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TMI Blog2023 (7) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... issued there under. 3. The applicant requested advance ruling on the following: 3.1. Is not the product "Dhathri Dahasamani" to be rightfully classifiable under HSN 0910 91 00 instead of classifying Linder HSN 2106 90 50 and therefore tax rate is under entry number 44 of schedule I prescribed by notification number 1/2017-CT(R) dated 28.06.2017 as amended? 3.2. If not classifiable as above, is not the product to be classifiable under HSN 2103 90 40 and therefore tax rate is under entry No. 44 of schedule I prescribed by notification No. 1/2017-CT(R) dated: 28,06.2017 as amended? 4. Contentions of the Applicant: 4.1. The applicant submits that they are the sole distributor of various herbal ayurvedic products produced by M/s. Warriers Hospital and Panchakarma Centre, Velanchira, Kayamkulam, Alappuzha. The products are manufactured under drag license number DL/No.24/25D/O4, issued by the Deputy Drugs Controller ASU and State Licensing Authority, Government of Kerala and renewed up to 31 December 2023. 4.2. It is submitted by the applicant that one of the products distributed by them, viz, "Dhathri Dahasamani", which is used as a flavour and taste component in drinking water is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) of Chapter 9 is reproduced as follows; "Note No, 1 Mixtures of the products of headings 0904 to 0910 are to be classified as follows: (a) ................................. (b) The mixtures of two or more of the products of different headings are to be classified in heading 0910. The addition of other substances to the products of headings 0904 to 0910 [or to the mixtures referred to in paragraph (a) or (b) above] shall not affect their classification provided the resulting mixtures retain the essential character of the goods of those heading. Otherwise, such mixtures are not classified in this Chapter, those constituting mixed condiments or mixed seasonings are classified in heading 2103". 4.5. The product "Dhathri Dahasamani' contains certain ingredients that come under the definition of "spice" as well as certain other substances. As per the Chapter Note 1(b) of Chapter 9, the addition of other substances to spices will not affect the classification provided the resulting mixture retains the essential character of spices. In the case of the product "Dhathri Dahasamani' it retains the essential characteristics of the spice ingredients ie; dry ginger (chukku), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the subject product is not classifiable under Heading 0910; then it is to be classified under the Heading 2103 within Chapter 21 relating to miscellaneous edible preparations. The subject product can never be eaten up or consumed as food stuff, but it is only a condiment. The derived essence of a combination of various items in the mixture only is dissolved within water and the water is consumed and not the mixture as such and hence the product cannot be included in the category of food. Chapter Note (1)(b) of Chapter 9 is reproduced as follows; "Note No. 1 Mixtures of the products of headings 0904 to 0910 are to be classified as follows; (a) .................................. (b) The mixtures of two or more products of different headings are to be classified in heading 0910. The addition of other substances to the products of headings 0904 to 0910 [or to the mixtures referred to in paragraph (a) or (b) above] shall not affect their classification provided the resulting mixtures retain the essential character of the goods of those heading. Otherwise, such mixtures are not classified in this Chapter/those constituting mixed condiments or mixed seasonings are classifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20% 3 Ramacham Vetiveriazizanioides 1211 90 49 5g 10% 4 Naruneendi Hemidesmus indicus 1211 90 49 4g 8% 5 Chandanam Santalum album 1211 90 50 2g 4% 6 Chukku Zingiber officinale 0910 11 20 4g 8% "Dhathri Dahasamani" 50g 100% 7.3. The product is a mixture of dried herbs and spices and when the mixture is added to boiling water in the prescribed measure the resultant drinking water will be slight dark coloured with a unique flavour. The product is used to enhance the flavour and taste of drinking water; 7.4. It is stated by the applicant that at present the product is supplied by classifying it under the CTH 2106 90 50 of Chapter 21 of the First Schedule to the Customs Tariff Act, 1975 and subject to tax at the rate of 18% [CGST - 9% and SGST - 9%]. 7.5. The Explanation (iii) & (iv) appended to the Notification No. 01/2017 -Central Tax (Rate) dated 28.06.2017 reads as follows; (iii) "Tariff item", "subheading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in numerical order among those. Rule 4: Akin Rule - 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. 7.8. In the case of COMMISSIONER OF CENTRAL EXCISE Vs M/s WOCKHARDT LIFE SCIENCES LTD reported in 2012 (277) ELT 299 (SC); the Hon'ble Supreme Court, inter alia, laid down the following principles for the 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 most common. Whether a particular article will fall within a particular Tariff heading or not has to be decided on the basis of the tangible material or evidence to determine how such an article is understood in 'common parlance' or in 'commercial world' or in 'trade circle' or in its popular sense meaning. It is they who are concerned with it and it is the sense in which they understand it that constitutes the definitive index of the legislative intention, when the statute was enacted. * However, there cannot be a static parameter for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 'edible preparations not elsewhere specified or included'. In the latter case, Chapter Notes 9(b) & 9(c) of Chapter 21 are being relied upon for classifying these products under the sub-beading 2108.90. Trade interests have, however, argued that these products are merely additives for different food items and not readily consumable products through the simple processes of cooking, frying, boiling or adding with water, oil or milk. Hence it is claimed that the products in question cannot be classified under sub-heading 2108.90 of CET. 3. The matter has been examined. Spices are specifically covered under Chapter 9 of Central Excise Tariff and mixed condiments and mixed seasonings under heading 21.03 of Central Excise Tariff. Heading 21.08 of CET on the other hand is a residuary entry which refers to "edible preparations not a elsewhere specified or included". While there are no definitions available for spices and mixed condiments and mixed seasonings in the Central Excise Tariff, the Explanatory Notes to the HSN give the following description of these products. Spices Spices i.e. a group of vegetable products (including seeds etc.), rich in essential oils and aromat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d merit classification in the residuary heading 21.08 provided they are not covered or included in any other heading of CET. 4.2 Viewed in the context, products like sambar powder, rasam powder, puliyogare mix or powder, vanghibhath mix or powder consisting or mainly spices and required to be added to cooked dal or cooked rice mainly for spicing flavouring or seasoning would appear to merit classification as spices or mixed condiments and seasonings. On the other hand, products like instant samber mix, instant rasam mix, instant spiced bhath mix (bisibelebath) or instantkharabhath mix consisting of dal or rice flakes or sooji along with spices and other substances and which can be made up into food preparations by simply mixing and boiling/cooking in water would merit classification as miscellaneous edible preparations of heading 2108 of Central Excise Tariff. 5. In view of the above, board desires that classification of each product be decided on merit having regard to discussions herein above." 7.10. The classification of the subject product namely; 'Dhathri Dahasamini" has to be determined keeping in view the principles mentioned above Admittedly, the product is predomi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... athri Dahasamini" is not capable of being used as a food preparation for human consumption in its own right; i.e., the product cannot be used as such either directly or indirectly or after processing (such as cooking, dissolving or boiling in water, milk or cither liquid etc.) for human consumption. On the other hand, it is used for flavouring or increasing the taste of water by adding it to boiling water. The consumers of the products are also using it for adding it to boiling water for giving flavour, aroma or taste to the boiled water and not for the consumption of the product by adding boiled water. Hence as per common parlance understanding also the product is used for flavouring boiled water. 7.14. Accordingly, applying the principles of Rule 3 of the General Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975; the ratio of the above-referred judgment of the Hon'ble Supreme Court and the clarification of the Board in Circular dated 30.04.1996 extracted above, the product "Dhathri Dahasamini" which is predominantly a mixture of condiments/seasonings that is added to boiling water mainly for its aromatic, flavouring or seasoning properties merits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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