TaxTMI 
TaxTMI 
2024 (12) TMI 207
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...., Gujarat [hereinafter referred to as 'appellant'] against the Advance Ruling No. GUJ/GAAR/R/28/2021 dated 19.7.2021, passed by the Gujarat Authority for Advance Ruling [GAAR]. 3. The facts briefly are that the appellant is engaged in the business of manufacture and supply of the below mentioned fourteen instant mix flours viz Gota mix flour Dakor Gota mix flour Khaman mix flour Methi Gota mix flour Ildi mix flour Handvo mix flour Dalwada mix flour Rava Idli mix flour Dhokla mix flour Medu vada mix flour Dahiwada mix flour Upma mix flour Dosa mix flour Khichu mix flour which as per the applicant are not in 'ready to eat' but in 'ready to cook' form under their registered brand name. 4. Before the GAAR, the appellant submitted that the below mentioned process is undertaken for manufacturing & selling the above products, viz: (a) that they purchase food grains and pulses from open market. (b) that such pulses are sorted and washed and then sent to grinding machine. (c) that pulses are grinded into flour in grinding machine for eg where grams are purchased it results into gram flour by following grinding process. In certain c....
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....eaves, Coriander seed, Red chilli powder, Citric acid (E 330) , Sodium bicarbonate , Turmeric Powder, Black pepper, Bishop's weed seed, Asafoetida , Garam masala powder 10 Handavo Mix Flour Rice flour, Split Bengal gram flour, Split black gram flour, Wheat flour, Iodised salt, Sodium bicarbonate, Citric Acid (E 330), Red chilli powder, Turmeric powder Asafoetida 11 RavaIdli Mix flour Semolina, Vegetable oil, IodisedSalt, Split Bengal Gram, Cashew Nuts, Sodium bicarbonate Mustard Seeds , Curry Leaves, Citric Acid (E 330), Dried Ginger Powder 12 Meduvada Mix Flour Split Black Gram Flour, Refined Wheat Flour, Wheat Flour, Vegetable oil, Iodised Salt, Sodium bicarbonate, Citric Acid (E 330), Semolina, Rice Flour, Asafoetida 13 Upama Mix flour Semolina, Vegetable oil, Split Bengal gram, Split Black gram, Iodised salt , Mustard seeds dried ginger powder, Sugar, Green chilli , Curry leaves, Citric Acid (E 330) ,Asafoetida 14 Khichu Mix flour Rice Flour, Sago Flour, Iodised Salt, Cumin Seeds, Bishop Weed, Sodium Bicarbonate (E500), Red Chilly Powder, Coarse Fenugreek, Coarse Mustard, Asafoaetida 6. The percentage-wise break-up of the flou....
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.... flour, etc have been held to be flours under entry 12 in Schedule I to GVAT Act; that if there is no substantial change in schedule entries then classification & interpretation adopted needs to be followed; that they wish to rely on the judgement in the case of West Coast Waterbase P Ltd 2016 (95) VST 370 (Guj.); that they also wish to rely on the case of Samsung India Electronics P Ltd Judgement dated 28.3.2019 in SCA 6109/2019; * that the content of pulse flour is considerable & as per common parlance test said products are known as instant mix flour in the market; that the instant mix flour made from dried leguminous vegetable is eligible for classification under 1106; * that they also wish to rely on the decision of GAAR dated 30.7.2020; * that they wish to rely on the circular no. 80/54/2018-GST dated 31.12.2018, which is applicable to them; that the circular is binding in view of the judgement in the case of Dhiren Chemical Industries 2002 (149) ELT 3 SC; * flour sold to customers are ready to cook' form and not in 'ready to cat' form; * that when the product is eligible to be classified under specific entry [1106], general entry ....
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.....2018, [sattu] is not applicable since this is not a case of addition of small amounts of additives/spices; • that HSN 2106 also covers preparations for use after processing such as cooking. 12. Feeling aggrieved, the appellant is before us ie Gujarat Appellate Authority for Advance Ruling [GAAAR] raising the following averments viz • that the flour sold by them are in 'ready to cook' & not 'ready to eat' condition; that they are selling it in raw form which needs further process of cooking to make in consumable; • that the composition & ingredients contained in the flour reveal that it does not contain maize flour or wheat flour: • that flours of different varieties, other than cereal flour of wheat and maize, fall under HSN 1102 attracting 5% GST; • that flours of grains and pulses are major components and since grains and pulses fall under 0713, alternately, it would be eligible for classification under HSN 1106; • that mere nixing of flour with spices and condiments does not change its basic characteristic; that flour purchased from flour mills do not contain these spices & condiments & except for ....
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....therwise, in terms of the judgement of the Hon'ble Supreme Court, in the case of Minwool Rock Fibers Ltd 2012 (278) ELT 581 the entries most beneficial to the applicant are 1102 and 1106; that general entry 2106 must be avoided. In view of the aforementioned averments, the appellant stated that the fourteen products as listed in paragraph 3 supra would fall under the heading 1106 and should be charged to tax @ of 5% [2.5% CGST & 2.5 % SGST]. 13. Personal hearing in the matter was held on 26.09.2024 wherein Shri Nishant Shukla, Advocate appeared on behalf of the appellant. He reiterated the written submissions made in the appeal. 14. We have carefully gone through and considered the appeal filed by the appellant, their written submission, oral submissions made during the course of personal hearing and the impugned order. 15. The issue involved in this case is regarding proper classification and determination of rate of tax in respect of the fourteen items listed in paragraph 3 above. As is already mentioned supra, GAAR has held that the aforementioned products are to be classified under HSN 2106 90 (Others) attracting 18% GST (9% CGST and 9% SGST). 16. We find that th....
