Coated cheese snacks lose cheese identity and fall under food-preparation classification rather than Heading 0406.

Breaded cheese or cheese balls marketed and packaged as snack food were held not to retain the commercial identity or character of cheese for Heading 0406. The material before the AAR showed that no test report was produced to establish that the goods remained cheese after coating, and the manufacturing process, label, packaging and composition pointed to a distinct snack article. On that basis, the goods were classified under Heading 2106 as food preparations not elsewhere specified or included, attracting GST at 18%.

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Issues: Whether Breaded Cheese or Cheese Balls retain the character of cheese and are classifiable under Heading 0406, or are classifiable as food preparations under Heading 2106.

Analysis: The product was found to be marketed and packaged as a snack food rather than as cheese per se. Although HSN notes state that cheese coated with batter or breadcrumbs may remain in Heading 0406 if it retains the character of cheese, the Authority held that no test report was produced to show that the impugned goods retained that character. On the material before it, the manufacturing process, label, packaging, and composition indicated that the cheese had been converted into a distinct snack article. The percentage of cheese was also not found sufficient to overwhelm the other ingredients.

Conclusion: The goods are not classifiable as cheese under Heading 0406 and are classifiable under Heading 2106 as food preparations not elsewhere specified or included, taxable at 18% GST.

Ratio Decidendi: Where a coated cheese product no longer retains its commercial identity and character as cheese and is marketed as a snack food, it is classifiable as a food preparation under Heading 2106 rather than as cheese under Heading 0406.

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