TaxTMI 
TaxTMI 
2023 (6) TMI 1182
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....C 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 Law. 3. Contentions of the applicant: - The appli....
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....ire 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 Cereal Starch content Ash content Rate of passage through a sieve with an aperture of 315 micrometres (microns) 500 micrometres (microns) ....
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....o 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 per Kg 1. Zinc-Zinc Oxide 30mg 2. Vitamin A- Retinyl Palmitate 1500 µg RE 3. Thiamine (Vitamin Bl)- Thiamine hydrochloride, Thiamine mononitrate; 3.5 µg 4. Riboflavin (Vitamin B2)- Riboflavin, Riboflavin 5' phosphate sodium; 4mg 5. Niacin-Nicotinamide, Nicotinic acid; 42mg 6. Py....
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....rtified 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-CT(R) dated 28.06.2017: S.No. Chapter / Heading / Subheading / Tariff item Description of Goods (1) (2) (3) 75 1103 Cereal groats, meal and pellets other than pre-packaged and labeled 3.22 That, pellets of blended fortified rice flour which are commonly known as Fortified Rice Kernels (FRK) falling under Chapter Heading 1103 are subject to GST as under:- * taxable at the rate of 5% GST under Entry Number 56 of Schedule I of Notification No. 1/2017-CT(R) dated 28.06.2017, if pre-....
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.... 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 TOTAL 3678.60807mg 0.00367860807 KG iv. From the above parameters of the test report, it is much clear that quantity of vitamins and minerals is very nominal i.e.0.37%. v. Rice flour with added minerals and vitamins in very small quantities is a product from milling of Rice classifiable under Chapter Heading 1102. vi. In the compilation submitted during the course of personal hearing on 16.12.2022, we have submitted following technical documents and all these documents provide the flow of production process of FRK: vii. SOP for FRK Production - issued by Food Safety and Standards Authority of India [FSSAI]-....
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....sis, 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 the applicant and the law as applicable in the present case. 6. Section 96 of CGST Act, 2017, Authority for advance ruling, stipulates as under: - Subject to the provisions of this Chapter, for the purposes of this Act, the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory. Section 97(2) of CGST Act, 2017 stipulates that: - The question, on which the advance ruling is sought under this Act, shall be in respect of,- (a) classification of any goods or services or both; (b) applicability ....
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....f 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 analyzing the CTH 1102 there is no doubt that Rice Flour added with Minerals and vitamins are the product from milling of Rice classifiable under Chapter 11 and further 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 and accordingly 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. In support of their above view, they have also cited reference to Chapter Note 2(A) of Chapter 11 of Custom Tariff Act and further, Chapter Note 2(B) of Custom Tariff Act as also explanatory No....
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....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, 1975 (51 of 1975) and further that 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, so far as may be, apply to the interpretation of this notification. Therefore, it is implied by virtue of above explanation that the classification of goods has to be done in accordance with Customs Tariff Act 1975. However, once the heading/tariff item is arrived at, the rate of GST would be governed by above notification. 9.4 In the aforesaid context, chapter Notes to Chapter 11 of Customs Tariff Act reads as under: - CHAPTER 11 Products of the milling industry; malt; starches; inulin; wheat gluten Notes: 1. This Chapter does not cover: (a) roasted malt put....
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....ding 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 completely coated with chocolate or other food preparations containing cocoa of heading 1806 (heading 1806). 4. For the purposes of heading 1904, the expression "otherwise prepared" means prepared or processed to an extent beyond that provided for in the headings of, or Notes to, Chapter 10 or 11. 9.6 Now on a harmonious reading of Chapter 11 vis-a-vis Chapter 19 of Customs Tariff supra, it can be seen that Chapter 11 deals with products of milling industry and further that chapter Note 2 (A) of Chapter 11 stipulates regarding the products from the milling of the cereals i.e., products obtained consequent upon being subjected only and only to the process of milling of cereals, which obviously as per the admission of the applicant themselves in their application, is not the case here in as much as post milling, rice is further subjected to the process of conversion of rice into rice flour followed by Blending of rice flour and Vitamins-Minerals premix and thereaft....
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....hat 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 Kernels (FRK) and thereby to arrive at the applicate rate of GST on the same, we would also like to cite reference to the Agenda for 45th GST Council meeting held on 17th September 2021 (volume 2) wherein at Agenda item 14 relating to issues recommended by the Fitment committee for the consideration of GST council, point no. 5 regarding proposals as contained in para 4 and placed before the GST council for consideration at Sno. 21 read as under: - Annexure-l Recommendations made by the Fitment Committee for making changes in GST rates or for issuance of clarification in relations to goods S.No Description/HSN Present GST rate Requested GST rate Comments 1. 2. ................... 21. Fortified Rice Kernel (Premix) (1904) 18% Rate reduction 1. Fortified rice kernel (premix) is produced at substantive value addition over normal rice. Fortified Rice Kernel (FRK) is a reconstituted rice grain made from rice flo....