TaxTMI 
TaxTMI 
2022 (3) TMI 1045
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....r certain provisions. Accordingly, a reference hereinafter to the provisions of the CGST Act, Rules and the notifications issued there under shall include a reference to the corresponding provisions of the KSGST Act, Rules and the notifications issued there under 3. Brief facts of the case: 3.1. The appellant is engaged in business as a supplier of goods such as Jackfruit Chips, Banana Chips (salted and masala), and Sharkaraivaratty. The appellant make supply of these items without brand name. Jack Fruit chips are made by frying the fruit in edible oil. Potato and Topioca Chips are also made by frying in edible oil. Salt is applied at the stage of frying. These will be sold as salted chips. If the chips are applied with masala after frying, it becomes masala chips. Banana Chips are made by slicing banana to thin round pieces and fried in edible oil. Salt and turmeric powder are also applied. In case of masala chips, appropriate type of masala is added. Sharkaraivaratty is made by frying, in edible oil, thick pieces of banana slices. Thereafter, they are mixed thoroughly in dense syrup of jaggery and thereafter in powder of dried ginger (chukku) and cardamom. As banana chips (....
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...., the Hon'ble Advance Ruling Authority of Kerala vide Order No. KER/113/2021 dated 25.05.2021 held that all the products involved in the application are not classifiable under heading 2106.90 as claimed by the appellant but are classifiable under heading 2008.19 of Customs Tariff and TAXABLE UNDER Entry Sl. No. 40 of schedule II to Notification No. 1/2017-CT (rate) dated 28.06.2017 and leviable to GST @12% (6%-CGST +6% SGST). 4. Grounds of Appeal: Being aggrieved of the advance ruling order, the appellant has filed the instant appeal seeking setting aside of the said rulings on the fallowing grounds: 4.1. The Order of Learned Authority for Advance Ruling, Kerala, in so far as it is prejudicial to the appellant, is opposed to facts and law of the case. Learned Authority for Advance Ruling failed to consider the facts and legal aspects stated in the application for advance ruling. 4.2. Supplementary Note No. 6 in Chapter 21 of Customs Tariff Act says "Tariff item 2106.90.99 includes sweetmeats commonly known as "Misthans" or "Mithai" or called by any other name. They also include products Commonly known as "Namkeens", "mixtures", "Bhujia", "Chabena" or called by any othe....
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....y other Chapter like Chapter 20 does not arise. Similarly, Sharkaraivaratty and Halwa are sweetmeats by application of common parlance test and Supplementary Note No. 6 of Chapter 21, as is evident from the words "commonly known as "Misthans" or "Mithai" or called by any other name. They also include products commonly known as "Namkeens", "mixtures", "Bhujia", "Chabena" or called by any other name. Such products remain classified in these sub-headings irrespective of the nature of their ingredients". Therefore, Sharkkaraivaratty and Halwa, made with jaggery as sweetener, are also sweetmeats, Neither the Customs Tariff Act nor the GST laws lay down that sweetmeats should be prepared only with sugar as the sweetener. Jaggery is a commonly used sweetener. This submission is fortified by supplementary Note 6 in Chapter 21 as well as the press release dated 29/09/2017 of CBIC containing an FAQ relating to GST Rates. Hence, the question of including Sharkkaraivaratty and Halwa under HSN 2008 does not arise. Relevant portion of FAQ is extracted below:- "What is the HS Code and GST rate on chena products, halwa, barfi (i.e. khoya product), laddu? Products like halwa, barf....
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....tables like tomato, soya etc., as can be seen from 2103.20.00 (tomato ketchup other tomato sauces). Therefore a product made out of fruit or vegetable need not necessarily fall under Chapter 20 if they are included under any other chapter by specific inclusion. 4.10. On the basis of above, the appellant prayed that this Appellate Authority for Advance Ruling may hold that sharkkaraivaratty, halwa, chips made of banana (salted, masala or made from raw or ripe banana), jackfruit, tapioca, chembu, potato and kovakkai and pavakkai vattal are classifiable under HSN 2106.90.99 and liable for tax under Entries 101 and 101 A of Schedule I of Notification No. 1/ 2017 - Central Tax (Rate), Dated 28-6-2017 4.11. In addition to above submissions, the appellant also submitted the following in their favour: • Supplementary Note No.5 (b) of Chapter 21 of Customs Tariff Act states that Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter alia, includes preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption. Supplementary Note No. 6 of Chapter 21 of Customs Tariff Act....
