TaxTMI 
TaxTMI 
2026 (9) TMI 1006
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....nd alkalizing compound that provides crispness, puffing, and extended shelf life to papad and similar food products; that the product contains no artificial additives, preservatives, or harmful chemicals and is consumed as part of traditional Indian cuisine. 3. The applicant has further submitted that they have been classifying Papad Khar under HSN Code 2836 (Food Additives/Preparations) with 18% GST rate, however, based on the applicant's detailed product analysis and technical opinion, Papad Khar should be correctly classified under either: HSN Code 2501 (Common Salts - Natural/Rock Salt) @ 5% GST, OR HSN Code 2102 (Prepared Food Additives/Condiments) @ 5% GST. The applicant seeks advance ruling on the correct classification and applicable GST rate, which would result in significant reduction from the currently applied 18% rate. 4. The applicant has submitted that they specifically contest the current HSN 2836 classification @ 18% GST and seeks binding clarification that the product should be taxed at 5% (not 18%) under the correct HSN code. The applicant has submitted the complete manufacturing process (stage-wise) for papad khar production, from initial preparation throug....
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....NaCl) 70% Flavor enhancement, preservation Potassium Carbonate (K2CO3) 0-10% Regional variations Moisture <2% --- B. Physical Specifications: Parameter Specifications Appearance White crystalline powder Particle size 100-200 mesh Bulk density 0.8 - 1.2 g/cm3 pH (1% solution) 8.3 - 9.5 (Strongly alkaline) Solubility Freely soluble in water Purity 98% minimum (Food grade) 5. They are seeking Advance Ruling on the following questions: a) Whether Papad Khar should be classified under HSN Code 2501 (Common Salts) @ 5% GST based on its alkaline salt composition and food application; OR b) Whether Papad Khar should be classified under HSN Code 2102 (Prepared Food Additives/Condiments) @ 5% GST based on its nature as a food processing ingredient; OR c) Whether Papad Khar qualifies for GST exemption under: Notification No. 2/2017-Central Tax (Rate), Entry 96 (Papad and related food items); OR Entry 23 (Unpacked food items and basic food ingredients); OR Any other applicable exemption notification; d) If the product is incorrectly classified under HSN 2836@ 18% GST, what is the corr....
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.... occurring or manufactured alkaline salt (sodium sesquicarbonate or potassium carbonate compound), hence falls within HSN Chapter 25 (Salt; Sulphur; Earths and Stone; Plastering Materials, Lime and Cement). HSN 2501 covers "Common Salts (Rock Salt, Sea Salt, Refined Salt)" at 5% GST. This is the primary and correct classification based on product composition. • If considered as a prepared food additive rather than raw salt, HSN 2102 (Prepared Food Additives/Condiments/Seasoning Preparations) applies. HSN 2102 specifically covers food preparation ingredients and condiments at 5% GST. This classification is also more appropriate than HSN 2836. • HSN 2836 is intended for chemical explosives and pyrotechnic materials. Papad Khar has no explosive properties and is not regulated under explosives legislation. Using this classification creates cascading 18% GST on a basic food ingredient. No reasonable interpretation of HSN 2836 includes food additives or edible salts. • The current 18% GST rate (HSN 2836) on Papad Khar is significantly higher than the correct rate of 5% (HSN 2501/2102), creating excessive tax burden on papad manufacturers. Input Tax ....
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....r papad khar production, from initial preparation through final packaging as detailed in para-4 above. 11. Further, the applicant has submitted that multiple Advance Rulings (including Gujarat AAR/AAAR decisions) have confirmed that papad, irrespective of shape, size, or form, is exempt from GST and following the principle established in GST jurisprudence, papad khar, which is an essential ingredient in its manufacture, should logically qualify for similar treatment and be exempted; that Notification No. 02/2017-CT (Entry 23) provides exemption for cereals and millets (unpacked), pulses (unpacked), spices (unpacked), oil seeds & essential food ingredients and papad khar, when supplied in unpacked or basic form for food preparation, qualifies as an essential food ingredient similar to spices and condiments, which are traditionally exempt; that HSN 2836 (Explosives/Pyrotechnics) is wholly inappropriate for a food ingredient which creates cascading burden on entire papad manufacturing ecosystem by increasing papad production cost by 15-20%. The applicant has further submitted that alternative correct classification is either: (i) HSN 2501 (5% GST) as it is a naturally occu....
