TaxTMI 
TaxTMI 
2022 (9) TMI 841
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....t 2017. The applicant launched a non-alcoholic malt drink called 'Kingfisher Radler', in 2018, classified the said product under tariff heading 2209 9100, as non-alcoholic beer. 3. In view of the above, the applicant has sought advance ruling in respect of the following question: Whether the non-alcoholic malt drink "Kingfisher Radler' is covered as "Carbonated beverages of fruit drink or carbonated beverages with fruit juice" of chapter heading 2202, under Entry 12B of Notification No.1/2017 dated 28.06.2017 (as introduced by Notification No.8/2011-Central Tax (Rate) dated 30.09.2021). 3 (b) Admissibility of the Application : The applicant is seeking advance ruling in respect of classification their product "Kingfisher Radler." The advance ruling on the question "classification of any goods or services or both" can be sought by the applicant under Section 97 (2) (a) of the CGST Act 2017. Hence the instant application is admissible in terms of Section 97(2)(a) of the CGST Act 2017. 4. BRIEF FACTS OF THE CASE: The applicant furnished the following facts relevant to the issue having bearing on the question raised. 4.1 Applicant launched non-alcoholic malts on a comm....
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....ed fruit-based beverages. The product is minimally carbonated to add effervescence and freshness to the drink and contains additives to regulate acidity and preserve the drink. A distinction between the product and carbonated beverage of fruit juice is tabulated below: Particulars Product Carbonated beverage HSN 2202 91 00 2202 Classification Non-alcoholic beer Carbonated beverage with fruit juice Ingredients Barely Malt, Invert sugar, Mixed fruit juice, flavours, hops and other additives Sugar, Apple Juice, flavour and other additives Calories (per 100 ml) 38 Kcal 54 Kcal Sugar (per 100m1) 9.3 gms 13.6 gmgs The Ingredients used in the product are tabulated hereunder: Sl.No. Ingredients Ginger Lime (in%) Lemon (in %) Mint lime (in %) 1 Barley malt 4.03 2.94 2.77 2 Sugar 9 10.10 9.50 3 Mixed fruit juice (Equivalent reconstituted juice concentrate) 0.05 1.11 1.05 4 Hops 0.01 0.01 0.01 5 Quillaia Extract 0.04 0.02 0.02 6 Carbon Dioxide 0.52 0.52 0.52 7 Water 86.14 85.29 86.12 8 Flavour and other additives Minimal Quantity Minimal Quantity Minimal Quantity The product is manufactured in a brewery and....
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....s at rates as may be notified. The CGST rates are notified under Notification No. 1/2017 - Central Tax (rate) dated 28th June 2017 and SGST rates are notified under corresponding State Notification (jointly referred as 'the GST rate Notification'). In respect of certain specified goods, Notification No. 1/2017-Compensation cess (rate) dated 28.06.2017 provides the applicable rate of Compensation cess. 5.2 Principles for interpretation of the tariff : The GST rate Notification(s) are based on the first Schedule to the Customs Tariff Act (CTA). As per Explanation (iv) to the GST rate Notifications, the rules of interpretation and the Section and Chapter Notes of the Schedule to the CTA are applicable for interpretation of the GST rate Notifications. Given this, judicial pronouncements on classification of goods under Customs and Excise laws, and HSN explanatory notes" are relevant guides for determining classification under the GST rate Notifications. 5.3 Non-alcoholic malts have a separate and distinct classification under the Tariff viz. 2202 91 00 (non-alcoholic beer) carrying GST rate of 18% : a. Non-alcoholic malts / beer has a separate and distinct classification En....
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.... was held that while interpreting items in taxing statutes whose primary object was to raise revenue and for which purpose to classify diverse products, resort shall be made to their popular meaning, that is to say, the meaning attached to them by those dealing in them. b. It is submitted that the product is marketed and understood in common trade parlance as 'non-alcoholie beer' and on this basis alone it deserves to be classified under Tariff item 2202 91 00. Therefore, the product cannot be said to be covered under the amendment Notification as 'Carbonated beverages of fruit drink or carbonated beverages with fruit juice'. c. It is submitted that the product is understood in common trade parlance and marketed as 'non-alcoholic beer' and is widely available in retail stores as well as e-commerce platforms such as: alcoholic beer' on the web browser shows results of wide range of malt-based beverages (including the product) available in varied fruit as well as non-fruit flavours. Result of such search on a web browser is captured at Exhibit 'C'. d. On a perusal of the results shown by the web browser for non-alcoholic beer which includes t....
