Jackfruit chips, potato chips, tapioca chips, and roasted nuts without brand names classified under HSN 2008, not 2106.90.99

AAAR Kerala ruled that jackfruit chips, potato chips, tapioca chips, and roasted/salted nuts sold without brand names are classifiable under HSN Code 2008 rather than 2106.90.99. The authority held that these products retain their essential character as fruits/vegetables despite processing through frying and salting. Since Chapter 20 specifically covers preparations of vegetables and fruits, while Chapter 21 covers miscellaneous edible preparations, the specific heading 2008 prevails over the residuary heading 2106.90. All items attract 12% GST under Entry 40 of Schedule II. The supplier's classification under HSN 1903 was deemed incorrect.

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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/roasted and salted preparations of Ground nuts, Cashew nuts, and other seeds.
2. Correctness of the classification of Jackfruit Chips under HSN Code 1903 by the supplier.
3. Applicability of HSN Code 2106.90.99 for various chips and roasted/salted preparations and their classification as Namkeens.

Detailed Analysis:

1. Classification and Tax Rate of Chips and Roasted/Salted Preparations:
The appellant argued that the products should be classified under HSN 2106.90.99 as Namkeens or sweetmeats and taxed at 5% under Entry 101A of Schedule I to Notification No. 1/2017-CT(rate). They relied on Supplementary Notes No. 5(b) and 6 of Chapter 21, which include preparations for human consumption and products commonly known as Namkeens and sweetmeats.

However, the authority examined the rival entries, particularly Chapter 20 and Heading 2008, which cover preparations of vegetables, fruits, nuts, or other parts of plants. The explanatory notes to Heading 2008 specify that it includes products like roasted, salted, or roasted and salted nuts and fruits. The authority concluded that these products are appropriately classifiable under Heading 2008, as the essential characteristics of the fruits or vegetables remain unchanged after processing (slicing, frying, adding salt or masala).

The authority noted that Heading 2106.90 is a residuary entry and should only be used if the products are not covered elsewhere in the tariff. Since the products in question are specifically covered under Heading 2008, they cannot be classified under Heading 2106.90.

2. Correctness of Classification of Jackfruit Chips under HSN Code 1903:
The appellant's supplier classified Jackfruit Chips under HSN Code 1903. The authority rejected this classification, affirming that Jackfruit Chips should be classified under Customs Tariff Heading 2008.19.40.

3. Applicability of HSN Code 2106.90.99 for Various Chips and Roasted/Salted Preparations:
The appellant contended that products like Jackfruit Chips, Banana Chips, and roasted/salted preparations should be classified under HSN 2106.90.99 as Namkeens. The authority rejected this contention, stating that these products are specifically covered under Heading 2008. The rules for interpretation of the tariff, particularly Rule 1, 2, and 3, were applied to determine that the products should be classified under Heading 2008.

The authority also referred to relevant case laws and previous advance rulings, which supported the classification under Heading 2008. The decision in Pepsico India Holdings P Ltd Vs Commissioner of Central Excise and ST Chandigarh reinforced the classification of similar products under Chapter 20 rather than Chapter 21.

Conclusion:
The authority upheld the Advance Ruling No. KER/114/2021 dated 26/05/2021 with modifications. The products in question (Jackfruit Chips, Banana Chips, Tapioca Chips, Potato Chips, Chembu Chips, Pavakka Chips, and roasted/salted/roasted and salted preparations of Ground nuts, Cashew nuts, and other seeds) are classified under various sub-headings of Heading 2008 of the Customs Tariff Act, 1975, and are liable to GST at the rate of 12% as per Entry at Sl. No. 40 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. The appeal filed by the appellant was consequently rejected.

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