TaxTMI 
TaxTMI 
2022 (3) TMI 1083
X X X X Extracts X X X X
X X X X Extracts X X X X
....manufacturing process of Apple Cola Fizzy and Malt Cola Fizzy. Ingredients • Water • Sugar • Apple Juice Concentrate (1.9%) [Equivalent to 12.7% Apple Juice Reconstituted] • Carbon Dioxide (INS290) • Acidity Regulators [INS296, INS 331 9iii), INS 330] • Preservatives (INS211, INS224, INS202) • Antioxidant (INS300) • Natural Color (150d) • Added Flavour Manufacturing Process a) Drawing of water from bore well or any other source & then collecting it in food graded Storage tank. b) Then processes shall be undertaken for water treatment wherein water will be passed through pressure sand filter, activated carbon, micron cartridge filter (5 Micron), Reverse Osmosis system, chemical dozer System, ozonisation system & Ultra Violet sterilization system. Then the treated water will be collected in Stainless Steel storage tanks. c) The treated water will be transferred to blending tank for further processing. d) Double-refined sugar will be melted in the said tank with treated water. Melted sugar will be transferred through Stainless S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....40% (with cess) d. XotikJeeruJeera Beverage- 40% (with cess) 6. The applicant submitted that the difference in rate of tax charged by various other manufactures is quite huge. Charging of 40% rate of tax when competitors are charging 12% makes the product unsellable and whole margin get eaten up subsequently. That in the above background, the applicant is confused and wishes to seeks the classification of the goods which it proposes to manufacture. 7. The applicant has submitted that to determine the classification of 'Apple Cola Fizzy' and 'Malt Cola Fizzy, referred Chapter 22 "Beverages, spirits and vinegar" of the Customs Tariff and the Chapter heading which is relevant to the product is CTH 2202, reproduced as follows: 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 2202 10 - Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured : 2202 10 10--- Aerated waters 2202 10 20 --- Lemonade 2202 10 90 --....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Beverages' while Regulation 2.3.30 deals with 'Carbonated Fruit Beverages or Fruit Drinks'. 11. The relevant Regulations of FSSAI and the Food category under Appendix A are reproduced as follows: 2.3.10: Thermally Processed Fruit Beverages / Fruit Drink/ Ready to Serve Fruit Beverages 1. Thermally Processed Fruit Beverages / Fruit Drink/ Ready to Serve Fruit Beverages (Canned, Bottled, Flexible Pack And/ Or Aseptically Packed) means an unfermented but fermentable product which is prepared from juice or Pulp/Puree or concentrated juice or pulp of sound mature fruit. The substances that may be added to fruit juice or pulp are water, peel oil, fruit essences and flavours, salt, sugar, invert sugar, liquid glucose, milk and other ingredients appropriate to the product and processed by heat, in an appropriate manner, before or after being sealed in a container, so as to prevent spoilage. 2. The product may contain food additives permitted in these regulations including Appendix A. The product shall conform to the microbiological requirements given in Appendix B. The product shall meet the following requirements:- (i) Total Soluble solid (m/m) Not les....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssed Fruit Beverages/Fruit Drinks/Ready to Serve Fruit Beverages'. On the other hand, carbonated fruit beverages or fruit drinks may be prepared from carbonated water or by the process of carbonation, however thermal processing or processing by heat is not a trait of carbonated beverages. 14. The beverages of the applicant have the following characteristics: i It is made from apple juice concentrate. ii The fruit juice content and solids content percentage is more than 10%. iii It is thermally processed beverage. iv After the thermal processing, Carbon Dioxide is purged in the ready Fruit beverage for preservation to create an environment which will help to prevent spoilage during its shelf life. iv It will be mentioned on the label that it contains Apple Juice Concentrate. 15. The applicant on the basis of above submits that their product is a thermally processed fruit beverages/ready to serve fruit beverage complying with category 2.3.10 as per FSSAI Regulations, 2011 having carbon dioxide as an ingredient which is used for preservation purpose only. 16. Food Safety and Standards (Food Products Standards and Food Additives) Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upon the chemical examiner's report to submit that there are 13.7% by weight are soluble solids in the product. The respondent also relied upon the text to Prevention of Food Adulteration Rules, 1955 to submit that fruit beverage or fruit drink must contain total soluble solids not less than 10%. 