Flavoured beverage classification turns on true composition, not claimed description, where no fruit pulp or juice is present.

A beverage made from betel leaf or ajwain extracts mixed with propylene glycol, menthol and packaged drinking water was held not to fall under HSN 2202 99 20 because that heading covers fruit pulp or fruit juice based drinks, which this product did not contain. Its true character was treated as a flavoured beverage under HSN 2202 10 90. As a result, the 12% tax rate linked to the claimed classification was not applicable, and the higher rate for flavoured goods applied instead.

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Issues: (i) Whether the product marketed as natural antioxidant water with betel leaf extract and ajwain extract is classifiable under HSN 2202 99 20; (ii) Whether tax at 12% was correctly charged on the product.

Issue (i): Whether the product marketed as natural antioxidant water with betel leaf extract and ajwain extract is classifiable under HSN 2202 99 20.

Analysis: The product was found to be prepared by extracting betel leaf or ajwain oil, blending it with propylene glycol and menthol crystals, and then mixing the stock solutions with packaged drinking water. The description under HSN 2202 99 20 covers fruit pulp or fruit juice based drinks, whereas the product contained no fruit pulp or fruit juice. The presence of flavouring additives and the certificate describing the product as paan flavoured water showed that the product was not correctly placed under the said tariff item.

Conclusion: The product is not classifiable under HSN 2202 99 20.

Issue (ii): Whether tax at 12% was correctly charged on the product.

Analysis: The 12% rate was adopted only because the product had been treated as HSN 2202 99 20. Once that classification was found to be incorrect, the corresponding tax rate could not apply. The product was treated as a flavoured beverage falling under HSN 2202 10 90, attracting tax at the higher rate prescribed for flavoured goods under the relevant notification.

Conclusion: Tax at 12% was not correctly charged on the product.

Final Conclusion: The advance ruling determined that the applicant's product is a flavoured beverage and not a fruit pulp or fruit juice based drink, and the classification and tax rate proposed by the applicant were both incorrect.

Ratio Decidendi: A product is classified according to its true composition and essential character, and a drink containing flavouring additives but no fruit pulp or fruit juice cannot be classified as a fruit pulp or fruit juice based drink.

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