beer initially nor it's alcoholic strength is reduced to 0.5% vol. Thus the impugned product does not qualify to be a non-alcoholic beer, but it is a non-alcoholic beverage. Whether the impugned product qualifies to be a malt based beverage or fruit based beverage? - HELD THAT:- The %age of Barley malt is less than the mixed fruit juice content in all the product variants. The Ginger lime variant is not considered as its production is discontinued, as per the applicant. Thus it could be inferred that the predominant component of the product is mixed fruit juice content - the contention of the applicant that the product is marketed and understood in common trade parlance as 'non-alcoholic beer' and on this basis alone it deserves to be classified under tariff item 2201 91 00 is not acceptable. The impugned product is a mixture of Barley malt, sugar, mixed fruit juice, hops, lemon extract, carbon dioxide, water, flavor other additives and Black carrot juice, amongst which the predominant is mixed fruit juice, in all variants of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of any goods or services or both can be sought by the applicant under Section 97 (2) (a) of the CGST Act 2017. Hence the instant application is admissible in terms of Section 97(2)(a) of the CGST Act 2017. 4. BRIEF FACTS OF THE CASE: The applicant furnished the following facts relevant to the issue having bearing on the question raised. 4.1 Applicant launched non-alcoholic malts on a commercial basis in 2018 as an alternative to alcoholic beer and sweetened aerated waters. As a manufacturer of alcoholic beer, the Applicant was able to leverage its expertise to create non-alcoholic malt beverages. Non-alcoholic malts are agri-based products containing barley malt and substantially lesser sugar. While beer contains 1.2% to 8% alcohol by volume (ABV), non-alcoholic malt has 0% ABV. They are manufactured out of 100% natural ingredients of agricultural origin such as barley, hops etc along with antioxidants and preservatives. 4.2 The Applicant launched a non-alcoholic malt drink called 'Kingfisher Radler' (hereinafter referred to as the product' ) in 2018. The product is akin to a beer, albeit without containing alcohol. The product replicates the ingred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tives Calories (per 100 ml) 38 Kcal 54 Kcal Sugar (per 100m1) 9.3 gms 13.6 gmgs The Ingredients used in the product are tabulated hereunder: Sl.No. Ingredients Ginger Lime (in%) Lemon (in %) Mint lime (in %) 1 Barley malt 4.03 2.94 2.77 2 Sugar 9 10.10 9.50 3 Mixed fruit juice (Equivalent reconstituted juice concentrate) 0.05 1.11 1.05 4 Hops 0.01 0.01 0.01 5 Quillaia Extract 0.04 0.02 0.02 6 Carbon Dioxide 0.52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Fruit Drink or Carbonated Beverages with Fruit juice under tariff Heading 2022 A Plain reading of the above entry suggests that it intends to cover carbonated fruit-based drinks or carbonated beverages with fruit juice. It is noteworthy that the description of goods covered by the aforesaid entry is aligned with FSSAI category 2.3.30 viz. 'Carbonted fruit Beverages or Fruit Drinks' and 'Carbonated Beverages with Fruit juice.' The said FSSAI category has been consistently referred to and applied by courts including by the Hon'ble Supreme Court for interpretation of the scope of tariff entries under chapter heading 2022. In the above factual background, the applicant is filling the present application seeking an advance ruling on coverage of the product under the said entry. 5. Applicant's Interpretation of Law: 5.1 As per Section 9 of the CGST Act, GST is leviable on supply of goods / services at rates as may be notified. The CGST rates are notified under Notification No. 1/2017 - Central Tax (rate) dated 28th June 2017 and SGST rates are notified under corresponding State Notification (jointly referred as 'the GST rate Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from malt and contains 0% alcohol, it merits classification as 'non-alcoholic beer' rather than carbonated beverage of fruit juice or fruit drink, liable to GST at 18% under Sr. No. 24A of the GST rate Notifications. e. It is therefore submitted that non-alcoholic malts have a separate and distinct classification under the Tariff viz. 2202 9100 (non-alcoholic beer) liable to GST at 18%. 5.4 In common parlance, the product is referred to and consumed as beer without alcohol (non-alcoholic malt), and not as a carbonated fruit drink or carbonated beverage with fruit juice. a. The Applicant submits that it is well settled law that an article should be classified under the customs Tariff (as applicable to GST) on the basis of its popular sense, i.e., the sense in which people conversant or dealing with the commodity would attribute to it. Reliance in this regard is placed on the decision in Asian paints India Ltd v. Collector of Central Excise [1988 (35) E.L.T (SC)] Wherein it was held that while interpreting items in taxing statutes whose primary object was to raise revenue and for which purpose to classify diverse products, resort shall be made to their po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the amendment Notifications do not apply to the product as it is neither known nor consumed as a carbonated beverage of fruit drink or fruit juice. 