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TMI Blog2025 (2) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... fter referred to as 'appellant'] the against Advance Ruling No. GUJ/GAAR/R/29/2021 dated 19.7.2021, passed by the Gujarat Authority for Advance Ruling [GAAR]. 3. The facts briefly are that the appellant is engaged in the business of manufacture and supply of the below mentioned ten instant mix flours viz Dalwada instant mix flour Pizza instant mix flour Dahiwada instant mix flour Handvo instant mix flour Idli instant mix flour Gota instant mix flour + chutney powder Dhokla instant mix flour Methi Gota instant mix flour + kadhi powder Dhosa instant mix flour Khaman instant mix flour + masala pack which as per the appellant are not in 'ready to eat' but in 'ready to cook' form under their registered brand name. 4. Before the GAAR, the appellant submitted that the below mentioned process is undertaken for manufacturing & selling the above products, viz: (a) that they purchase food grains and pulses from vendors. (b) that such food grains/pulses are fumigated and cleaned for removal of wastage. (c) that food grains/pulses are then grinded and converted into flour. (d) that flour is sieved for removal of impurities. (e) that flour is then mixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100.00 6 Dhokla Instant Mix Flour 400 gm 15.00 12.00 27.00 60.50 60.50 87.50 12.50 Sugar, Iodised Salt, Raising agent (Sodium bicarbonate INS 500(ii)), Acidity regulator (Citric acid INS 330) Nil N.A. 100.00 7 Dhosa Instant Mix Flour 400 gm 20.00 20.00 59.00 15.50 74.50 94.50 5.50 Iodised Salt, Acidity regulator (Citric acid INS 330), Raising agent (Sodium bicarbonate INS 500(ii)) Nil N.A. 100.00 8 Pizza Instant Mix Flour 400 gm 0.00 75.50 75.50 75.50 24.50 Hydrogenated Vegetable Oil, Acidity regulator (Citric acid INS 330), Raising agent (Sodium bicarbonate INS 500(ii)) Nil N.A. 100.00 9 Methi Gota Instant Mix Flour 400 gm (including kadhi powder of 40 gm) 70.75 70.75 0.00 70.75 22.00 Iodised Salt, Acidity regulator (Citric acid INS 330), Sugar, Raising agent (Sodium bicarbonate INS 500(ii)) 7.25 Dry Fenugreek Leaves (Kasuri Methi), Coriander Crushed, Black Pepper Crushed, Turmeric Powder, Chilli Powder, Compounded Asafoetida, Garam Masala Powder, Ajwain 100.00 9A Kadhi Powder 40 gm Crushed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the case with the Schedule-I of the Gujarat Value Added Tax Act, 2003. * that as far as instant mix flours of Khaman, Gota, Dalwada, Dahiwada and Methi Gota is concerned, inspection revealed that each of the packet is marked Instant Mix'; * the proportion of spices and additives contained in the above products ranges from 5% to 33.4%; that the products contain spices and additives in different proportions not mentioned in the Chapter Heading 11.06 or the relevant Explanatory Notes of HSN; that this is not the case of addition of very small amounts of additives; * that in terms of explanatory notes of HSN in respect of heading 1101 & 1102, flours which have been further processed or had other substances added with a view to their use as food preparations are excluded; that if other substances (other than specified substances) are added to the flours with a view to use as food preparations', then the same gets excluded from the heading 1101 or 1102; * that products being supplied by the applicant contain spices and additives apart from flour of dried leguminous vegetables, rice and wheat, in different proportions; * that the difference between idli/dhosa instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ruling of the AAR holding the flour to be falling under entry 23 of schedule III of notification No. 1/2017-CT (R), is not correct since these cannot be straight away cooked for preparing food articles for human consumption; * that AAR has erred in classifying instant mix on the grounds that it contains spices. In view of the aforementioned averments, the appellant stated that the ten products as listed in paragraph 3 supra are liable to GST @ 5% [2.5% CGST & 2.5 % SGST]. 12. Personal hearing in the matter was held on 08.11.2024 wherein Shri Hardik Bhatt, CA, appeared on behalf of the appellant. He reiterated the written submissions made in the appeal. During the course of personal hearing, the appellant submitted additional submissions raising the following averments viz: * that even though various ingredients are added to flour as additives, it has been clarified in circular No. 80/54/2018-GST dated 31.12.2018, that 'sattu', falls under HSN code 1106 & is leviable to GST @ 5%; * that they would like to rely on the case of IOC MANU/SC/0142/2004, wherein the Hon'ble SC held that officers cannot argue the case against circular issued by the Board; * that Id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the impugned ruling dated 19.7.2021. 14. The issue involved in this case is regarding proper classification and determination of rate of tax in respect of the ten items listed in paragraph 3 above. As is already mentioned supra, GAAR has held that the aforementioned products are classifiable under HSN 2106 90 (Others) attracting 18% GST (9% CGST and 9% SGST). 15. We find that the appellant in his averments has stated that the product would fall under HSN 1101, 1102 or 1106. 