Classification of 'Maida Vadam/Papad' as 'Papad' under GST Act provides tax exemption

The product 'Maida Vadam/Papad' was classified as 'Papad' under Chapter 1905 of the GST Act by the Authority. It was determined that the product's characteristics and manufacturing process aligned more closely with 'Papad' than 'Namkeen,' warranting the classification decision. As a result, the product was exempted from CGST and SGST, providing clarity on the applicable tax treatment and HSN Code for the applicant.

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Issues Involved:
Classification of product as 'Papad' or 'Namkeen' under GST Act based on manufacturing process and characteristics.
Determining the applicable tax rate and HSN Code for the product 'Maida Vadam/Papad'.

Detailed Analysis:
1. Classification Issue:
The applicant sought an advance ruling on the classification of their product, 'Maida Vadam/Papad,' under the GST Act. The product is made of maida, salt, and bicarbonate, dried in an oven, and needs to be fried in oil before consumption. The applicant argued that the product should be classified as 'Papad' under Chapter 1905, citing similarities with traditional papads and fulfilling general characteristics of papads, as per their submission and supporting documents.

2. Manufacturing Process and Characteristics:
The applicant provided details of the manufacturing process, highlighting the use of machinery, preservatives, and the need for frying before consumption. They emphasized that the product is similar to 'Papad' and not 'Namkeen,' as it requires further processing by the consumer. The Authority analyzed the relevant Customs Tariff chapters and notes to determine the appropriate classification based on the nature of the product and its characteristics.

3. Legal Interpretation and Precedents:
The Authority referred to Notification No. 1/2017 - Central Tax (Rate) and relevant Customs Tariff chapters to interpret the classification criteria for the product. They compared the characteristics of 'Papad' and 'Namkeen,' considering the product's readiness for consumption and the manufacturing process. The Authority also cited a precedent related to a similar product, emphasizing the importance of the final processing step before consumption in determining classification.

4. Ruling and Conclusion:
After thorough analysis, the Authority ruled that the product 'Maida Vadam/Papad' is classifiable under '19050540' as 'Papad.' They further exempted the product from CGST and SGST as per Notification No. 02/2017-CT (Rate) and relevant state notification. The ruling clarified the tax treatment and classification of the product based on its characteristics and manufacturing process, providing a definitive conclusion for the applicant's query.

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