TaxTMI 
TaxTMI 
2020 (5) TMI 284
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....ounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a). On the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b). On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104 (1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void sb-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifical....
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....tem 22029920 as 'Fruit Juice Based Drinks'- "Fruit juice based drinks are not defined in the Tariff Schedule. o Honble Supreme Court in the case of Commissioner Vs. Parle Agro Pvt Ltd [2010 (254) ELT A 13) = 2009 (7) TMI 1229 - SC ORDER examined whether the common parlance test was the only test to be applied for understanding the different entries and whether the decision and opinion of Food Safety Authorities on the product in question was relevant. The Hon'ble Court observed that the common parlance test or commercial parlance test were not the only test which can be applied for interpreting the entries; scientific and technical meaning of the word 'aerated' used under different Statutes can also be looked into for finding out the real import of the entry; therefore the Supreme Court referred to Regulation 2.3.10 in regard to 'thermally processed fruit beverages/fruit drink, ready to serve fruit beverages'. o Thus, FSSAI Regulations can definitely be relied upon to understand the scope of 'fruit juice based drinks'. This understanding was also referred to/followed in CESTAT Larger Bench decision in case of M/s. Brindavan Beverages Private Limited Vs. CCE & ST [....
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.... o The goods falling under Tariff item 2202 10 20/2202 10 90 will cover within its ambit those drinks which are made up of water and contain lime /orange -flavour added thereto. o The expression 'fruit pulp or fruit juice based drinks' falling under 22029920 essentially means a drink based on fruit pulp or fruit juice which gives the overall/essential character to the drink. o The products in question are to be prepared with orange/lime juice as its base, which will be added to the syrupy liquid consisting of water, sugar and other constituents. Thus the same are active ingredient of the product in question, and imparts the basic attribute to the drink, including its taste and characteristics, therefore qualifying as "fruit juice based drink" under the Tariff item No. 22029920. o Reliance is also placed upon D. Hicks(ed.), Production and Packaging of Non-carbonated Fruit Juices and Fruit Beverages, 1990, Van Nostrand Reinhold, New York, wherein it is stated that the most significant feature of a fruit beverage is not its fruit content but the function for which it is designed and marketed. The fruit is often a dominant ingredient providing its overa....
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....uld cover only those beverages which are prepared with flavours and the beverages which are prepared from fruit juice would be classifiable under Tariff item 22029920. o From a perusal of the manufacturing process of product in question, it can be seen that apart from Lime juice / Orange juice, they use Carbon di oxide as one of the ingredients to manufacture which is added merely for preservation of the beverage and not for any other purpose. It is 5.00%/2.50% Orange/ Lime juice which gives the beverage its essential character and forms the base of the beverage o Reliance is placed on the Carbonated Soft Drinks: Formulation and Manufacture, Edited by David P. Steen and Philip R. Ashurst, 2006 and also on Chemistry and Technology of Soft Drinks and Fruit Juices, Second Edition, edited by Philip R. Ashurst, Ashurst and Associates, consulting Chemists for the Food Industry, Hereford, UK, 2005 by Blackwell Publishing Ltd and stated that Carbon di oxide is a very effective preservative, as it inhibits growth of micro-organisms in the beverage and the Carbon di oxide is for preservation purposes. o Applying the hierarchical classification, as set out in the ge....
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....it juice-based drink, unlike the other aerated beverages marketed under the various brand names, which are commonly understood as 'soft drinks' or flavoured aerated water. The same is also supported by the fact that the products are covered by FSSAI Regulation 2.3.30 and are labelled as 'carbonated beverage with fruit juice'. PERSONAL HEARING: 5. The Appellant was granted personal hearing as required under law before this Appellate Authority on 22nd January 2020. The Authorized representatives of the Appellant Shri. R. Raghavan, Ms. R. Sahana, Shri. B.Venkatraman Advocates and Authorized representatives and Shri.M. Elangovan of the appellant company appeared for hearing. They reiterated the written submissions filed along with the Appeal. They submitted a compendium of statutory provisions and case laws relied upon by them. They undertook to submit a written synopsis on the arguments made including on the fitment prevailing and the change solicited within a weeks' time. 6. The appellant as undertook during the hearing furnished a written submission on 30.01.2020. They have inter-alia stated that: • The product merits classification under CTH 2202 99 20 by virt....
