AAR rejects FANTA FRUITY ORANGE classification application due to identical Gujarat AAR application already decided

The Karnataka AAR rejected an application seeking classification of FANTA FRUITY ORANGE under GST schedules, determining whether it falls under Chapter 2202 99 20 (fruit pulp/juice based drinks), Chapter 2202 99 90 (other non-alcoholic beverages), or Chapter 2202 10 (goods with added sugar/sweetening matter). The application was rejected because the applicant had previously filed an identical application before the Gujarat AAR on 27.11.2017 regarding the same product classification question, which had already been decided by that authority.

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Issues Involved:
1. Classification of "FANTA FRUITY ORANGE" under the appropriate Chapter Heading and Schedule of the GST Tariff.

Detailed Analysis:

Issue 1: Classification of "FANTA FRUITY ORANGE"
The applicant, a private limited company registered under the GST Act, sought an advance ruling on whether "FANTA FRUITY ORANGE" should be classified under:
- Chapter Heading 2202 99 20 at Sl.No. 48 under Schedule II as "Fruit pulp or fruit juice based drinks",
- Chapter 2202 99 90 at Sl.No. 24A under Schedule III as "Other Non-alcoholic beverages", or
- Chapter 2202 10 at Sl.No.12 under Schedule IV as "All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured".

Applicant’s Submission:
1. Product Composition and Manufacturing Process:
- The product contains 10.5% Orange Juice, sugar, acidity regulators, preservatives, stabilizers, synthetic food colors, carbon dioxide, and sweeteners.
- The manufacturing process involves mixing orange juice concentrate with water, sugar syrup, and other additives, followed by carbonation and packaging.

2. Classification Argument:
- The applicant argues that the product should be classified under Tariff Item No. 2202 99 20 as "Fruit pulp or fruit juice based drinks" because the orange juice constitutes 10.5% of the total beverage and imparts the essential character to the drink.
- They assert that the carbonation is only for preservation purposes and not to classify it under aerated waters.

3. Supporting References:
- The applicant references various dictionaries and technical literature to define "base" and "flavour", emphasizing that the orange juice is the main ingredient giving the drink its essential character.
- They also cite the US Customs Ruling No. N 122815, which distinguishes between fruit juice-based drinks and flavoured waters based on the dominant ingredient.

4. Legal Precedents:
- The applicant references the Tribunal’s decision in CCE, Bhopal v. Parle Agro Pvt. Ltd., where a similar product "Appy Fizz" was classified under Tariff Item 2202 90 20 despite being aerated.

Authority’s Findings:
1. Pending Application in Gujarat:
- The applicant had already filed an application for advance ruling on the same issue before the Gujarat Authority for Advance Ruling, which culminated in a ruling (GUJ/GAAR/R/07/2019 dated 30.03.2019).

2. Legal Provisions:
- Section 98(2) of the CGST Act, 2017, states that the Authority shall not admit an application where the question raised is already pending or decided in any proceedings in the case of an applicant under any provisions of the Act.

Ruling:
- The application filed by the applicant is rejected because the question raised has already been decided by the Gujarat Authority for Advance Ruling.

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