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....n common parlance, FOOD SAFTY AND STANDARDS (FOOD PRODUCTS STANDARDS AND FOOD ADDITIVES) REGULATIONS, 2011 by CSTAT, it is prayed that this Honourable Kerala Appellate Authority for Advance Ruling may kindly classify the products under HSN 2106.90.99 and Entry 101 A/ 101 of Schedule I of Central Tax (Rate) Notification 1 of 2017. 5. PERSONAL HEARING: The appellant was afforded an opportunity of personal hearing via virtual media on 02/11/2021. The authorized representative of the appellant CA Shri. C. Sheshadrinadhan appeared before the authority and reiterated the contentions raised in the appeal memorandum. They also submitted additional submission in their favour for consideration. which was also taken on record. 6. DISCUSSION & FINDINGS 6.1. We have carefully gone through the facts of the case, the order issued by the Authority for Advance ruling vide order no: KER 113/2021 dated 26/05/2021, the appeal memorandum filed by the appellant and other submissions made by them during the course of personal hearing and other evidences on record. The issue to be determined is the classification and rate of tax of Jackfruit Chips, Banana Chips, Tapoica Chips, Potato Chips, Ch....
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....in HSN 2106.90.99 and hence cannot be classified under any other Chapter. 6.4. The appellant has also referred to Supplementary Note No. 6 of chapter 21 in their favour, which provides as under: "Tariff item 2106.90.99 includes sweet meat commonly known as "Misthans" or "Mithai" or called by any other name. They also include products commonly known as "Namkeens", "mixtures", "Bhujia", "Chabena" or called by any other name. Such products remain classified in these sub-headings irrespective of the nature of their ingredient". The appellant has submitted that Supplementary Note No. 6 in Chapter 21 makes HSN 2106.90.99 a specific entry. So, chips made from banana (ripe as wen as raw), tapioca, jack fruit, potato and chembu and kovakka and pavakka vattal, ought to have been held as NAMKEENS and liable for tax under Entry No. 101 A of Central Tax (Rate) Notification No. 1/ 2017 dated 27/06/2017. So, the question of including them under any other Chapter like Chapter 20 does not arise. Similarly, Sharkaraivaratty and Halwa are sweetmeats by application of common parlance test and Supplementary Note No. 6 of Chapter 21, as is evident from the words "commonly known as "Mistha....
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....hich are not elsewhere specified in the customs tariff. Those food preparations not specified or included elsewhere in the tariff being preparations for use either directly or after processing for human consumption are to be classified under this heading 2106. Further the heading 2106 specifically excludes the preparations made from fruit, nuts or other edible parts of plants of heading 20.08, provided that the essential character of the preparations is given by such fruit, nuts or other edible parts of plants. Therefore, it is evident that the entry 2106.90 is a residuary entry in respect of edible preparations and hence the edible preparations shall be classified under this entry only if the same are not classifiable under any of the other specific entries for edible preparations. Therefore, we need to examine if these products are not elsewhere covered or specified in the customs tariff. 6.6. The rival entries of Tariff which have been relied upon by the Advance Ruling authority are chapter 20 (which covers Preparations of vegetables, fruit, nuts or other parts of plants) and heading 2008, the relevant contents of which are reproduced below: 20.08 - Fruit, nuts and o....
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....ot peeled or with the stones or pips removed) crushed and sterilised, whether or not containing added water or sugar syrup but in a proportion insufficient to render them ready for direct consumption as beverages. When rendered ready for direct consumption as beverages by addition of a sufficient quantity of water or of sugar syrup, these products fall in heading 22.02. (6) Cooked fruit. However, fruit cooked by steaming or boiling in water and frozen remains in heading 08.11. (7) Stems, roots and other edible parts of plants (e.g., ginger, angelica, yams, sweet potatoes, hop shoots, vine leaves, palm hearts) conserved in syrup or otherwise prepared or preserved. (8) Tamaring pods in sugar syrup. (9) Fruit, nuts, fruit-peel and other edible parts of plants (other than vegetables), preserved by sugar and put up in syrup (e.g., marrons glaces or ginger), whatever the packing. (10) Fruit preserved by osmotic dehydration. The expression "osmotic dehydration" refers to a process whereby pieces of fruit are subjects to prolonged soaking in a concentrated sugar syrup to that much of the water and the natural sugar of the fruit is replaced by su....
