Vegetable chips and roasted nuts classified under HSN 2008.19 not residuary heading 2106.90.99

The AAAR Kerala ruled that jackfruit chips, banana chips, tapioca chips, potato chips, and other vegetable chips (salted/masala varieties) are classifiable under HSN Code 2008.19.40, not under the residuary heading 2106.90.99. The authority held that Chapter 20 specifically covers preparations of vegetables, fruits, and nuts, making it more specific than the miscellaneous edible preparations under Chapter 21. Similarly, roasted/salted cashew nuts were classified under 2008.19.10, while other roasted/salted nuts and seeds fall under 2008.19.20. The classification was determined by applying tariff interpretation rules, rejecting the appellant's common parlance understanding argument.

---

---

Issues Involved:
1. Classification of Jackfruit Chips, Banana Chips, Tapioca Chips, Potato Chips, Chembu Chips, Pavakka Chips, and Sharkaraivaratty.
2. GST rate applicable to the above products.
3. Classification of roasted/salted/roasted and salted preparations of Ground nuts, Cashew nuts, and other seeds.
4. Applicability of HSN Code 2106.90.99 for the above products.

Issue-wise Detailed Analysis:

1. Classification of Chips and Sharkaraivaratty:
The appellant argued that Jackfruit Chips, Banana Chips, Tapioca Chips, Potato Chips, Chembu Chips, Pavakka Chips, and Sharkaraivaratty should be classified under HSN 2106.90.99 as "Namkeens" or "Sweetmeats" and taxed at 5% GST under Entry 101A of Schedule I of Notification No. 1/2017. The appellant relied on Supplementary Note No. 6 of Chapter 21, which includes products commonly known as "Namkeens" and "Sweetmeats" under HSN 2106.90.99. However, the Appellate Authority upheld the classification under HSN 2008.19.40, as these products are essentially prepared or preserved fruits and vegetables, falling under Chapter 20, which covers preparations of vegetables, fruits, nuts, or other parts of plants. The authority emphasized that the essential character of the fruits or vegetables remains unchanged after processing, and thus they are appropriately classifiable under heading 2008.

2. GST Rate Applicable to Chips and Sharkaraivaratty:
The Appellate Authority confirmed that products classified under HSN 2008.19.40 attract a GST rate of 12% (6% CGST + 6% SGST) as per Entry 40 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. This decision was based on the specific inclusion of such products under Chapter 20 of the Customs Tariff Act.

3. Classification of Roasted/Salted Preparations of Nuts and Seeds:
The appellant contended that roasted and salted/salted/roasted preparations of Ground nuts, Cashew nuts, and other seeds should be classified under HSN 2106.90.99 as "Namkeens" and taxed at 5% GST. However, the Appellate Authority held that these products are specifically covered under Chapter 20, with roasted/salted cashew nuts classified under HSN 2008.19.10 and other roasted/salted nuts and seeds under HSN 2008.19.20. These classifications attract a GST rate of 12% (6% CGST + 6% SGST) as per Entry 40 of Schedule II of Notification No. 01/2017 Central Tax (Rate).

4. Applicability of HSN Code 2106.90.99:
The appellant's reliance on HSN 2106.90.99 was rejected by the authority, which emphasized that HSN 2106 is a residuary entry for food preparations not elsewhere specified or included. Since the products in question are specifically covered under Chapter 20, they cannot be classified under the residuary entry of HSN 2106. The authority applied the rules for interpretation of the Customs Tariff, particularly Rule 1, 2, and 3, which prioritize specific headings over general or residuary ones.

Conclusion:
The Appellate Authority upheld the Advance Ruling No. KER/115/2021 dated 26/05/2021, confirming the classification of the impugned products under various headings of Chapter 20 and the applicable GST rate of 12%. The appeal filed by the appellant was rejected, and the products were not classified under HSN 2106.90.99 as "Namkeens" or "Sweetmeats."

---