TaxTMI 
TaxTMI 
2019 (10) TMI 1186
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....No.341 & 342, Akkiyampatty Village, Sendamangapalam Post, Namakkal 637 409. (Hereinafter referred to as 'Applicant') is a manufacturer of fruit juices and also carbonated fruit juices. They are registered under GST vide GSTIN No. 33AADCR3175K1ZA. The Applicant has preferred an application seeking Advance Ruling on the following Question: "Classification of goods manufactured - Whether Carbonated Fruit Juice falls under Fruit Juices or Aerated drinks?" The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2. The applicant has stated that • they are manufacturers of Fruit juices and also Carbonated fruit juices. • The GST rate @28% and Cess @12 % are applicable only for the goods with description as all goods including Aerated water containing added sugar or other sweetening materials or flavoured. Hence nowhere fruit juices are mentioned. • Their product Carbonated fruit juices do not fall under the above description of Aerated water containing ad....
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....nder 22029920 with GST rate at 12%. Their drinks are fruit base drinks and Co2 wart is used for preservation purpose. Fruit pulps are in semi liquid form and fruit juice are in liquid form without any addition of sugar or other additives. There is no difference in the usage of fruit pulp or fruit juices used for manufacture of carbonated fruit juices. They submitted copy of Hon'ble Supreme court judgment in classification of 'APPY FIZZ' in case of M/s. Parle Agro Ltd vs Commissioner of Commercial Taxes, Trivandrum = 2017 (5) TMI 592 - SUPREME COURT in the VAT regime where the Hon'ble Supreme court ruled on the classification as per Kerala VAT notifications. They stated that fruit pulp or fruit juice based drinks should be classified under HSN 22029920. Appy Fizz drink is being sold at 12 % GST and the same should be permitted for their drinks. They submitted invoices for purchasing 'Lime Clear Juice' and 'Kinnow Clear Juice' which is classified under HSN 2009. They submitted product specifications of these two inputs indicating that they are of fruit juice (sulphited) of lime and orange with no added sugar , water except KMS (potassium metabisulfite) 3.2 The Procedure for ....
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....cal and artificial flavor 0.3% * Sodium Benzonate and potassium Sorbate as preservatives- 0.15% * Sugar-14% Cloudy Lemon (Richyaaa Damer/Licta) * Reverse osmosis treated carbonated water-92.5% * Natural Lime juice-2.5% * Citric acid or Sodium citrate as acidity regulators 0.3% * Lime as natural identical and artificial flavouring substance 0.3% * Sodium benzonate and potassium sorbate as preservatives- 0.15% * Sugar-14% Cola (Richyaaa Damer/Licta) * Reverse osmosis treated carbonated water-92.5% * Natural lime juice-2.5% * Sugar-13% * Sodium benzonate and potassium sorbate as pres 0.15% * Caramel colour as permitted natural color Phosphoric acid 85%food grade, citric acid and sodim citrate as acidity regulator -0.3% * Natural flavoring oils- substances of nutmeg, cinnamon, cassia, lime, lemon and orange oils as added flavours -0.3% * Less than 100 ppm caffeine-0.02% Jeera Soda masala (Richyaaa Damer/Licta) * Reverse osmosis treated carbonated water-92.5% * Natural lime juice-2.5% * Sugar-12% * Citric acid, sodium citrate and black salt as acidity Regulators-0.3% * Jeera, mint and tamarind as added natural flavours....
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....e (2.5%) • Licta Cola (200/300/600 ml) - having Lime Juice (2.5%) • Richyaa Darner Jeera Soda (200/300/600/1500 ml) - having Lime/Lemon Juice (2.5%) • Licta Jeera Masala (200/300/600/1500 ml) - having Lime /Lemon Juice (2.5%) c. Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 dt.1.8.2011 effective from 5.08.2011 d. Food Safety Standards (Food Product and Food Additives) Eleventh Amendment Regulations, 2016 dt 25.10.2016 5.1 The Assistant Commissioner of State (ST), Rasipuram has furnished the comments on the questions raised by the applicant which is reproduced below: • The product sold is termed as Carbonated Beverage with Fruit Juice (as per FSSAI regulation cited by them), the question raised in the application form for advance ruling is "Whether Carbonated Fruits Juices Falls under Fruit Juices or Aerated Drinks?" The terms Carbonated Fruits Juices and Carbonated Beverage with Fruit Juice denote different substances according to the very same FSSAI regulations. Thus, the question raised in the AAR pertains to a product different from that of the dealer's. â....
