Product classification: "un-fried Fryums" subject to 18% GST, not "Papad"

The Authority ruled that the product of different shapes and sizes manufactured by the applicant is classified as "un-fried Fryums" under Tariff Item 2106 90 99, not as "Papad" under Tariff Heading 1905. As a result, the applicable Goods and Services Tax rate of 18% (CGST 9% + SGST 9% or IGST 18%) is imposed on the product "un-fried Fryums."

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Issues Involved:
1. Classification of "Papad" of different shapes and sizes.
2. Applicable rate of SGST and CGST on such "Papad".

Detailed Analysis:

Issue 1: Classification of "Papad" of Different Shapes and Sizes

The applicant, engaged in manufacturing and marketing "Papad" of various shapes and sizes, sought to classify their product under Tariff Heading 1905. They argued that irrespective of shape or size, their product should be considered "Papad" and thus exempt from tax under Notification No. 02/2017-Central Tax (Rate).

The applicant cited several judicial precedents to support their claim, including:
- State of Punjab Vs. Amritsar Beverages Ltd.: Supreme Court acknowledged the need for creative interpretation to balance old laws with technological advancements.
- M/s. J. K. Cotton Spinning and Weaving Mills Ltd. Vs. Union of India: Supreme Court emphasized the importance of interpreting legislative intent to include new facts and situations.
- State of Karnataka Vs. Vasavamba Stores: Karnataka High Court ruled that "Fryums" in uncooked form qualify as "Papad".

The applicant also referenced the Tamil Nadu Advance Ruling Authority's decision in the case of Subramani Sumathi, which classified "Maida Vadam/Papad" under Tariff Heading 1905 90 40.

Authority's Findings:

The Authority examined whether "un-fried Fryums" could be classified as "Papad" under common parlance and judicial interpretations. They noted:
- Common Parlance Test: Products should be classified based on how they are understood in common language and commercial parlance. "Papad" is distinct from "Fryums" in the market.
- Judicial Precedents: The case of T.T.K. Pharma Ltd. v. Collector of Central Excise classified "Fryums" as "Namkeen" and not "Papad". Similarly, the Supreme Court in Commercial Tax, Indore v. T.T.K. Health Care Ltd. likened "Fryums" to "seviyan", requiring further cooking before consumption.
- Visual Distinction: Photographs of "Papad" and "Fryums" highlighted their distinct appearances, reinforcing their separate identities in the market.

The Authority concluded that "un-fried Fryums" are not classifiable as "Papad" under Tariff Item 1905 90 40.

Issue 2: Applicable Rate of SGST and CGST on Such "Papad"

Given the classification of "un-fried Fryums" under Tariff Item 2106 90 99, the applicable rate of GST was determined. Chapter Heading 2106 covers "Food preparations not elsewhere specified or included".

Authority's Findings:

- Chapter Note 5 and 6 of Chapter 21: These notes provide an inclusive definition covering preparations for human consumption, either directly or after processing.
- Relevant Rulings: The Gujarat Advance Authority in M/s. Sonal Product and the Madhya Pradesh Advance Authority in M/s. Alisha Foods classified "un-fried Fryums" under Tariff Item 2106 90 99, attracting an 18% GST rate.

Based on these findings, the Authority ruled that "un-fried Fryums" are classifiable under Tariff Item 2106 90 99 and attract a GST rate of 18% (CGST 9% + GGST 9% or IGST 18%).

Ruling:

1. Classification: The product of different shapes and sizes manufactured and supplied by the applicant is "un-fried Fryums" and not "Papad", classifiable under Tariff Item 2106 90 99.
2. Applicable Rate: Goods and Services Tax rate of 18% (CGST 9% + GGST 9% or IGST 18%) is applicable to the product "un-fried Fryums".

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