TaxTMI 
TaxTMI 
2021 (8) TMI 839
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....e of the customer; that as per their understanding the above flours fall under HSN 1102 and are taxable at 2.5% CGST + 2.5% SGST. 2. The applicant referred to the various determination orders passed under section 80 of GVAT Act, 2003 i.e. Determination Order No. 2010/D/171-177/No.356-359 dated 12-8-10 in Kitchen Overseas ltd., Determination Order No.2010/D/55-62/No.45-48 dated 27-5-11 of Vitagreen products pvt. ltd., and Determination Order No.2013/D/197/2019 in the case of M.T.R. foods pvt.ltd. dated 20-12-13 wherein different varieties of flour i.e. Gota Flour, Khaman Flour, Dalwada Flour, Dahiwada Flour, Dhokla Flour, Idli Flour and Dosa Flour have been considered to be flours and held to be falling under Entry 12 in Schedule I to the GVAT Act under 'Flour of Cereal and Pulses'; that inspite of there being a change in law i.e. the time when that determination order was passed the GVAT Act was prevailing and currently GST Act is in force but if there is no substantial change in the schedule entries then the classification and interpretation adopted in the earlier law needs to be followed; that the applicant relies upon the decision of the Hon'ble High Court of Gujarat in the cas....
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....ufactured (commercially known as 'Instant Mix Flour') are sold in open market or through distributors to consumers. {vi} The consumer of such instant mix flour is required to follow the recipe and instructions stated on the packing for food preparation process before such product can be consumed as eatable. {vii} Hence, mix flour cannot be consumed as it is, but it is required to follow certain cooking procedures before consumption. Hence the product manufactured and sold by the applicant is not 'ready to eat' but can be said as 'ready to cook'. 5. The applicant further submits that the manufacturing process of all the mix flours is more or less similar with necessary changes in type of flour and composition and proportion of other ingredients and in any case the main ingredient remains flour which may be either rice flour, grams flour, paddy flour etc. The manufacturing process is submitted as follows: {i} Ready to mix/Instant mix flour contains mainly flours of grains and/ or pulses like bengal gram dal, gram dal, udad dal, chana dal, Moong dal, Paddy, Sago, wheat granule, rice etc. where the content of 'flour' is having major weightage. Mos....
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....te, Citric acid (E 330) 6 Dhokala Mix Flour Rice Flour, Split Bengal Gram Flour, Split Black Gram Flour, Iodised Salt, Citric Acid (E 330) Sodium bicarbonate 7 Dahiwada Mix flour Split Black gram flour, Garbanzo beans flour, Iodised salt, Citric Acid (E 330) Sodium bicarbonate 8 Dosa Mix Flour Rice flour, Split Black gram flour, Refined wheat flour, Iodised salt, Citric Acid (E 330), Sodium bicarbonate 9 Methi Gota Mix Flour Split Bengal gram Flour, Sugar, Wheat flour, Semolina, Iodised salt, Dried Fenugreek leaves, Coriander seed, Red chilli powder, Citric acid (E 330) , Sodium bicarbonate , Turmeric Powder, Black pepper, Bishop's weed seed, Asafoetida , Garam masala powder 10 Handavo Mix Flour Rice flour, Split Bengal gram flour, Split black gram flour, Wheat flour, Iodised salt, Sodium bicarbonate, Citric Acid (E 330), Red chilli powder, Turmeric powder Asafoetida 11 RavaIdli Mix flour Semolina, Vegetable oil, IodisedSalt, Split Bengal Gram, Cashew Nuts, Sodium bicarbonate Mustard Seeds , Curry Leaves, Citric Acid (E 330), Dried Ginger Powder 12 Meduvada Mix Flour Split Black Gram Flour, Refined Wheat Flour, Wheat Flour, Vegetable oil, Iodised Salt, Sodi....