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....ion of passage through a standard sieve as required by paragraph (B) of that Note. Flours of this heading may be improved by the addition of very small quantities of mineral phosphates, anti-oxidants, emulsifiers, vitamins or prepared baking powders (self-raising flour). The heading also covers "swelling" (pregelatinised) flours which have been heat treated to pregelatinise the starch. They are used for making preparations of heading 19.01, bakery improvers or animal feeds or in certain industries such as the textile or paper industries or in metallurgy (for the preparation of foundry core binders). Flours which have been further processed or had other substances added with a view to their use as food preparations are excluded (generally beading 19.01). The heading also excludes flours mixed with cocoa (heading 18.06 if they contain 40% or more by weight of cocoa calculated on a totally defatted basis, or beading 19.01 if less). 11.06 Flour, meal and powder of the dried leguminous vegetables of heading 07.13, of sago or of roots or tubers of heading 07.14 or of the products of Chapter 8. 1106.10 - Of the dried leguminous vegetab....
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..... However, if substances (other than specified substances) are added to the flours with a view to use as 'food preparations', then the same gets excluded from the Chapter Heading 11.02. A glance at paragraph 6, supra, which mentions the percentage-wise break-up of the flours and other ingredients, depict that the various products supplied by the appellant, contain spices and other ingredients apart from flour of dried leguminous vegetables, rice and wheat, in different proportions. The spices and other ingredients contained in these products include sugar, semolina, iodised salt, sesame seed, red chili powder. garam masala, black pepper, coriander, sodium bicarbonate, garam masala, etc.. These spices and ingredients are other than those substances mentioned in the explanatory notes of HSN for Chapter Heading 1102 which could be added in very small quantities to improve or enrich the flours for the resultant product to still remain classified in those Chapter Headings. The proportion of spices and other ingredients contained in these products ranges from 5% to 37%, which is already mentioned in the table supra in paragraph 6. It is also evident from the recipe submitted by the appel....
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....- Mango flour 1106 30 90--- Other Now, as is evident, Chapter Heading 11.06 covers "Flour, Meal and Powder of the dried leguminous vegetables of Heading 0713, of sago or of roots or tubers of Heading 0714 or of the products of Chapter 8". As per Rule 1 of the General Rules for the Interpretation of Customs Tariff Act, 1975, for legal purposes, classification shall be determined according to the terms of the headings and any relative section of Chapter Notes. Thus, the classification of the product is required to be determined in accordance with the terms of the headings. As per Chapter Heading 1106, it covers Flour, Meal and Powder of the dried leguminous vegetables of Chapter Heading 07.13 and other specified products. As the products of the appellant contain spices and other ingredients in different proportions, which are not mentioned in the Chapter Heading 11.06 or the relevant explanatory notes of HSN, we find that the said products are not covered under Chapter Heading 11.06. 21. The appellant has further relied on Rule 3(b) of the General Rules of Interpretation [GRI], to aver that the product would fall under chapter heading 1102 or 1106. To substantiate this....
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....dated 31.12.2018 classifying "Sattu' is applicable to their products also. 23. To examine the claim of the appellant, the relevant portion of the circular relied upon is being reproduced for ease of reference viz CBIC circular No. 80/54/2018-GST dated 31.12.2018[relevant extracts] 3. Applicability of GST on Chhatua or Sattu: 3.1 Doubts have been raised regarding applicability of GST on Chhatua (Known as "Sattu" in Hindi Belt). 3.2 Chhatua or Sattu is a mixture of flour of ground pulses and cereals. HSN code 1106 includes the flour, meal and powder made from peas, beans or lentils (dried leguminous vegetables falling under 0713). Such flour improved by the addition of very small amounts of additives continues to be classified under HSN code 1106. 1: unbranded, it attracts Nil GST (S. No. 78 of notification No. 2/2017-Central Tax (Rate) dated 28.06.2017) and if branded and packed it attracts 5% GST (S. No. 59 of schedule I of notification No. 1/2017-Central Taxes (Rate) dated 28.06.2017). The CBIC has clarified in the aforesaid circular that the flour of ground pulses and cereals, improved by the addition of very small amounts of additives continues t....
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.... more specific heading in the Nomenclature. As is evident from the explanatory notes, it covers food preparations not elsewhere specified or included. Further of 21.06 covers the preparation for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.) for human consumption, and preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption, are classifiable under Chapter Heading 21.06 of the CTA, 1975. 26. The appellant has already stated that his 14 products of mix flour/instant mix flour are preparations consisting wholly of foodstuffs viz. flours of leguminous vegetables and cereals as well as spices and condiments, and these products are used in the making of food preparations for human consumption. It is a fact that these products are preparations for use, after processing, such as cooking, dissolving or boiling in water, milk, etc., for human consumption. Thus, we are of the view that all the aforementioned 14 products of Mix flour/Instant Mix flour are appropriately classifiable under chapter heading 2106, more so since they are not mentioned under any othe....