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....6. However, the Hon'ble Authority for Advance Ruling went on to place reliance on the Food Category System in Appendix A of the FSSAI Regulations and equated 'Carbonated Fruit Beverages or Fruit Drinks' covered under Regulation 2.3.30 to 'Carbonated Water- Based Flavoured Drinks' (Category 14.1.4.1 Of the Food Category System in Appendix A). o Only those drinks which are water-based' can fall within the scope of Category 14.1.4.1. It is submitted that as noted by the Hon'ble Authority for Advance Ruling themselves, the impugned products qualify as 'fruit juice based drinks' by Virtue of falling within the scope of Regulation 2.3.30 ('Carbonated Fruit Beverages or Fruit Drinks"). Thus, the Hon'ble Authority for Advance Ruling have contradicted their own conclusion that the products are Carbonated Beverages with fruit juice by way of also holding that the products qualify as Carbonated water-based flavoured drinks. It is also highlighted that Hon'ble Authority for Advance Ruling has on one hand recognised that the impugned products will not qualify as 'Carbonated water" in terms of Regulation 2.10.6 while at the same time has observed that the products can qualify as Carbona....
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....lassification only under CTH 2202. o They are also not contending that the Impugned products qualify as Fruit Juices under CTH 2009. On the other hand, the impugned products are classifiable under CTH 2202 only. Consequently, there is no dispute at the four digit level classification. The issue pertains only to classification of the impugned products under CTH 2202 99 20 as 'fruit juice based drinks'. Merely because the impugned products do not qualify as 'Fruit Juices', the same does not automatically debar the products from being classified as 'fruit juice based drinks' under CTH 2202 99 20 for the reasons explicated above. Thus, the impugned products are rightly classifiable under CTH 2202 99 20 as 'Fruit Juice based drinks'. • C. Industry practice- o Their competitors in the industry who are manufacturing similar carbonated beverages are classifying their products under 2202 99 20 as fruit juice based drinks. In this regard, it is pertinent to refer to the decision of the Ld. Commissioner Appeals, Hyderabad in the case Trinity Beverages Pvt Ltd. [42/19-20 dated 30.09.2019] wherein it was held that the fruit based drinks manufactured by them con....
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....ich did not contain any fruit juice. Thus, since the impugned products contain lime juice/lime juice concentrate [2.5%]/ orange juice [5%] as the case may be, the tax incidence applicable to the said products cannot be compared with the tax incidence applicable to the above mentioned carbonated beverages with fruit flavours manufactured prior to 27" November 2017. o In any case, for reference purposes, the tax incidence applicable to the carbonated beverages with fruit flavours and the impugned products [both prior to and after introduction of GST] is tabulated herein below. Product Manufactured Period Tax incidence Carbonated beverages with fruit flavours (Does not contain any fruit juice. Only artificial favouring agents added) Prior to 1st JuIy (Pre GST) 38.545% [21% ED + 14.5% VAT] Carbonated beverages with fruit flavours (Does not contain any fruit juice. Only artificial flavouring agents added) 1st July 2017 to 26th November 2017 40% Carbonated beverages with fruit juice (contains lime juice/lime juice From 27th November 2017 onwards 12% (if classified under CTH 2202 99 20 as "Fruit juice based drinks") Concentrate [2.5%] & oran....
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.... Notes and applying to the products has held that these beverages are classifiable under CTH '220210-Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured'. (4) examined the FSSAI Regulation 2.10.6-Beverages Non-Alcoholic-Carbonated and Category 14.1.1- Waters of Appendix A of the Regulations, for arriving at the eight digit level classification under CTH 220210 and concluded that the Beverages under this category(i.e. covered under Regulation 2.10.6) are the 'Aerated Waters' covered under CTH 22021010 while the appellants products which are covered under Para 3A of the Regulation 2.3.30 and Category 14.1.4.1 are either classifiable under CTH 22021020 or CTH 22021090. The Lower authority has found that the impugned products are neither 'Fruit Juice' classifiable under CTH 2009 or 'Aerated Waters' Classifiable under CTH 22021010 but Carbonated beverages with fruit juice classifiable under CTH 22021020 or 22021090. 7.1 The appellant accept the finding of the Lower Authority that (1) their products which are 'Carbonated Beverage with Fruit Juice' are not classifiable as 'Fruit Juice" under CTH 2009 a....
