TMI Blog2024 (2) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... and literature regarding the manufacturing process of Crackle as provided by the Appellant. Any suppression, misrepresentation of facts would be dealt with in terms of Section 104 of the CGST / SGST Act 2017. In the case at hand, there is a specific entry for Sugar Boiled Confectionery under SI. No. 32AA of Schedule -II of Notification No. 01/2017-CT(Rate). Based on the literature and claim made by the Appellant in their submissions, it is seen that the product Crackle would fall under the category of Sugar Boiled Confectionery . As such, the product Crackel would rightly be classified under Schedule-II SI. No. 32AA chargeable to a tax rate of 12%. As regards the finding of the AAR in IN RE: M/S. SRI VENKATESWARA CASHEW CHIKKY MANUFACTURERS [ 2023 (9) TMI 162 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH] that only products generally meant for immediate consumption are to be classified under CH 1704, it is found that the same has an inherent flaw. If the said HS Explanatory provisions of immediate consumption is to be made applicable to Crackle , then the same is equally applicable to all the products falling under Chapter Heading 1704 which are covered under Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Cashew Nuts 28% to 30% 3 Butter 1% to 2% 4 Glucose 1% to 2% The Appellant sought clarification with regard to the product is supplied as raw material to the manufacturer of ice creams i.e. Hindustan Unilever Limited, Dairy Classic lce Creams (P) Ltd etc., and is used as toppings in lce creams. The Applicant classified the product under Chapter 17049020 till date and discharged GST at the rate of 18% and approached the Authority for Advance Ruling on the following question: Question : Whether the product by name Crackle , manufactured and supplied by the applicant containing the ingredients Sugar, Cashew Nuts, Butter, Liquid glucose and other permitted Flavours, should be classified under the Tariff Heading 1704 enumerated at Serial number 32AA of Schedule III of Notification No. 01/2017 as a Sugar boiled confectionery.? The Authority for Advance Ruling Andhra Pradesh in its orders in AAR No. 10/AP/GST/2023 dated 26.05.2023 held: Answer : Negative Aggrieved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us court held : (1) Reasons in support of decision must be cogent, clear and succinct. A pretence of reasons or 'rubber stamp reasons' is not to be equated with a valid decision making process. A.4 The Appellant also rely on the judgment of the Hon ble Gujarat High Court in the case of Vadilal Gases Limited Vs. Union of India 2016 (332) ELT 625 (Guj.) wherein it has been held that the quasi-judicial authorities should give sufficient reasons to demonstrate that relevant factors having considered objectively which is a primary requirement. The relevant portion of the judgment is reproduced below for ready reference: 10. At this juncture, reference may be made to the decision of the Supreme Court in the case of Assistant Commissioner of Commercial Tax Department v. Shukla and Brothers, (2010) 4 SCC 785 2010 (254) E.L.T. 6 (S.C) 2011 (22) S.T.R. 105 (S.C), on which reliance has been placed by the learned counsel for the petitioner wherein the court has held that the principles of natural justice has twin ingredients; firstly, the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he nature of confection, comfit or sweetmeat or pertaining to confections or confectioner's work. As per this Dictionary, the word 'confection' means to prepare for use with sugar, syrup, or the like; to make into a confection; to mix, make up as a condiment or seasoned delicacy. We find that in the same Dictionary, the words confectionery preparation are defined as a sweetmeat. The word 'sweetmeat' is defined in the Webster's Encyclopaedic Unbridged Dictionary as sweet delicacy, prepared with sugar, honey or the like, as preserves candy, or formerly cakes or pastry. In Fund All Wagnalls New Standard Dictionary confectionary is defined as- Confectionary is defined as sweet meat. Collectively, that a confectionary makes or sells as candy or other articles made of sugar, sirup honey or the like In Word Origins and their Romantic Stories by Wilfred Funk, on page 346, the Word 'Confetti' is given. We reproduce the relevant portion from the said book: CONFETTI: was once candy Confetti is an Italian word for candies or sweetmeats; and the corresponding French word is bonbon, literally 'good-good'. On carnival days the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntially only these articles which are commonly called sweetmeats. Thus, it is clear that it Is food chiefly made of sugar. Normally it Is made by cooking process, other than baking. Impugned product