2023 (1) TMI 496 - AAR - GST

Snack products like potato chips, sev, chevda classified as namkeens under CTH 21069099 attract 12% GST when pre-packaged

AAR Gujarat ruled that various snack products including salted potato chips, potato sev, potato chevda, sing bhujiya, sev mamara, chana daal, gathiya, and ... Classification of goods - rate of GST - sold without brand name - salted and flavored Potato Chips - Potato Sev (Aloo Sev) - Potato Chevda (Potato Stick Mixture) - Sing Bhujiya - Sev Mamara (Roasted Puffed Rice mixed with Nylon Sev) - Chana Daal (Fried Split Bengal Gram) - Gathiya - Khatta Mitha Chevda Mixture - potato starch - HELD THAT:- Chapter 21 of the Customs Tariff covers “Miscellaneous edible preparations”. The Heading 2106 of the Chapter 21 covers food preparations not elsewhere specified or included. Supplementary Notes 5(b) of Section IV of Heading 2106 of Ch-21 of Customs Tariff Act includes, 'preparation for use, either directly or after processing for human consumption'. Those food preparations, not specified or included elsewhere in the tariff being preparations for use either directly or after processing for human consumption are to be classified under this head - The product which are commonly known as Namkeens”, “mixtures”, “Bhujia”, “Chabena” or called by any other name shall be classified under Tariff Item 210690900. The term NAMKEEN is not defined under the CGST Act. So, common parlance test has to be applied. In common/commercial parlance, NAMKEEN means SAVOURY SNACK that is ready to eat and is a food product prepared by applying salt, masala and the like. The applicant food products salted and flavored Potato Chips, Potato Sev (Aloo Sev), Potato Chivda (Potato Salli Mixture), Sing Bhujiya, Sev Mamara (Roasted Puffed Rice with Nylon Sev), Chana Daal (Fried split Bengal Gram), Gathiya and Khatta Mitha Chevda Mixture are salted and savory products. These products are ready to eat and directly consumed by human beings. Therefore, the applicant food products be classified under CTH 21069099 of Customs Tariff Act. Rate of GST applicable on the applicant food products - HELD THAT:- The applicant supply its food product in packages (plastic bag) of pre-determined weight and have mandatory declarations which required as per the Legal Metrology Act,2009 (1 of 2010) and the rules made there under. Thus applicant intended supply of food products is pre-package and labelled where as the entry No. 101A of Not No. 1/2017-CT (Rate) is applicable to the goods which are not pre-packaged and labelled. The entry No. 101A of the Notification before amendment w.e.f 18-7-2022 is applicable with regard to the un-branded packages means do not contain any brand name but after amendment with effect from 18-7-2022, the applicability of GST on the supply having/containing brand name was omitted and in this place applicability GST on the supply of pre-packaged and labelled was came into existence - supply of food products are pre-packaged and labelled, therefore applicant is not eligible to tax rate of GST @5% at entry No. 101A of Not. No. 1/2017-CT (Rate). The applicant intended supply of food product viz. salted and flavored Potato Chips, Potato Sev (Aloo Sev), Potato Chivda (Potato Salli Mixture), Sing Bhujiya. Sev Mamara (Roasted Puffed Rice with Nylon Sev), Chana Daal (Fried split Bengal Gram), Gathiya and Khatta Mitha Chevda Mixture is pre-packaged and labelled, therefore covers under entry No. 46 of Not. No. 1/2017-CT (Rate) dated 28-6-2017 as amended vide Not. No. 1/2017-CT (Rate) dated 28-6-2017 of Schedule-II attracts tax rate of GST @12% with effect from 18-7-2022. Classification of potato starch and applicable tax rate of GST - HELD THAT:- Potato Starch has specific entry in tariff and merits classification under CTH 11081300 of Customs Tariff Act, 1975 - the applicant product 'Potato Starch' which is by-product of Potato and generate during the course of manufacture of Chips, Potato Sticks and Allo Sev, covers under entry No. 18 of Not. No. 1/2017-CT (Rate) dated 28-6-2017 as amended and attracts tax rate @12%. Issues Involved:1. Classification and GST rate for salted and flavored Potato Chips.2. Classification and GST rate for Potato Sev (Aloo Sev).3. Classification and GST rate for Potato Chivda (Potato Salli Mixture).4. Classification and GST rate for Sing Bhujiya.5. Classification and GST rate for Sev Mamara (Roasted Puffed Rice mixed with Nylon Sev).6. Classification and GST rate for Chana Daal (Fried Split Bengal Gram).7. Classification and GST rate for Gathiya.8. Classification and GST rate for Khatta Mitha Chevda Mixture.9. Classification and GST rate for Potato Starch.Detailed Analysis:1. Salted and Flavored Potato Chips:The applicant intends to sell unbranded salted and flavored potato chips. The manufacturing process involves cleaning, peeling, slicing, frying, seasoning, and packaging in unbranded plastic bags. As per the applicant, these products are classified as 'Namkeens' under tariff item 2106 90 99, attracting a GST rate of 5% if sold without a brand name. However, post the amendment effective from 18-7-2022, the classification remains under 2106 90 99, but the GST rate applicable is 12% as the products are pre-packaged and labeled.2. Potato Sev (Aloo Sev):Potato Sev is manufactured using various ingredients like Longi Mirch, white salt, turmeric powder, potato flakes, gram flour, starch powder, and rice flour. The final product, sold as 'Namkeen,' is classified under tariff item 2106 90 99. Initially, it attracted a GST rate of 5% when unbranded, but the amended GST rate is 12% for pre-packaged and labeled products.3. Potato Chivda (Potato Salli Mixture):Potato Chivda is made from raw potatoes and mixed with various ingredients like sugar, rock salt, red chili, green chili, turmeric powder, fried masala Sabu dana, raisins, peanuts, and other dry fruits. Classified under tariff item 2106 90 99, it initially attracted a GST rate of 5% when unbranded. Post amendment, the GST rate is 12% for pre-packaged and labeled products.4. Sing Bhujiya:Sing Bhujiya is made from peanuts, gram flour, salt, and various spices. It is classified under tariff item 2106 90 99 and initially attracted a GST rate of 5% when unbranded. Post amendment, the GST rate is 12% for pre-packaged and labeled products.5. Sev Mamara (Roasted Puffed Rice mixed with Nylon Sev):Sev Mamara is made from puffed rice, ready Nylon Sev, and various spices. It is classified under tariff item 2106 90 99 and initially attracted a GST rate of 5% when unbranded. Post amendment, the GST rate is 12% for pre-packaged and labeled products.6. Chana Daal (Fried Split Bengal Gram):Fried Chana Daal is made from split Bengal gram, edible oil, water, and various spices. It is classified under tariff item 2106 90 99 and initially attracted a GST rate of 5% when unbranded. Post amendment, the GST rate is 12% for pre-packaged and labeled products.7. Gathiya:Gathiya is made from white salt, baking soda, gram flour, pea flour, black pepper, carom seeds, edible oil, and starch powder. Classified under tariff item 2106 90 99, it initially attracted a GST rate of 5% when unbranded. Post amendment, the GST rate is 12% for pre-packaged and labeled products.8. Khatta Mitha Chevda Mixture:Khatta Mitha Chevda Mixture is made from chana daal, green peas, masoor daal, Sev, Gathiya, Bundi, rice flakes, red peanuts, and various spices. It is classified under tariff item 2106 90 99 and initially attracted a GST rate of 5% when unbranded. Post amendment, the GST rate is 12% for pre-packaged and labeled products.9. Potato Starch:Potato starch is produced as a by-product during the manufacturing process of potato-based products. It is classified under tariff item 1108 13 00. The applicable GST rate is 12% as per entry No. 18 of Schedule-II of Notification No. 1/2017-CT (Rate).Ruling:The tariff classification and GST tax rate for the applicant's products are as follows:1. Salted and flavored Potato Chips: 21069099, GST rate 12%.2. Potato Sev (Aloo Sev): 21069099, GST rate 12%.3. Potato Chivda (Potato Salli Mixture): 21069099, GST rate 12%.4. Sing Bhujiya: 21069099, GST rate 12%.5. Sev Mamara (Roasted Puffed Rice mixed with Nylon Sev): 21069099, GST rate 12%.6. Chana Daal (Fried Split Bengal Gram): 21069099, GST rate 12%.7. Gathiya: 21069099, GST rate 12%.8. Khatta Mitha Chevda Mixture: 21069099, GST rate 12%.9. Potato Starch: 11081300, GST rate 12%.