Product "Prohance-D (Chocolate)" Classified as Beverage Preparation Under GST Heading 2106 90 50

The authority classified the product, Prohance-D (Chocolate), under "Compound preparations for making non-alcoholic beverages" (Heading 2106 90 50), attracting 18% GST. Despite some diabetic-friendly ingredients, the product's marketing for general health benefits led to its classification as a beverage preparation rather than solely as a diabetic food.

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Issues Involved:
1. Appropriate classification of the Applicant’s product, Prohance-D (Chocolate).

Detailed Analysis:

1. Classification of Prohance-D (Chocolate):
The applicant, Sun Pharmaceutical Industries Ltd., sought an advance ruling on the classification of Prohance-D (Chocolate) under GST laws. They contended that the product should be classified under "Diabetic Food" (Heading 2106 90 91) attracting 12% GST, arguing that it is specially designed for diabetics, sugar-free, low on Glycemic Index (GI), and marketed as a diabetic food.

Applicant's Interpretation:
The applicant argued that Prohance-D (Chocolate) is a "Diabetic Food" under Heading 2106 90 91, emphasizing that it is formulated with ingredients like Isomaltulose, Fructo-oligosaccharides, and Inulin, which are recognized by FSSAI as suitable for special dietary uses. They cited various definitions and legal precedents to support their claim that the product is a food preparation for diabetics and should be classified accordingly.

Jurisdictional Officer's Contention:
The jurisdictional officer argued that Prohance-D (Chocolate) is not exclusively a diabetic food as it is marketed for general health benefits. They suggested that the product should be classified under "Compound preparations for making non-alcoholic beverages" (Heading 2106 90 50), attracting 18% GST, because it is a powder mixed with water or milk to make a beverage.

Authority's Observations:
The authority reviewed the definitions of "food" and "diabetic food" from various sources, including the FSSAI Act and dictionaries, and concluded that Prohance-D (Chocolate) qualifies as food. However, they noted that the product is marketed for various health benefits beyond diabetes, and lacks sufficient dietary fiber and slow-digestion agents typical of diabetic foods.

Conclusion on Classification:
The authority determined that Prohance-D (Chocolate) does not meet the criteria to be classified solely as a diabetic food. Instead, they classified it under "Compound preparations for making non-alcoholic beverages" (Heading 2106 90 50), attracting 18% GST, as it is a food preparation meant to be mixed with water or milk to create a beverage.

Final Judgment:
The appropriate classification of the Applicant’s product, Prohance-D (Chocolate), is under Heading 2106 90 50 as a "Compound preparation for making non-alcoholic beverages," attracting GST at the rate of 18%.

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