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.... ingredients used in preparation, it is evident that flour of grains and pulses are the major components of the said finished products; that the said grains and pulses shall very well cover under heading '0713' having brief description 'Dried Leguminous vegetables' and accordingly, instant mixed flour made from such dried leguminous vegetables are eligible to be classified under heading '1106' having brief description 'Meal and powder of the dried leguminous vegetables of heading 0713 and taxable accordingly. The applicant has produced the percentage ratio of the grains and pulses in the products which shall make it clear that major contents of the products of the applicant are flours of grains and pulses: Sr.No. Product Dried leguminous vegetable flours Rice and wheat flours Total flours Spices and other ingredients Chana Dal flour Udad dal flour Moong/ Math Dal flour Total leguminous flours Soji flour (wheat granules) Rice flour Wheat flour Sabu Dana flour Total of rice flours / wheat flours 1. Gota Mix Flour 34 0 0 34 11 0 18 0 29 63 37 2. Khaman Mix Flour 75 0 0 75 0 0 0 0 0 75 25 3. Idli Mix Flour 0 18....
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....nt does that job and mixes flour with spices and condiments in such proportion to get best taste; that customer purchases Instant Flour Mixes of the applicant exactly in the similar manner it may purchase other flours from a flour mill; that flours available at the flour mill are flours without the spices and condiments mixed with it while the flours of the applicant are mixed with spices and condiments; that except this, there is no other difference in the flours available at flour mill and flours manufactured and sold by the applicant. So, mere mixing of flour with spices and condiments does not change basic character and form of flour so as to consider it as an entirely different product i.e. The FLOUR remains FLOUR. 7.1 The applicant is further supported in its submission by Circular No. 80/54/2018-GST dated 31.12.2018 issued by the Central Board of Indirect Taxes and Customs wherein the following has been clarified with regard to classification of "Sattu"; "3. Applicability of GST on Chhatua or Sattu: 3.1 Doubts have been raised regarding applicability of GST on Chhatua (Known as "Sattu" in Hindi Belt). 3.2 Chhatua or Sattu is a mixture of flour of ground pulses and cer....
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....products are "ready to cook" and not "ready to eat" and after the products are purchased by the customer, some processes need to be carried out and thereafter it is cooked and made ready for consumption' and that it can be said that applicant is selling it in raw form which needs further process of cooking to make it consumable; that as per their understanding, the products in question i.e. Flours Mix of different types that are in neither cooked nor ready to eat condition seems squarely eligible to be classified under Chapter Tariff Heading - 1106; that Chapter Tariff Heading 2106 is a residuary entry meaning thereby that it is a general entry which includes the products which do not fall anywhere else in any other Chapter Tariff Heading; that effective 2005, India has adopted 8 digit classification coding and the manner of determining classification has undergone complete change and common parlance test cannot be the sole test for determining classification of a product; that with respect to classification in Heading 2106, it is important to refer to Chapter Notes of Heading 21 wherein under clause 5 (b) it is stated that Heading 2106 includes preparations for use, either directl....
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....h either "Misthan" or "Mithai" or "Namkeen" or "Chabena" or "Bhujia"; that their products are not ready to eat products for human consumption and thus, heading 2106 90 99 even as general entry is not capable of including the products of the applicant and 1106 is the only entry and most specific entry where the products manufactured by the applicant would fall; that in GST regime, the Customs Tariff has become relevant for the purpose of determination of classification for any supply of goods wherever the rate schedule is aligned with Customs Tariff. From perusal of Customs Tariff Act, 1975 read with interpretation Rules & judicial precedent, we understand that the classification in Customs is driven by the ingredients used in the products. Predominant content in the product would help in determining appropriate classification; that in the case of Manilal Commodities Pvt. Ltd. Vs. Collector of Customs [1992-59-ELT-189-Tribunal], the Honourable Tribunal was of the view that the classification on the basis of predominant contents is generally accepted as proper test. Further, Honourable Allahabad High Court in the case of Commissioner of Customs, C.G.O. Vs. Sonam International [2012-2....
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....rinciple, the General Residuary Entry 2106 must be avoided and should make way for the entries 1102 and 1106 which are most beneficial to applicant; that in this regard, applicant gains strong support from the decision of Honourable Supreme Court in the case of Commissioner of Central Excise, Bhopal Vs. Minwool Rock Fibers Ltd. - 2012 (278) ELT 581 wherein Honourable Supreme Court has held that - In case of classification, entry which is beneficial to the assessee requires to be applied. 8.3 The applicant has concluded his submission by stating that considering the overall facts and circumstances of the case vis-à-vis the entries in question and the settled law on the subject, the applicant submits that MIX FLOURS of different varieties as stated above are eligible to be classified under the Tariff Heading No.1106 and thus attract GST at 2.5% CGST + 2.5% SGST i.e. 5% GST. Personal hearing: 9. Shri Nishant Shukla, C.A. appeared for the hearing in person on 30-6-21 and reiterated the contents of the application and the contents of submission dated 29-6-21. FINDINGS: 10. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and GGST Act, 2017 a....