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....alt (including iodised salt) 2501 00 20 --- Rock salt 2501 00 90 --- Other HSN NOTES TO HEADING 2501: 25.01 - Salt (including table salt and denatured salt) and pure sodium chloride, whether or not in aqueous solution or containing added anti-caking or free-flowing agents; sea water. This heading relates to sodium chloride, commonly known as salt. Salt is used for culinary purposes (cooking salt, table salt), but it also has many other uses and, if necessary, may be denatured to render it unfit for human consumption. The heading includes: (A) Salt which is extracted from underground: either by conventional mining (rock salt), or by solution mining (water is injected under pressure into a layer of salt and returns to the surface as saturated brine). (B) Evaporated salt: solar salt (sea salt) is obtained by evaporation of sea water by the sun; refined salt is obtained by evaporation of saturated brine. (C) Sea water, brine and other saline solutions. The heading also covers: (1) Salt (e.g., table salt) which has been slightly iodised, phosphated, etc., or treated so that it will remain ....
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.... yeasts of this heading may be in the active or inactive state. Active yeasts generally provoke fermentation. They consist essentially of certain micro-organisms (almost exclusively of the genus Saccharomyces), which multiply during alcoholic fermentation. Yeasts may also be produced by partial or total prevention of felmentation, according to the aeration process. The active yeasts include: (1) Brewery yeast. This forms in beer fermentation vats. It is presented as a yellowish-brown paste or solid generally with the bitter flavour of hops and the odour of beer. (2) Distillery yeast. This is produced during the fermentation, of, e.g., grain, potatoes or fruit, in distilleries. It is a firm cream- coloured paste varying in odour according to the product used in the distillation. (3) Bakers' yeast, produced by the propagation under special conditions of specially cultured strains of yeast in a carbohydrate medium such as molasses. It is generally marketed in the form of pressed yellowish-grey cakes (pressed yeast) which sometimes have an alcoholic odour. It is, however, also marketed in the dried form (usually in grains) or as liquid yeast. ....
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....h. Under suitable conditions they evolve carbon dioxide and are therefore used in baking for leavening dough. They are usually sold in retail packings (sachets, tins, etc.) under various names (baking powder, Alsatian leaven, etc.). The heading excludes, inter alia : (a) Self-raising cereal flour, e.g., flour to which baking powder has been added (heading 11.01 or 11.02). (b) Autolysed yeast (heading 21.06). (c) Cultures of micro-organisms (other than yeasts) and vaccines (heading 30.02). (d) Medicaments of heading 30.03 or 30.04. (e) Enzymes (amylases, pepsin, rennet, etc.) (heading 35.07). 13. We find that tariff heading 2501 covers three sub-headings i.e. Common Salt (HSN code - 25010010), Rock Salt (HSN code - 25010020) & others (HSN Code - 25010090). We also find that as per the applicant's submission, their product 'Papad khar' constitutes of 70% Sodium Chloride (NaCl), 15% Sodium Carbonate (Na2CO3) and 15% Sodium Bicarbonate (NaHCO3). 'Common Salt' contains 100% Sodium Chloride whereas 'Rock Salt' contains of 90% to 98% Sodium Chloride. Thus, the percentage of various chemical constituents present in 'papad khar' itsel....
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....iew of the above discussion, it can be safely assumed that the product of the applicant does not fall within the ambit of heading 2501. 15. We find that heading 2102 (which has been suggested as an alternative tariff heading for their product by the applicant) covers Active yeasts (sub-heading 210210), Inactive yeasts (sub- heading 210220) & prepared baking powders (sub-heading 210230). However, since the applicant has not clarified as to whether their product is covered under 'yeast' or 'baking powder', it becomes obligatory for us to examine the issue. We find that while papad khar (also known as sajji khar) of the applicant is an alkaline salt powder constituted of sodium chloride, sodium carbonate and sodium bicarbonate which acts as a raising agent and alkalizing compound that provides crispness, puffing, and extended shelf life to papad and similar food products i.e. it creates a chemical reaction that immediately expands the dough and gives snacks like papad and khichiya their signature crunch and flaky texture, yeast is a living, single-celled organism (a type of fungus) that ferments sugars to create carbon dioxide gas, which causes dough to rise. Further, a plain compa....
