Flavored milk reclassified as beverage containing milk under Customs Tariff Act

The authority classified flavored milk as a "beverage containing milk" under Tariff Item 2202 99 30 of the Customs Tariff Act, 1975, based on the examination of relevant chapter notes and judicial precedents. The essential character of milk in flavored milk products was considered, leading to the conclusion that they fall under Chapter 22 rather than Chapter 4 of the GST Tariff.

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Issues Involved:
1. Classification of "Flavored Milk" under GST Tariff.

Detailed Analysis:

Issue 1: Classification of "Flavored Milk" under GST Tariff

Applicant's Submission:
The applicant, a cooperative society producing various milk products, including flavored milk under the trade names Amul Kool and Amul Kool Café, sought an advance ruling on the classification of flavored milk. They argued that flavored milk should be classified under Heading 0402, Sub Heading 04029990 of the GST Tariff, as it retains the essential character of milk despite the addition of sugar and flavors.

Process and Composition:
The process involves standardizing fresh milk according to fat content, heating, filtering, pasteurizing, homogenizing, and then adding sugar and flavors before bottling. The essential character of milk remains unchanged. The product, being partially skimmed milk with added sugar, was argued to fall under Heading 0402 of the GST Tariff, specifically under Sub Heading 04029990.

Relevant Legal References:
The applicant referred to the Harmonized System of Nomenclature (HSN) and various judicial precedents, including the Punjab & Haryana High Court ruling in Food Specialities Ltd. v/s UOI and the CESTAT decision in Mehsana District Co-operative Milk Producers Unions Ltd., to support their classification under Chapter 4 of the GST Tariff.

Authority's Discussion and Findings:
The authority examined the relevant chapter notes of CTH 0402 and 0404, and the Explanatory Notes as per HSN. The product in question is flavored milk, which is a beverage ready for consumption and based on milk. The Explanatory Notes to HSN of Chapter 04.02 explicitly exclude beverages consisting of milk flavored with cocoa or other substances, directing such products to Chapter 22 under Heading 2202.

Examination of CTH 2202:
The authority noted that CTH 2202 covers waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavored, and other non-alcoholic beverages. Sub-heading 2202 99 30 specifically includes "Beverages containing milk."

Judicial Precedents:
The authority referred to various judicial precedents, including the Hon’ble Madras High Court in the State of Tamil Nadu v. TVL. Ganesh Corporation and the Hon’ble High Court of Gujarat in M/s. Kaira Dist. Coop. Milk Producers’ Union Ltd. v. UOI, which supported the classification of flavored milk under Chapter 22 as a beverage containing milk.

Advance Rulings:
The authority also considered similar advance rulings from Tamil Nadu and Andhra Pradesh, which classified flavored milk under Tariff Item 2202 99 30.

Conclusion:
The authority concluded that flavored milk is classifiable under Tariff Item 2202 99 30 of the First Schedule to the Customs Tariff Act, 1975, as a "beverage containing milk."

Ruling:
The flavored milk is classifiable under Tariff Item 2202 99 30 of the First Schedule to the Customs Tariff Act, 1975, as a "beverage containing milk."

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