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TMI Blog2024 (10) TMI 877X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by M/s. VRB CONSUMER PRODUCTS PRIVATE LIMITED, SP-17 RIICO INDUSTRIAL AREA, NEEMRANA, ALWAR - 301705, Rajasthan (hereinafter "the applicant") is fit to pronounce advance ruling as they have deposited prescribed Fee under CGST Act and it falls under the ambit of the Section 97 (2) (a) given as under: (a) Classification of goods and/or services or both A. SUBMISSION OF THE APPLICANT (in brief):- 1. VRB Consumer Products Private Limited ("Applicant") intends to manufacture and supply dried softy ice cream mix (low fat) in vanilla flavour ("Vanilla Mix") at its manufacturing unit (factory) located at Plot SP3-7, RIICO Industrial Area, Tehshil Kotputli, Keshwana, Jaipur, in Rajasthan. 2. Applicant is a company incorporated under the Companies Act, 1956. It has PAN-India distribution network. Applicant with GSTIN 08AAECV2035KlZ9 is registered with the Goods and Services Tax department in the State of Rajasthan and falls within the administrative jurisdiction of CGST Commissionerate Alwar, Rajasthan. 3. Applicant intends to manufacture Vanilla Mix, which will be in the form of powder and will contain the following ingredients: Sr. No. Ingredients Vanilla Mix 1. Sugar 61.2% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Advance Ruling Authority in terms of Section 97 (2) (a) of CGST Act. Similar provisions are contained in Section 97 of RGST Act. 4. Further, Applicant is also registered in the state of Rajasthan. Hence, the present advance ruling application is maintainable before the Hon'ble Rajasthan Authority for Advance Ruling. APPLICANT'S UNDERSTANDING 5. Applicant's interpretation is that Vanilla Mix is liable to be classified under Heading 0404 as mentioned at Sr. No. 10 of Schedule I to Rate Notification. Schedule I-2.5% S.No. Chapter /Heading /Sub-heading/Tariff item Description of Goods 10 0404 Whey, whether or not concentrated or containing added sugar or other sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included 6. The submissions in support of the aforesaid interpretation have been enunciated in the following paragraphs. 7. Rate Notification has been divided into seven schedules, wherein each schedule prescribes the applicable rate of tax under GST on the basis of 'Tariff item', 'Sub-heading', 'Heading' and 'Chapter'. 8. Explanation (iii) of Rate Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal, are about 4.8%. 18. The essential ingredient of Vanilla Mix is milk solids, which forms the basis of the product. Milk solids to the dried powder left after all the water is removed from natural liquid milk. It is made by evaporating milk and spraying into a heated area where it leaves a powdery residue. 19. Milk solids also consist of the protein, and it helps in improving the texture or soft serve, due to the protein functionality. It helps in providing chew resistance to soft serve, helps in improving whip ability and helps in reducing freezing point of soft serve. 20. If solids levels are too low, soft serve can lack texture, freeze too hard, and may have textural problems like iciness and if solids levels are too high soft serve can be excessively chewy or cakey and it may get grainy texture. Thus, milk solids play a vital role in Vanilla Mix, which makes it an essential ingredient. 21. Therefore. once the condition of natural milk constituents i.e.. milk solids being essential ingredient is satisfied, the product is liable to be classified under Heading 0404. 22. Reliance is placed upon LVP Foods Private Limited, 2020 (32) G.S.T.L. 612 (A.A.R. - GST - U.P.), wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate Narendra Singhvi, Advocate Shrishti Agarwal authorized representative appeared for personal hearing. They reiterated the submission already made by them. E. COMMENTS OF THE JURISDICTIONAL OFFICER:- Comments received from the Assistant Commissioner. CGST Division-E. [RIICO Industrial Area, Behror, Alwar, Rajasthan vide letter C.NO.IV-39(07)Misc Report/BEH/2022/Pt-1/316 dated-25.06.2024 are as under:- At the outset it is submitted that FORM GST ARA-01 dated 20.03.2024 has been filed by M/s. VRB Consumer Products Private Limited, SP-17, RIICO Industrial Area. Neemrana. District-Alwar whereas the product information label submitted along with the application indicates that the product in question is proposed to be manufactured by M/s. VRB Consumer Products Private Limited, Plot No. SP3-7. RIICO Industrial Area. Keshwana, Tehsil-Kotputli, District-Jaipur (Rajasthan). Thus, it is serious contradiction as regards the identity of the manufacturer registered person and the applicant registered person who are clearly distinct persons in law. However, without commenting upon the possible error in printing or otherwise, it has been assumed that the registered person who has filed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 4 of the First Schedule to the Tariff Act is meant for 'Dairy Produce etc.' which is part of Section I which broadly covers 'Animal Products'. According to Chapter Note 5 of Chapter 4, this Chapter does not cover products obtained from milk by replacing one or more of its natural constituents (for example, butyric fats) by' another substance (for example, oleic fats) (heading 1901 or 2106). Thus, it is evident that if a product is covered by heading 1901 or 2106 the same shall not be covered under Chapter 4 of the First Schedule to the Tariff Act. 6.1. Chapter 21 of the