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....r sound mature fruit. The substances that may be added to fruit juice or pulp are water, peel oil, fruit essences and flavors, salt, sugar, invert sugar, liquid, glucose, milk and other ingredients appropriate to the product and processed by heat, in an appropriate manner, before or after being sealed in a container so as to prevent spoilage. The product shall meet the following requirements: (i) Total soluble solid(m/m) Not less than 10.0 percent (ii) Fruit juice content (a) Lime/Lemon ready to save beverage Not less than 5.0% (b) All other beverage /drink Not less than 10.0% Thus, the statutory regulations require a minimum of 10% fruit content to be called a Fruit Beverage. • Thus, on a plain reading of regulations 2.3.6 and 2.3.10, the product cannot be considered as Fruits Juices or Fruit Beverages/Fruit Drink. In other words, fruit is not its primary, defining, unique quality. • Are "Carbonated Beverage with Fruit Juice" same as "Carbonated Fruit Beverages or Fruit Drinks"? Under the Food Safety and Standards (Food Safety & Standards and Food Additives) Regulations, 2011, Regulation 2.3.30 defines Carb....
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....009 2202 10 Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured 2202 10 10 Aerated waters 2202 10 20 Lemonade 2202 10 90 Other • The Fruit Products Order, 1955 in Part 11 (D) mentions the Specifications for sweetened aerated waters with no fruits juice or fruit pulp or containing less than 10 percent of fruit juice or fruit pulps as follows. Product (Variety Total Soluble Definition and general characteristics Flavored sweetened aerated water Sweetened aerated water with single or composite flavors Minimum 8% Aerated water means potable water impregnated with carbon dioxide under pressure improperly scaled container and may contain any of the flowing single or in combination:- sugar liquid glucose dextrose honey monohydrate, invert sugar fructose, saccharine not exceeding 100 parts per million, fruit and vegetables extractives (less than 10% on weight to weight) Thus, it can be established that the FSSAI term "Carbonated Beverage with Fruit Juice" is best captured in the HSN Code as "Aerated Water" using the Fruit Products Order. • The Appy Fi....
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....tion is sought are having the names and labeling as listed in Para 4 (b) above with the ingredients as listed in Para 3.3 above. The labels all have the description "Contains Fruit", and "Carbonated Beverage with fruit Juice" for the products. The products all have Reverse osmosis treated carbonated water at 92.5% proportion and sugar at 12-14%. As per the label, Richyaa Darner Lemon, Licta Lemon, Richyaa Darner Cola, Licta Cola, Richyaa Darner Jeera Soda, Licta Jeera Masala all have Lemon /Lime juice of 2.5% proportion. Richyaa Darner Orange and Licta Orange have Orange juice at 5% proportion. They also have specific added flavours and colours. Apart from the specific ingredients mentioned, the products contain Citric acid or sodium citrate as Acidity Regulators and Sodium Benzonate and potassium Sorbate Preservatives. From the test report submitted by the applicant the sample is described as 'Richyaa Darner ...Carbonated Beverage with Fruit Drink', Licta......Carbonated Beverage with Fruit Drink' with the fruit content varying slightly from the labels as indicated in Para 3.5 above. The inputs used for these products are 'Lime juice clear (sulphited) and Kinnow (orange juice clea....
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....ingredients appropriule to the products. ................ 3A. in case the quantity of fruit juice is below 10.0 per cent. But not less than 5.0 per Cent. (2.5 per cent. In case of lime or lemon), the product shall be called 'carbonated Beverages with fruit juice' and in such cases the requirement of TSS (Total Soluble Solids) shall not apply and the quantity of fruit juice shall be declared on the label. It is seen that the instant product fits into this category as it is a beverage which is prepared from fruit juice and carbonated water. The applicant has also labelled their products as 'Carbonated Beverage with Fruit Drink' as required in Para 2.3.30 (3A) above. Further, as per Appendix A to these Regulations where there is a food category system, it is seen that fruit juices are classified under 14.1.2.1 as 14.1.2.1 Fruit juices Fruit juice is the un-fermented but fermentable liquid obtained from the edible part of sound, appropriately mature and fresh fruit or of fruit maintained in sound condition by suitable means. The juice is prepared by suitable processes, which maintain the essential physical, chemical, organoleptic and nutritiona....
