Food items like jackfruit chips, banana chips retain essential characteristics, classified under HSN 2008 not 2106.90.99

The AAAR Kerala ruled that various food items including jackfruit chips, banana chips, potato chips, tapioca chips, and sharkara varatty are classifiable under HSN Code 2008 rather than 2106.90.99. The authority held that these products, despite undergoing frying and salting processes, retain their essential characteristics as fruits and vegetables. Similarly, roasted and salted groundnuts, cashew nuts and other seeds fall under heading 2008 as specifically covered items. The authority applied tariff interpretation rules, particularly Rule 3(a), determining that specific heading 2008 takes precedence over residuary heading 2106.90. All products under Chapter 2008 attract 12% GST rate.

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Issues Involved:
1. Classification and tax rate of Jackfruit Chips, Banana Chips, Tapioca Chips, Potato Chips, Chembu Chips, Pavakka Chips, and roasted/salted preparations of Groundnuts, Cashew nuts, and other seeds.

Detailed Analysis:

Issue 1: Classification of Banana Chips and Jackfruit Chips
- Appellant's Argument: The appellant contends that Banana Chips and Jackfruit Chips (salted and masala varieties) sold without a brand name should be classified as "Namkeens" under HSN Code 2106.90.99 and taxed at 5% under Entry 101A of Schedule I of Notification No. 1 of 2017.
- Authority's Finding: The authority held that Banana Chips and Jackfruit Chips are classifiable under Customs Tariff Heading 2008.19.40, which covers "Fruits, nuts, and other edible parts of plants, otherwise prepared or preserved." These items are liable to GST at the rate of 12% as per Entry 40 of Schedule II of Notification No. 1/2017-CT(R).

Issue 2: Classification of Sharkaraivaratty
- Appellant's Argument: The appellant argues that Sharkaraivaratty should be classified as "Sweetmeats" under HSN Code 2106.90.99 and taxed at 5% under Entry 101A of Schedule I of Notification No. 1 of 2017.
- Authority's Finding: The authority determined that Sharkaraivaratty is classifiable under Customs Tariff Heading 2008.19.40 and is liable to GST at the rate of 12% as per Entry 40 of Schedule II of Notification No. 1/2017-CT(R).

Issue 3: Classification of Roasted and Salted Preparations of Groundnuts, Cashew Nuts, and Other Seeds
- Appellant's Argument: The appellant claims that these roasted and salted preparations should be classified as "Namkeens" under HSN Code 2106.90.99 and taxed at 5% under Entry 101A of Schedule I of Notification No. 1 of 2017.
- Authority's Finding: The authority held that roasted/salted/roasted and salted Cashew nuts are classifiable under Customs Tariff Heading 2008.19.10, and roasted/salted/roasted and salted Groundnuts and other nuts are classifiable under Customs Tariff Heading 2008.19.20. These items are liable to GST at the rate of 12% as per Entry 40 of Schedule II of Notification No. 1/2017-CT(R).

Issue 4: Classification of Salted and Masala Chips of Potato and Tapioca
- Appellant's Argument: The appellant argues that these chips should be classified as "Namkeens" under HSN Code 2106.90.99 and taxed at 5% under Entry 101A of Schedule I of Notification No. 1 of 2017.
- Authority's Finding: The authority determined that salted and masala chips of Potato and Tapioca are classifiable under Customs Tariff Heading 2008.19.40 and are liable to GST at the rate of 12% as per Entry 40 of Schedule II of Notification No. 1/2017-CT(R).

Conclusion:
The appellate authority upheld the Advance Ruling No. KER/112/2021 dated 26/05/2021 with the following modifications:
- Banana Chips and Jackfruit Chips: Classified under Customs Tariff Heading 2008.19.40, liable to GST at 12%.
- Sharkaraivaratty: Classified under Customs Tariff Heading 2008.19.40, liable to GST at 12%.
- Roasted and Salted Preparations of Groundnuts, Cashew Nuts, and Other Seeds: Classified under Customs Tariff Headings 2008.19.10 and 2008.19.20, liable to GST at 12%.
- Salted and Masala Chips of Potato and Tapioca: Classified under Customs Tariff Heading 2008.19.40, liable to GST at 12%.

The appeal filed by the appellant was consequently rejected.

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