Kerala AAR classifies Dhathri Dahasamani herbal product under HSN 2103 90 40 attracting 12% GST

The Kerala AAR classified Dhathri Dahasamani, an herbal product, under HSN 2103 90 40 rather than HSN 0910 91 00 or HSN 2106 90 50. The ruling determined that since 92% of ingredients fall under Heading 1211 (plants used in pharmacy) with only 8% ginger from Chapter 9, the product cannot be considered a mixture with essential character of Chapter 9 goods. The product is not suitable for direct human consumption and was classified as a preparation under HSN 2103 90 40, attracting 12% GST under Schedule II entry 44.

---

---

Issues Involved:
1. Classification of the product "Dhathri Dahasamani" under HSN 0910 91 00.
2. Classification of the product "Dhathri Dahasamani" under HSN 2103 90 40.

Issue 1: Classification under HSN 0910 91 00

The applicant contended that "Dhathri Dahasamani," a mixture of dried herbs and spices used to enhance the flavor and taste of drinking water, should be classified under HSN 0910 91 00. They argued that the product retains the essential characteristics of spices as defined in Chapter 9 of the Customs Tariff Act, 1975, and cited a similar product, "KP Namboothiri's Dahamukthi," classified under HSN 0910 30 90 at 5% GST. They supported their claim by referring to the General Rule for Interpretation of the Schedules to the Customs Tariff, which states that goods should be classified under the heading to which they are most akin.

Issue 2: Classification under HSN 2103 90 40

The applicant alternatively argued that if the product is not classifiable under HSN 0910, it should be classified under HSN 2103 90 40, which pertains to mixed condiments and mixed seasoning. They emphasized that the product is not consumed as food but used as a condiment to enhance the flavor of water.

Judgment:

Discussion and Conclusion:

The Authority examined the application and submissions, focusing on the classification of "Dhathri Dahasamani." The product is manufactured under a drug license and is a mixture of dried herbs and spices added to boiling water to enhance flavor. Currently, it is classified under CTH 2106 90 50 and taxed at 18% (CGST 9%, SGST 9%).

The Authority referred to the rules for interpretation of the Customs Tariff Act, 1975, including Section and Chapter Notes and General Explanatory Notes, which apply to the interpretation of the GST Tariff/Rate Schedule. The classification principles from the Supreme Court judgment in COMMISSIONER OF CENTRAL EXCISE Vs M/s WOCKHARDT LIFE SCIENCES LTD were also considered.

The product contains only one ingredient, Chukku (Ginger), from Chapter 9, constituting 8% of the mixture. The remaining ingredients fall under Heading 1211 of Chapter 12, making up 92% of the product. Therefore, it cannot be classified under CTH 0910 91 00 as it does not retain the essential character of goods in Chapter 9.

The product is not used as a food preparation but for flavoring water, aligning with mixed condiments and seasoning under Heading 2103 90 40. The Authority concluded that "Dhathri Dahasamani" is appropriately classifiable under Heading 2103 90 40 and liable to GST at 12% (6% CGST + 6% SGST).

Ruling:

Question 1: Is the product "Dhathri Dahasamani" rightfully classifiable under HSN 0910 91 00Rs.
Ruling: No.

Question 2: If not classifiable as above, is the product classifiable under HSN 2103 90 40Rs.
Ruling: Yes, the product "Dhathri Dahasamani" is classifiable under Heading 2103 90 40 and liable to GST at 12% (6% CGST + 6% SGST).

---