In Re: M/s. Ahmednagar District Goat Rearing and Processing Co-Op Federation Ltd.
GST
2018 (9) TMI 1184 – APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA – 2018 (17) G. S. T. L. 128 (App. A. A. R. – GST), [2019] 66 G S.T.R. 88 (AAR)
APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA – AAAR
Dated:- 11-9-2018
MAH/AAAR/SS-RJ/10/2018-19
GST
SMT. SUNGITA SHARMA, AND SHRI RAJIV JALOTA, MEMBER
PROCEEDINGS
(under Section 101 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
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 such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act.
The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Maharashtra G
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nments. Further, the consideration also is charged on the basis of weight of the meat supplied which is not uniform and not pre-determined in each consignment. The packaging and the marketing pattern on illustrative basis is explained as below:-
Mutton: – Each frozen carcass is put in LDPE Bag (Primary Packing) which is not sealed & no weight is mentioned on such LDPE Bag. Thereafter, generally two of such LDPE Bags are put in HDPE Bag (Secondary Packing) and the weight of the two carcass packed in two individual LDPE bags is manually mentioned by marker. The reason of mentioning the weight manually by an ink marker is that the weight of each packaging is not pre-determined and uniform and varies in every consignment so dispatched, since no two animals are of same weight and size. For instance, if one of the carcass weighs 7 Kg & other one weighs 6.5 Kg, the HDPE Bag would bear the marking as “8+7.5 = 15.5 Kg”.
C) The Four digit HSN of the Subject Product is given below:-
HSN
Produ
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ut up in unit containers]
Therefore, the tax on items of chapter sub heading 0204 was leviable only where the frozen meat of sheep or goats was put up in 'unit containers'.
ii. Thereafter, an amendment was carried out in the schedule Il of Notification No. 1/2017 dated 28th June 2017 – Integrated Tax (Rate) vide Notification No, 43/2017 Integrated Tax (Rate) dated 14th November 2017 w.e.f 15th November 2017 onwards, and the following entry was inserted which relates to taxability of the subject products. The Schedule I of the Notification No 43/2017-lntegrated Tax (Rate) dated 14th November 2017 deals with the products which are subject to 5 % GST and entry No 1 which pertain to sheep/Goat meat respectively is reproduced as below:
Schedule I
S. No.
Chapter/Heading/Sub-heading Tariff item
Description of Goods
1
0204
All goods (other than fresh or chilled) and put up in unit container and,
(a) bearing a registered brand name; or
a)) bearing a brand name on which actionable cla
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of law is available father than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily], subject to conditions as in the ANNEXURE l]” ;
Now a diligent perusal of the above relevant entries reproduced above brings out that GST is chargeable only when the following conditions are met
– Up till 14th November 2017, if product is “Frozen” and put up in “Unit container”
– On or after 15th November 2017, if the product is “Frozen”, put up in “Unit Container” and is “Branded”.
D). In the present facts of the case, since the meat supplied by the appellant was not in predetermined quantities in each consignment, the supply could not be construed as in unit containers as defined in the explanation to the notification 01/2017-Integrated Tax (Rate) dated 28.06.2017 and accordingly the supplies effected by the appellant were duly eligible for the exemption under Notification 02/2017- Integrated Tax(Rate) dated 28.06.2017.
E). The appel
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ntegrated Tax (Rate) dated 28.06.2017 for the period 01.07.2017 to 13.11.2017 and thereafter under schedule I entry No. 1 of the Notification 01/2017-lntegrated Tax (Rate) dated 28.06.2017 as amended vide Notification 43 of 2017- Integrated Tax (Rate) dated 14.11.2017.
G). Being aggrieved by the orders of the Maharashtra Authority for Advance Ruling, the appellant has preferred the present appeal before this appellate authority on the following grounds which are without prejudice to each other.
GROUNDS OF APPEAL
1. The authority for advance ruling has grossly erred in concluding that the clearances of the appellant are in unit containers, which is contrary to the judicial discipline on the subject and is in utter mis-interpretation of the definition of unit container as given in the statute on the subject. Here the appellant craves leave to reproduce the definition of unit container as provided in notification 1/2017- Integrated Tax (Rate) dated 28/06/2017 as amended.
Explanation.
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h in weight as the weight of an animal carcass would never be same as that of the another. Therefore, by no stretch of imagination it could be concluded that the packaging holds predetermined quantity as the weight varies in each and every individual packaging and is depended upon the weight of the animal carcass which is packed in to the individual LDPE bags. Therefore the conclusion drawn by the authority of advance ruling that the packing is in a unit container is highly misconceived and contrary to the facts on records and according may kindly be quashed in entirety.
