TaxTMI 
TaxTMI 
2021 (8) TMI 193
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....d 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 subsection (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 dissimila....
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....fication on the following questions: 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') 3. The Original Authority has ruled as follows: UHT Sterilized Flavoured Milk marketed under the brand name 'Britannia Winkin' Cow Thick Shake' by the applicant is not classifiable under the Tariff heading '0402 /0404" but classifiable under CTH 22029930. 4. Aggrieved by the above decision, the Appellant has filed the present appeal. The grounds of appeal are as follows: * The product under consideration i.e., flavoured milk is a daily produce. It is essentially milk added with sugar and permitted additives. The single largest ingredient in the product, in quantity and essence is milk which constitutes more than 80-90% of the product. The other ingredients in the product, i.e Sugar, Cocoa, Vanilla, Salt etc. are added for flavour and sweetening and additive....
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....detailed hereunder) which squarely support the view that the product is classifiable under Chapter 4. The Impugned Order deserves to be set-aside on this ground alone. * The position and treatment adopted by the Food Safety and Standards Authority of India, which is the regulator for the Food sector, is of utmost relevance' in determining classification of a product. The Ld. AAR ought to have appreciated that the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 ('the FSS Regulations') set out the categorisation of foods for prescribing standards and permitted ingredients and additives. * It is clear that in common parlance and as per the FSSAI, flavoured milk is essentially milk / dairy product, rather than a beverage made from milk. In view of this aforesaid, the Ld. AAR ought to have appreciated that flavoured milk is nothing but milk, rather than a beverage containing milk. The Appellant therefore submits that the product deserves to be classified under Chapter heading 0402. * At Para No. 6.8 of the Impugned Ruling, the Ld. AAR has held that the Appellant's reliance on the FSSAI Regulations has no relevance in the present case since ....
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....uestion of law in the present case and is hence wholly misplaced. * In the present case they do not seek to apply a provision from the FSS Regulations, as much as it seeks to refer to the provisions to better understand the nature of the product as per the government regulator of the concerned product. The question before the Ld. AAR was merely determination of classification of the said product. In this context of determining classification of a product, the Hon'ble Apex Court has held that the FSSAI Regulations are relevant and can be relied on, in the decision in Parle Agro(supra). Therefore, it is submitted that the FSSAI Regulations relied on by them ought to have been considered by the Ld. AAR while passing the Impugned Ruling. The Impugned Ruling is therefore unsustainable. * Even if flavored milk is considered not to be milk itself, but a product containing milk/milk constituents, it would still be classifiable under Chapter 4, specifically Entry 0404 90 00. While in terms of the foregoing submissions, the most appropriate classification of the product in question is 0402, without prejudice, if a view is taken that flavoured milk is not milk itself but a product contain....
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....ured milk is classifiable under 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 in the present case 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. It does not lose its basic characteristics and nutritive value merely by the process of heating and cooling or by addition of sugars or flavour. 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. * The general explanatory notes for Chapter 4 under the Harmonized Commodity Description and Coding System ('HSN') specifies as follows: "(1) Dairy products: (A) Milk, i.e. full cream milk and partially or completely skimmed milk. (E) Products consisting of natural milk constituents,....
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.... the entry for 'beverages containing milk', the legislature seeks to cover beverages in which milk is one amongst various other ingredients, such as tea, coffee etc. and not products where the predominant ingredient and nature is that of milk. In all these cases, in common parlance the products are known in their generic name such as coffee, tea though they contain milk powder. For this purpose, on application of the principle of "Ejusdem Generis ", either milk is absent or would be a negligible portion of the preparations like Fruit pulp, soya milk drinks, beverages containing milk etc, while Winkin Cow is a product, which is substantially and predominantly only milk. * In Nestle India Limited vs. Commissioner of Central Excise [2001 (132) ELT 134 (Tri. Del)] wherein it was held that 'Milkmaid Kesar Kulfi Mix' (consisting of 57.5% of dairy powder), 'Milkmaid Shahi Rabri Mix' (consisting of 57.5% of dairy powder) and 'Milkmaid Kalakand Mix' (consisting of 68.8% of dairy powder) were classifiable under Chapter 4. In the present case, milk constitutes over 80-90% of the product and the product is in liquid state, i.e. natural milk form. It is not even reduced to powder. In another ....
