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TMI Blog2024 (10) TMI 1422X X X X Extracts X X X X X X X X Extracts X X X X ..... reinafter referred to as 'Appellant') against the advance ruling no. UP ADRG 01/2024 dated 15.04.2024, made by the Uttar Pradesh State Authority for Advance Ruling. 2.2 The appellant is a proprietorship firm engaged in trading of packaged food items and is proposing to set up a unit to manufacture a new product 'Cream' to be used in kitchen as an ingredient in food preparations or cakes etc. It is a liquid product with smooth white texture to give creamy taste and texture to the gravy in dishes. It will not contain any dairy fat and will contain vegetable fat to the extent of 23%. The ingredients, as per the lab test report dated 18.11.2023, are Edible Vegetable Fat, Milk Solids, Sugar and lodized Salt with constituents being Protein (2.26%), Fat (22.94%) and Sodium (0.06985 %) besides Water 67.3%), Sugar (1%) and premix of emulsifiers, stabilizers, acidity regulators etc (5.5%). 2.3 The Appellant had submitted application for Advance Ruling before the Authority of Advance Ruling for determination of following questions. (i) What is the appropriate Chapter Heading under which the product proposed to be manufactured by the appellant is classifiable under GST Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eservatives) as ingredient has not been found mentioned in the HSN explanatory notes in respect of preparation of vegetables oil in the nature of an emulsion of water-in-oil, though it may resemble like a regular cream. But in order to fall under Chapter heading 1517, sugar and premix cannot be understood to be included in the above combination of ingredients. Thus, the proposed product cannot be classified under Chapter heading 1517. 3.4.1 With respect to above para the appellant referred to the HSN explanatory note to chapter heading 1517 which read as under: "The products of this heading, the fats or oils of which may previously have been hydrogenated, may be worked by emulsification (e.g. with skimmed milk), churning, texturation (modification of the texture or crystalline structure), etc., and may contain small quantities of added lecithin, starch, colouring, flavouring, vitamins, butter or other milkfat (subject to the restrictions in Note 1(c) of this chapter)." 3.4.2 That the sugar content is only 1% and premix comprises 5.5% of the impugned product. The premixes (emulsifiers, stabilizers, acidity regulators and preservatives) in the proposed product serves as lecithin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduct to add creamy milky flavour to the dishes being prepared. That, it is understood that the end use of the proposed product is intended to be used as a milk cream. That it has been a settled principle of law that taxing statute, the principle of common parlance should be followed for classification of product and in the present case, the dispute is regarding classification of 'Cream' which in common parlance is considered as a milk product. 3.7 Decision issued by AAAR for the State of Haryana in the case of M/s Khera Trading Company, Panipat, Haryana that the such product 'Cream' should be classified under Chapter 2106 is not binding in terms of Section 103 of CGST Act, 2017 on the appellants. That the appellant and Khera Trading are separate taxpayers and therefore, the appellant's case should be independently examined. 4. Reason for delay in filing appeal before the Appellate Authority. The appellant vide application for the condonation of delay received on 19.07.2024 submitted that Shri Surendra Kumar (Prop. M/s S.S. Traders) had remained out of station during 01.07.2024 to 07.07.2024 and requested for condonation of delay of 5 days in filing the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing matter 0402 29 -- Other : 0402 29 10 --- Whole milk 0402 29 20 --- Milk for babies 0402 29 90 --- Other - Other : 0402 91 -- Not containing added sugar or other sweetening matter : 0402 91 10 --- Condensed milk 0402 91 90 --- Other 0402 99 -- Other : 0402 99 10 --- Whole milk 0402 99 20 --- Condensed milk 0402 99 90 --- Other Tariff Item Description of Goods 1517 MARGARINE; EDIBLE MIXTURES OR PREPARATIONS OF ANIMAL, VEGETABLE OR MICROBIAL FATS OR OILS OR OF FRACTIONS OF DIFFERENT FATS OR OILS OF THIS CHAPTER, OTHER THAN EDIBLE FATS AND OILS OR THEIR FRACTIONS OF HEADING 1516 1517 10 - Margarine, excluding liquid margarine: 1517 10 10 --- Of animal origin --- Of vegetable origin : 1517 10 21 ---- Edible grade 1517 10 22 ---- Linoxyn 1517 10 29 ---- Other 1517 90 - Other : 1517 90 10 --- Sal fat (processed or refined) 1517 90 30 --- Imitation lard of animal origin 1517 90 40 --- Imitation lard of vegetable origin 1517 90 90 --- Other Tariff Item Description of Goods 2106 FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED OR INCLUDED 2106 10 00 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;, therefore, the said product becomes a preparation of vegetable oil. 6.5.3 Chapter subheading 1517 covers 'Margarine; edible mixture or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this Chapter, other than edible fats or oils or their fractions of heading 1516'. 6.5.4 Chapter sub-heading 1517 10 covers 'Margarine, excluding liquid margarine'. As per the HSN explanatory notes, margarine (other than liquid margarine) is a plastic mass, generally yellowish, obtained from fats or oils of animal or vegetable origin or from a mixture of these fats or oil. It is an emulsion of the water-in-oil type, generally made to resemble butter in appearance, consistency, colour etc. 6.5.5 Further, we find that as per the General standards for Milk and Milk Products as provided in the 'Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011' the margarine means: I. Table Margarine - an emulsion of edible oils and fats with water and it shall be free from rancidity, mineral oil and animal body fats. It may contain common salt not exceeding 2.5 per cent, skimmed milk powder not exceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orce between the ingredients. We find that the appellant has claimed that the premix (emulsifiers, stabilizers, acidity regulators and preservatives) serve a similar role as lecithin and starch, and the flavouring component i.e. vanilla flavour is itself included in the HSN notes. 6.6.4 On basis of the HSN explanatory notes and the submissions of the appellant, we hold that the ingredients i.e. sugar & premix (emulsifiers, stabilizers, acidity regulators and preservatives) though are not mentioned in the notes/explanatory notes to the chapter heading 15, final product being a preparation, the said ingredients mentioned under sub-headings of chapter 15 may be inclusive or exclusive of the said ingredients i.e. sugar & premix (emulsifiers, stabilizers, acidity regulators and preservatives). 6.7 We find that the general rule of interpretation of provide the methodology of classification of products under various chapters. Classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3 that reads: "When by application of rule 2(b) or for any other reason, goods are prima facie, classifiable under two or more headings, classifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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