2018 (10) TMI 1623 - AAR - GST

Classification of 'Militry Malai Mithai' as sweet meat under Chapter Heading 2106 90 99 for GST.

The product 'Militry Malai Mithai' has been classified under Chapter Heading 2106 90 99 as a sweet meat, attracting a GST rate of 5%. This classification ... Classification of goods - sweetmeats - miscellaneous edible products - sugar confectionery - dairy products consisting of natural milk constituents - residual tariff entryClassification of goods - sweetmeats - miscellaneous edible products - sugar confectionery - dairy products consisting of natural milk constituents - residual tariff entry - Appropriate tariff classification of the product 'Militry Malai Mithai' for GST purposes. - HELD THAT: - The Authority examined the product's composition, physical form, packaging and trade practice and considered the fitment under three contending chapters. Chapter 04 (dairy products) was rejected because the product, though containing milk derivatives, is not a product of natural milk constituents as envisaged by Chapter 04 and thus does not fall within headings 0401-0406. Chapter 17 (sugar and sugar confectionery) was considered next: the product is neither chewing gum, jelly confectionery, boiled sweet nor toffee/caramel and does not fit any specific sub heading; it is a semi liquid/paste in sachets and its ingredients, process and final form take it outside the family of sugar confectionery. Consequently the only appropriate placement is in Chapter 21 (miscellaneous edible preparations) as a residual item. Within Chapter 21, no specific entry fits the product, and it correctly falls under the residual sub heading 2106 90 99 as a 'sweetmeat'. On that basis the Authority concluded that the product merits classification as a miscellaneous edible product / sweetmeat and is chargeable under the tariff entry for sweetmeats. [Paras 5, 6]The product 'Militry Malai Mithai' is classifiable under Chapter Heading 2106 90 99 as a 'sweetmeat' and attracts the GST rate applicable to that entry.Final Conclusion: The Authority ruled that 'Militry Malai Mithai' is classifiable as a sweetmeat under tariff entry 2106 90 99 (Chapter 21) and shall be chargeable to GST at the rate applicable to that entry; the ruling is prospective and does not entitle the applicant to refunds for past tax paid. Issues Involved:1. Classification of the product 'Militry Malai Mithai' under the appropriate GST Tariff Heading.2. Determination of whether the product is a sweet meat, dairy product, or sugar confectionery.3. Examination of the applicant's arguments and the department's viewpoint on product classification.4. Analysis of applicable GST rates based on the classification.Detailed Analysis:1. Classification of 'Militry Malai Mithai':The applicant manufactures 'Militry Malai Mithai,' which contains sugar, vegetable fats, skimmed milk powder, whey powder, emulsifiers, and flavors. The product is packed in small sachets and marketed as a sweet meat.2. Determination of Product Type:- Sweet Meat Classification (Heading 2106):The applicant argues that the product should be classified as a sweet meat under Heading 21069099, citing that it is similar to traditional sweets like Rabdi and is recognized in the market as Mithai. The applicant references the CBEC FAQ, which includes similar products under HS Code 2106, attracting 5% GST.- Dairy Product Classification (Heading 0404):Alternatively, the applicant suggests that the product could be classified as a dairy product under Heading 04049000, as it contains natural milk constituents like skimmed milk powder and whey powder. However, the ruling finds that the product does not qualify as a natural milk constituent product and thus cannot be classified under Chapter 04.- Sugar Confectionery Classification (Heading 1704):The applicant currently classifies the product under Heading 1704 as sugar confectionery, attracting 18% GST. The ruling examines the product against various sub-headings under Chapter 17 and concludes that it does not fit any specific category such as chewing gum, jelly confectionery, boiled sweets, or toffees. The product is a semi-liquid preparation, not a solid or semi-solid confectionery, and thus cannot be classified under Chapter 17.3. Examination of Arguments and Department's Viewpoint:- The department's opinion aligns with the current classification under Heading 1704, but the ruling finds this insufficient and driven by the higher tax rate.- The ruling emphasizes that classification should be based on the product's nature and not the tax rate.4. Analysis of Applicable GST Rates:- The ruling concludes that the product should be classified under Chapter Heading 2106 90 99 as a miscellaneous edible product, specifically as a sweet meat.- The applicable GST rate for this classification is 5%, as per Notification No.01/2017-Central Tax (Rate) dated 28.06.2017.Conclusion:The product 'Militry Malai Mithai' is classified under Chapter Heading 2106 90 99 as a sweet meat, attracting a GST rate of 5%. This classification is effective prospectively and does not entitle the applicant to a refund of any previously paid tax.Ruling:- The product 'Militry Malai Mithai' will be classified under Chapter Heading 2106 90 of the GST Tariff as a sweet meat.- The ruling is subject to provisions under section 103(2) and remains valid unless declared void under Section 104(1) of the GST Act.