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....) and comply with the criterion of passage through a standard sieve as required by paragraph (B) of that Note. Flours of this heading may be improved by the addition of very small quantities of mineral phosphates, anti-oxidants, emulsifiers, vitamins or prepared baking powders (self raising flour). The heading also covers 'swelling' (pregelatinised) flours which have been heattreated to pregelatinise the starch. They are used for making preparations of heading 19.01, bakery improvers or animal feeds or in certain industries such as the textile or paper industries or in metallurgy( for the preparation of foundry core binders). Flours which have been further processed or had other substances added with a view to their use as food preparations are excluded (generally heading 19.01). This heading also excludes flours mixed with cocoa (heading 18.06 if they contain 40% or more by weight of cocoa calculated on a totally defatted basis, or heading 19.01, if less). 14. In respect of Chapter Heading 1102, it has been mentioned in the Explanatory Notes of HSN that "Flours of this heading may be improved by the addition of very small quantities of mineral phosphates, anti-oxidants, emulsifie....
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....ive, without prejudice to any of the submissions above, the products of the applicant are equally eligible to be classified under Tariff heading 1106. Chapter Heading 1106 covers "Flour, Meal and Powder of the dried leguminous vegetables of Heading 0713, of sago or of roots or tubers of Heading 0714 or of the products of Chapter 8". Chapter Heading 1106 as per Customs Tariff: 1106 FLOUR, MEAL AND POWDER OF THE DRIED LEGUMINOUS VEGETABLES OF HEADING 0713, OF SAGO OR OF ROOTS OR TUBERS OF HEADING 0714 OR OF THE PRODUCTS OF CHAPTER 8: 1106 10 00- Of the dried leguminous vegetables of heading 0713 1106 20- Of sago or of roots or tubers of heading 0714: 1106 20 10--- Of sago 1106 20 20 --- Of manioc (cassava) 1106 20 90--- Of other roots and tubers 1106 30 - Of the products of Chapter 8: 1106 30 10--- Of tamarind 1106 30 20--- Of singoda 1106 30 30--- Mango flour 1106 30 90--- Other As per Rule 1 of the General Rules for the Interpretation of CTA, 1975, for legal purposes,Classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. Thus, the classification of the product is required to be determined in acco....
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.... covers Food Preparations not elsewhere specified or included. The Explanatory Notes of HSN for Chapter Heading 2106 provides as follows :- "Provided that they are not covered by any other heading of the Nomenclature, this heading covers : A) Preparations for use, either directly or after processing (such as cooking, dissolvingor boiling in water, milk, etc.), for human consumption. B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics(appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter 38). ......." 18.1 The subject 14 products of Mix Flour/ Instant Mix Flour are preparations for use, after processing, such as cooking, carrying out the detailed procedure for cooking as mentioned on the packets of all the said products, then ready for human consumption. The applicant submitted that the products are not 'in....
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....able under HSN 2106. The Central excise Tariff Heading 2106 was based on HSN and applies to subject matter. APPLICABLE RATE OF GOODS AND SERVICES TAX 21. The various Instant Mix/ Ready Mix Flour being supplied by the applicant classifiable under HSN 2106 and in precise subheading 2106 90. 21.1 Notification No. 1/2017-Central Tax (Rate) dated 28-6-17, as amended, entry at Sr. No. 23 of Schedule - III reads as follows - S.No. Chapter/ Heading/ Sub-heading/Tariff item Description of Goods 23. 2106 Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods] 21.2 Thus, 'Food preparations not elsewhere specified or included' falling under Chapter Heading 2106 are covered under the aforesaid Entry at Sr. No. 23 of Schedule- III of Notification No. 1/2017-Central Tax, as amended, attracting Goods and Services Tax @ 18% (CGST 9% + SGST 9%), though some of the specific products of Chapter Heading 2106 excluded from this entry are covered under different entries of Schedule-I or ....