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....0. The processes specified in chapter, 7, 8 or 11 are freezing, steaming, boiling, drying, provisionally preserving and milling. Chapter heading 2008 covers roasted, salted or roasted nuts and fruits such as ground nuts, cashew nuts, other seeds and nuts and these are specifically covered under said heading vide sl. No. 40 of schedule II to notification No. 1/2017-CT (rate). Hence there remains no doubt that the roasted/salted/roasted and salted ground nuts, cashew nuts and other seeds/nuts shall be appropriately classifiable under heading 2008 of customs tariff. Even otherwise also, heading 2106.90 being a residuary heading shall not stand against a specific heading 2008 as per Rules of interpretation of the tariff. 6.10. Regarding other items under dispute viz. banana chips, tapioca chips, potato chips, jackfruit chips and sharkara varatty, the manufacturing process applied by the appellant in making these items is not in dispute. These chips are made by slicing, frying, adding salt or masala or jaggery syrup before packing and supply. It is not the case of the appellant that the essential characteristics of the fruits or vegetables are getting changed by applying the processe....
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....s may be, apply to the interpretation of above table." 6.12. In view of the above legal provisions, the rules for interpretation of the First Schedule to the Customs Tariff Act, 1975 including the Section and Chapter Notes and the General Explanatory Notes are squarely applicable for interpretation of the GST Tariff/ Rate Schedule. Hence, the contention of the appellant in this regard is baseless and is accordingly rejected. The General Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975 are as follows: "Rule 1: The titles of Sections, Chapters and sub chapters are provided for case of references only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section of Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions; Rule 2: (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfurnished, provided that, as presented, the incomplete or unfurnished articles has the essential character of the complete or finished article. It shall also be taken to include a r....
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....ods consisting wholly or partly of such material or substance....according to which the chips of jackfruit, potato, banana or tapioca gets also appropriately classifiable under heading 2008 along with specifically covered goods viz. Roasted and salted nuts under examination (which is covered by Rule 3(a) of the said rules for interpretation). Further, chapter 21 covers Miscellaneous edible preparations, whereas chapter 20 specifically covers Preparations of vegetables, fruits, nuts or other parts of plants. Hence, when there is a specific entry providing for the most specific description in the heading 2008 to the impugned products over the residuary heading description of heading 2106.90, the said impugned goods is held appropriately classifiable under heading 2008, by virtue of rule 3(a) of the rules for interpretation. In view of clear provisions in GST laws for interpretation of tariff, the contention of the appellant regarding common parlance understanding of a goods does not hold water, as is therefore rejected. 6.14. The case laws pointed out by the appellant are not applicable in the current case due to following reasons. The Hon'ble High court of Kerala in case of P Bas....
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....e test' or the 'Commercial usage test' is the most common. Whether a particular article will fall within a particular Tariff heading or not has to be decided on the basis of the tangible material or evidence to determine how such an article is understood in 'common parlance' or in 'commercial world' or in 'trade circle' or in its popular sense meaning. It is they who are concerned with it and it is the sense in which they understand it that constitutes the definitive index of the legislative intention, when the statute was enacted. • However, there cannot be a static parameter for the correct classification of a commodity. The process of manufacture of a product and the end use to which it is put, cannot necessarily be determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the broad description of the article fits in with the expression used in the Tariff. • Moreover, the functional utility and predominant or primary usage of the commodity which is being classified must be taken into account, apart from the understanding in common parlance. ....
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....fied or included; such as Ground-nuts, Cashew nut, roasted, salted or roasted and salted, Other roasted nuts and seeds, squash of Mango, Lemon, Orange, Pineapple or other fruits. On a plain reading of the above entry, it is evident that all the products that fall under Chapter Heading 2008 of the Customs Tariff Act, 1975 attract GST at the rate of 12 % [6% CGST + 6% SGST]. In view of the observations as above, the following orders are issued; ORDER 1. Whether Jackfruit Chips, Banana Chips (salted and masala varieties) made out of both raw as well as ripe banana and sold without BRAND NAME are classifiable as NAMKEENS and are covered by HSN Code 2106.90.99 and taxable under Entry 101A of Schedule of Central Tax (Rate) Notification No. 1 of 2017? No. The Jackfruit Chips and Banana Chips are classifiable under Customs Tariff Heading 2008.19.40 and liable to GST at the rate of 12% [6% - CGST + 6% - SGST] as per Entry at Sl No. No. 40 of Schedule II of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017. 2. Whether the Sharkara Varatty sold without BRAND NAME is classifiable as SWEET MEATS and covered by HSN Code 2106.90.99 and taxable under Entry 101A of Sched....