TaxTMI 
TaxTMI 
2023 (6) TMI 1182
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.... M/s Brindavan Agrotech Private Limited DSC Unit no. 318 Second Floor DLF South court building, Saket South Delhi, New Delhi 110017 having user ID 222200000100ART has furnished an application in form ARA-01 under section 97 of the Chhattisgarh Goods & Services Tax Act, 2017 seeking advance ruling regarding HSN classification of the "Fortified Rice Kernels(FRK)" and the rate of tax applicable on its supply under GST Law. 2. Facts of the case: - 2.1. M/s Brindavan Agrotech Private Limited (hereinafter referred to as the M/s Brindavan Agrotech Private Limited (hereinafter referred to as the "applicant"), a Company having its principal place of business at DSC Unit No-318, Second Floor, DLF South Court Building, Saket, South Delhi, 110017. 2.2 The applicant is planning to start a unit at Chhattisgarh for manufacturing and sale of product namely pellets of blended fortified rice flour which is also commonly known as "Fortified Rice Kernels(FRK)" in the common trade parlance (hereinafter referred as "product"/ "FRK") and accordingly the applicant wants to seek advance ruling on HSN classification of the said product and the rate of tax applicable on its supply under GST La....
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....apter under the above provisions shall be classified in heading 1101 or 1102 if it passes 80% or more through a woven metal wire cloth sieve with the aperture of 315 microns. Otherwise, they fall in heading 1103 or 1104. 3.8. That, Chapter Note 2 of Custom Tariff Act is extracted as under for ease of reference:- 2(A) Products from the milling of the cereals listed in the table below fall in this Chapter if they have, by weight on the dry product: (a) a starch content (determined by the modified Ewers polarimetric method) exceeding that indicated in column (2): and (b) an ash content (after deduction of any added minerals) not exceeding that indicated in column (3). Otherwise, they fall in heading 2302. However, germ of cereals, whole, rolled, flaked or ground, is always classified in heading 1104. (B) Products falling in this Chapter under the above provisions shall be classified in heading 1101 or 1102 if the percentage passing through a woven metal wire cloth sieve with the aperture indicated in column (4) or (5) is not less, by weight, than that shown against the cereal concerned. Otherwise, they fall in heading 1103 or 1104 Cer....
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....hate, anti-oxidants, emulsifiers, or prepared baking powder (self-raising flour). The heading also covers... [Emphasis Supplied] 3.12 That, as discussed in the facts, raw material (rice) is converted into rice flour. Thereafter, a mixture of vitamins and minerals has to be added to the rice flour as per the FSSAI guidelines. Food Safety and Standard (Fortification of Foods) Regulations, 2017 issued by FSSAI provides for the following ratio of Vitamin and Minerals which are to be added in a quantity of 1 kg of Rice: Standards for Fortification of rice Rice when fortified, shall contain added iron, folic acid, and Vitamin B-12 at the level given in the table below S.No Nutrient Level of fortification per kg 1. Iron- (a) Ferric pyrophosphate (b) Sodium Iron (III) Ethylene diamine tetra Acetate, Trihydrate (Sodium Ferrate - Na Fe EDTA); 20mg 2. Folic acid- Folic acid; 1300 µg 3. Vitamin-B12 cyanocobalamin, hydroxocobalamin; 10 µg In addition, rice may also be fortified with following micronutrients, singly or in combination, at the level given in the table below: S.No Nutrient Level of Fortification ....
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.... 3.18 That, the applicant submits that the extruder machine used for converting Rice flour (added with vitamins and minerals) into FRK agglomerates rice flour by compression technique and converts it into FRK. In such technique, only 0.5 % or less binder is used for converting Rice into FRK. 3.19 That, in light of the above detailed discussion, the applicant is of the view that the pellets of blended Fortified Rice Flour which are also commonly known as 'Fortified Rice Kernel (FRK)' fall under Chapter Heading 1103 of Customs Tariff Act. 3.20 That, the relevant tax rate entry for products falling under Chapter Heading 1103 in Notification No. 01 /2017-CT(R) dated 28.06.201 7 reads as below: Number 56 of Schedule I of Notification No. 1 /2017-CT(R) dated 28.06.2017: S.No. Chapter / Heading / Subheading / Tariff item Description of Goods (1) (2) (3) 56 1103 Cereal groats, meal and pellets, including suji and dalia, pre-packaged and labeled 3.21 That, the relevant exemption entry for products falling under Chapter Heading 1103 in Notification No. 02/2017-CT(R) dated 28.06.2017 reads as below: Entry Number 75 of Notification No. 2/2017-C....
