TaxTMI 
TaxTMI 
2021 (8) TMI 839
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....e packet of flour for the convenience 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 Ho....
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....ch mixed flour is packed in various packings. {v} Mixed flours of different varieties manufactured (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 ....
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....eed Seed, Coriander Seed Red, Chilli Powder, Black Pepper, Garam Masala Powder 5 Dalwada Mix Flour Split Green gram flour, Split black gram flour, Iodised salt, Sodium bicarbonate, 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 Gra....
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....in the ANNEXURE]. 5.5 The applicant further submits that content of pulse flour is considerable and as per the common parlance test, said products are known as instant mix flour in the market and taking into consideration the process of preparation of instant mix flour and proportion of 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 Moo....
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....tries under the VAT Act reference was made to the HSN codes of relevant products for determination of rate of tax. 7. The applicant submits that flour remains flour even after mixing it with some spices and condiments and the basic characteristics of flour does not change; that the customer purchases flour mixed with spices and condiments but it does not purchase a ready to eat product of the shelf; that the applicant could supply spices and condiments in separate sachets and could sell pure flour but for the ease and convenience of customer and to relieve the customer from going through the process of mixing of those spices and condiments with the flour, the applicant 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 s....
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....on the Revenue. 7.3 The applicant has submitted that the percentage ratio of the grains and pulses in the products shall make it clear that major contents of the products of the applicant are flours of grains and pulses; that this proportion is authentic as the same is drawn from the inhouse laboratory of the applicant and being in food industry, for hygiene as well as to maintain the standard and taste, the applicant is bound to carry out the test results first in laboratory and thereafter only the grains, pulses and other ingredients are moved forward for processing and mixing, hence there remains no doubt about the authenticity of the percentage ratio report. 7.4 The applicant submits that their 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 sq....
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....st India Pvt. Ltd. Vs. State of UP - 2008 (225) ELT 321 (SC) is that - If there is conflict between two entries one leading to an opinion that it comes within the purview of the tariff entry and another the residuary entry, the former should be preferred. 7.6 The applicant further submits that yet another principle of rule of interpretation and classification is noscitur a sociis which means that meaning of a word is to be judged by the company it keeps and applying the said principle while classifying the products of the present applicant, by no means it can be said that it is eligible to be classified under heading 2106 because by no stretch of imagination the products of the applicant can be equated with 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 s....
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....er two or more headings. According to the said rule, composite goods consisting of different materials or made up of different components which cannot be classified by reference to sub-rule (a) shall be classified as if they consisted of the material or components which gives them their essential character insofar as this criterion is applicable." 8.2 The applicant has stated that it is very well settled position of law that when the issue is of interpretation of entries and classification of a product, the entry most beneficial to the tax payer has to be preferred and in the present case of the applicant, the entries most beneficial to the applicant are 1102 and 1106 as the case may be and thus relying upon the said principle, 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 ....
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....EREAL FLOURS OTHER THAN THAT OF WHEAT OR MESLIN 1102 20 00 -- Maize (corn) flour 1102 90 - Other : 1102 90 10 - - - Rye flour 1102 90 90 - - - Other Explanatory notes to HSN in respect of Heading1102 reads as under: 11.02 Cereal flours other than of wheat or meslin. This heading covers flours (i.e. the pulverised products obtained by milling the cereals of chapter 10) other than flours of wheat or meslin. Products of the milling of rye, barley, oats, maize (corn) (including whole cobs ground with or without their husks) grain sorghum, rice or buckwheat are classified in this heading as flours if they fulfil the requirements as to starch content and ash content set out in paragraph (A) of Chapter Note 2(see General Explanatory Note) 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 pregela....
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....s is 37% in Gota Instant mix flour, 37% in DakorGota Instant mix flour, 25% in MethiGota Instant mix flour, 25% in Khaman Instant mix flour, 8% in Dhokla Instant mix flour, 6% in Idli Instant mix flour , 11% in RavaIdli Instant mix flour, 5% in Dosa Instant mix flour, 17% in Upma Instant mix flour, 6% in Dahiwada Instant mix flour, 8% in Dalwada Instant mix flour, 14% in Menduvada Instant mix flour, 9% in Handvo Instant mix flour and 6% in Khichu Instant mix flour. It is also evident from the recipe submitted by the applicant that the Spices and other ingredients have been added to the flours with a view to their use as food preparations. As such, in view of the Explanatory Notes of the HSN, these products are excluded from the Chapter Heading 1102. 16. The applicant submits that in the alternative, 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: ....
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.... has referred to CBIC Circular No. 80/54/2018-GST dated 31-2-18, which has inter-alia clarified the applicability of GST on 'Chhatua or Sattu'. The CBIC has clarified in the aforesaid Circular that the flour of ground pulses and cereals, improved by the addition of very small amounts of additives continues to be classified under HSN Code 1106. On examination of the percentage breakup of the subject products and the composition of the products, we find that this is not the case of addition of very small amounts of additives in subject products. We hold that the subject Circular is not applicable in present case as the said products are different from Sattu and have spices and ingredients in varying proportions as cited by the applicant and are in the nature of instant mix. Therefore, as per our findings, we are not inclined to admit CTH 1106 for said products 18. We note that HSN 2106 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....
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.... Chapter or heading or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition No. 28 2106 Texturised Vegetable Proteins (Soya bari), and instant food mixes such as Pongal mix, Vadai mix, Pacoda mix, Payasam mix, Gulab jamun mix, Rava Dosa mix, Idli mix, dosai mix, Murruku mix, and Kesari mix. 8% - 20. Though the issue involved in that case was regarding admissibility of Sl. No. 28 of Notification No. 3/2006-Central Excise to the Instant Food Mixes (Gota Mix, Khaman Mix, Dal Wada Mix etc.), the fact that in the said Sl. No. 28, the description of goods mentioned against Chapter Heading 2106 included Instant Food Mixes such as Pongal mix, Vadai mix, Pacoda mix, Payasam mix, Gulab Jamun mix, Rava Dosa mix, Idli mix, Dosa mix, Murruku mix, and Kesari mix, supports our view that various Instant Food Mixes (Instant Mix / Ready Mix Flour) being supplied by the applicant are classifiable 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....