Product classification ruling: "Un-fried Fryums" under Customs Tariff Act. GST rate set at 18%.

The Authority for Advance Ruling (AAR) determined that the product of different shapes and sizes manufactured and supplied by the applicant is classified as "un-fried Fryums" under Tariff Item 2106 90 99 of the Customs Tariff Act, 1975. The applicable GST rate on the supply of such un-fried "Fryums" was ruled to be 18% (CGST 9% + GGST 9% or IGST 18%). This ruling was based on the distinction between "Papad" and "Fryums" in common parlance and the specific tariff headings applicable to each product.

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

Detailed Analysis:

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

The applicant, engaged in manufacturing and marketing "Papad" of various shapes and sizes, filed for an advance ruling to determine the appropriate tariff heading for their product. They argued that their product should be classified under Chapter Tariff Heading 1905, which includes "Papad, by whatever name it is known, except when served for consumption," and thus should be exempt from GST.

The applicant cited various judicial pronouncements to support their claim, emphasizing the need for updated interpretation of laws in line with technological advancements and changing market trends. They also referred to previous cases where courts had classified similar products under the "Papad" category, regardless of shape or size.

However, the Authority for Advance Ruling (AAR) examined whether the term "Papad" in common parlance would include different shapes and sizes of un-fried "Fryums." They referred to the Customs Tariff Act, 1975, and various judicial decisions, emphasizing the common parlance test, which interprets terms based on their popular meaning among those dealing with the subject matter.

The AAR noted that "Papad" and "Fryums" are distinct products in the market, with "Fryums" commonly known as "Namkeen" and not "Papad." They concluded that un-fried "Fryums" do not fall under the tariff item 1905 90 40, which is specific to "Papad."

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

The AAR then addressed the appropriate classification for un-fried "Fryums." They referred to Chapter Heading 2106 of the Customs Tariff Act, 1975, which covers "Food preparations not elsewhere specified or included." This heading includes preparations for use either directly or after processing for human consumption.

The AAR concluded that un-fried "Fryums" should be classified under Tariff Item 2106 90 99, which pertains to other food preparations not specified elsewhere. Consequently, the applicable GST rate for un-fried "Fryums" is 18% (CGST 9% + GGST 9% or IGST 18%) as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended.

Ruling:

1. The product of different shapes and sizes manufactured and supplied by the applicant is "un-fried Fryums" and not "Papad," and is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975.
2. The applicable GST rate on the supply of such un-fried "Fryums" is 18% (CGST 9% + GGST 9% or IGST 18%).

This detailed analysis ensures that the classification and applicable tax rates are consistent with the legal interpretations and common parlance understanding of the terms involved.

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