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....ated fruit drink' will show results for products like Appy Fizz, Shunya Go, Shunya Fizz, Frusia, etc. These searches will not show results of the product at hand. Few links showing these results is given below and search results of the same is captured at Exhibit 'D'. d. The description of goods covered by the amendment Notifications under Chapter Heading 2202 'Carbonated beverages of Fruit Drink or Carbonated beverages with fruit juice' is in line with the classification adopted by the Food Safety and Standards Authority of India (the FSSAI'), which is the regulator for the Food sector. The Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 (the FSS Regulations') set out the categorisation of foods for prescribing Standards and permitted ingredients and additives. Regulation 2.3.30 of the FSS Regulations, which deals with the FSSAI classification entry for 'Carbonated Fruit Beverages or Fruit Drinks', is extracted below: "2.3.30 carbonated Fruit Beverages or Fruit Drinks: 1. Carbonated Fruit Beverages or Fruit Drink means any beverage or drink which is purported to be prepared from fruit juice and wate....
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....eer. Further, the product is characteristically different from the commonly available "Carbonated beverages with fruit juice". b. In common parlance, the Product is not understood or sold as carbonated beverage with fruit juice. The manufacturing process of carbonated beverages with fruit juice commences with blending sugar syrup with fruit juice, flavours and other ingredients whereas in case of the product, the manufacturing process is similar to that of brewing beer where firstly the malt is extracted and processed at various stages to obtain wort and thereafter sugar, flavour and other ingredients are blended for taste and preservation purposes. This is not the manner in which the product is manufactured - detailed process set out at Para 4.3 supra. c. Further, Regulation 2.3.40 of the FSS Regulations, which deals with the category of 'Fruit Based Beverage Mix/powdered fruit Based beverage', prescribes that in such beverage(s) the fruit juice content when reconstituted by dilution should not be less than 5% (in case of lemon) and 10% (in case of other fruits). As submitted above, the fruit juice content in the Product, even reconstituted is lower than the prescribed....
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....sent case, the product contains maximum 1.1 1% of fruit juice (reconstituted juice is also a maximum of 4.3%) which is less than the prescribed criteria (minimum of 5% in case of lime and lemon and 10% in other case of fruit pulp or juice). Therefore, the product cannot be classified as carbonated fruit beverage / fruit drink. 5.6 2202 91 00 is specific entry chargeable to 18% and will not be covered under general entry a. On the basis of common law principles, the product merits classification under an entry which is most akin to its description rather than a generic entry. This principle is enunciated in the General Rules for the Interpretation of Import Tariff ('GRI') as well. The GRI governs the classification of goods under the Customs Tariff, and as per settled law, the relevant rules of the interpretation are to be applied for classification of goods for GST purposes as well. As per Rule 3(a) of GRI, when goods are prima-facie covered under two or more headings, classification shall be affected such that a specific entry will prevail over a general entry. b. Chapter heading 2202 covers Waters, including mineral waters and aerated waters containing added sugar or oth....
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....s, it appears that the amendment Notifications seeks to cover beverages falling under tariff item 2202 99 20 even if they are carbonated and does not seek to cover novel products like malt-based beverage or non-alcoholic beer which has small quantities of fruit juice only for the purpose of flavouring. g. The purpose of the amendment Notifications appears to tax carbonated and sweetened beverages. However, the product in question is not a sweetened carbonated beverage but rather a malt / grain-based beverage containing much less sugar (32 Calories in 100m1) as compared to typical sweetened carbonated beverages (containing 63 calories in 100m1). This alone distinguishes the product from other sweetened / fruit-based carbonated beverages that are being classified under the amendment Notifications and, hence, deserves to be classified as a malt beverage / non-alcoholic beer. h. Therefore, in common parlance and as per the FSSAI (which is the sector regulator,) the product is a non-alcoholic beer, a beverage made from malt rather than a carbonated beverages of fruit drink or carbonated beverages with fruit juice and is not covered under the amendment Notifications. 6. The Joint Co....