5.5 Product does not qualify as Carbonated beverages of fruit drink a. Fruit drink in common parlance means non-alcoholic beverages that are obtained by subjecting different types of fruit to certain processes according to a series of rigid standards to avoid food frauds or the marketing of ungenuine foods . Collins dictionary (web edition), defines fruit drink as (non-alcoholic) beverage made from fruit. b. It is submitted that a 'fruit drink' is understood as a drink obtained / made from fruit. Since the product at hand is made from malt and contains traces of fruit only for flavouring purpose, it cannot be considered as Carbonated beverages of fruit drink . c. Further, a search on the web browser using term 'fruit drink' will show results for products like maaza, minute maid, real fruit drinks, etc., while a search of 'carbonated fruit drink' will show results for products like Appy Fizz, Shunya Go, Shunya Fizz, Frusia, etc. These searches will not show results ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn as carbonated fruit drink, it should be prepared from fruit juice and water or carbonated water whereas in case of the product at hand, it is essentially prepared from wort, i.e., a malt extract, and minimal fruit juice and carbonation is added merely for flavouring and freshness purpose respectively. The product is also marketed as a non-alcoholic drink rather than fruit-based beverage. g. The Applicant accordingly submits that since the said product contains less than 5% of fruit juice / pulp, it cannot be classified as carbonated fruit beverage or fruit drink as it is a 'malt beverage'. h. In view of the above, the product at hand is not a fruit drink and is neither understood nor sold as a fruit drink and hence, cannot be termed as carbonated fruit beverage or fruit drink. 5.5 Product does not qualify as Carbonated beverages with fruit juice a. As mentioned at Para 5.4 (c) above, the product is understood and sold as non-alcoholic malt or beer without alcohol. The product at hand was conceived, developed, launched, and is sold as a non-alcoholic alternative to beer. Further, the product is characteristically different from the commonly availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quantity prescribed under the FSS Regulations). Similarly, the Larger Bench of the Hon'ble Tribunal in Brindavan Beverages Pvt. Ltd. VS CCCE ST, Meerut [2019 (29) G.S.T.L 418] held that Minute maid nimbu Fresh, Nimbu Masala soda and Nimbooz are classifiable under the tariff item 2202 90 20 as Fruit pulp or fruit juice based drinks for the following reasons: The lemon juice content specified for lemon juice-based drinks under Regulation 2.3.10 of the Additives Regulations is more than 5% and the products under consideration i.e. Minute Maid Nimbu Fresh, Nimbooz Masala Soda and Nimbooz have lemon juice content exceeding 5% As per the Common parlance test , the labels of the product clearly indicated that the said products are bought and sold in the market as Fruit drink with lemon juice having a lemon juice content of 5% or more and are described as Ready to Serve Fruit Drink and not as Lemonades or Lemon / Lime Flavoured Drinks f. It is apparent from the above judicial precedents that the criteria uniformly followed to determine whether a product is fruit juice / pulp content in it. In the present case, the product contains maximum 1.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld prevail over a heading with a more general description . Atul Glass Industries Ltd. Vs collector of Central Excise [1986 (25) ELT 473 (SC)] - It was inter-alia held that in case of specific entry and a general entry, the special must exclude general and therefore, specific would prevail over general. Superintendent of C.E. and others vs. Vac Met Corpn. Pvt. Ltd [1985 (22) ELT 330 (SC)] - it was inter-alia held that When an article falls within a specific entry such goods must necessarily be excluded from the general entry e. Accordingly, since the more specific classification is under entry 2202 91 00 (non-alcoholic beer), and by application of Rule 3(a) of the General Rules and the above judicial ratios, the more specific description will prevail over general, the product cannot be covered under 'Carbonated Beverages of fruit drink or Carbonated beverages with fruit juice under 2202' as mentioned at Entry 12B and Entry 4B of the said amendment Notifications. f. The Applicant submits that the entry in the amendment Notifications are general entries classifying goods at 4-digit level. On a joint reading of the FSSAI and Tariff classificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Tax of the Company appeared for personal hearing proceedings held on 10.02.2022, reiterated the facts narrated in their application requested for additional hearing to submit technical report on the product. The applicant was given an opportunity of additional hearing on 14.03.2022 and the authorised representative along with Sri Sujan Devaraju appeared and submitted the technical report. FINDINGS DISCUSSION 8. