Rate of GST on Fortified Rice Kernals

[OmPrakash jain]

What is the rate of tax on Fortified Rice Kernals (FRK) under which code together with reasons

[YAGAY and SUN]

HSN 19049090 and attracts GST @ 18% (SGST 9 % + CGST 9 %) - Fortified Rice Kernals

[OmPrakash jain]

Sir,

What is the logic for classifying it under HSN 19049090 and not as a ricesince mixing of additives will not change the nature of Rice as per decided cases and classification guidelines by way of chapter notes..

[KASTURI SETHI]

Fortified Rice Kernel is classifiable under HSN 1904 90 00 of GST Tariff as “other” and attracts GST @ 18%. held by AAR, Rajasthan reported as 2020 (1) TMI-1006 in Re. JVS Foods Pvt. Ltd.decided on 28.11.19.

[KASTURI SETHI]

There is a discrepancy in the above decision of AAR. In para no.6 FRK has been classified under Chapter/Heading/Sub-heading No. (HSN) 1904 90 90 whereas in para no.5 below Table correct HSN has been mentioned as 1904 90 00. There is no sub-heading no. 1904 90 90 in Customs Tariff Act, 1975 (GST Tariff is based on Customs Tariff Act).

[OmPrakash jain]

Sh KASTURI SETHI

HSN code difference is only a typographical error. The AAR has adopted revenue oriented approach by taxing FRK @18%.

My submission is that why FRK should not be classified as RICE-Milled- “OTHER” UNDER HSN CODE 1006 30 90. If not then why?

[YAGAY and SUN]

Just to clarify that in legal matters, logic do not either work or accepted in the court of Law.

[OmPrakash jain]

Sir,

Why FRK should not be classified as RICE-Milled- “OTHER” UNDER HSN CODE 1006 30 90. What type of Rice is covered under this entry.

[KASTURI SETHI]

Dear Sh.Om Prkash Jain Ji,

Why FRK cannot be classified under Tariff Chapter/Heading/Sub-heading No.1006 30 90 ?

Chapter/Heading 1006 classifies plain rice. various kinds of rice and parts of rice/ layers of rice i.e. husk, bran, seed etc. All these are in natural form. All these are unprocessed forms.The process of milling separates husk (shelling) and outer bran(polishing) from the kernel. Nothing is added but only dissection/segregation is involved inasmuch as rice in the grain form is not edible. Sub-Heading is always an integral part of main Chapter/Heading. Here sub-heading no. 1006 30 90 (Other) is an integral part of main Chapter/Heading No.1006. Sub-heading no. cannot go beyond Chapter or Heading. Its scope is restricted up to Heading or Chapter. If you go through Chapter 10 of Central Excise Tariff Act as on 30.6.2017, you will find blank entry against the column, ‘Rate of duty’. This was blank because no manufacturing activity was involved because Central Excise duty was on ‘manufacture’. Now tax has been mentioned against this column because taxable event is ‘supply’. I mean to say all the above activities/processes involved are natural processes/unprocessed.

Fortified Rice Kernel

As its name indicates rice kernel (inner part of rice) is strengthened. Kernel is coated with micronutrients. The nutrients like iron, folic acid and other B-complex vitamins, vitamin A , zinc etc are driven into the body of rice grain (kernel) by the process of fortification. Thus fortification is a process of manufacture which increases the nutritional value of rice. In this way, the identity character of rice kernel is changed and it is a new product. By way of fortification everything is changed. Its shape is changed, its taste is changed, nutritional value is enhanced (changed), its end use is and function is changed.

So how a new product FRK can be classified under unprocessed/natural forms of rice (Paddy) ? The decision of AAR Rajasthan is legally correct and proper. It is not prejudiced.

I am all praise for you because do not sit still until or unless you are satisfied or concept is clear to you. So I would like to suggest you make further search on the issue in order to convince yourself.

What is rice ? What is legal and literal meaning of ‘Fortification’ What is Kernel ? What is rice kernel ?

Last but not the least I agree with M/s. Yagay And Sun, Sirs. He is very much right on the issue whatever he has expressed. His contribution in searching proper HSN cannot be brushed aside.

Hope you will like it.

Regards.

.

AI Summary

Classification of fortified rice kernels as manufactured food product supports treating fortified kernels under prepared-food tariff and GST.
Classification of Fortified Rice Kernels hinges on whether fortification constitutes a manufacturing process that changes the rice kernel's identity, physical character, nutritional composition and end use, thereby placing it in the tariff heading for prepared cereal products rather than in the plain rice heading; the AAR treated FRK as a prepared/manufactured product and classified it under the "other" prepared cereal provision, resulting in the applicable GST treatment for such preparations.