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....application seeking advance ruling with regard to classification of their product "Kingfisher Radler", manufactured & made available in three flavours i.e. Ginger lime, Mint lime and Lemon. The applicant submitted that the said product is a non-alcoholic malt beverage, an agri based product, containing barley malt, lesser sugar, manufactured out of natural ingredients such as barley, hops etc., along with antioxidants and preservatives. Further since the barley malt has a peculiar bitter taste sugar and juice compounds in small quantities are added to make it suitable for the Indian palate. 11. The applicant furnished the details of ingredients used in the product & contends that their product merits classification under tariff heading 2202 9100, as non-alcoholic beer, as it is akin to a beer without alcohol and also replicates the ingredients, taste, feel and packing of beer. Further, they endeavour to substantiate their contention on the basis of the following grounds: a) Heading 2202 is divided into two sub-groups and the impugned product is covered under non-alcoholic beverage, not including fruit or vegetable juices of heading 2009 and thereby merits classification as non-a....
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.... be preferred in terms of well settled law. The Hon'ble Supreme Court in the case of CCE Vs Minwood Rock Fibres Ltd., [2012 (278) ELT 581 (SC)] held that in case there are two competitive entries for classification of a product, the heading most beneficial to the assesse is to be adopted. 12. The applicant further, vide their letter dated 22.08.2022, received in this office on 23.08.2022, furnished additional written submissions, without prejudice to their earlier submissions, pursuant to release of agenda and minutes of 45th GST council meeting inter alia stating as under: a) The amendment notifications bearing No.8/2021-CT(Rate) and No.1/2021-CC(Rate) both dated 30.09.2021, issued on the recommendations of 45th GST Council meeting, increased the GST rate to 28% and Compensation Cess levied at 12% with effect from 01.10.2021, on the following goods. "Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice, under tariff heading 2202" b) The amendment notifications seek to cover only goods falling under subheading 2202 10. The product at hand (Kingfisher Radler) is a non-alcoholic malt based substitute for beer, which is specifically covered under SI.....
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....cified that "for the purposes of heading 2202, the term 'non-alcoholic beverages' means beverages of an alcoholic strength by volume not exceeding 0.5% vol." Further Explanatory Notes to Chapter Heading 2202 specify that the said heading covers non-alcoholic beverages. This heading consists of three groups (A,B &C) and the group (B) i.e. "non-alcoholic" beer" includes the following. a) Beer made from malt, the alcoholic strength of which by volume has been reduced to 0.5% vol or less b) Ginger beer and herb beer, having an alcoholic strength by volume not exceeding 0.5% vol. c) Mixtures of beer and non-alcoholic beverages (e.g., lemonade), having an alcoholic strength by volume not exceeding 0.5% vol It could be inferred from the above that 'non-alcoholic beer' is basically a beer having certain alcoholic strength which is reduced to 0.5% vol or less. It is an admitted fact in the instant case that the impugned product does not contain any alcoholic strength by volume, as it is not fermented and hence the question of reducing the said strength does not arise. Hence the impugned product is neither a beer initially nor it's alcoholic strength is reduced to ....
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....zy Lemon Malt Added Mint & Lime Flavours Water, Invert Sugar, Barley Malt (2.77%), Mixed Fruit Juice (4%), Carbon Dioxide (INS 290), Quillia Extract (INS 999) HOPS & Antioxidant (INS 300) Equivalent mixed fruit juice content is 4.2% as per the report It is observed from the aforesaid labels that all the variants have been marked as "Carbonated Non-alcoholic Drink" and not as "non alcoholic beer", as claimed by the applicant. In view of this, the contention of the applicant that the product is marketed and understood in common trade parlance as 'non-alcoholic beer' and on this basis alone it deserves to be classified under tariff item 2201 91 00 is not acceptable. 17. At this juncture we invite reference to the General Interpretation Rules, specifically Rule 2(b), for classification of the product/s, which is given below: Rule 2(b) : Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or sub....