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....the test report of Rice Flour issued by an authorized laboratory, the chemical parameters of the Rice Flour are measured and it is found that Starch content is 80,48% and Ash Content is 0.51%. Further, in a Sieve test the Lab has found that 99.91 % Rice Flour passes through a woven metal wire cloth sieve with the aperture of 315 microns. Thus, the parameters as provided in Chapter Heading 1102 are met in the present case. ii. That the quantity of vitamins and minerals which are to be added in Rice flour to prepare FRK as per FSSAI Regulations is very small. iii. That as per the test report of Pellets of Fortified Rice ["FRK"] issued by an authorized laboratory the chemical parameters of Pellets of Fortified Rice ["FRK"] have been measured and it is found that it contains following mentioned quantities of Vitamins and Minerals: S.No Nutrient Quantity in per kg of FRK Conversion in MG [Milligram] Conversion in KG 1. Iron (Ferric pyrophosphate) 3667.27mg (milligram) 3667.27mg 2. Vitamin B9 (Folic Acid) 11225.50pg (micro gram) 11.2255mg 3. Vitamin B12 112.57pg (micro gram) 0.11257mg TO....
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....d that they are planning to have a manufacturing unit of the said FRK at Chhattisgarh. Accordingly, it was his opinion that the pellets of blended Fortified rice flour which are also commonly known as Fortified rice kernel (FRK) fall under chapter heading 1103 of Customs Tariff Act and taxable at the rate of 5% GST under entry no. 56 of Schedule I of Notification No. 1/2017-CT(Rate) dated 28.6.2017, if prepackaged and labeled or exempted under entry no. 75 of Notification No. 2/2017-CT(Rate) dated 28.6.2017, if not pre-packaged and labelled. He reiterated the contention in the matter as made in their ARA-01 and requested for a ruling in the matter. 5. The legal position, analysis, and discussion: - At the very outset, we would like to make it clear that the provisions for implementing the CGST Act and the Chhattisgarh GST Act, 2017 [hereinafter referred to as "the CGST Act and the CGGST Act"] are similar and thus, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the CGGST Act, 2017. Now we sequentially proceed to discuss the issues involved in the ruling so sought by th....
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....rits. 8. Now we proceed to decide the issues raised by the applicant on merits. The issues covered in the instant case in hand is regarding classification and applicability of GST on the said Fortified Rice Kernels (FRK) which the applicant intends to manufacture and supply at Chhattisgarh. In this context, the applicant in their writeup has submitted that the process to fortify rice consists of three main steps: - Conversion of rice into rice flour,- i. Blending of rice flour and Vitamins-Minerals premix ii. Extrusion of mixture in shape of rice to form pellets of blended fortified rice flour having the same composition as of rice with addition of Vitamins-Minerals premix. and further that, the product is purchased and mixed with millet/traditional rice in ratio of 1:100 for further distribution/usage by the Government Agencies/Organizations under various Schemes of Central & State Government. 9. We further find from the detailed submissions put forth by the applicant, that they are of the firm opinion that their product viz. FRK fall under chapter 1103 of the Customs Tariff Act. In arriving at their above view, it has been their submission that after....