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....ariff heading 2836 as well HSN notes of heading 2836 in order to explore whether the product of the applicant falls under the said heading or otherwise. The same are reproduced hereunder: Relevant portions of Chapter Notes of Chapter 28 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975): CHAPTER 28 Inorganic chemicals, organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes NOTES : 1. Except where the context otherwise requires, the headings of this Chapter apply only to: (a) separate chemical elements and separate chemically defined compounds, whether or not containing impurities; (b) the products mentioned in (a) above dissolved in water; (c) the products mentioned in (a) above dissolved in other solvents provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use; (d) the products mentioned in (a), (b) or (c) above with an added stabili....
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.....5 g each, of the halides of the alkali or alkaline-earth metals, of heading 3824; (f) precious or semi-precious stones (natural, synthetic or reconstructed) or dust or powder of such stones (headings 7102 to 7105), or precious metals or precious metal alloys of Chapter 71; (g) the metals, whether or not pure, metal alloys or cermets, including sintered metal carbides (metal carbides sintered with a metal), of Section XV; or (h) optical elements, for example, of the halides of the alkali or alkaline-earth metals (heading 9001). 4.---------- 5. Headings 2826 to 2842 apply only to metal or ammonium salts or peroxysalts. Except where the context otherwise requires, double or complex salts are to be classified in heading 2842. 6. Heading 2844 applies only to: (a)------------------ (b) ------------------ (c) ------------------ (d) ------------------ (e) ------------------ (f) ------------------ (g) ------------------ (i) ------------------ 7. ------------------ 8. ------------------ SUB-HEADING NOTE: ------------------ SUPPLEME....
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....chloride); as an anti- scaling product (see Explanatory Note to heading 38.24); in the preparation of sodium hydroxide, sodium salts and indigo; in the metallurgy of tungsten, bismuth antimony or vanadium; in photography; for purifying industrial water (lime soda process) and, mixed with lime, for purifying coal gas. (b) Sodium hydrogen carbonate (acid carbonate, sodium bicarbonate) (NaHCO3). Usually a crystalline powder or white Crystals, soluble in water, especially when hot, and liable to deteriorate in a humid atmosphere. Used in medicine (for treating gravel); for manufacturing digestive tablets and aerated beverages; in the preparation of baking powders; in the porcelain industry, etc. Natural sodium carbonate (natron, etc.) is excluded (heading 25.30). (3)------------------ (4) ------------------ (5) ------------------ (6) ------------------ (B) PEROXOCARBONATES (PERCARBONATES) (1) Sodium peroxocarbonates. Prepared by treating sodium peroxide, hydrated or not, with liquid carbon dioxide. White powders, dissolving in water to form oxygen and neutral sodium carbonate. Used for bleaching, in the preparation of domes....
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.... Khar is often sold and referred to as sodium sesquicarbonate and is primarily used in Indian cuisine to give crispiness, volume, and an extended shelf life to papads and other crispy snacks and acts as a dough conditioner, helping the papad puff up beautifully when fried or roasted. Further, if you are cooking and need to substitute papad khar, the closest and most accessible alternative is baking soda. Baking soda, chemically known as sodium bicarbonate (or bicarbonate of soda), is a natural, alkaline white powder which acts as a leavening agent in cooking, reacting with acids to produce carbon dioxide bubbles that cause doughs and batters to rise. It also acts as an alkaline substitute for traditional papad khar, and helps in making the papad lighter, crispier, and more puffed up when cooked. Thus, it can be clearly inferred from the above discussions that there is a distinct similarity in utility of both papad khar and baking soda, when used in cooking. Further, papad khar (sodium sesquicarbonate), being carbonate/bicarbonate would naturally fall under heading 2836 which covers carbonates, peroxocarbonates (percarbonates) and the like. The above discussions leave no room for do....