2018 (10) TMI 1312 – AUTHORITY FOR ADVANCE RULING, KERALA – 2018 (18) G. S. T. L. 367 (App. A. A. R. – GST) – Rate of GST – Classification of the commodity – commodity 'Ada' – whether the commodity “Ada” should be classified under the HSN Code 1902 along with “Seviyan (Vemicelli)” attracting GST at the rate of 5% or should be classified under residual entry at Sl No. 453 of the Third Schedule of Notification No. 01/2017 – Central Tax (Rate) dated 28.06.2017 and State Government Notification No. 360/2017 attracting 18% GST?
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Held that:- The applicable rule in this case is Rule 4 and as per the same, 'Ada' is to be classified under the heading appropriate to the goods to which it is most similar in character.
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The product, “Ada”, in sum and substance, is something akin, i.e., similar in character to “Vermicelli”. Both are made from 'maida or rice flour' or 'maida and rice flour' and are manufactured through an identical process and “ada” is used for giving richness to certain
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acting 5% GST. – CT/3368/2018-C3 Dated:- 25-9-2018 – Pullela Nageswara Rao, IRS, Member And Rajan N. Khobragade IAS, Member ORDER M/s. Ramachandran Bror, Kollam, a wholesale distributor of Ada in Kollam District (hereinafter called the applicant) is a registered person having GSTIN 32AAJFM1969P1ZP. The applicant had preferred an application on 20.02.2018 for Advance Ruling on the rate of tax of the commodity 'Ada'. 2. The applicant had argued that usage of Ada is same as that of "seviyan (vermicelli) i.e., to make sweet kheer or palada payasam or ada pradhaman. Ada is one of the grocery goods, mainly used by Keralites to prepare a sweet kheer or payasam otherwise called pradhaman. The ada is produced from rice flour or maida and no other ingredients are added. 3. In support of their claim, the applicant had produced a copy of the judgment dated 23.04.1987 of Tamil Nadu Sales Tax Appellate Tribunal, Madurai Bench in the case of Meenakshi Cottage Industries Vs State of Tami
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da", the matter has been referred to the Appellate Authority for Advance Ruling in terms of subsection (5) of Section 98 of the CGST/KGST Act, 2017 for hearing and decision on the classification of the said commodity. 6. A personal hearing was granted to the applicant on 13.09.2018. On the basis of the facts disclosed in the application and the oral/written submissions made at the time of personal hearing, it was decided to admit the application and the contentions raised by the applicant were examined. 7. Seviyan (Vermicelli) is a commodity produced from maida and is used for the purpose of giving richness to Kheer / Payasam. "Ada" is also a commodity produced from maida or rice flour or a mixture of maida and rice flour and is used for the purpose of giving richness to some regional varieties of payasams; Known as "Ada Pradhaman" and "Palada Pradhaman". In other words, "Seviyan (Vermicelli)" and "Ada" are produced from maida or r
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ould be classified under residual entry at Sl No. 453 of the Third Schedule of Notification No. 01/2017 – Central Tax (Rate) dated 28.06.2017 and State Government Notification No. 360/2017 attracting 18% GST. 9. Sl No. 453 of Third Schedule reads as follows; "Any Chapter – Goods which are not specified in Schedule I, II, IV, V or VI." Therefore, it is evident that the entry is a residuary entry to classify commodities that are not classifiable under any of the other entries. 10. The Explanation appended to the Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 reads as follows; "Explanation:- (1) In this Schedule, tariff item, heading, sub-heading and Chapter shall mean respectively a tariff item, heading, sub-heading and Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (2) The rules for the interpretation of the First Schedule to the said Customs Tariff Act, 1975, including the Section and Chapter Notes and the General E
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goods in this Schedule shall be governed by the following principles: 1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that materi
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ures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. 14. A perusal of the para supra and the application of the same with respect to the facts in the instant case, it is evident that the applicable rule in this case is Rule 4 and as per the same, 'Ada' is to be classified under the heading appropriate to the goods to which it is most similar in chara
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in Para 3, inter alia, observed as under; "The question before us is whether the department is right in claiming that the items in question are dutiable under Tariff Entry 68. This, as mentioned already, is the residuary entry and only such goods as cannot be brought under the various specific entries in the tariff should be attempted to be brought under the residuary entry. In other words, unless the department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item." 18. In the case of Western India Plywoods Ltd Vs Collector of Customs reported in 2005 (188) ELT 365 SC the Hon ble Supreme Court, inter alia, held that; "Application of residuary item only when no other heading expressly or by necessary implication applies." 19. In the case of COMMISSIONER OF CENTRAL EXCISE vs M/s WOCKHARDT LIFE SCIENCES LTD reported in 2012 (277) ELT 299 (SC); the Hon'
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classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the broad description of the article fits in with the expression used in the Tariff. Moreover, the functional utility and predominant or primary usage of the commodity which is being classified must be taken into account, apart from the understanding in common parlance. A commodity cannot be classified in a residuary entry, in the presence of a specific entry, even if such specific entry requires the product to be understood in the technical sense. A residuary entry can be taken refuge of only in the absence of a specific entry; that is to say, the latter will always prevail over the former. The combined factor that requires to be taken note of for the purpose of the classification of the goods are the composition, the product literature, the label, the character of the product and the use to which the product is put. 20. In the light of the discussion above, it can
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