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matters 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 would also mean reference to the corresponding similar provisions in the KGST Act. 9. We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant the submissions made by their learned representative during the time of hearing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;Carbonated beverage containing fruit juice' which are covered under Regulation 2.3.30 of FSS Standards Additives Regulations. Product has been registered and classified as Proprietary Food' by FSSAI. f) Regulation 2.3.30 of the FSS Additive Regulations provides that minimum 10% fruit juice or 5% lime juice is required to qualify as a 'fruit drink'; minimum 5% fruit juice or 2.5% lime/ lemon juice required to be a carbonated beverages with fruit juice. The fruit content of the product is below 5% as prescribed under the said Regulation and therefore the product does not qualify as 'Carbonated Fruit Beverages or Fruit Drinks' or Carbonated beverage containing fruit juice'. g) Hon'ble Supreme Court in Parle Agro case [2017 (352) 113 SC] observed that the use of carbon dioxide to the extent of 0.6% was only for preservation and not sufficient to qualify the product as aerated. The product at hand contains only 0.5% approx. of carbon dioxide, less than the quantity observed by the Hon'ble Supreme Court and hence the product cannot be considered as aerated / carbonated. h) Without prejudice, even if the product is considered as &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms Tariff and also the corresponding Harmonised Commodity Description and Coding System Explanatory Notes of World Customs Organisation (WCO). 14. The applicant contended that their product qualifies and merits classification as non-alcoholic beer under tariff heading 2202 9100. We invite reference to the tariff item 2202, relevant to the issue before us, which is as under: Tariff item Description of goods 2202 WATERS, INCLUDING MINERAL WATERS AND AERATED WATERS, CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER OR FLAVOURED, AND OTHER NON-ALCOHOLIC BEVERAGES, INCLUDING FRUIT OR VEGETABLE JUICES OF HEADING 2009 2202 10 - Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or favoured: 2202 10 10 --- Aerated Waters 2202 10 20 --- Lemonade 2202 10 90 --- other 1 -other: 2202 91 00 -- N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sl.No. Ingredients Ginger lime (in %) Lemon (in %) Mint lime (in %) Black current (in %) Strawberry cranberry (in %) 1. Barley malt 4.03 2.94 2.77 1.00 1.00 2. Sugar 9 10.10 9.50 12.24 12.43 3. Mixed Fruit (Concentrate) 0.05 1.11 1.05 0.47 0.16 [Equivalent mixed fruit juice content] [below 0.5] [4.29] [4.20] [2.76] [2.68] 4. Hops 0.01 0.01 0.01 0.02 0.02 5. Quillaia/Lemon Extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NS 290), Quillia Extract (INS 999) HOPS Antioxidant (INS 300) Equivalent mixed fruit juice content is 4.2% as per the report It is observed from the aforesaid labels that all the variants have been marked as Carbonated Non-alcoholic Drink and not as non alcoholic beer , as claimed by the applicant. In view of this, the contention of the applicant that the product is marketed and understood in common trade parlance as 'non-alcoholic beer' and on this basis alone it deserves to be classified under tariff item 2201 91 00 is not acceptable. 17. At this juncture we invite reference to the General Interpretation Rules, specifically Rule 2(b), for classification of the product/s, which is given below: Rule 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 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Bombay in the case of Kaira Dist. Co. Op. Milk Products Union Ltd., Vs U.O.I. [1989 (41) ELT 186 (Bom.) - paras 7 8]. 20. Further the Hon'ble Delhi High Court in Greatship (India) Ltd., Vs UOI -[2016 (338) ELT 545 Del.] has held that an interpretation of statutes, for conflict of views between two Central Government Ministries - In such case, view taken by Ministry that is primarily responsible for policy in question, should prevail. By applying the same ratio, we find it in compliance to judicial discipline and in consonance to the laid ratio decided as cited, that in matters of GST classification, we comply with the General Rules of Interpretation for GST classification and GST scheme of law. 21. In view of the foregoing, we pass the following RULING The product Kingfisher Radler' has different variants and all the variants merit classification as carbonated beverages of fruit drink, all covered under tariff heading 2202 99 90. Accordingly the product attracts GST 28% along with applicable Compensation Cess of 12% in terms of SI.No.12B of Schedule IV to the Notification No.1/ 2017-Central Tax (Rate) dated 28.06.2017, as amended. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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