TaxTMI 
TaxTMI 
2020 (5) TMI 214
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....r, Tower B, 3^rd Main Road, Ambattur Industrial Estate, Chennai, TamilNadu-600 058. (hereinafter called the Applicant) are registered under GST with GSTIN. 33AABCS2066P1ZM. The applicant is a leading supplier of dairy products, biscuits, breads, etc. which are available across the country in close to 5 million retail outlets. The applicant has sought Advance Ruling on: Whether UHT Sterilized Flavoured Milk is classifiable under Chapter 4 (Tariff Heading 0402 which covers 'Milk... containing added sugar or other sweetening matter...' or alternatively, Tariff Heading 0404 which covers 'Other', i.e. 'products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included') 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. 2.1 The Applicant has stated that they manufacture / procure and supply UHT Sterilized Flavoured Milk and market it under the brand name 'Britannia Winkin' Cow Thick Shake' (hereinafter ....
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....hat the natural dairy product is flavoured such that it is the most tasty / favoured milk, while the other additives allow for effective packing and shelf-life. These additions do not in any manner change the essential nature of the product, i.e. milk. The product is marketed under the brand name Winkin' Cow thick shake' to make it more attractive to consumers. It is pertinent to mention here that the product is targeted towards children, and hence, the packaging, labelling and marketing of the product as a fun, colourful and tasty drink is essential. At the same time, it is as imperative that the drink holds the necessary nutrition to ensure that it is chosen by purchasers (adults) as a preferred choice for consumption. The Applicant has submitted that the essential nature and character of the product under consideration is milk. They relied upon the decision of the Hon'ble High Court in Gujarat Coop. Milk Marketing Federation Ltd. vs. State of U.P. [(2017 (5) GSTL 351 (All.)] = 2017 (6) TMI 91 - ALLAHABAD HIGH COURT. 2.3 The applicant has relied on the position and treatment adopted by the Food Safety and Standards Authority of India, the regulator for the Food sector, and has....
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....g 0402, the product will fall for classification under the said heading. Thus, even if flavoured milk is classifiable in two or more headings i.e. under Chapter 4 and Chapter 22, then as per the General Rules, the most specific description shall be preferred over general description. The product is commonly known and understood as 'flavoured milk', as it is essentially a form of milk rather than a derivative of milk or milk product. Therefore, the entry most specifically applicable is under Chapter 4. • Rule 3 (b) of the General Rules [which is applicable in the event that classification cannot be determined under Rule 3 (a)] inter alia states that mixture and composite goods consisting of different materials shall be classified as if they consist of the material or component which gives them their essential character. In the present case, since milk constitutes the major ingredient and provides the essential character to the flavoured milk, the product merits classification as milk under Chapter 4. • Further, the general explanatory notes for Chapter 4 under the Harmonized Commodity Description and Coding System permits addition of certain other ingredien....
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....onstituents. It was also held that the addition of small quantities of other substances will not change the essential character of the product and the product will remain nutritious milk only. Therefore, the Applicant has claimed that the product (flavoured milk) is most appropriately classifiable under Chapter 4, specifically Tariff Entry 0402 99 90, or alternatively, Tariff Entry 0404 90 00. 3.1 The applicant was extended an opportunity to be heard in person on 26.09.2019. The representatives of the applicant company appeared. They gave a written submission and stated that the product Winkin' Cow' is flavoured milk which has 80% and more milk along with flavour, sugar and stabilizers. They submitted that the products should be classified under 0402 or 04049000. The product has milk, solids also. They submitted various judgements under VAT and Central Excise where such products were classified under 0404/02. They submitted copies of invoices. They undertook to submit detailed manufacturing processes and ingredients list with proportion, copies of FSSAI certification for food addition, labelling etc in two weeks time. 3.2 The applicant submitted the Flow Chart of manufacturin....