First Schedule to the Tariff Act covers 'Miscellaneous edible preparations' and the said Chapter is part of the broad head of 'Prepared food stuffs, beverages, spirits and vinegar' under Section IV of the First Schedule to the Tariff Act. Thus, according to the broad scope of different sections of the First Schedule to the Tariff Act, "prepared foodstuffs and beverages" are clearly distinguishable from "products of animal origin", the basic difference being the nature of products in question. While Chapter 4 covers products of animal origin which means that the products are normally natural or near natural in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by Heading 2106 and even such preparations which are required to be subjected to further processing for obtaining the preparations for human consumption are also covered by the said Heading 2106. 7.1. According to the product information label submitted by the applicant, the product proposed to be manufactured by the applicant contains a wide range of ingredients. The information label shows that the product is not simply a dairy produce which may be referred to as a product of animal origin rather the same is an edible preparation which contains sugar, milk solids, stabilisers, citrus fibre, anti-caking agents, iodised salt and natural flavouring agents as its ingredients. 7.2. Further, the label also has nutritional information showing the nutritional values of various contents of energy, protein, carbohydrate, total sugar, added sugar, total fat, trans fat, saturated fat, cholesterol and sodium in the said product which has been given for the information of the ultimate human consumer. Thus, it is evident that the product in question is an item of edible preparation obtained by a complete process of manufacture and not simply a dairy produce. Thus, the coverage of prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2035K1Z9. The applicant intends to manufacture and supply dried softy ice cream mix (low fat) in vanilla flavour ("Vanilla Mix") at its manufacturing unit (factory) located at Plot SP3-7. RIICO Industrial Area, Tehshil Kotputli, Keshwana, Jaipur, in Rajasthan. The said product i.e. dried softy ice cream mix (low fat) in vanilla flavour ("Vanilla Mix") will be in the form of powder and will contain the following ingredients: Sr. No. Ingredients Vanilla Mix 1. Sugar 61.2% 2. Milk Solids (Skimmed Milk Powder) 34% 3. Other ingredients (stabilizers, anti-caking agents, citrus fibre, iodised salt, flavouring substances) 4.8% They have submitted copy of label and has explained the manufacturing process of Vanilla Mix which includes (i) Procurement of raw materials, (ii) Mixing of ingredients, (iii) Quality check up and (iv) Packing and dispatch. 3) Applicant has submitted that their product - Vanilla Mix is liable to be classified under Heading 0404 as mentioned at Sr. No. 10 of Schedule I to Rate Notification which defines as "Whey, whether or not concentrated or containing added sugar or other sweetening matter; natural milk constituents, whether or not containing added su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or other sweetening matter, not elsewhere specified or included" From bare perusal of the above heading, it is evident that it refers to products consisting of natural milk constituents may or may not consist added sugar or other sweetening matter. However, in the instant product, the amount of sugar is 61.2% and milk solids is 34% which is about 55.56% as compared to the amount of sugar (34/61.2) which implies that the major ingredient of the product is sugar. Accordingly, it would be appropriate to say that in the product in question, "milk solids are added to sugar" and not that "sugar is added to milk solids". Further, we also find that 5 more ingredients viz. stabilizers (INS 466, INS 407, INS 412), citrus fibre, anticaking agents, iodised salt, natural flavouring substances (Vanilla) total 4.8% are also added in the instant product. We find that said products are not only for increasing the shelf life of the product but substances like natural flavouring substances (Vanilla) gives the vanilla flavour to the product which is the key identity of the product, a combination of citrus fibre and stabilizer produce desirable ice cream properties, Iodised salt helps in lowering th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption; (c) preparations consisting wholly or partly of foodstuffs, used in making of beverages of foods preparations for human consumption; (d) powders for table creams, jellies, ice-creams and similar preparations, whether or not sweetened; (e) flavouring powders for making beverages, whether or not sweetened; (f) preparations consisting of tea or coffee and milk powder, sugar and any other added ingredients; (g) preparations (for example, tablets) consisting of saccharin and foodstuff, such as lactose, used for sweetening purposes; (h) pre-cooked rice, cooked either fully or partially and their dehydrates; and (i) preparations for lemonades or other beverages, consisting, for example, of flavoured or coloured syrups, syrup flavoured with an added concentrated extract, syrup flavoured with fruit juices and concentrated fruit juice with added ingredients. Perusal of the said Chapter Note 5 reveals that food preparations subjected to further processing for human consumption are covered under Heading 2106. It is also apparent that po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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