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....f well settled law in a catena of judgments including in Cavinkare (supra), addition of a small quantity of artificial flavorings does not change the essential nature of the product and the product continues to be classified under Chapter 4. * The Impugned Ruling seeks to make a reference to HSN explanatory notes to contend that "beverages consisting of milk flavoured with cocoa or other substances" fall under HS 2202 as per the said explanatory notes and the said reference is misconceived and is without any basis in fact or law. Factually, the product under consideration is milk / produce of animal origin and this is also accepted vide a catena of judgments on identical products. Given this factual and legal position, reference to "beverage consisting of milk" under the HSN explanatory notes is not relevant to the present case, in as much as the product at hand is essentially milk / milk product falling under chapter 4. * Even assuming without accepting that said HSN explanatory note is relevant to the product at hand, they submit and highlight the decision in Collector of Customs, Bombay vs. HICO Products Ltd [1984 (8) TMI 324 - CEGAT New Delhi] wherein it was held that HSN E....
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....ified solely on the basis of GRI 1 and if the Section Notes and Chapter Notes do not otherwise require, the remaining GRI's may then be applied. In this regard, reliance is placed in the decision in Modi Xerox Ltd. Vs. Collector of Customs, New Delhi/Bombay [1997 (12) TMI 642 - CEGAT New Delhi] * In the present case, the product can be classified under Chapter 4 in accordance with GRI 1 in terms of the headings of the Tariff Schedule itself. The said product is essentially 'milk' and thus the product in question is classifiable under Chapter 4 on the basis of the Chapter heading itself. Hence, there is no requirement to seek to classify the said product in accordance with the explanatory notes under Heading 2202. * Judicial precedents relied on by them shall prevail over the interpretation sought to be adopted by referring to HSN explanatory note by the Ld. AAR. Without prejudice, it is submitted that even assuming that there are two views possible, it is a well settled legal position that one favourable to the assessee in matters of taxation has to be preferred. * The Impugned Order seeks to refer to certain recommendations of the Fitment Committee as mentioned in Agenda of ....
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....considered therein. * In any case, it is settled law inter-alia in Kalyani Packaging Industry v. Union of India [2004 (168) E.L.T. 145 (S.C)] that Departmental circulars cannot prevail over law laid down by a Court. Reliance in this regard is also placed on the judgment in Commissioner of C.Ex., Bolpur v. Ratan Melting & Wire Industries [2008 (231) E.L.T. 22 (S.C.)] where a similar position was taken. * It is submitted that the said product, i.e. flavoured milk, merits classification under Chapter 4 as it constitutes 90% milk and the product is essentially milk only. It is submitted that even products that contain less than 90% of milk are being classified under Chapter 4, as elaborated hereunder. * In Nestle India Ltd. v. CCE, New Delhi [2001 (3) TMI 157- CEGAT. New Delhi] (supra), the products in question were Nestle Milkmaid Kalakand Mix (containing dairy powder of 68.8%), Nestle milkmaid rabri mix (containing dairy powder of 57.5%) and nestle milkmaid kulfi mix (containing dairy powder of 57.5%). These products thus contained much lesser than 90% of milk. However, it was held by the Hon'ble Tribunal that they are to be classified under Chapter 4. This decision was affirme....
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....d that: (1) their product is made up of 80-90% of Milk and is only "Milk" (2) GST Council has not clarified the classification of the product as mentioned in the impugned order (3) Non-Reliance of FSSAI regulation by the lower authority is not correct He stated that their product is a new product launched post-GST and as an abundant caution they classified it under Chapter 22 of Customs Tariff. He relied on a catena of decisions and requested to permit them to furnish a written submission which was allowed. The authorized representative was asked to furnish invoice copy and rulings supporting similar product under CTH 0402/0404. 5.3 The appellant furnished their written submissions dated 24.06.2021 through e-mail. In the submissions, they had furnished the background, concept of Flavoured Milk, issues involved, judicial precedents in detail along with the copies of all the case laws relied upon by them, copy of the FSSAI Certificate and copies of the labels of their products. They have not furnished any invoice copy supporting similar product under CTH 0402/0404. 5.4 On the issues involved, the following are stated: * Whether the product is 'beverage containing milk' or ....
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....milk, as per FSSAI regulations, means the product prepared from milk or other products derived from milk, or both, and edible flavourings with or without addition of sugar, nutritive sweeteners, other non-diary ingredients including stabilizers and food colours * Therefore the product in the present case is flavoured milk and comes under the ambit of Milk Product as per the FSSAI Regulations, 2011 and in accordance with Chapter 4 of the Customs Tariff as the Tariff Heading 0402 covers 'Milk and cream, concentrated or containing added sugar or other sweetening matter', the product merits classification under tariff heading 0402 * What is flavor? To what extent flavor can be used so that it does not change the nature of the original product? * FSSAI has classified flavours into three categories:- Natural Flavouring substances and Natural Flavours; Flavouring substances that are Nature-identical; Substances of Artificial Flavours * Flavours can be added to the food in accordance with Good Manufacturing Practices (GMP) Guidelines * Chapter 4 of the Customs Tariff permits addition of certain other ingredients which could either work as stabilizers, sweeteners or flavouring age....