manufactured by the Appellant contain substantial amount of sugar, and are not made out of the baking process. Therefore, the Impugned product primarily falls under the ambit of 'confectionery' products. Principles and Classification of Confectionery Products B.6 Confectionery is an important food item of great popularity among wide range of population. It has been enjoyed as a major food delicacy from ancient times. The term confectionery is ambiguous and describes a spectrum of sweet goods and takes on different meaning depending on the country in which it is used, for example in the United Kingdom the term applies to any sweet product including cakes. Globally, confectionery foods represent 50% by volume of foods produced and 60% by value. The Indian confectionery market is estimated to be 1,38,000 metric tonnes (in 2005) and is segmented into sugar-boiled confectionery, chocolates, mints and chewing gums. Sugar-boiled confectionery consisting of hard-boiled candy, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1 of 2017 enlists the rate of tax, on goods falling within the ambit of GST. The said Notification has undergone various amendments since inception of GST. Presently, in the above notification, the goods falling under HSN Code 1704 are primarily covered under three schedules i.e. Schedule I, Schedule II and Schedule III with 5%, 12% and 18% rates of tax respectively. Items of HSN Code 1704 falling under Schedule I of GST Notification 01/2017: B.12 As per GST Notification 41/2017 dated 15.11.2017 read with GST Notification 01/2017, the following items pertaining to HSN Code 1704 are falling under serial number 92 of Schedule 1 of GST Notification 01/2017 with 5% rate of Tax. The relevant extract of serial number 92 is as under: Schedule I -2.5% S.No Chapter Heading/ Tariff Item Description of Goods (1) (2) (3) 92 1702 or 1704 Palmyra sugar, mishri, batasha, bura, sakar, khadi sakar, harda, sakariya, gatta, kuliya, elaichidana, lukumdana, chikkis like puffed rice chikki, peanut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in detailed in ensuing paragraphs 1. Food Safety and Standards (Food products Standards and Food Additives) Regulations, 2011 Food Safety and Standards (Food products Standards and Food Additives) Regulations, 2011 Inter alia deals with Sugar Boiled Confectionery under Chapter 2 of Food Product Standards In Para 2.7 of Sweets Confectionery. Relevant extract of FSSAI Regulations 2011 is enclosed as Annexure-1 Particulars Sugar Boiled Confectionery as per FSSAI Regulations 2011 Applying FSSAI Regulations 2011 in present case Meaning Sugar boiled confectionery means a processed food article made from sugar with or without doctoring agents by process of boiling whether panned or not As submitted earlier, the impugned product N.B.S. Crackle was a processed food article made from 68% to 72% of sugar with doctoring agents of butter and glucose and the same was manufactured through boiling process. Types of Sugar Boiled Confectionery 1. Hard Boiled Sugar Confectionery means a supercooled solution with a com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was incorporated by amalgamation of erstwhile three food standards i.e. a) IS 1008:1981' Specification for hard boiled confectionery b) IS 1667: 1981- Specification for toffees c) IS 8806: 1978- Specification for pan goods confectionery Relevant extract of IS 1008:2004 is enclosed as Annexure-3. Particulars Sugar Soiled Confectionery as per IS 1008:2004 Scope IS 1008:2004 prescribes the requirement and method of sampling and test for hard boiled confectionery, pan goods confectionery and toffees. Essential Ingredients The essential ingredients of Sugar Boiled Confectionery are a) Sugar and b) Water Types of Sugar Boiled Confectionery 1. Hard Boiled Sugar Confectionery means a supercooled solution with a combination of sucrose and liquid glucose or sucrose treated with an acid doctor such as cream of tartar (potassium acid tartrate) 2. Pan Goods Confectionery made by the panning process in revolving pans/drums by using either hot coating or cold coating and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of Food Technology, JNTU Kakinada, Andhra Pradesh wherein the impugned product N.B.S. Crackle manufactured by the Appellant has satisfied all the parameters laid down under Indian Standard IS 1008:2004 in the said technical test report. The relevant extract of Food testing report is extracted as under:- In light of the above submissions, we request your good office to kindly classify the impugned product N.B.S. Crackle under Serial number 32AA of Schedule II of Notification 01/2017. C. Specific Entry prevails over general entry C.1 The Appellant submits that the impugned products dealt by the Appellant are classifiable under Sugar Boiled