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.... This heading, covers non-alcoholic beverages, as defined in Note 3 to this Chapter, not classified under other headings particularly heading 20.09 or 22.01. (A) Waters, including mineral waters and aerated wafers, containing added sugar or other sweetening mailer or flavoured. This group include, inter alia : (1) Sweetened or flavoured mineral waters (natural or artificial). (2) Beverages such as lemonade, orangeade, cola, consisting of ordinary drinking water, sweetened on not, flavoured with fruit juices or essence, or compound extracts, to which citric acid tartaric acid are sometimes added. They are often acrated with carbon dioxide gas, and are generally presented in bottles or other 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 provisions, the follow....
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....d water-based flavoured drinks' and thereupon concluded that the products are classifiable under CTH 22021020/22021090, which are by itself contradictory. The appellant states that once the products are held to be covered under Regulation 2.3.30 and not under 2.10.6[Beverages Non-Alcoholic - Carbonated], the products are to be classified under CTH 22029920/22029990 as Fruit juice based drink. The relevant Regulations of FSSAI and the Food category under Appendix A are examined as under: Para 2.3.30 of the FSSAI Regulation: 2.3.30 Carbonated Fruit Beverages or Fruit Drinks: 1. Carbonated Fruit Beverages or Fruit Drink means any beverage or drink which is Purported to be prepared from fruit juice and water or carbonated water and containing sugar, dextrose, invert sugar or liquid glucose either singly or in combination. It may contain peel oil and fruit essences. It may also contain any other ingredients appropriate to the products. 2. The product may contain food additives permitted in these regulations including Appendix A. The product shall conform to the microbiological requirements given in Appendix B. It shall meet the following requirements: (i....
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.... 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 round in category 14.1.4 (emphasis supplied) 14.1.2 Fruit and Vegetable Juices This category applies only to fruit and vegetable juices. Beverages based on fruit and Vegetable juices are found in food category 14.1.4.2.......(emphasis supplied) 14.1.4.1 Carbonated water-based flavoured drinks - Includes water-based flavoured drinks with added carbon dioxide with nutritive, non-nutritive and/or intense sweeteners and other permitted food additives. Includes gaseosa (water-based drinks with added carbon dioxide, sweetener, and flavour), and sodas such as colas, pepper-types, root beer, lemon-lime, and citrus types, both diet/ light and regular types. These beverages may be clear, cloudy, or may contain particulate matter (e.g. fruit pieces).......(emphasis supplied). From the above, it is clear that • Waters/Mineral waters/ Carbonated waters/S....
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....under FSSAI. 8.4 The appellant has stated that the products which are not essentially in the nature of waters, would not fall for classification under 22021020/22021090 and that the said view is affirmed by the Hon'ble Tribunal Larger Bench in the case of Brindavan Beverages Pvt Ltd [2019 (10) TMI 762]. In the cited decision under Para 66, it is observed as under: "66. It can however be urged that even when lemon or lime juice is added to water as a flavouring agent, the product can still be called lemonade. Though it has to be seen whether the product is essentially waters with added flavour or whether lemon juice is the basis of the fruit drink, but the answer also lies in the definition of "non-carbonated ready to serve fruit beverages" under Regulation 2.3.10 and "Carbonated fruit beverages and fruit drinks" under regulation 2.3.30. It would follow from these regulations that even when lime juice is added but the fruit content of lime or lemon juice is not less than 5%, the product would be classified as fruit juice based drinks but if the lime or lemon juice content is less than 5%, then it would classify as lemonade." (emphasis supplied) The Tribunal has conclu....