16. Before dwelling on to the issue, we would like to reproduce relevant portions of chapter heading, circular/clarification & notification for ease of reference viz 1101 00 00 WHEAT OR MESLIN FLOUR 1102 CEREAL FLOURS OTHER THAN THAT OF WHEAT OR MESLIN 1102 20 00-- Maize (corn) flour 1102 90 Other: 1102 90 10---Rye flour 1102 90 90---Other Explanatory notes to HSN in respect of Headings 1101, 1102 and 1106 read as under: 11.01 Wheat or meslin flour This heading covers wheat or meslin flour (i.e. the pulverised products obtained by milling the cereals of heading 10.01) which fulfil the requirements as to starch content and ash content set out in paragraph (A) of Chapter Note 2 (see Gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heading also excludes flours mixed with cocoa (heading 18.06 if they contain 40% or more by weight of cocoa calculated on a totally defatted basis, or heading 19.01, if less). 11.06 Flour, meal and powder of the dried leguminous vegetables of heading 07.13, of sago or of roots or tubers of heading 07.14 or of the products of Chapter 8. 1106.10 Of the dried leguminous vegetables of heading 07.13 1106.20 - Of sago or of roots or tubers of heading 07.14 1106.30 - Of the products of Chapter 8 (A) Flour, meal and powder of the dried leguminous vegetables of heading 07.13. This heading includes the flour, meal and powder made from peas, beans or lentils; they are mainly used for prepared soups or purées. The heading does not cover: (a) Non-defatted soya flour (heading 12.08). (b) Locust bean flour (heading 12.12). (c) Soups and broths (whether in liquid, solid or powder form), with a basis of vegetable flours or meals (heading 21.04). (B) Flour, meal and powder of sago or of roots or tubers of heading 07.14. These products are obtained by the simple grinding or grating of the pith of the sago palm or of the dried roots of the manioc, etc. Some of these pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anatory notes of HSN for chapter 11, it is observed that the products from the milling of the cereals listed in the table (wheat and rye, barley, oats, maize and grain, sorghum, rice, buckwheat) fall in this chapter if they satisfy some characteristics. Further, in terms of para 2(B) of the explanatory notes of HSN for chapter 11, products falling in this chapter under the provisions of para 2(A) shall be classified in heading 11.01 or 11.02, if the percentage passing through a woven metal wire cloth sieve with the aperture of 315 micro meters (microns) / 500 micro meters (microns) is not less, by weight than that shown against the cereal concerned, otherwise, they fall in heading 11.03 or 11.04. It has also been inter-alia mentioned that this chapter includes products obtained by submitting raw materials of other chapters (dried leguminous vegetables, potatoes, fruit, etc.) to processes similar to those indicated in paragraph (1) or (2) mentioned therein. Thus, the products from the milling of the cereals, dried leguminous products etc. are covered in chapter 11 of the Customs Tariff Act, 1975. 18. It is the appellant's averment that instant mix flours of Khaman, Gota, Dalwad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case as the products being supplied by the appellant contain other ingredients like iodised salt, acidity regulator (INS 330), raising agent (INS 500(ii)) in different proportions which cannot be held to be in very small amounts, which was not the case with the 'Chhatua or Sattu'. 20. The appellant has further contended that instant mix of Idli, Dhokla, Dhosa and Handvo merit classification under HSN 1102 whereas Pizza Instant mix merits classification under HSN 1101. We find that the flours remain classified under chapter heading 1101 or 1102 even if the flour has been improved by the addition of very small quantities of specified substances. However, if substances (other than specified substances) are added to the flours with a view to use as 'food preparations', then the same gets excluded from the chapter heading 1101 or 11.02. A glance at paragraph 5, supra, which mentions the constituent components of the flours and other ingredients, depict that the various products supplied by the appellant, contain spices and other ingredients apart from flour of dried leguminous vegetables, rice and wheat, in different proportions. The spices and other ingr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1101 or 1106. To substantiate this averment they have relied on the judgement in the case of The Collector of Central Excise v/s Bakelite Hylam Ltd. (1997) 10 SCC 350. We reproduce Rule 3(b) of the GRI, viz; 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 to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .06 Food preparations not elsewhere specified or included. 2106.10 Protein concentrates and textured protein substances 2106.90 Other Provided that they are not covered by any other heading of the Nomenclature, this heading covers: (A) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption. (B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter 38). However, the heading does not cover enzymatic preparations containing foodstuffs (e.g., meat tenderisers consisting of a proteolytic enzyme with added dextrose or other foodstuffs). Such preparations fall in heading 35.07 provided that they are not covered by a more specific heading in the Nomenclature. As is evi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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