Tax Rates for "Namkeen" and "Extruded Raw Stick" clarified by the Authority

The Authority ruled that if the manufacturer of "Namkeen" voluntarily foregoes any actionable claim or enforcement right in respect of the brand name by fulfilling specified conditions, the applicable Central Tax and State Tax rate would be 2.5% each, totaling 5%. For the product "Extruded raw stick," classified under Tariff Item 2106 90 99, which requires frying before consumption, the tax rate is 9% under both Central and State Tax, totaling 18%.

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Issues Involved:
1. Applicable CGST & SGST Tax rate on "Namkeen" after fulfilling the conditions for disclaimer, use of unregistered brand, name, symbol, etc.
2. CSH/HSN Code and applicable Tax rate of the final product "Extruded raw stick."

Issue-wise Detailed Analysis:

1. Applicable CGST & SGST Tax rate on "Namkeen" after fulfilling the conditions for disclaimer, use of unregistered brand, name, symbol, etc.:

The applicant, a manufacturer of "Namkeen," sought clarification on the applicable tax rate under the conditions of using an unregistered brand name and disclaimer. The applicant currently sells "Namkeen" in printed pouches with an MRP ranging from Rs. 1/- to Rs. 5/-, billing it at 12% GST. They plan to introduce a disclaimer on each retail pack, voluntarily foregoing any actionable claim or enforcement right in respect of the brand name, and will not use any registered trademark or symbol.

The Authority referred to Notification No. 34/2017-Central Tax (Rate) dated 13.10.2017, which allows a reduced tax rate if the brand name is voluntarily foregone. The notification specifies that "Namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form" without a registered brand name or actionable claim are subject to a 5% GST rate (2.5% CGST + 2.5% SGST).

The applicant's compliance with the conditions of the notification, including filing an affidavit and printing the disclaimer on the unit containers, qualifies them for the reduced tax rate. Consequently, the applicable rate of Central Tax and State Tax for "Namkeen" would be 2.5% each, cumulatively 5%.

2. CSH/HSN Code and applicable Tax rate of the final product "Extruded raw stick":

The applicant also sought the classification and tax rate for "Extruded raw stick," which is made from corn, rice grits, etc., and packed in loose bags without any brand but containing the manufacturer's details. The product becomes similar to "kurkure" when fried.

The Authority examined the relevant tariff headings and chapter notes. Chapter Heading 2106 covers "Food preparations not elsewhere specified or included." Specifically, Tariff Item 2106 90 99 includes products like "Namkeens," "Mixtures," and similar edible preparations.

The Authority concluded that the "raw extruded stick" falls under Tariff Item 2106 90 99. However, since the product is not ready for consumption and requires frying before consumption, it does not fall under the category of ready-to-eat "Namkeens." Therefore, it is subject to an 18% GST rate (9% CGST + 9% SGST) as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended.

Ruling:

1. Namkeen: If the applicant voluntarily foregoes their actionable claim or enforceable right on the brand name in the prescribed manner, the applicable rate of Central Tax and State Tax would be 2.5% each, cumulatively 5%.

2. Extruded raw stick: The CSH/HSN code is 21069099, attracting a tax rate of 9% each under Central and State Tax, cumulatively 18%.

This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.

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