TaxTMI 
TaxTMI 
2021 (2) TMI 822
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....f the Court, the parties have consented to the following order being passed :- a) The Customs Excise and Service Tax Appellate Tribunal (CESTAT) is directed to decide the main appeal bearing Customs Appeal No. 75195 of 2020 within a period of three weeks from date. b) The petitioner shall be at liberty to pursue its remedy before the Customs Excise and Service Tax Appellate Tribunal (CESTAT) against the order passed by the Principal Commissioner of Customs dated December 07, 2020 as well as the order dated December 15, 2020 passed by the Deputy Commissioner of Customs before the Appellate Authority." 2. Accordingly, the matter was heard on a priority basis on 18 January 2021 for final disposal. 3. The issue which falls for consideration in this appeal is whether the goods imported by the respondent, such as, Big Cola, Big Orange Cola, Big Lemon etc., which they described as "carbonated beverage with fruit juice" are classifiable under Customs Tariff Heading 22021090 and 22021020 as claimed by the Revenue or are classifiable under 22029920 as claimed by the respondent/importer. 4. The respondent is an importer of branded drinks namely Big Lemon ....
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....d Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification". 5. From the above explanation to the notification, it is clear that there is no separate classification of goods for the purpose of IGST and the classification of the goods under the Customs Tariff holds good for IGST as well. The Customs Tariff Act, 1975 provides for Rules of interpretation which aid in classifying the goods and these Rules also apply to IGST. If the imported goods are classified under Customs tariff Heading 220210 as "all goods (including aerated waters), containing added sugar or other sweetening matter or flavoured", IGST @ 28 per cent is to be levied on the imported goods. On the other hand, if they are classified under Customs Tariff Heading 22029920 as "fruit pulp or fruit juice based drinks", IGST @ 12 per cent is to be levied. On a specific query by the Bench, the learned Counsel for the respondent explained that they have been importing these goods in the past and have always been classifying them under 22029920 as "fruit pulp or fruit juice based drinks" and Customs department has been clearing them a....
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....99 90 --- Other ............................................ 1 30% 7. Learned Assistant Commissioner held that the primary quality of the imported product is a beverage with overwhelming constituent being carbonated water with an extremely small percentage of fruit juice between 2.5% and 5% and therefore the HSN Code 22029020 under which the assessee claimed the classification is not correct. This tariff entry pertains to fruit pulp or fruit juice based drinks. As the defining character of the products is carbonated beverages and the fruit juice is a secondary character, they need to be classified under Customs Tariff Heading 22021020 in case of Lime based drinks and 22021090 in case of others. Being Aggrieved by this order, the importer filed an appeal before the Commissioner (Appeals), who, by the impugned order, held that the drinks are classifiable under 22029920 and set aside the order of the Assistant Commissioner. His reasonings are as follows: (a) there is no guidance in the Customs Tariff Act, 1975 regarding what constitutes fruit juice based drinks and what percentage of fruit juice is required to qualify a beverage as fruit juice based drinks ....
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....ges Pvt. Ltd. versus Commissioner of Customs, Central Excise & Service Tax, Meerut [2019 (29) G.S.T.L. 418 (Tri. - LB)] also held that Nimbu Masala Soda and Nimbooz are classifiable under 22029020 as the fruit juice content of Lime in Nimbooz is not less than 5% and the total soluble solid is also not less than 10% as required under FSSAI Regulations ; (d) The FSSAI Regulations 2.3.30 pertaining to carbonated beverages or fruit drinks was amended w.e.f. 25/10/2016 whereby Clause 3A has been inserted providing for beverages containing more than 5% of fruit juice (2.5% for lime) but less than 10% (5% for Lime) would also fall under Regulation 2.3.30 as "carbonated beverages with fruit juice". 8. In the present appeal, Revenue has assailed the impugned order on the following grounds:- (i) the Commissioner (Appeals) has failed to take note of the food category description in Appendix A of the FSSAI Regulations which clarifies that the beverages based on fruit and vegetable juices are to be classified under food categories 14.1.4.2 whereas carbonated beverages, fruit juice, such as, one being imported by the respondent are covered under 14.1.4.1 of the FSSAI Regul....
