Kingfisher Radler classified as carbonated fruit beverage, not non-alcoholic beer, attracts 28% GST plus 12% cess

The Karnataka AAR ruled that Kingfisher Radler, a non-alcoholic malt drink, does not qualify as non-alcoholic beer since it contains no alcohol and is not fermented. The product was classified as a carbonated fruit beverage under tariff heading 2202 99 90 based on mixed fruit juice being the predominant component over barley malt content. The AAR rejected the applicant's argument for classification as non-alcoholic beer based on trade parlance, applying Rule 2(b) of General Interpretation Rules for classification by predominant material. The product attracts 28% GST plus 12% cess under Entry 12B of Notification No.1/2017.

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Issues Involved:

1. Classification of the product "Kingfisher Radler" under the appropriate tariff heading.
2. Determination of the applicable GST rate and compensation cess for the product.
3. Consideration of the product as "non-alcoholic beer" or "carbonated beverages of fruit drink or carbonated beverages with fruit juice."

Detailed Analysis:

Issue 1: Classification of the Product

The applicant, engaged in manufacturing non-alcoholic malt beverages, sought to classify "Kingfisher Radler" under tariff heading 2202 9100 as non-alcoholic beer. The product, containing barley malt and minimal fruit juice, was presented as an alternative to alcoholic beer. The applicant argued that the product, marketed as a non-alcoholic beer, should be classified under this specific tariff heading.

However, the ruling determined that "non-alcoholic beer" refers to beer with reduced alcohol content (not exceeding 0.5% by volume). Since "Kingfisher Radler" contains 0% alcohol and is not fermented, it does not qualify as non-alcoholic beer. Instead, it is a non-alcoholic beverage.

Issue 2: Determination of Applicable GST Rate and Compensation Cess

The applicant contended that the product should attract an 18% GST rate under entry 24A of Schedule III to Notification No.1/2017-Central Tax (Rate), as it falls under tariff heading 2202 9100. The applicant further argued that the product does not qualify as a carbonated fruit beverage or fruit drink under FSSAI regulations due to its low fruit juice content.

However, the ruling emphasized that the product's predominant ingredient is mixed fruit juice, making it a carbonated beverage of fruit drink. Consequently, it falls under tariff heading 2202 99 90. As per entry 12B of Schedule IV to the Notification No.1/2017-Central Tax (Rate), effective from 01.10.2021, the product attracts a GST rate of 28% along with a compensation cess of 12%.

Issue 3: Consideration as "Non-Alcoholic Beer" or "Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice"

The applicant argued that the product is marketed and understood in common trade parlance as non-alcoholic beer, thus meriting classification under tariff item 2202 9100. They also referenced judicial precedents and FSSAI regulations to support their claim.

The ruling, however, noted that the product labels describe it as a "Carbonated Non-alcoholic Drink" rather than non-alcoholic beer. Additionally, the General Interpretation Rules for classification were applied, considering the product's predominant ingredient (mixed fruit juice). The ruling concluded that the product is a carbonated beverage of fruit drink under tariff heading 2202 99 90, attracting the specified GST rate and compensation cess.

Conclusion:

The ruling determined that the product "Kingfisher Radler" and its variants are classified as carbonated beverages of fruit drink under tariff heading 2202 99 90. Accordingly, the product attracts a GST rate of 28% along with a compensation cess of 12%, as per entry 12B of Schedule IV to the Notification No.1/2017-Central Tax (Rate), effective from 01.10.2021. The applicant's arguments for classifying the product under tariff heading 2202 9100 as non-alcoholic beer were not accepted.

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