Ready to Eat Popcorn Classified Under HSN Code 1904 with 18% GST Rate for Retail Sales

The AAR determined that 'Ready to Eat' popcorn should be classified under HSN code 1904 (prepared foods obtained by swelling or roasting cereals) rather than under 2008 or 2106. This classification was based on the manufacturing process involving swelling of corn through heating, which aligns with the specifications in tariff heading 1904. Following this classification, the applicable GST rate for retail sales of 'Ready to Eat' popcorn was established at 9% SGST and 9% CGST.

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Issues:
1. Classification of 'Ready to Eat' popcorn under HSN codes.
2. Determination of the applicable GST rate on retail sales of 'Ready to Eat' popcorn.

Analysis:

Issue 1: Classification of 'Ready to Eat' popcorn under HSN codes
The applicant, a company selling ready-to-eat popcorn, sought clarification on the correct classification of their product under the Harmonized System of Nomenclature (HSN) codes for GST purposes. The applicant believed that the popcorn should be classified under Tariff Heading 1904, which covers prepared foods obtained by swelling or roasting of cereals or cereal products. They argued that the process of swelling maize corn by heating it qualifies the product for this classification. Additionally, they mentioned that in some cases, RTE popcorn had been classified under Tariff Heading 2008 or 2106. However, the Authority for Advance Ruling analyzed the facts presented and concluded that the RTE popcorn indeed falls under Tariff Heading 1904, as it involves the swelling of corn through a heating process, as specified in the relevant tariff entry. The ruling emphasized that specific entries should be preferred over general or residual entries for classification, as established by various judgments of the Supreme Court of India. Therefore, the Authority ruled that the correct HSN classification for the 'Ready to Eat' popcorn is '1904'.

Issue 2: Determination of the applicable GST rate on retail sales of 'Ready to Eat' popcorn
In addition to the classification issue, the applicant also sought clarification on the GST rate applicable to retail sales of their 'Ready to Eat' popcorn. The Authority determined that the rate of GST applicable on the 'Ready to Eat' popcorn sold in retail packages is 9% each for State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST). This determination was based on the classification of the product under Tariff Heading 1904, as discussed in the ruling. Therefore, the ruling provided clarity on both the HSN classification and the applicable GST rate for the sale of 'Ready to Eat' popcorn.

In conclusion, the Advance Ruling Authority clarified the classification of 'Ready to Eat' popcorn under the HSN codes as '1904' and determined the applicable GST rate for retail sales of the product as 9% SGST and 9% CGST each. The ruling was based on a detailed analysis of the product's characteristics and relevant tariff entries, ensuring consistency with established legal principles and court precedents.

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