2. The authority of advance ruling failed to assail the definition of “UNIT” before drawing their final conclusion on the matter. The Merriam Webster Dictionary defines 'unit' as 'a determinate quantity (as of length, time, heat, or value) adopted as a standard of measurement such as an amount of work used in education in calculating student credits or an amount of a biologically active agent (such as a drug or antige
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unit containers and ordinarily intended for sale, including preparations of vegetables, fruit milk cereals, flour, starch, birds, eggs, meat offals, animal blood, fish, crustacean or molluses, not elsewhere specified.”
Thus, under the old Central Excise Tariff, prepared/ preserved food put up in 'unit container' and ordinarily intended for sale were exigible to central excise duty. Therefore there were twin requirements to be satisfied for the levy of duty, firstly the goods should be put up in unit container and secondly, they should have ordinarily been intended for sale.
The expression “unit container” was not defined in the old Central Excise Tariff but instructions in this regard were issued by Central Board of Excise and Customs vide letter M.F. (D.R.I.) No. B/5/1169-CX-I., dated 3-4-1969, clarifying the meaning of the term 'unit container' as under:
'Meaning of Unit Containers. The expression 'unit container' used in Tariff Item 1B means a container in which prepared or pres
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d in predetermined quantity in its containers as there the manufacturers know as how much quantity they intend to pack in the respective unit containers and the unit containers are also designed to hold the specific predetermined quantity for example; 1 kg, 5 kg or 10kg etc. and the unit containers would have the predetermined quantity preprinted on the container. In the instant case each and every packaging would vary in weight as the weight of the content to be packed is not predetermined and would entirely depend upon the weight of the animal carcass which is packed in the LDPE bags and no two animals would have the same weight. Therefore the interpretation forwarded by the Authority of Advance Ruling is under misinterpretation of the definition and the facts on the record.
4. The appellant further cited Hon'ble Tribunal's judgment in the case of:
Collector of Central Excise vs Himachal Pradesh Horticulture Produce Marketing & Processing Corporation Ltd. 1998 (34) E.L.T. 160 (Trib
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not full or practically so. Nor would a prudent customer readily buy a product in a container which does not appear to be full.
46. The above observations on the methods of marketing of common consumer products, do not require any special knowledge because they are a matter of common experience. The tariff item and the Finance Ministry's instructions are consistent with the general experience and practice as mentioned above. General experience would certainly show that prepared and preserved foods and the like, as they are ordinarily sold in the market, are packed in containers which contain a specific and clearly marked quantity of the goods. The quantity may vary according to the product and the manufacturer, but even then there are many standard quantities common to different manufacturers, such as 100 gms, 500 gms, 1 kg, 100 ml, 200 ml and 500 ml. Such products are sold in what may appropriately be called “unit containers” which can conveniently contain that particular quantity.
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anister) designed to hold a pre-determined quantity or number.”
In the context of new Central Excise Tariff Act, 1985, in the case of Agro Foods Punjab Ltd. v. Collector of Central Excise, 1990 (49) E.L.T. 404, = 1990 (3) TMI 194 – CEGAT, NEW DELHI the tribunal observed as below;
“We hold that there is no difference either in the entry, in between 1B of the old Tariff and new Tariff 2001.10 or in the issue involved in both the cases, Following the ratio of the decision in the case of M/s. HPMC we hold that clearance in barrels does not amount to sale of the contents as put in a unit container. Accordingly, the goods in question are not classifiable wider sub-heading 2001.10 but they are classifiable under sub-heading 2001.90,”
The Hon'ble Tribunal in another judgment in the case of MP Vegetable Fruit Products v. Collector of Central Excise, Raipur, 1995 (76) E.L.T. 393 (Tribunal) = 1995 (1) TMI 155 – CEGAT, NEW DELHI held that Jerry cans of tomato puree of 35 litre capacity being su
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ilar to the LDPE bags in the present case and weight of the animal carcass is also varied in each and every consignment of ours.
6. The explanation to the notification 01/2017 Integrated Tax(Rate) and 02/2017 Integrated Tax ( Rate) both dated 28/06/2017 as amended defines 'Unit Container' in the similar tone and phraseology as to the definition under the old and new Central Excise Tariff and accordingly the judicial precedents ordained in context to the Central Excise provisions in relation to unit containers would very well apply to the present controversy in hand and therefore it can be safely concluded that the contents of appellant's products being not uniform in size and weight in not predetermined quantity and accordingly not packed in unit containers and the appellant is entitled to the exemption as provided in the notification 02/2017 Integrated Tax (Rate) dated 28/06/2017 as amended.
7. It is a settled law by now for that an exemption notification has to be interpreted by ta
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provided to the investors and manufacturers. Therefore, such purpose is not to be defeated nor those who may be entitled for it are to be deprived by interpreting the notification which may give it some meaning other than what is clearly and plainly flowing from it.
