AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 511
X X X X Extracts X X X X
X X X X Extracts X X X X
....e would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT: 2.1 The present Advance Ruling application is filed by M/s Healthy Life Foodtech Pvt. Ltd., the Applicant, registered under MGST Act, 2017 with GST registration number 27AACCH5228A1Z1 with its principal place of business at 18/2, Samrat Mill Compound, Vikhroli (W), Mumbai 400079. BACKROUND OF THE APPLICANT 2.2 Applicant manufactures the impugned product namely GLAZE GELS and markets it to Bakeries all across India. BACKGROUND OF PRODUCT USAGE 2.3 Cake/ Pastry making involves stacking of slices of sponge cake in layers which are sandwiched with Creams mixed with fruits/ nuts/ crumbs/gems and/or pieces of "Sugar boiled confectionery" (SBC) to give it unique features. The typical taste & ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bination) and Preservatives (0.05) (salts of Benzoic and Sorbic acid). MANUFACTURING PROCESS 2.8 The said glaze gel is processed in a manner similar to Boiled Sugar Confectionery. Our typical process is illustrated here:- * Mixing Sucrose, Glucose, water, sorbitol in a steam jacket vessel. * Adding stabilizers, colors and flavours (or only flavours if desired) * Boiling * Adding preservatives and food acids * Filling in plastic pails. Properties of final cooled product:- a) Semisolid mass, which takes shape of the plastic Pail when cooled. b) Typical 'boiled sugar confectionery ' taste (of different flavours respectively) Varieties of flavour:- a) All fruit colours & flavours e.g. - Strawberry, Mango, berries & more such flavours b) All Nut colour and flavours, e.g. - Almond, Pistachio and more such nuts. c) All Mithai colours and flavours for e.g. - milk, khoya, and more such products d) All typical Indian colours and flavours such as khus, kewra and more such flavours e) Transparent/Neutral, plain (no colour & flavour of Lemons, vanilla as case may be) f) Any combination of above. All flavours above are synthetic and no fruits/nuts/milk p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion to answer specific questions. To be exhaustive and elaborate is not the mandate of any 'Foreword' and further it is an Introductory and indicatory writeup of an individual mind and it should not be constructed as collective wisdom of the committee which formulated the said standards' and nothing contained therein the "Foreword" is binding and only the Standards as enumerated therein in the main body of the booklet starting from page 1, which are legally binding, as far as the specifications are concerned to understand the contents of a product, for which the standards purports to specify. 2.14 Applicant further asserts that ISI standards do not specify any final moisture content in the finished product but merely lists 1] sugars & 2] water as essential ingredients, & if by adaptation of the said standard, if an allegedly new product, without prejudice, is generated and if such a resulting product, which conforms to the very specific ingredient requirement of the ISI 1008:2004 along with the specified processes as therein enumerated in the said standards, shall be deemed to qualify as the product enumerated in chapter heading 'SBC', which by itself is a tari....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ionery', but will put the same demand as under: '- 'Papa gets me an orange goli (col.)/orange peeper (col.) or orange candy but never the term 'orange SBC' will be used by laymen. The express problem is caused by the term SBC encompassing many embodiments and many spin off products, and the said sub categories of product is known but the main category i.e., SBC is not well known 2.21 GLAZE GEL is an industrial product; hence any Common Parlance Test is Repugnant to the context. GLAZE GEL is not used by the general public directly rendering the said test ineligible. Applicant submits that's 'SBC' are not words of everyday use. 2.22 Hon'ble Supreme Court, in the case of Commr. of CX v/s. Connaught Plaza Restaurant (P) Ltd (2012) has observed that Applicability of Common parlance Test may not be identical in all conditions:- Time and again, the principle of common parlance as the standard for interpreting terms in the taxing statutes, albeit subject to certain exceptions, where the statutory context runs to the contrary, has been reiterated. The application of the common parlance test is an extension of the general principle of interpretation....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be Popular and be in usage amongst the common/trade people. Applicant submits that general invoices of companies selling SBC products do not use the term SBC and use other trade terms but are still classified under chapter heading 'SBC' & Applicant reasserts that the term 'sugar boiled confectionery is unknown in Bakery trade. End Use/User Test: 2.28 The applicant submits that it is well settled in law that taxation statues do not distinguish tariff on the basis of end use/user of any Finished product. 2.29 In Pharm Aromatics v MCGM, in Bombay High Court, it was observed that: Another test, which is sometimes applied by the Courts is "user test". According to this test the use to which the goods can be put can also be considered in interpreting an item. However, this rule of interpretation has got its own limitations because certain goods may be put to certain uses by different persons. That, however, cannot entitle the revenue to apply different rates of tax to the sales of same goods by different persons depending upon the use to which they will be put by the purchasers. To apply this test, therefore, the deciding factor has to be predominant or ordinary purpose....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Without Prejudice to anything contained anywhere in this Application, Applicant submits that the impugned Product is nothing but 'SBC. B. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW 2.34 Applicant humbly submits that the impugned product, being a SBC with added moisture to impart pliability is nothing but 'SBC' as in the Chap. Hdng 'sugar boiled confectionery' of schedule II, Sr no. 32AA under MGST and taxable at 6% state tax. In support of this contention the applicant submits the following grounds as under.