2021 (8) TMI 493 - AAR - GST

Ruling on Unbranded Jackfruit, Banana, Potato Chips & Roasted Nuts: GST Implications

The Authority ruled that chips made from Jackfruit, Banana, Potato, Tapioca, Chembu, and Pavakka, when sold without a brand name, are classified under ... Classification of goods - HSN Code - chips made from Jackfruit, Banana (both raw as well as ripe banana), Banana chips (masala), Potato, Tapioca, Chembu and Pavakka and sold without BRAND NAME - classifiable as NAMKEENS and are covered by HSN Code 2106.90.99 and taxable under Entry 101A of 1st Schedule of Central Tax (Rate) Notification 1/2017? - roasted and salted / salted / roasted preparations such as of Ground nuts, Cashew nut and other seeds - when sold without a brand name can they be classified under HSN 2106.90.99 and taxed under Entry 101A of Schedule 1 of Central Tax (Rate) Notification 1/2017? HELD THAT:- 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 Jackfruit Chips, Banana Chips, Tapoica Chips, Potato Chips, Chembu Chips and Pavakka Chips (Bittergourd) (Whether salted/ masala or otherwise) are classifiable under Tariff Heading 2008 19 40 of the Customs Tariff Act, 1975. Regarding classification of roasted /salted / roasted and salted Cashew nuts, Ground nuts and other nuts there are specific headings under Chapter 20 that covers the products. Accordingly, roasted /salted / roasted and salted Cashew nuts are classifiable under Tariff Heading 2008 19 10, and other roasted /salted / roasted and salted nuts and seeds are classifiable under 2008 19 20 of the Customs Tariff Act, 1975. 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 tax rate of chips made from Jackfruit, Banana, Potato, Tapioca, Chembu, and Pavakka.2. Classification and tax rate of roasted and salted preparations such as Ground nuts, Cashew nuts, and other seeds.Issue-wise Detailed Analysis:1. Classification and Tax Rate of Chips:The applicant contended that chips made from Jackfruit, Banana, Potato, Tapioca, Chembu, and Pavakka, sold without a brand name, should be classified as 'Namkeens' under HSN Code 2106.90.99 and taxed at 5% GST as per Entry 101A of Schedule I of Notification No. 01/2017.The Authority examined the provisions of the CGST Act and the KSGST Act, noting that both Acts have similar provisions. The applicant's contention was based on the classification of these products as Namkeens, which are typically understood as savory snacks.The Authority referred to Chapter 21 of the Customs Tariff, which covers 'Miscellaneous edible preparations' and specifically to Heading 2106, which includes food preparations not elsewhere specified or included. However, it was clarified that this heading is a residuary entry and should only be used if the products are not classifiable under any other specific entries.Chapter 20 of the Customs Tariff specifically covers 'Preparations of vegetables, fruits, nuts, or other parts of plants.' The Authority highlighted that Chapter Note 1(a) to Chapter 20 excludes vegetables, fruits, or nuts prepared or preserved by processes specified in Chapters 7, 8, or 11. The processes in these chapters include freezing, steaming, boiling, drying, provisionally preserving, and milling.The Authority concluded that frying and roasting are high-temperature cooking methods and that products prepared by these methods are classifiable under Chapter 20. Specifically, Jackfruit Chips, Banana Chips, Tapioca Chips, Potato Chips, Chembu Chips, and Pavakka Chips (whether salted/masala or otherwise) fall under Tariff Heading 2008.19.40.The applicable GST rate for these products is 12% (6% CGST + 6% SGST) as per Entry 40 of Schedule II of Notification No. 01/2017.2. Classification and Tax Rate of Roasted and Salted Preparations:The applicant also sought clarification on the classification of roasted and salted preparations such as Ground nuts, Cashew nuts, and other seeds, contending that these should also be classified as Namkeens under HSN 2106.90.99 and taxed at 5% GST.The Authority examined the relevant provisions and concluded that roasted/salted/roasted and salted Cashew nuts are classifiable under Tariff Heading 2008.19.10, and roasted/salted/roasted and salted Ground nuts and other nuts are classifiable under Tariff Heading 2008.19.20.The applicable GST rate for these products is also 12% (6% CGST + 6% SGST) as per Entry 40 of Schedule II of Notification No. 01/2017.Ruling:1. Chips made from Jackfruit, Banana (both raw as well as ripe), Banana chips (masala), Potato, Tapioca, Chembu, and Pavakka, sold without a brand name, are classifiable under Customs Tariff Heading 2008.19.40 and are liable to GST at the rate of 12% (6% CGST + 6% SGST).2. Roasted and salted/salted/roasted preparations such as Ground nuts, Cashew nuts, and other seeds, when sold without a brand name, are classifiable under Customs Tariff Heading 2008.19.10 for Cashew nuts and 2008.19.20 for Ground nuts and other nuts, and are liable to GST at the rate of 12% (6% CGST + 6% SGST).