2021 (7) TMI 482 - AAR - GST

Food Items Classified Under Customs Tariff Heading 2008.19.40 Subject to 12% GST

The court ruled that Banana Chips, Jackfruit Chips, Tapioca Chips, and Jaggery Coated Banana Chips are all classified under Customs Tariff Heading ... Classification of supply - rate of tax - banana chips - jackfruit chips - tapioca chips - supply without registration of brand name - jaggery coated banana chips (sarkaraupperi in Malayalam) - to be classified under Chapter 20 or under Heading 2106 - CGST Act, 2017 - Kerala GST Act, 2017 - HELD THAT:- All the vegetable, fruit or nut products or preparations made other than by the processes specified in Chapters 7, 8 or 11 are included in the Chapter 20. The processes specified in Chapters 7, 8 or 11 mainly include freezing, steaming, boiling, drying, provisionally preserving and milling. Therefore, any vegetable, fruit, nut or edible parts of plant which is prepared or preserved by any other process than these are liable to be classified under Chapter 20. Chapter Heading 2008 of the Customs Tariff covers all roasted and fried vegetable products. Frying and roasting are two popular cooking methods that both use high temperature. It is not necessary that both the conditions are to be cumulatively satisfied for classifying a product under the category of roasted and fried products. When according to chapter notes and description of tariff items the products are classifiable under specific headings of Chapter 20 they cannot be classified under Heading 2106 as food preparations not elsewhere specified or included. Applying the principles of interpretation in Rule 2 of the General Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975 the Banana Chips, Jackfruit Chips, Tapioca Chips and Jaggery Coated Banana Chips are classifiable under Tariff Heading 2008 19 40 of the Customs Tariff Act, 1975. The products falling under this Heading 2008 may be sweetened by adding sweetening agents or other substances like starch may also be added to the products. However, they do not alter the essential character of the product and they continue to be classifiable under Chapter Heading 2008. “Sweetmeat” means food rich in sugar or made of or covered in sugar or any sweet food or delicacy prepared with sugar. Therefore, sugar is one of the essential ingredients for classification of any sweet food item as sweetmeat. The findings in the decisions quoted by the applicant are also on the same lines that sweetmeats are sweet edible preparations rich in sugar or prepared with sugar. Therefore, only sweet edible preparations containing sugar can be considered as sweetmeats. Jaggery Coated Banana Chips - HELD THAT:- It is evident from Annexure - M and N of the application itself that jaggery is manufactured from sugarcane by a simple process which can be done in the farms by the farmers themselves but the manufacturing of sugar involves many processes that cannot be carried out in a farm. The only process that is common for manufacture of jaggery and sugar is the extraction of juice from sugarcane and its concentration. Moreover, Jaggery and Sugar are commercially distinct products having individual characteristics and economic value and both cannot be equated. Hence by no stretch of imagination Jaggery Coated Banana Chips be considered as a sweet edible preparation containing sugar. Thus, the products are classifiable under Tariff Item 2008 19 40 of Chapter 20 of the Customs Tariff Act, 1975. Rate of Tax - HELD THAT:- On a plain reading of the entry at Si No. 40 of Schedule II of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017, it is evident that all the products that fall under Chapter Heading 2008 of the Customs Tariff Act, 1975 attract GST at the rate of 12%. Issues Involved:1. Classification and rate of tax applicable to the supply of Banana Chips.2. Classification and rate of tax applicable to the supply of Jackfruit Chips.3. Classification and rate of tax applicable to the supply of Tapioca Chips.4. Classification and rate of tax applicable to the supply of Jaggery Coated Banana Chips (Sarkaraupperi).Issue-wise Detailed Analysis:1. Classification and Rate of Tax for Banana Chips:The applicant contended that Banana Chips should be classified under 'Namkeens' and taxed at 5% GST as per SI.No.101A of Schedule I of Notification No. 01/2017 CT (Rate) dated 28.06.2017. However, upon examination, it was determined that Banana Chips fall under Customs Tariff Heading 2008.19.40, which pertains to 'Preparations of vegetables, fruits, nuts or other parts of plants.' Consequently, Banana Chips are liable to GST at the rate of 12% [6% CGST + 6% SGST] as per Entry at Sl No. 40 of Schedule II of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017.2. Classification and Rate of Tax for Jackfruit Chips:Similar to Banana Chips, the applicant argued that Jackfruit Chips should be classified under 'Namkeens' and taxed at 5% GST. However, the judgement concluded that Jackfruit Chips are also classifiable under Customs Tariff Heading 2008.19.40. Thus, they attract GST at the rate of 12% [6% CGST + 6% SGST] as per Entry at Sl No. 40 of Schedule II of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017.3. Classification and Rate of Tax for Tapioca Chips:The applicant suggested that Tapioca Chips could be classified under Customs Tariff Heading 1903 or 2106 and taxed at 5%. However, the ruling clarified that Tapioca Chips do not qualify under Heading 1903 (which covers Tapioca in forms like flakes, grains, etc., but not fried products). Instead, Tapioca Chips fall under Customs Tariff Heading 2008.19.40, making them subject to GST at the rate of 12% [6% CGST + 6% SGST] as per Entry at Sl No. 40 of Schedule II of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017.4. Classification and Rate of Tax for Jaggery Coated Banana Chips (Sarkaraupperi):The applicant classified Jaggery Coated Banana Chips under 'Sweetmeats' and sought a 5% GST rate. However, the judgement found that Jaggery Coated Banana Chips do not contain sugar and are not recognized as sweet edible preparations containing sugar. Therefore, they do not qualify as 'Sweetmeats.' Instead, they are classified under Customs Tariff Heading 2008.19.40, and are liable to GST at the rate of 12% [6% CGST + 6% SGST] as per Entry at Sl No. 40 of Schedule II of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017.Ruling:1. Banana Chips are classifiable under Customs Tariff Heading 2008.19.40 and liable to GST at 12% [6% CGST + 6% SGST].2. Jackfruit Chips are classifiable under Customs Tariff Heading 2008.19.40 and liable to GST at 12% [6% CGST + 6% SGST].3. Tapioca Chips are classifiable under Customs Tariff Heading 2008.19.40 and liable to GST at 12% [6% CGST + 6% SGST].4. Jaggery Coated Banana Chips (Sarkaraupperi) are classifiable under Customs Tariff Heading 2008.19.40 and liable to GST at 12% [6% CGST + 6% SGST].