TaxTMI 
TaxTMI 
2022 (12) TMI 511
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....the impugned product GLAZE GEL is to be classified. At the outset, we 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 ....
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....o 02%), Food Acids (0.5% to 01%) (citric, acetic, tartaric, lactic, malic). (Singly or in combination) 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, ....
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.... ingredients and clause 3.3] forms a list of exhaustive optional ingredients or allied ingredients. 2.13 Applicant states that anything contained in "Foreword" of the document ISI 1008:2004 is general in nature and by way of General introduction and is not an exhaustive list of products but is a mere Illustration, and needs specific elaboration 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 ne....
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....ere, Applicant submits that Common parlance test shall be of no benefit at arriving at the correct classification of the impugned product, as the term 'SBC' is a barely known term in the citizenry of India . A sample of a group of lay persons including children will never ask a question as under:- '- 'Papa gets me an Orange sugar boiled confectionery', 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 Com....
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....ognizance of SBC is necessary among the tradespeople otherwise the said trade test will be rendered ineligible. Further, SBC is not a name of any particular products but a category of products and is a coined word by Techno/ scientific people, which the Taxation statutes have borrowed from technical journals. 2.27 To undergo a Common /Trade parlance test, it is incumbent of the Tariff Heading to 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. Howe....
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....hich arises "from the linguistic implication by which words having literally a wide meaning (when taken in isolation) are treated as reduced in scope by the verbal context." It may be regarded as an instance of ellipsis, or reliance on implication. This principle is presumed to apply unless there is some contrary indication (See Glanville Williams, 'The Origins and Logical Implications of the Ejusdem Generis Rule' 7 Conv (NS) 119). 2.33 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 ....
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....ar confectionery [other than mishri, batasha, bura, sakar, khadi sakar, harda, sakariya, gatta, kuliya, elaichidana, lukumdana, chikkis like puffed rice chikki, peanut chikki, sesame chikki, til chikki, til patti, til revdi, sugar makhana, groundnut sweets, gajak and sugar boiled confectionery] [5] Applicant submits that SUGAR CONFECTIONERY is a general Heading and SUGAR BOILED CONFECTIONERY is a specific heading. The Applicant submits that SUGAR BOILED CONFECTIONERY is a part of broader category of SUGAR CONFECTIONERY. [6] The Applicant 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 m....
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....ns: 1990 79 STC 51 Gauhati by referring to various judicial decision further held that benefit should be given to the consumer wherein two views are possible for classification of goods. It is also by now well-settled that if two views are possible regarding classification of certain goods the benefit must go to the tax payer. If a taxpayer seeks advantage, which was not intended by the legislature, but to which he was entitled on a construction of the statute he must be given that advantage [See Atkinson v. Good lass Wall and Lead Industries Ltd. [1950] 31 TC 447 (HL) at page 472; Commissioner of Income-tax v. Vegetable Products Ltd. [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 ....
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....ply in response to the reply filed by the Jurisdiction officer and case be finalized on the basis of final hearing. We heard both the sides. 05. OBSERVATIONSAND FINDINGS: 5.1 We have understood the facts of the matter, perused the documents on record and submissions, both oral and written made by the applicant. 5.2 We observe that, Applicant, a GST registered person in Maharashtra, manufactures & sells GLAZE GELS to various bakeries across India. The issue before this Authority is one of classification of the said product i.e GLAZE GELS under the GST Tariff. 5.3 The applicant has stated that 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 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....
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....the impugned product is not a vitreous mass, rather it is a semi solid mass which, as per the applicant's submissions, takes the shape of the pail in which it is poured. This semi solid property is what helps the impugned product to be used in cakes as a filling between the sponge layers of a cake. 5.5.3 Also, it is seen that 'Sugar Boiled Confectionery' is bought and consumed by end users, whereas the impugned products are sold only to bakeries/cake manufacturers. As per the submissions of the applicant, the impugned products are not meant for consumption by the end users directly but are used in the process of cake making only. The applicant has correctly stated that lay persons 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 menti....
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.... contention of the applicant that since their product has ingredients, formulations, processes which are similar (not same) to ingredients/formulations/processes employed with what is traditionally classed as 'Sugar Boiled Confectionery (SBC)', so also the impugned product be also treated as SBC. Accordingly, the applicant points out to the fact that the impugned product is similar to Sugar Boiled Confectionery even though the product is semi solid in nature and should therefore be treated as SBC. We do not agree with this view of the applicant because the applicant have themselves stated that the impugned product is in a semi solid form and not in vitreous form as Sugar Boiled Confectionery. Further we also find 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 ....