Fresh green pepper classification turns on common parlance and processing, with unprocessed produce treated as a vegetable and GST-exempt.

Fresh raw green pepper of genus Piper nigrum, when sold unprocessed and picked from the vine, is classified in common parlance as a vegetable under Chapter 7 of the Customs Tariff Act, because it does not yet acquire the essential oil, aroma or condiment character of a spice. It is therefore not classifiable as a spice under Chapter 9 in its fresh state. The ruling further distinguishes processed green pepper, which may fall under Chapter 9, including heading 0904 11 90, depending on the nature of processing. On that basis, sale or purchase of fresh raw green pepper is exempt from GST under Entry No. 43 of Notification No. 02/2017-Central Tax (Rate).

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Issues: (i) Whether fresh raw green pepper of genus Piper nigrum is classifiable as a vegetable under Chapter 7 of the Customs Tariff Act, 1975; (ii) whether such green pepper is classifiable as a spice under Chapter 9 of the Customs Tariff Act, 1975; (iii) if not, under which heading it falls, including the effect of processing; and (iv) the rate of GST applicable on sale or purchase of raw green pepper.

Issue (i): Whether fresh raw green pepper of genus Piper nigrum is classifiable as a vegetable under Chapter 7 of the Customs Tariff Act, 1975.

Analysis: Fresh green pepper plucked from the vine was held to lack the attributes of a spice in its raw state. Applying common parlance and the character of the commodity before processing, the Authority found that the produce is understood as a vegetable when fresh and unprocessed.

Conclusion: Fresh raw green pepper of genus Piper nigrum is classifiable under Chapter 7 of the Customs Tariff Act, 1975.

Issue (ii): Whether such green pepper is classifiable as a spice under Chapter 9 of the Customs Tariff Act, 1975.

Analysis: The Authority held that the essential oil, aroma and condiment character associated with spices emerge only after processing, drying or similar treatment. In the fresh state, the commodity does not answer the description of a spice.

Conclusion: Fresh raw green pepper of genus Piper nigrum is not classifiable as a spice under Chapter 9 of the Customs Tariff Act, 1975 in its unprocessed form.

Issue (iii): If not, under which heading it falls, including the effect of processing.

Analysis: The Authority distinguished between fresh produce and processed produce. It held that green pepper picked fresh from the vine falls under Chapter 7, while green pepper subjected to processing for retaining natural green colour and flavour would fall under the relevant Chapter 9 heading.

Conclusion: Fresh green pepper is classifiable under Chapter 7, while processed green pepper is classifiable under Chapter 9, including heading 0904 11 90.

Issue (iv): The rate of GST applicable on sale or purchase of raw green pepper.

Analysis: Since the fresh produce was treated as goods covered by the exemption entry for other fresh vegetables, the Authority held that the sale or purchase of green pepper picked from the vine attracts exemption under the cited notification.

Conclusion: Sale or purchase of fresh raw green pepper picked from the vine is exempt from GST under Entry No. 43 of Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017.

Final Conclusion: The ruling settles that unprocessed fresh green pepper is to be treated as a Chapter 7 vegetable and is GST-exempt, while processed green pepper may fall within Chapter 9 depending on the nature of processing.

Ratio Decidendi: Classification of a commodity under the tariff depends on its identity in common parlance and its essential character in the condition in which it is sold or supplied, with processing capable of changing that character for tariff purposes.

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