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....side purview of Chapter 4 * Cavinkare Private Limited Vs. Commissioner of Central Excise [2019 (11) TMI 1054 - CESTAT Chennai] * Nestle India Ltd Vs. CCE New Delhi [2018 (8) G.S.T.L. 211(Tri. - Del.)] * The product in question is essentially milk and deserves to be classified under Chapter 4 * Gujarat Coop. Milk Marketing Federeation Ltd Vs. State of U.P. [2017(5) GSTL351 (All.)] * Karnataka Co-operative Milk Producers Federation Ltd [(2020)79GST 11 (AAR)] * Deputy Commissioner of Sales Tax (Law), Board of Revenue, Ernakulam Vs. PIO Food Packers [AIR 1980 SC 1227] * Applicability of FSSAI Act & Regulations * Parle Agro (P) Ltd Vs. Commissioner of Commercial Taxes, Trivandrum [ 2017 (5) TMI 592-SC] * Brindavan Beverages Private Limited Vs. CCE & ST [ 2019 (10) TMI 762-CESTAT Allahabad (LB)] * Flavoured Milk is classified under Chapter 4 * Commissioner of Central Excise Vs. Amrit Food [2015 (324) ELT 418 (SC)] * Fun foods Pvt Ltd Vs. Commissioner of Central Excise, Jaipur - I [2017 (348) ELT 357 (Tri- Del)] * Nestle India Limited Vs. Commissioner of Central Excise [ 2001 (132) ELT 134 (Tri Del)] * Danone Foods and Beverages (I) Pvt Ltd Vs. The Commissioner....
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.... Winkin' Cow - Thick shakes Constituent 1 Strawbericious Standardised Milk (89%), Sugar, Water, Emulsifier and Stabilizers, Strawberry Puree (0.1%), Acidity Regulato 2 Mangolicious Standardised Milk (89%), Sugar, Water, Emulsifier and Stabilizers, Alphonso mango Puree (0.1%), Acidity Regulator 3 Chocolicious Toned Milk (87%), Sugar, Water, Milk solids, Emulsifier and Stabilizers, Cocoa powder(l%), Acidity Regulator 4 Vanillicious Standardised Milk (89%), Sugar, Water, Emulsifier and Stabilizers, Acidity Regulator, Natural and Artificial Vanilla (0.1%) From the above, it is seen that Standardised milk/Toned Milk are sterlised using the UHT process to which sugar, water, Emulsifier and stabilizers, flavours, Acidity regulator and Milk solids in the case of Toned Milk. The products are 'ready to drink' and are marketed as Thick shakes' with a shelf life of 6 months in tetra packs. 7.2 The appellant are aggrieved that when the Lower authority has found that the products are a 'form of milk', there is no finding by the Authority that - milk loses its identity; a new product comes into existence and it is not milk anymore; new product cannot be called as Toned Milk or Thic....
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....he standards for 2.10 BEVERAGES, (Other than Dairy and Fruits & Vegetables based) is given. Thus, it is evident that 'Beverages' which are 'ready to drink' drinks except water, when based on Dairy products, Fruits & Vegetable, the standards for the same are given under '2.1 -Dairy Products', '2.3 -Fruits & Vegetable products' and not under 2.10 which provides the standards for Beverages other than Dairy, Fruits 8s Vegetable based. This does not mean that there are no beverages which are dairy, Fruit 8s Vegetable based. If that is the case, there is no requirement for an exclusion to be specified, while stating the standards at Regulation 2.10, i.e. as 'Beverages excluding dairy and Fruit & Vegetables'. Thus, it is conclusive that FSSAI regulations gives the standards of beverages other than Diary and Fruit & Vegetables at 2.10 and the beverages based on Dairy, Fruits and Vegetables stands covered under Regulation 2.1 and 2.3 respectively. 8.2 Customs Tariff adopted for the purposes of GST is aligned to HSN and the classification of the products in the Tariff is in a sequence. The initial Sections/Chapters contain Live animals, not so processed goods and the latter parts contain th....
