TaxTMI 
TaxTMI 
2020 (5) TMI 284
X X X X Extracts X X X X
X X X X Extracts X X X X
....der 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 specifically made to such dissimilar provisions, a reference to th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 [2019 (10) TMI 762-CESTAT Allahabad (LB)]. In any case, the Authority in the Impugned Ruling has also reli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e -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 overall character to the drink which cannot be achieved in any other way o Sub-heading 2202 10 covers waters, including aerated waters, which are either sweetened or flavoured or bot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 general explanatory notes to the present case, since lemonade figures under "---" under 2202 10 20, it has to be a sub-classification of the immediately preceding single dash, which is 2201 10. Thus, unless the products satisfy the descr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 virtue of qualifying as a 'Carbonated beverage' which is distinct from Waters'/ 'Carbonated water'. o A perusal of Heading 2202 would indicate that it is divided into two sub-headings; the first one covers 'waters, including mineral waters and aerated waters, containing added sugar or other sweetening m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hose 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 Carbonated water-based flavoured drinks under Category 14.1.4.1. These observations are in no doubt, in direct contradiction with one and another. * Furthermore, the Hon'ble Authority for Advance Ruling without giving due consideration to the General Explanatory Notes [i.e. interpretation of entries appearing with triple dash ---], classified the impugned products....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'. 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 containing a fruit juice content of around 7% and qualifying as a carbonated beverage with fruit drink as per Para 3A of Regulation 2.3.20 supra are classifiable as fruit juice based drinks under 2202 99 20. The said Order has not yet been appealed against by the Department. o Consequently, it is submitted that it is a settled principle that in the context of classification, different players in the industry manufacturing simila....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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%] & orange juice [5%] (After Note: introduction of GST and change in composition of the products manufactured) There is no comparable tax incidence for this product under the pre-GST regime as the appellant has only begun manufacturing the said products by adding fruit juices from 27th November 2017 onwards) DISCUSSIONS: 7. We have carefully considered the various submissions made by the Appellant and the applicable statutory provisions. The appellant has sought ruling on the following question: Classification of good....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le 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 and (2) the products are classifiable under CTH 2202, The appellant contends before us that their products do not fall under 220210 as Waters/Waters flavoured with fruit juice but merits classification under 22029920 as 'Others-Fruit Juice Based Drinks' or under 22029990- 'Others/others'. The contention of the appellant is that the products by virtue of qualifying as a 'Carbonated beverage' and covered under FSSAI Regulation 2.3.30, is distinct from 'Waters'/ 'Carbonated water' and merits classification under CTH 22029920/22029990 and that just because the impugned products do not qua....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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 following are evident * As per the Notes A(2) above, CTH 220210 covers-Beverages such as lemonade, Orangeade, Cola consisting of drinking water, sweetened or not, flavoured with fruit juices, often aerated with Carbon dioxide and generally presented in bottles or other airtight containers. * As per Notes B above, CTH 220299 covers - other non-alcoholic beverages, not including Fruit or Vegetable juice under 2009 and ready for consumption The Customs Tariff under single dash(-)CTH 2202 10 includes Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured and under the said (-), the following are covered: CTH 2202 10 10(with a (---)) covers Aerated waters; CTH 2202 10 20(with a (---)) covers Lemonade; CTH 22....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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) Total Soluble Solids(m/ m) Not less than 10.0 percent (ii) Fruit Content(m/ m) (a) Lime or Lemon juice Not less than 5.0 percent (b) Other fruits Not less than 10.0 percent 3. The product shall have the colour, taste & flavor characteristic of the product & shall be free from extraneous matter. 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. Thus carbonated Fruit Beverage or Fruit Drink is prepared from fruit juice and water or carbonated water and the minimum requirement of the Fruit content is not less than 5.0 percent in the case of Lime or Lemon juic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....et/ 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/Soda are categorized under 14.1.1 * Fruit and Vegetable juices are categorized under 14.1.2 * Carbonated and Non-Carbonated waters containing flavours are found in category 14.1.4 * Carbonated waters containing flavours are categorized under 14.1.4.1 as 'Carbonated water-based flavoured drinks' * Beverages based on fruit and Vegetable juices are found in food category 14.1.4.2, which covers Von-Carbonated water-based flavoured drinks, including Punches and Ades' 8.3 The appellant has stated that when it is concluded by the Lower authority that the products are not covered as 'Carbonated Water' under Regulation 2.10.6 [Beverages Non Alcoholic-Carbonated], the same do not fall under the food category at 14.1.4.1. From the categorisation of the Food products above, the Carbonated water is categorised under 14.1.1, while the Carbonated Waters containing flavours are categorised under 14.1.4.1. The Regulation 2.3.30 specifies the requirement of fruit jui....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sified 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 concluded that those carbonated beverages wherein the content of lime or lemon juice is less than 5% would classify as lemonade. In the case at hand the content of lime juice/orange juice is 2.5%/5.0% only and therefore the cited decision is not applicable to the case at hand. 9. The appellant has placed reliance on the decision of the Ld. Commissioner Appeals, Hyderabad in the case Trinity Beverages Pvt Ltd.[42/ 19-20 dated 30.09.2019] and have claimed that their competitors in the Industry who are manufacturing similar carbonated beverages are classifying their products under CTH 22029920 as fruit juice based drinks. It is seen that in the said case, the Fruit juice content in the Beverages is around 7% and the Commissioner(Appeal) following the CESTAT Larger Bench decision in the Case of Brindavan Beverages cited above has held that they are fruit-based and accordingly classified under CTH 22029920. The facts are not similar in as much as the percentage of fruit content in the products at hand are 5% or less and as....