- [1] The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall apply to this interpretation by the Applicant. Without prejudice to the applicants' assertions and claims and beliefs, the following averments are made to arrive at the correct classification by Technical Approach. [2] Section 4 of Harmonized Commodity Description and Coding System of tariff Nomenclature comprises of chapters numbering 16 to 24 and these stated chapters comprises all of Food Products. Chapter 17 specifically ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pplicant submits that the entry chapter heading SUGAR CONFECTIONERY does not exclude products made from non -boiling process such as (examples below are not limited to only those enumerated below),- A] White Chocolate - Processed in a ball Mill B] Lozenges - Processed in tableting machine C] Printable Sugar sheets - Processed in Rollers (with heat or without) D] Colourful Sugar strands - Processed in Extruders (with or without heat), hence the aforesaid entry SUGAR CONFECTIONERY is General in nature compared to the entry BOILED SUGAR CONFECTIONERY which is specific and restrictive in nature as products made essentially from Sugars and their mixtures and which undergo a Boiling Process only can be classified as 'sugar boiled confectionery' [7] As per Rule 3A of GIR rules, where a SPECIFIC ENTRY SHOULD PREVAIL OVER GENERAL ENTRY, the applicant submits the impugned product GLAZE GELS should be classified under schedule II chapter heading 1704 which reads as "sugar boiled confectionery' and to interpret it in any other manner shall induce violence to the plain and unambiguous language of the said Rule. [8] Without prejudice to anything submitted by the applicant....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... [1973] 88 ITR 192 (SC) ; State of Bombay v. Automobile and Agricultural Industries Corporation [1961 ] 12 STC 122 (SC) and Commissioner of Incometax v. M.P. Jatia [1976] 105 ITR 179 (SC); (1976) 4 SCC 92 at page 96]." PRAYER In view of the facts of the case and submissions made it is humbly prayed that the hon'able authority kindly Declare GLAZE GEL to be classified under Entry 32AA of schedule II under the MGST Act 2017. 03. CONTENTION - AS PER THE CONCERNED OFFICER: Officers submission dated:-30.09.2022 3.1 The applicant submits that their product namely 'Glaze gels', also known by its various synonyms in Trade namely 'GeH', 'Coldgeli', 'Glaze' etc is made of various sugars (mainly sucrose & glucose), water, thickening agents, colours and flavours and it is submitted by Applicant that the same ingredients may also be used for making 'sugar boiled confectionery' (SBC). Applicant also submits that the process of manufacturing of their product 'glaze gels' is also similar to process of Manufacture of 'SBC' & hence pleads to classify their product as "SBC" under Chap Hdng 1704 sr.no 32AA in sch 2. 3.2 After Careful ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich are sandwiched with Creams mixed with fruits/ nuts/ crumbs/gems and/or pieces of sugar boiled confectionery for taste, colour and decorative purposes. According to the applicant, the impugned product manufactured by them is a format of 'Sugar Boiled Confectionery' since GLAZE GELS also employ the same ingredients, formulations and the same processes (i.e., 'BOILING') and also employs similar equipment's to manufacture as is done in the case of 'Sugar Boiled Confectionery'. Thus, according to the applicant, the impugned product has the ingredients, formulations, processes which are similar to ingredients/formulations / processes employed with what is traditionally classed as 'Sugar Boiled Confectionery' and therefore the subject product needs to be classified as 'Sugar Boiled Confectionery' falling under Chapter Heading 1704 and covered by Schedule II, Sr. No. 32AA, attracting 12% GST of Notification No. 01/2017 dated 28.06.2017 as amended from time to time pertaining to rate of GST on goods. 5.4.1 The jurisdictional officer has submitted that the impugned product, known by its various synonyms in Trade namely 'Geli', 'Col....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s will never ask for 'Orange sugar boiled confectionery', but will put the same demand asking for 'Orange goli/orange candy'. However, even though such lay persons may not know the product as 'Orange sugar boiled confectionery', fact will remain that an 'Orange Goli/Orange Candy' is nothing but an 'Orange sugar boiled confectionery', a vitreous product. From the copy of invoices submitted by the applicant, it is seen that the impugned products are mentioned as Glaze Gels even though the applicant is claiming the impugned product to be Sugar Boiled Confectionery. With these observations, applicant's opposition to use of common parlance test in their application is also disposed. 5.5.4 In view of the above, we find that the impugned product (which is semi solid in nature) is definitely a 'Sugar Confectionery' but cannot be termed as a 'Sugar Boiled Confectionery'. 5.6 Notes to Chapter No. 17.04 of the Tariff states that "This heading covers most of the sugar preparations which are marketed in a solid or semi-solid form, generally suitable for immediate consumption and collectively referred to as sweetmeats, confectionery o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that while Sugar Boiled Confectionery are directly sold to end ultimate end users for consumption, whereas the impugned product are not consumed by the end consumers, rather their product is used by cake manufacturers as a filling between sponge layers of cakes. 5.10 In view of the above discussion, we hold that the impugned product cannot be considered as a Sugar Boiled Confectionery and there fore the Sr. No. 32 AA (Schedule II) of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 is not applicable to the said product. Further, since we have already opined herein above that the impugned product is 'Sugar Confectionery" the said product falls under Sr. No. 12 of Schedule III of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 attracting GST rate of 18% . 5.11 The second question raised by the applicant is under which Chapter Heading should the impugned product fall. 5.11.1 The various sub headings of Chapter Heading 1704 are as under: 1704 10 10 - Chewing Gum, whether or not sugar coated 1704 90 - Other: 1704 90 10 --- Jelly Confectionery.... 1704 90 20 --- Boiled Sweets, whether or not filled.... 1704 90 30 --- Toffees, caramels and simil....