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....nt and the Department has not discharged this burden through any positive evidence, test report, market enquiry, by expert evidence, common parlance test, etc. to prove that the subject goods are recognised as aerated water in the market ; (2) up to 20 April 2020, the same goods were being allowed clearance by the Department under Tariff item 22099920 and it has been the long standing practice which should not be changed unless there is adequate evidence to change it ; (3) the Tariff Heading 220910 under which the Revenue seeks to classify their products, covers only beverages which are prepared with flavours. They do not cover fruit pulp or fruit juice based drinks, such as, the flavoured waters contemplated under sub-heading 220210 or containing flavoured agents which impart only the sensation and odour.Reliance is placed on the Larger Bench decision of Brindavan Beverages (supra) which was followed by the Tribunal in the case of Varun Beverages Ltd. versus Commissioner of CGST, Dehradun [2019 (368) E.L.T. 701 (Tri. - Del.)] ; (4) the subject goods are fruit juice based drinks because they contain fruit pulp or fruit juice with or without additional flavou....
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....med Big Orange which has orange flavour but contains 5% apple juice and no orange juice but has only pictures of cut orange. Similarly, Big Kids Jeera does not appear to have any Jeera but only apple juice. To that extent, the representation on the labels appears to be inaccurate but this does not affect the classification of the products since there is no dispute that all these are "carbonated beverages with fruit juice'. The products in question are not fruit or vegetable juices themselves which would be classifiable under Heading 2009. It is also not in dispute that the Customs Tariff is relevant for determining the rate of IGST payable on the imported goods. The relevant entry in Chapter 22 of the Customs Tariff Heading Act is as follows :- Tariff Item Description of goods Unit Rate of Standard Duty Preferential Areas 2202 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 2203 10 - Waters, including mineral waters and aerated waters, containing added s....
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....e dash (-) the first one is numbered 220210 which covers "Waters including mineral waters and aerated waters containing added sugar or other sweetening matters or flavoured" and the second one is for "other" which is not numbered but the further divisions under this single dash are numbered.According to the Revenue, the goods fall under the first Single Dash and according to the Respondent Assessee, under the second Single dash. 16. Within the first Single dash, there are three categories of products "Aerated waters" (22021010), Lemonade (22021020) and other (22021090). Revenue wants to classify the Carbonated beverage with fruit juice containing lime imported by the respondent under "Lemonade' (22021020) and classify the Carbonated beverage containing other fruit juices under others (22021090). 17. Under the second Single dash (-) "other", under which the respondent assessee classifies the product, there are two subcategories, viz., non-alcoholic beer (22029100) and other (220299). Undisputedly, the goods in question are not non-alcoholic beer. Within the"other" (220299), there are four further sub-categories -those containing soya, those containing milk, fruit....
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....ence to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. 3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted....
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....is filler material like talc, glue, etc. Yet, the tablet cannot be classified as product of talc.Thus, predominance of a component may not matter at all in many cases. 23. In other cases, the predominant ingredient characterises the product and the smaller ingredient only imparts to it some special characteristics or features. Some manufacturers offer pickles with garlic and without garlic. In such a case, the pickle does not become a product of garlic and the garlic only adds an additional flavour. Similarly, a chocolate with nuts is essentially a chocolate and not a preparation of nuts. 24. There are still other cases, where more than one component or ingredient of a mixture- regardless of the quantities- characterise the product. Milk shake, for instance, is made from fruit and milk and can neither be called only milk nor fruit juice. It is the combination of the two which gives its unique character. 25. The question which falls for consideration in the present case is how to view the products in question- (a) as carbonated beverages treating the fruit juice as a secondary character as the Revenue views them or (b) as fruit juice based drinks as the Re....
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....f lime). It is true that in view of this difference in the composition these goods do not fall under Clause 2 of FSSAI Regulation 2.3.30 but they do fall under Clause 3A. Identical view has been taken by the Larger Bench of the Tribunal in the case of Brindavan Beverages (supra). 27. Revenue has relied upon the ruling of the Advance Ruling Authority in the case of IGST and a support to such a decision by the GST Council which are not binding precedents for this Bench. At any rate, the ruling of the Advance Ruling Authority is not even applicable to any assessee other than the one who sought clarification. Therefore, the learned Commissioner (Appeals) is correct in not relying upon such a decision. 28. Revenue has also argued that the food category description in Appendix A of the FSSAI Regulations clarifies that the beverages based on fruit and vegetable juices are to be classified under food categories 14.1.4.2 whereas carbonated beverages fruit juice, such as, one being imported by the respondent are covered under 14.1.4.1. A perusal of Appendix A of the FSSAI Regulations shows that it is a Food Category System. It states that the food category sys....