Confectionery there are catena of case laws held in Supreme Court of India that a general entry or a residual entry will be preferred for a classification of commodity only in the absence of a specific entry. C.2 The Apex Court of India in the case of Indian Metals Ferrous Alloys v. Collector of Central Excise 1991 taxmann.com 71 held that in classification of goods a specific entry will be preferred to a general entry. Similarly the Hon'ble Supreme Court in the case of State of Karnataka v. Durga Projects Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rstood according to the common, commercial understanding of those terms used and not in their scientific and technical sense 'for the Legislature does not suppose our merchants to be naturalists or geologists or botanists'. A.4 The Apex Court in the Mauri Yeast India Pvt. Ltd. v. State of Uttar Pradesh (2008) 14 VST 259 (SC) while answering the question of classification of 'yeast' observed that the trade or commercial meaning or the end-user context would be a relevant factor in construing the fiscal statute. A.5 The Hon'ble High Court of Andhra Pradesh in the case of Reckitt Benckiser (India) Limited Vs. State of A.P. (2012) 56 VST 1 (AP HC) observed that usual method adopted by an assessment officer, or a dealer would provide the popular meaning, or the meaning attached to the products by those who deal In them and this has to be considered while interpreting the entries in Sales Tax Act. A.6 Considering the above, the Noticee wishes to submit that the impugned product 'N.B.S. Crackle' is in Pari-Materia with Butterscotch nuts, the same shall be used by the trade for toppings in ice creams, cakes, home goods, shakes. The ingredients o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions made by the appellant at the time of hearing and taking into consideration the facts of the case, we make the following observations. 5.1 The short question posed to this Authority is whether the product Crackle manufactured and supplied by the appellant containing the ingredients sugar, cashew nuts, butter, liquid glucose and other permitted flavours would be classified under SI. No. 32AA of Schedule -III (sic) of Notification No. 1/2017-Central Tax (Rate) as Sugar Boiled Confectionery, chargeable to tax at the rate of 12% (6% CGST and 6% SGST). 5.2 We have perused the ruling of the Authority for Advance Ruling, Andhra Pradesh (AAR). It is seen that the AAR had replied in the Negative to the question posed before the AAR. The AAR relied upon the HS Explanatory Notes for products under Chapter Heading 1704 read with the CBEC FAQs issued on 29-9-2017 which requires that for products to be classified under this heading of 1704, the same are to be marketed in a solid or semi-solid form and generally suitable for immediate consumption. The AAR specifically held that the impugned products are not meant for consumption by the end users directly but are used in the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hikki, peanut chikki, sesame chikki, til chikki, til patti, til revdi, sugar makhana, groundnut sweets, gajak and sugar boiled confectionery] (iii) Schedule III -9% Notification No. 01/2017-Central Tax (Rate) dated 28-06-2017 was amended by GST Notification 41/2017 dated 14-11-2017 and GST Notification No. 06/2018-Central Tax (Rate) dated 25-01-2018, to include the following entry pertaining to HSN Code 1704 under serial number 12 of Schedule III of the said GST Notification 01/2017 with a tax rate of 18% (CGST 9% SGST 9%). The relevant extract of serial number 12 is as under: S.No Chapter Heading/ Tariff Item Description of Goods (1) (2) (3) 12 1704 Sugar confectionery [other than mishri, batasha, bura, sakar, khadi sakar, harda, sakariya, gatta, kuliya, elaichidana, lukumdana, chikkis like puffed rice chikki, peanut chikki, sesame chikki, til chikki, til patti, til revdi, sugar makhana, groundnut sweets, gajak and sugar boiled confectionery ] It can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this Authority is basing its findings on the submissions and literature regarding the manufacturing process of Crackle as provided by the Appellant. Any suppression, misrepresentation of facts would be dealt with in terms of Section 104 of the CGST / SGST Act 2017. 5.7 As per clause (IV) of the Explanation in Notification No. 01/2017-CT(Rate) dated 28-6-2017 The rules for the interpretation of the First Schedule to the Customs Tariff 6 2017, Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. Accordingly, Rule 3 of the General Rules of Interpretation of the Customs Tariff Act 1975 as made applicable to GST Matters vide Notification No. 1/2017-CT(Rate) reads as follows: Rule 3: When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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