Glaze Gels classified as sugar confectionery under Schedule III attracting 18% GST not sugar boiled confectionery

AAR Maharashtra ruled that Glaze Gels cannot be classified as sugar boiled confectionery under Schedule II, sl. no 32AA. The Authority determined that while the product is sugar confectionery, it differs from sugar boiled confectionery as it is semi-solid, sold exclusively to bakeries/cake manufacturers rather than end consumers, and used in cake-making processes. The product falls under Chapter 1704 9090 and Schedule III, sl. no 12, attracting 18% GST rate instead of the lower rate applicable to sugar boiled confectionery.

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Issues Involved:
1. Classification of the product "GLAZE GELS" under the GST Tariff.
2. Determination of the applicable GST rate for "GLAZE GELS".

Detailed Analysis:

Issue 1: Classification of the Product "GLAZE GELS" under the GST Tariff

Applicant's Argument:
- The applicant, M/s Healthy Life Foodtech Pvt. Ltd., manufactures "GLAZE GELS" and markets them to bakeries across India.
- The product is used in cake/pastry making for taste, color, and decorative purposes.
- The applicant asserts that "GLAZE GELS" should be classified as "Sugar Boiled Confectionery" (SBC) under Chapter Heading 1704, Schedule II, Sr. No. 32AA, attracting 12% GST.
- The applicant argues that "GLAZE GELS" employ similar ingredients, formulations, and processes (boiling) as traditional SBC, albeit with higher moisture content to achieve a semi-solid state.

Jurisdictional Officer's View:
- The officer agrees that the product falls under Chapter 17 but classifies it under Chapter Heading 1704 9010 as "Jelly Confectionery" due to its semi-solid consistency and non-fruit-based nature, attracting 18% GST.

Authority's Observations:
- The authority notes that "Sugar Boiled Confectionery" is typically a vitreous mass, whereas "GLAZE GELS" are semi-solid and take the shape of their container.
- The product is sold to bakeries for use in cakes and not directly to end consumers, unlike typical SBC.
- The authority concludes that "GLAZE GELS" cannot be classified as "Sugar Boiled Confectionery" due to its semi-solid nature and different end-use.

Conclusion on Issue 1:
- The authority holds that "GLAZE GELS" is not "Sugar Boiled Confectionery" and therefore does not fall under Chapter Heading 1704, Schedule II, Sr. No. 32AA.

Issue 2: Determination of the Applicable GST Rate for "GLAZE GELS"

Applicant's Argument:
- The applicant suggests that if "GLAZE GELS" is not classified as SBC, it should still fall under a specific category within Chapter 1704 due to its sugar content and manufacturing process.

Jurisdictional Officer's View:
- The officer classifies the product under Chapter Heading 1704 9010 as "Jelly Confectionery."

Authority's Observations:
- The authority reviews the sub-headings under Chapter 1704 and considers the definitions and properties of jelly and other sugar confectioneries.
- The authority finds that "GLAZE GELS" do not meet the criteria for "Jelly Confectionery" due to the absence of congealing agents like pectin or gelatin.
- The product is determined to be a type of sugar confectionery but not specifically jelly, boiled sweets, toffees, or caramels.

Conclusion on Issue 2:
- The authority classifies "GLAZE GELS" under Chapter Heading 1704 9090'"Other," falling under Sr. No. 12 of Schedule III of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017, attracting 18% GST.

Order:
1. Question 1: The impugned product "GLAZE GELS" is not classifiable under Chapter Heading 1704, Schedule II, Sr. No. 32AA as "Sugar Boiled Confectionery."
2. Question 2: "GLAZE GELS" is classified under Chapter Heading 1704 9090'"Other," attracting 18% GST as per Sr. No. 12 of Schedule III of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017, as amended.

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