6. The Revenue relied upon HSN Explanatory Notes of Chapter 22. We find that our tariff is not fully aligned with the HSN Explanatory Notes. In the HSN Explanatory [Notes] there are two sub-headings under Heading No. 2202 one is "water including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured" and second is in respect of others. Whereas Central Excise Tariff under sub-heading No. 2202 there are specific headings in respect of soya milk, drinks etc. As per the Central Excise Tariff, the waters; including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured are classifiable under subheading No. 2202.10. The drinks based on fruit juice are specifically classifiable under Item No. 2202 90 20 of the Tariff. In the present case, there is no dispute regarding the contents of the product. Revenu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther there was an entry in Notification No. 1/2017-Compensation Cess (Rate), dated 28-6-2017 which is as follows: S.No. Chapter/Heading/Sub-heading/Tariff Item Description of Goods Rate of Goods as Service tax compensation cess (1) (2) (3) (4) 2. 2202 10 10 Aerated Waters 12% 23. With effect from 01.10.2021, a new entry has been added in the Goods Tariff Notification under Schedule V having rate of tax as 28% and Cess Rate Notification vide Notification No. 8/2021-Central Tax (Rate) dated 30thSeptember, 2021, read as follows: 12B. 2202 Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice 28% SCHEDULE S.No. Chapter/Heading/Sub-heading/Tariff Item Description of Goods Rate of Goods as Service tax compensation cess (1) (2) (3) (4) 4B. 2202 Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice 12% 24. The applicant submits that on perusal of above it is evident that goods which merits classification under FSSAI Regulation No. 2.3.30 under point 1 or 3A i.e. Carbonated Fruit Beverage or Fruit Drink or Carbonated Beverage with fruit juice have been d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ruit pulp or fruit juice based drinks' falling under 2202 99 20 essentially means a drink based on fruit pulp or fruit juice which gives the overall/essential character to the drink. 29. The applicant submits that common parlance test can be applied to understand the classification of a product. In fact on principles for application of common and popular meaning of a product to determine the classification of a product, the Hon'ble Supreme Court in case of Commissioner v. Connaught Plaza Restaurant (P) Ltd. - 2012 (286) E.L.T. 321 (S.C.) has held that, Classification - Common parlance test - It is extension of general principle of interpretation of statutes for deciphering mind of law maker - It is attempt to discover intention of legislature from language used by it, keeping in mind, that language is at best imperfect instrument for expression of actual human thoughts - In absence of statutory definition in precise terms, it is construction of words, entries and items in taxing statutes in terms of their commercial or trade understanding, or according to their popular meaning - It operates on standard of average reasonable person who is not expected to be aware of tech....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ured by them is not classifiable under FSSAI Regulation No 2.3.30 under point 1 or 3A. Rather the given product as already explained is technically and commercially known as "Ready to Serve Fruit Beverage". It uses CO2 only for preservation purposes but does not includes the process of carbonation. Hence is classified under FASSAI Regulation No. 2.3.10 which includes Ready to Serve Fruit Beverage and does not include Carbonated Beverages. 35. The applicant has submitted that lastly it has already been held by the Hon'ble SC that beverages which merits classification under 2.3.10 under FSSAI regulations are classified under HSN Code 2202 99 20. Thus the product of the applicant which merits classification 2.3.10 and is not a carbonated beverage but rather is Fruit Juice based Drink and hence is taxable at Entry No 48 GST rates in Tariff Notification No. 01/2017- Central Tax (Rate) with rate of 12%. Question on which Advance Ruling sought 36. What should be the classification and applicable tax rate on the supply of Ready to Serve Fruit Beverage named as 'Apple Cola Fizzy' and 'Malt Cola Fizzy' made by the applicant under Notification No. 1/2017 - CT (Rate) dated 28.06.2017 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e shall follow the same in arriving at our pronouncement for Ruling in subject matter. 