Authority rejects applicant's tariff classification query due to close ties with company.

The authority rejected the applicant's request for an advance ruling on the classification of flavored milk under tariff headings 0402 99 90 or 2202 99 30 as inadmissible under the first proviso to Section 98(2) of the CGST Act 2017. This decision was based on the applicant's close relationship with M/s Karnataka Co-operative Milk Producers Federation Ltd. (KMF), including shared ownership and management control, as well as the fact that M/s KMF was already facing a case on the same classification issue.

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Issues Involved:
Classification of flavored milk under HSN 0402 99 90 or 2202 99 30, Admissibility of the application

Classification of Flavored Milk:
The applicant, a registered society engaged in processing milk products, sought an advance ruling on the classification of flavored milk under tariff headings 0402 99 90 or 2202 99 30. The applicant supplies flavored milk under the brand name "Nandini" to M/s Karnataka Co-operative Milk Producers Federation Ltd. (KMF). The applicant argued that the issue of classification was not pending or decided under any provisions of the CGST/KGST Act. They highlighted that they are a separate legal entity from M/s KMF, do not own the brand "Nandini," and pay royalty to M/s KMF for its use. However, it was revealed that M/s KMF owns 90% shares in the applicant company and has management control over it. As M/s KMF is facing a case on the classification of flavored milk, the applicant, being a job worker for M/s KMF, is bound by the outcome of those proceedings. Consequently, the authority rejected the application as inadmissible under the first proviso to Section 98(2) of the CGST Act 2017.

Admissibility of the Application:
The authority considered the admissibility of the application in relation to the classification of flavored milk. The applicant argued for the admissibility based on the grounds that the classification issue was not pending in any proceedings concerning them under the CGST/KGST Act. They emphasized their separate legal status from M/s KMF, the brand owner, and their role as a manufacturer supplying flavored milk under the "Nandini" brand. However, the authority found that due to the significant shareholding and management control of M/s KMF over the applicant, the pending case against M/s KMF regarding the classification of flavored milk also affected the applicant. As a result, the authority rejected the application as inadmissible under the first proviso to Section 98(2) of the CGST Act 2017.

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