Flavoured milk classified as beverage containing milk under Customs Tariff Act

The authority ruled that "flavoured milk" is classifiable under Tariff Item 2202 99 30 of the Customs Tariff Act as a "beverage containing milk." This aligns with previous rulings and judicial decisions under the Central Excise regime, confirming that flavoured milk falls under Chapter 22 of the GST Tariff as a ready-to-drink milk-based beverage.

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Issues Involved:
1. Classification of "Flavoured Milk" under GST Tariff.
2. Applicability of Chapter 4 or Chapter 22 of GST Tariff.
3. Relevance of previous judicial decisions and standards for classification.

Issue-wise Detailed Analysis:

1. Classification of "Flavoured Milk" under GST Tariff:
The applicant, M/s. Vadilal Industries Ltd., sought an advance ruling on the classification of "Flavoured Milk" sold under the trade name "Power Sip." The applicant argued that flavoured milk should be classified under Heading 0402, Subheading 04029990 of the GST Tariff. The process of making flavoured milk involves standardizing fresh milk, heating, filtering, pasteurizing, homogenizing, and then adding sugar and various flavours before bottling. The applicant contended that adding flavours does not change the essential character of milk, making it a simple preparation of milk without altering its composition. Thus, they believed it should fall under Chapter 4, specifically under Subheading 04029990.

2. Applicability of Chapter 4 or Chapter 22 of GST Tariff:
The authority examined the relevant chapter notes and explanatory notes of CTH 0402 and 0404. Chapter 4 covers dairy products, including milk and cream, concentrated or containing added sugar or other sweetening matter. However, beverages consisting of milk flavoured with cocoa or other substances are excluded from CTH 0402 and are classified under CTH 2202. The authority noted that the product in question, flavoured milk with added sugar and flavours, is a ready-for-consumption beverage based on milk. Therefore, it does not fall under CTH 0402 or 0404 but is appropriately classifiable under CTH 2202 99 30 as "Beverages containing milk."

3. Relevance of Previous Judicial Decisions and Standards for Classification:
The applicant referenced various judicial decisions and standards, including the judgment of the Hon’ble Punjab & Haryana High Court in the case of Food Specialities Ltd. v. UOI, which dealt with the classification of skimmed milk powder. However, the authority found these references irrelevant to the current case, which involves the classification of a beverage containing milk. The authority emphasized that the GST Tariff, aligned with the Customs Tariff, has different objectives and purposes compared to other acts like the Prevention of Food Adulteration Act, making it inappropriate to use standards from other legislations for GST classification.

Conclusion:
The authority concluded that "flavoured milk" is classifiable under Tariff Item 2202 99 30 of the First Schedule to the Customs Tariff Act, 1975, as a "beverage containing milk." This conclusion aligns with various advance rulings and judicial decisions under the Central Excise regime, which are applicable under GST as well. The ruling clarified that flavoured milk, being a ready-for-consumption beverage with a basis of milk, falls under Chapter 22 of the GST Tariff.

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