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....of time. Aseptic Tank Specially designed tank which can hold milk in sterile condition for particular length of time. Aseptic Filler Specially designed filler to fill sterile milk in pack formed with sterlised laminate in sterile environment and then sealing the package. Code printer On line dot matrix printer to print the batch code, MRP, Manufacturing date and time on the pads. Shrink wrap Equipment to apply and then shrink special poly film on the card board trays containing the packs. Certificate of FSSAI issued to Schreiber Dynamix Dairies Private Limited, Mumbai who manufactures Milk products was also submitted. 4. The applicant is under the administrative control of Central Tax. The said jurisdictional authority was addressed to report if there are any pending proceedings in the applicant's case on the issues raised by the applicant in the ARA application and for comments on the issues raised. The said authority did not furnish any report and also has not furnished any comments. Hence, it is construed that there is no proceedings pending in the case of the applicant on the questions seeking Advance ruling before us. 5. The State Jurisdictiona....
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....ion of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall be applied for the interpretation and classification of goods. 6.3 The relevant chapter notes of CTH 0402/04 and the Explanatory Notes are examined as under: CTH 0402: 0402 MILK AND CREAM, CONCENTRATED OR CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTERMILK AND CREAM, CONCENTRATED OR CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER 040210 - In powder, granules or other solid forms, of a fat content, by weight not exceeding 1.5% : 04021010 --- Skimmed Milk 04021020 --- Milk food for babies 04021090 --- Other - In powder, granules or other solid forms, of a fat content, by weight not exceeding 1.5% : 04022100 -- Not containing added sugar or other sweetening matter 040229 -- Other : 04022910 --- Whole milk Whole milk 04022920 --- Milk for babies Milk for babies 04022990 --- Other - Other : 040291 -- Not containing added sugar or other sweetening matter : 04029110 --- ....
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....am (heading 04.03). (b) Beverages consisting of milk flavoured with cocoa or other substances (heading 22.02). Subheading Explanatory Note. Subheadings 0402.10, 0402.21 and 0402.29 These subheadings do not cover concentrated milk or cream in the form of paste (subheadings 0402.91 and 0402.99), 04.04 - Whey, whether or not concentrated or containing added sugar or other sweetening matter: products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included. 0404.10 - Whey and modified whey, whether or not concentrated or containing added sugar or other sweetening matter 0404 90 - Other This heading covers whey (i.e.. the natural constituents of milk which remain after the fat and casein have been removed) and modified whey (sec Subheading Note 1 to this Chapter). These products may be in liquid, paste or solid (including frozen) form, and may be concentrated (e.g. in powder) or preserved. The heading also covers fresh or preserved products consisting of milk constituents, which do not have the same composition as the natu....
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.... product and those covered under CTH 0402/0404, it is evident that the product in hand consisting of milk flavoured with vanilla/ strawberry/mango/cocoa powder being ready for consumption beverages based on Milk is specifically excluded under CTH 0402, as seen from the Explanatory notes to HSN of the said chapter and hence not classifiable under CTH 0402; Also the product being not Whey', the plausible CTH will be 0404 90 only and there again the Explanatory notes clearly states that this heading includes products which lack one or more natural milk constituents, to which natural milk constituents are added, whereas in the case at hand, the product do not lack any natural milk constituents nor any natural milk constituents is added to the product. Therefore, we hold that the product is not classifiable under either CTH 0402 or 0404. 6.5 Further, the applicant has been classifying the product under CTH 2202 99 30 as seen in the Invoice furnished by the applicant. The applicability of CTH 2202 99 30 to the product is examined as under. The CTH 2202 99 is given as under: 2202 WATERS, INCLUDING MINERAL WATERS AND AERATED WATERS, CONTAINING ADDED SUGAR OR OTHER SWE....
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....he word "beverage", though not defined under CGST Act, 2017, is considered, in common parlance, as a drink that can be consumed directly and the instant product "flavoured milk" can be consumed as it is and hence is a beverage with a basis of milk. Therefore, the product is appropriately classifiable under CTH 22029930. 6.6 The applicant has relied on the General Rules of Interpretation of Tariff and has contended that the product is classifiable under Chapter 4 of the Customs Tariff made applicable to GST applying Rule 3 of the Interpretation Rules. The General Rules are to be applied seriatim. Rule (1) of the General rules for Interpretation states as follows: RULE 1 The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions. As per the above Rule, classification is to be determined based on the terms of the heading and any related Section/Chapter Note. CTH 22029930 specifically covers 'Beverages c....