43. In the present case, we find that the applicant has cited classification of subject goods based on Food safety and standards regulations. 44. Now, the Legislature has empowered competent authority vide Section 168 CGST Act, 2017 with the power to issue Instruction or directions as per the GST scheme of law. As per CGST Act and rules framed thereunder, we do not find FSSAI empowered under GST scheme of law to issue directions/ instructions for GST Classification. We hold that the FSSAI has been created for laying down science based standards for articles of food and to regulate their manufacture, storage, distribution, sale and import to ensure availability of safe and wholesome food for human consumption (url: https://fssai.gov.in/cms/about-fssai.php#) ; and cannot be the factor for determination of the classification of goods under the GST scheme of law and procedure. The issue whether the regulation of other statute can be used for determination of the classification under the different statute, has been addressed by the H'ble Apex Court in the case of Commissioner of Central Excise, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... matter or flavoured", and sub-heading 2202 90 which covers "other". The Tariff Heading 2202 in the Customs Tariff Act, 1975 is reproduced herein below :- Tariff Item Description of goods Unit (1) (2) (3) 2202 Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured, and other nonalcoholic beverages, not including fruit or vegetable juices of Heading 2009 2202 10 - Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured : 220210 10 --- Aerated Waters 1 220220 10 --- Lemonade 1 220290 10 --- Other 1 - Other : 2202 00 91 -- Non-alcoholic beer 2202 99 -- Other : 2202 10 99 --- Soya milk drinks, whether or not sweetened or flavoured 1 2202 20 99 --- Fruit pulp or fruit juice based drinks 1 2202 30 99 --- Beverages containing milk 1 2202 90 99 --- Other 1 49. Now We refer to the Explanatory Notes of Harmonised System of Nomenclature (HSN) for Tariff Heading 2202, reproduced as follows: "22.02 WAT....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are of the opinion that the subject goods which consist of water, sugar, sweetener, apple juice concentrate, flavours, aerated with carbon dioxide gas and presented in airtight containers fulfil the criteria to merit consideration for classification at HSN 220210. 52. We hold that subject goods, as evidenced from the Table-I at para 51, are carbonated beverages with fruit juice. Further, we, also, do notice there is a Tariff item at 22029920 with the description 'fruit pulp or fruit juice based drinks'. Now we do observe that the subject goods having apple juice concentrate 1.9 % [Equivalent to 12.7% Apple Juice Reconstituted] appear to satisfy this description also and prima facie this heading 22029920 cannot be brushed aside as not applicable for subject goods. 53. We have considered the two competing Tariffs 220210 and 220299. We note that the issue of classification of Carbonated beverage with fruit juice and the applicable GST Rate has been dealt with by the Committee of Secretaries, Fitment Committee in the GST Regime. The observation of the Fitment Committee, which recommended for no change in the prevailing rates under Annexure-III of their recommendations placed for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l decision to be 220210 for carbonated beverages with fruit juice. Here we find it apt to reproduce the wordings of H'ble Delhi High Court, in the case of Manufacturers Traders Association vs UOI 2020 (43) G.S.T.L. 616 (Del.), at para 10: 'GST Council - Status of - This is a Constitutional body brought into existence by 101st Amendment and is chaired by the Union Minister for Finance with Finance Minister of all States as members - Rates of GST are jointly decided and recommendations made to Central and State Governments - It is highest deliberative forum to resolve issues arising out of the implementation of the GST and the Council embodies the spirit of Co-operative Federalism'. The H'ble Court further ruled that it cannot sit in appeal and postulate that the decision of the Council is not what they have unwaveringly held it to be. 57. In conspectus of aforementioned discussions and findings, we pass the Ruling, based on the following: i. The Explanatory Notes to HSN 220210 ii. The GST Council has approved the recommendation of said Fitment Committee, wherein carbonated beverages with fruit juice had been classified at HSN 220210. iii. We ab....