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....ove, it is seen that CTH 0402 covers Milk and Cream, concentrated or containing Added Sugar or other sweetening matter; Heading 0402 10 and 0402 20 covers products 'In powder, granules or other solid forms...' and Heading 0402 99 90, which is Other-Other-Other is claimed to cover the appellants' products. The explanatoiy notes as per the HSN to the Tariff heading 0402 is as below: 0402 MILK AND CREAM, CONCENTRATED OR CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER (+) 0402 10 - In powder, granules or other solid forms, of a fat content, by weight not exceeding 1.5% : 0402.2 1 - - Not containing added sugar or other sweetening matter 0402.29 Other 0402 .91 - - Not containing added sugar or other sweetening matter 0402.99 - - Other This heading, coves milk (as defined in Note 1 to this Chapter) and cream, concentrated (for example, evaporated) or containing added sugar or other sweetening matter, whether liquid, paste or solid on blocks, powder or granules) and whether or not preserved or reconstituted, Milk powder may contain small quantities of starch (not exceeding 5% by wei....
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....g. In the case at hand, as per the label, the Milk constituent is 'Standardised Milk' or Toned Milk' which are not 'Full Cream Milk' or 'Skimmed Milk' as per the above definitions. The Chapter Note 1 clarifies the nature of Milk covered under the expression 'Milk' which is limited only to 'Full cream Milk' or 'partially or completely Skimmed Milk'. This shows that the other types of 'Milk' are excluded for the purposes of this Tariff heading. In the products at hand, the percentage composition of Standardised Milk or Toned Milk is 80 to 90% and the products are not of 'Full Cream Milk' or 'Skimmed Milk' and therefore are undoubtedly excluded from the purview of Tariff Heading 0402. Therefore, irrespective of the contentions that the product remains a 'Milk' even with added flavours until it is consumed, it is clearly established that the 'Milk' referred to in this Tariff heading and that of the appellant are not the same and the products in hand are not covered under CTH 0402. 8.5 With respect to the alternative Tariff heading 04049000, the same is examined as under: 0404 WHEY, WHETHER OR NOT CONCENTRATED OR CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER; PRODUCTS CONSISTING....
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....litative and quantitative composition as natural milk (heading 04.01 or 04.02). (b) Whey cheese (heading 04.06) (c) Products obtained from whey, containing by weight more than 95% In close, expressed as anhydrous lactose, calculated on the dry matter (heading 17.02). (d) Food preparations based on natural milk constituents but containing other substances not allowed in the products of this Chapter (in particular, heading 19.01). (e) Albumins (including concentrates of two or more whey proteins, containing by weight more than 80% whey proteins, calculated on the dry matter) (heading 35.02) or globulins (heading 35.04). From the above it is evident that the heading apart from whey, covers fresh or preserved products consisting of milk constituents, which do not have the same composition as the natural product, i.e., it includes products which lack one or more natural milk constituents; milk to which natural milk constituents have been added and such products are not to be more specifically covered elsewhere. In the case at hand, the product do not lack any natural constituents or no natural milk constituents are added and the product is not whey. Therefore, the products are ....
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.... pulp and other additives. * Whey-based beverage with spices: It has been developed using combination of Cheese/Paneer whey and Indian spices. Manufacturing process for lactose hydrolysed variant is also available. Manufacturing of whey beverages at a dairy plant requires pasteurisation and packaging facilities only. It can also be manufactured using the existing infrastructure for lassi/chhach, where available. The pasteurised product has a shelf life of 10 days at 80C or below when packed in polyfilm. FLAVOURED MILK Flavoured milk has sugar, flavouring and colouring added to make it tastier to consume. It is generally manufactured by in-bottle sterilisation or Ultra High Temperature (UHT) processing with aseptic packaging. For larger volumes, some capital investment for specific equipment such as automatic bottle-filler-cum-sealer and rotary bottle steriliser or aseptic processing and packaging unit may be required. If a dairy plant has infrastructure for UHT milk processing, the same can also be used for flavoured milk. The product does not contain any added preservative and has a shelf life of 6 months when sterilised in glass bottles or UHT processed and aseptically....
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....ussions in Para 8 and Para 9 above, it is evident that the product is classifiable on the application of the GRI 1 , which is 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. In the case at hand as has been brought supra, the classification is based on the Specific entry applicable to the product vide the Tariff heading read with the related HSN Explanatory Notes and the applicable Chapter Notes. The reliance of the HSN Explanatory Notes cannot be disputed and the tariff adopted for GST, i.e., Customs Tariff is aligned with the HSN completely. The appellant has relied on decisions stating reliance on HSN cannot prevail over a Tariff Description. In the case at hand, the Explanatory Notes have been taken as a guidance only, which is permitted under the Explanation to Notification No.01/2017. Further the classification is squarely dealt with by the application of GRI Rule 1 and therefore....