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....lso referred to as "Harmonised System of Nomenclature" or HSN. The rules of Interpretation of Customs Tariff are also stipulated. The rules of interpretation, section notes and chapter notes as specified under Customs Tariff Act 1975 are also applicable for classification of Goods under GST regime. 9.3 The Central government on recommendation of GST council has notified the rate of applicable tax payable on goods vide notification no. 01/2017 - CT (Rate) / Integrated tax (rate) dated 28/06/2017. It may be noted that notifications regarding central tax (CGST) are issued by central government and notification regarding state tax (SGST) issued by respective state government have identical provisions. The said notifications are subject to amendments from time to time by the government. The schedules in notifications issued have reference to chapter, heading, sub heading and tariff items. Explanation at the end of above notification no. 01/2017 - CT (Rate) dated 28/06/2017 inter alia provides that "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, subheading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 197....
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....reads as under: - CHAPTER 19 Preparations of cereals, flour, starch or milk; pastrycooks' products NOTES: 1. This Chapter does not cover : (a) except in the case of stuffed products of heading 1902, food preparations containing more than 20% by weight of sausage, meat, meat offal, blood, fish or crustaceans, molluscs or other aquatic invertebrates, or any combination thereof (Chapter 16): (b) biscuits or other articles made from flour or from starch, specially prepared for use in animal feeding (heading 2309); or (c) medicaments or other products of Chapter 30. 2. For the purposes of heading 1901: (a) the term "groats" means cereal groats of Chapter 11; (b) the terms "flour" and "meal" means : (1) cereal flour and meal of Chapter 11, and (2) flour, meal and powder of vegetable origin of any Chapter, other than flour, meal or powder of dried vegetables (heading 0712), of potatoes (heading 1105) or of dried leguminous vegetables (heading 1106). 3. Heading 1904 does not cover preparations containing more than 6% by weight of cocoa calculated on a totally defatted basis or compl....
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....etails of which are as under:- CHAPTER 19 Preparations of cereals, flour, starch or milk; pastrycooks' products Tariff item Description of goods 1904 PREPARED FOODS OBTAINED BY THE SWELLING OR ROASTING OF CEREALS OR CEREAL PRODUCTS (FOR EXAMPLE, CORN FLAKES); CEREALS [OTHER THAN MAIZE (CORN)] IN GRAIN FORM OR IN THE FORM OF FLAKES OR OTHER WORKED GRAINS (EXCEPT FLOUR, GROATS AND MEAL), PRE-COOKED OR OTHERWISE PREPARED, NOT ELSEWHERE SPECIFIED OR INCLUDED 1904 10 - Prepared foods obtained by the swelling or roasting of cereals or cereal products: 19041010 --- Corn flakes 19041020 --- Paws, Mudi and the like 1904 10 30 --- Bulgur wheat 1904 10 90 --- Other 1904 20 00 - Prepared foods obtained from unroasted cereal flakes or from mixtures of unroasted cereal flakes and roasted cereal flakes or swelled cereals 1904 30 00 - Bulgur wheat 1904 90 00 - Other 9.8 Now in view of the above discussion, there remains no ambiguity as regards the fact that the impugned goods are nothing but preparations of rice flour. At this juncture, for ascertainment of the correct classification of impugned good viz. Fortified Rice Kerne....
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....f the Notification, by citing the chapter of the goods as Chapter 19 or 21. This important decision at the highest policy making forum of GST also leads us to the inevitable conclusion that Fortified Rice Kernels merits classification under chapter heading 1904. Hence, the classification of impugned goods, claimed by the applicant under Chapter Heading 1103 of Customs Tariff Act is not sustainable under law, meriting rejection. S.No. Chapter Heading /Subheading/ Tariff item Description of Goods (1) (2) (3) 1. ------ ------------- 2. ------ ------------- 3. ------ ------------- ....... ....... ....... 15. 1904 [other than 1904 10 20] All goods i.e. Corn flakes, bulgar wheat, prepared foods obtained from cereal flakes [other than Puffed rice, commonly known as Muri, flattened or beaten rice, commonly known as Chira, parched rice, commonly known as khoi, parched paddy or rice coated with sugar or gur, commonly known as Murki] ....... ....... ....... Schedule IV- 14% Schedule V - 1.5% Schedule VI-0.125% 10.2 Thus, from the above it gets abundantly clear that the applicable rate of G....