Further the Hon'ble Tribunal in the case of:
DHL LEMUIR LOGISTICS PVT. LTD. Versus COMMISSIONER OF C. EX., MUMBAI 2012 (284) E.L.T. 505 (Tri. – Mumbai) = 2012 (6) TMI 458 – CESTAT, MUMBAI has ordained in unequivocal terms in para 5.2 of their judgment as under :
5.2 Any exemption notification has to be interpreted based on the language used therein. The Supreme Court in the case of Hemraj Gordhandas Vs. H.H.Dave, Asst. Collector of Central Excise & Customs [1978(2)ELT J 350 (SC)] = 1968 (9) TMI 112 – SUPREME COURT OF INDIA laid down the principle as follows:-
“It is well established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter
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indly be quashed in entirety.
PERSONAL HEARING
8. The personal hearing in the matter was fixed on 14.08.2018 which was attended by Sh. Gautam Chugh, Advocate and Sh. Ashok Mishra, C.A., on behalf of the appellant who reiterated their written submissions and also presented two rulings from Haryana State Advance Ruling Authority given in favour of the applicants(other than appellant) in similar matters. They further argued that even the number of carcass was not fixed in every package and many times there was only one carcass supplied depending upon the weight and size of the animal. The appellant submitted the sample packing material being used for the inner and outer packing of the carcass. They confirmed that in pre-GST regime the frozen meat in sealed container was levied to VAT in some states.
The jurisdictional officer, attending the hearing, reiterated their submissions made before the AAR.
Discussion and Findings
9. We have heard both parties and gone through the submissions
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canister) designed to hold a predetermined quantity or number, which is indicated on such package.
The facts of the case are such that if the said supplies are in unit container than same are chargeable to GST @12% for the period from 1st July 2017 to 14th November 2017 and @5% thereafter (provided they bear brand for this period). The issue of branding of the said goods is not before us as the appellant had sought advance ruling only on the issue of 'Unit Container' and they are in appeal for the same.
11. We observe that the definition of Unit Container is provided under the CGST Act as an explanation to the exemption Notification and we do not see any reason to resort to the similar definitions available in other Acts/Statutes. So, we will concentrate and restrict our scope to the definition available under the CGST Act which is the subject matter of this appeal.
In terms of the said definition, we observe that for any package (irrespective of size, nature and shape) to be a unit
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uantity/weight/number contained in the package which is not the case here. We have gone through the conditions specified in the tender document of Army and found that at nowhere it is mentioned that the said bags (LDPE or HDPE) should contain any fixed weight/quantity or number of the goods to be supplied. Just by mentioning the weight of the carcass (which may be one or two in number) on the outer packing in no way can be considered as the pre-determined quantity of the package. There is no doubt that the samples of bags produced before us during hearing are covered under 'package' as per the definition given in explanation to the notification but that package is not designed to hold any predetermined quantity. In the specifications mandated by the Army for the packing following is mentioned-
'Packing- Each dressed carcass subsequent to chilling and before freezing shall be individually packed into suitable sized oxygen-water impermeable heat shrink food grade colourless LDPE bags of
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s pre-determined. They, however, observed that the number is pre-determined which is known to the Army that each HDPE bag will contain two LDPE bags. This observation of AAR is contrary to the wordings of question No. 1 posed before them which clearly indicates that 'one or two such LDPE bags further packed in HDPE bags'. As claimed by the appellant, even the number is not pre-determined as the carcass may be one or two depending upon the size of the animal but it can never be more than two. Regarding the observation of AAR that Army is aware about the pre-determined number, we have seen that Army is not concerned about the number as they have neither floated tender on the basis of number nor are they making payment to appellant based on numbers. The number of carcasses is of no importance to the Army as their contract is based on weight. Also, the indication of weight of two carcasses or one carcass on the HDPE bag cannot be inferred as indication of 'number' of carcass on the package
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es of contract of the appellant with Army of pre- GST era and the invoices raised by the appellant. It is true that the contract was awarded for the basic rate and VAT was shown separately. The invoices confirm that the appellant was collecting and paying VAT at that time as the VAT was applicable on the 'Frozen meat in sealed containers'. The new contract under GST regime is also on similar lines i.e. on basic rates and GST is shown as separate. But the invoices produced by the appellant shows that they have collected only basic rates from Army and not charged the GST as the concept of unit container was not under VAT. Here we observe that applicability of VAT on said activities in pre-GST regime would not render the supplies chargeable to GST as we have to examine the issue in light of GST Acts, Rules, Notification etc. The conditions of chargeability to tax under GST are different form conditions under VAT. The said packages which fulfilled the conditions of 'Frozen and sealed' unde
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