TaxTMI 
TaxTMI 
2022 (9) TMI 255
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....as sought Advance Ruling on the following question "What would be the classification of 'Flavoured Milk' sold under trade name of Power Sip?" 4. The appellant has submitted that they are engaged in manufacture of goods like Ice Cream, ready to eat food and various milk products. Among other product, they are producing flavored milk under the trade name of "Power Sip". As per the appellant such flavoured milk merits classification under Heading 04029990 of the GST Tariff. The appellant submitted that the process of production of flavored milk is standardization of fresh milk according to the fat contents and heating at certain temperature followed by filtration, pasteurization and homogenization and then mixing of sugar and various flavors and finally bottling. 5. The appellant submitted that adding flavors to milk does not change essential character of milk. The product namely flavoured milk is milk only and is sold, purchased and consumed as milk in trade and amongst consumers. Therefore their product is classifiable under HSN Code 04029990 as the milk. The appellant relied upon the judgment of Punjab and Haryana High Court in case of Food Specialties Ltd V/s UOI [1....
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....led as follows:- "Ques. What would be the classification of 'Flavored Milk' sold under trade name of Power Sip? Ans: 'Flavoured Milk' is classifiable under Tariff Item 2202 99 30 of the First Schedule of the Customs Tariff' Act, 1975 as a 'beverage containing milk'." 7. Aggrieved by the aforesaid advance ruling, the appellant has filed the present appeal. 7.1 The appellant in the ground of appeal has submitted that the GAAR erred in overlooking the fact that the product in question was milk itself, and not a beverage containing milk or a beverage based on milk. The term 'milk' is defined under Note 1 to Chapter 4 and according to statutory definition of milk, flavored milk is milk and correctly classifiable under Chapter 4 of tariff. Flavored milk is even otherwise dairy produce which is most appropriately classifiable under chapter 4 which covers 'dairy produce' and therefore, classification of flavored milk under Chapter 22 is not correct which covers beverages other than milk as milk is specifically covered under Chapter 4. Further, Chapter Heading 22029030 covers 'beverages containing milk' means only those beverages that contains milk and not milk as su....
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....ed that PFA standards for milk are relevant for classification of milk under Central Excise Tariff. 7.6 The appellant submitted that GAAR erred in holding that product is a ready for consumption drink i.e. beverage with a basis of milk even after agreeing with the appellant's contention that the product in hand was milk. The products like milkis, swerve etc can be considered as beverages with a basis of milk or beverages containing milk. 7.7 The appellant submitted that milk is defined under Note 1 of Chapter 4 as full cream or partially or completely skimmed milk and the product in question is admittedly standardized milk which is classifiable under Heading 0402. Flavored milk is specifically covered under Para A.11.01.05 of the Prevention of Food Adulteration Rules which is relevant for classifying milk under Chapter 4 of tariff as held by Hon'ble Supreme Court. The appellant also submitted that Power Sip is known as milk in common parlance and the people selling, purchasing and consuming it identifies it as milk and not as beverages containing milk. 8. During the course of personal hearing held on 28.07.2022, the advocate for the appellant reiterated the submissions mad....
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.... solid forms, of a fat content, by weight not exceeding 1.5%: 0402 10 10 Skimmed Milk 0402 10 20 Milk food for babies 0402 10 90 Other -In powder, granules or other solid forms, of a fat content, by weight exceeding 1.5%: 0402 21 00 Not containing added sugar or other sweetening matter 0402 29 Other: 0402 29 10 Whole Milk 0402 29 20 Milk for babies 0402 29 90 Other Other: 0402 91 Not containing added sugar or other sweetening matter: 0402 91 10 Condensed milk 0402 91 90 Other 0402 99 Other: 0402 99 10 Whole milk 0402 99 20 Condensed milk 0402 99 90 Other Chapter Note 1 to Chapter 4 of the Customs Tariff Act, 1975 reads as under: 1. The expression "milk" means full cream milk or partially or completely skimmed milk. The relevant explanatory note of Customs Tariff Heading 0402 as per HSN is given below: This heading covers 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 (in blocks, powder of granules) and whether or n....
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.... it shall be ensured that the product remains homogeneous and no deposition of solids takes place on standing. In the present case, as per the product labels submitted by appellant, the Milk constituent is 'Double Toned Milk' which are not 'Full Cream Milk' or 'Skimmed Milk' as per above definitions and Chapter Note 1 explaining the scope of Heading 0402 and therefore are undoubtedly excluded from the purview of Tariff Heading 0402. Therefore, irrespective of the contentions that the product remains 'Milk' even with added flavours, it is clearly established that the 'Milk' referred to in this Tariff heading and the products of the appellant are not the same and on this ground alone the products in hand are not covered under Tariff Heading 0402. 13.2 Furthermore, the relevant explanatory notes of CTH 0402 of the HSN clearly state that beverages consisting of milk flavoured with cocoa or other substances is specifically excluded from this chapter heading. 14. The GAAR held that flavored milk is classifiable under CTH 2202 99 30. The relevant chapter notes, tariff entry and HSN Explanatory note is given below: CHAPTER 22 Beverages, spirits and vinegar 2202 - WATER....
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.... of milk but obtained after application of specific processes on the milk, as explained in Para 10. 16. The appellant submitted that GAAR erroneously classified flavoured milk under Chapter 22 which basically covers beverages other than milk, as milk is specifically covered under Chapter 4 of the tariff. This interpretation of appellant is not correct as 'beverage containing milk' is specifically covered under tariff item 2209 99 30 of Chapter 22. 17. The appellant submitted that GAAR erred in ignoring the judgments in cases of Mehsana District Cooperative Milk Producers Union Ltd and M/s Food Specialities Ltd on the basis that such judgments were with regard to classification of fully/partially skimmed milk/milk powder and that the judgments rendered under other act could not be considered for deciding classification under GST Tariff. The said contention of the appellant is not valid and legal. With regard to the judgment in case of Mehsana District Cooperative Milk Producers Union Ltd [2004 (167) ELT 456 (Tri.-Del.)], we find that this case was with regard to classification of skimmed milk powder under heading 0401.13 and with regard to judgment of Hon'ble Punjab & Haryana ....
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....erefore, it has to be classified under the Heading 0401.19 and not 0401.13 as claimed by the Revenue. In the impugned judgment, detailed reasons are given for rejecting the Revenue's contentions. Apart from referring to the fact that partially or completely skimmed milk are mentioned as separate products in the main heading itself, it has been pointed out with reference to ISI specification as well as Prevention of Food Adulteration Rules and the International Standard that 'partially skimmed milk powder' is different from 'skimmed milk powder' and is so recognised therein. Nothing is shown to us against this material to suggest that a different view is preferable for any reason. There is, thus, no ground to interfere in the appeals." The case does not have any relevance to the present case as the product and facts of the case are different. In the case of Gujarat Co-op. Milk Marketing Federation Ltd., the Hon'ble High Court at Allahabad had given decision in a VAT case interpreting the scope of exemption benefit given to Milk and Milk products under VAT laws applicable in the State of UP. The same is not relevant in the present case where classification is to be decided in term....