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....ry Notes of the First Schedule shall be applied for the interpretation and classification of goods. 6.4 The relevant entries of the Customs Tariff is given under for ease of reference: Chapter 2009 of Customs Tariff covers fruit juices (including grape must) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter. Chapter Note 6 of Chapter 20 states "For the purposes of heading 2009, the expression "juices, unfermented and not containing added spirit'' means juices of an alcoholic strength by volume (see Note 2 to Chapter 22) not exceeding 0.5% volume." HSN Explanatory Notes to Chapter 2009 states The fruit and vegetable juices of this heading are generally obtained by pressing fresh, healthy and ripe fruit or vegetables. This may be done (as in the case of citrus fruits) by means of mechanical "extractors" operating on the same principle as the household lemon-squeezer, or by pressing which may or may not be preceded either by crushing or grinding (for apples in particular) or by treatment with cold or hot water or with steam (e.g., tomatoes, blackcurrants and certain vegetables such a....
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....constituents (citric acid, essential oil extracted from the fruit, etc.) has been added in such quantity that the balance of the different constituents as found in the natural juice is clearly upset; in such case the product has lost its original character. The vegetable juices of this heading may also contain added salt (sodium chloride), spices or flavouring substances. However, the addition of water to a normal fruit or vegetable juice, or the addition to a concentrated juice of a greater quantity of water than is necessary to reconstitute the original natural juice, results in diluted products which have the character of beverages of heading 22.02. Fruit or vegetable juices containing a greater quantity of carbon dioxide than is normally present in juices treated with that product (aerated fruit juices), and also lemonades and aerated water flavoured with fruit juice are also excluded (heading 22.02). It is seen from the above that fruit juices are extracted from fresh, healthy and ripe fruits through various processes followed by filtration to remove solids, aeration, homogenization and sterlisation. Such fruit juices to be classified under CTH 2009 can have add....
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.... (2) Beverages such as lemonade, orangeade, cola. consisting of ordinary drinking water, sweetened or not, flavoured with fruit juices or essences, or compound extracts, to which citric acid or tartaric acid are sometimes added. They are often aerated with carbon dioxide gas, and are generally presented in bottles or airtight containers. (B) Other non-alcoholic beverages, not including fruit or vegetable juices of heading 20.09. This group includes, inter alia: (1) Tamarind nectar rendered ready for consumption as a beverage by the addition of water and sugar and straining. (2) Certain other beverages ready for consumption, such as those with a basis of milk and cocoa. From the above, it is seen that, Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured, and Other Non-alcoholic beverages, not including fruit or vegetable juices of Heading 2009' are covered under CTH 2202. Further, The Explanatory Notes classifies Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured' under CTH 220210. As per the explanatory notes....
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....ding 700 ppm. Or sucralose not exceeding 300 ppm or Neotame not exceeding 33 ppm. Category 14.1.1 of Appendix A to the regulations states 14.1.1 Waters Includes natural waters (14.1.1.1) and other bottled waters (14.1.1.2), each of which may be non-carbonated or carbonated. 14.1.1.2 Table waters and soda waters Includes waters other than natural source waters that may be carbonated by addition of carbon dioxide and may be processed by filtration, disinfection, or other suitable means. These waters may contain added mineral salts such as table water, bottled water with or without added minerals, purified water, seltzer water, club soda, and sparkling water. Carbonated and non-carbonated waters containing flavours are found in category 14.1.4 It is seen from the above that waters with added carbon dioxide which may contain added preservatives and flavoring , sugars are separately classified under Para 2.10.6 as Carbonated Water' and Category 14.1.1.2 as 'table waters and soda waters' which are different from 'Carbonated Fruit Beverages or Fruit Drinks' of Para 2.3.30 and Category '14.1.4.1' of FSSAI regulations. As discussed in Para 6.2 above....