2018 (10) TMI 1623 – AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH – 2018 (19) G. S. T. L. 111 (A. A. R. – GST) – Classification of an item – Militry Malai Mithai – whether classified under the Tariff Heading 2106 as Sweet Meats or under Tariff Heading 0404 as other dairy product consisting of natural milk constituents or under the Tariff Heading 1704 as a Sugar confectionery?
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Held that:- Applicant’s reservations against Chapter Head 1704 are driven, among other things, by financial grounds. Because, against Chapter Head 1704 they would have to cough up GST @18%. We also sense a similar but tacit approach from the department to maintain the status quo by placing the impugned product under Chapter 17 with an eye on higher rate of tax that is attracts – however, the endeavour of the department should be to decide appropriate classification irrespective of the rate of tax attached to it.
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Chapter 04 essentially covers dairy products and as per Chapter Note 4 of Chapter 04, the
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nery (1704 90 10) or Boiled Sweet (1704 90 20) or Toffee, caramel etc (1704 90 30). Clearly the product is neither a gum nor boiled sweet nor toffee or caramel. That leaves residual entry ‘Others’ (1704 90 90) if at all the impugned product is to brought under the purview of Chapter 17. In other words, there is no specific entry under Chapter 17 which would encompass the impugned product even by a remote chance. Moreover, the residual entry i.e ‘Others’ (1704 90 90) is to take care of other similar products of the same family viz. Sugar Confectionery which do not find specific mention against rest of the sub-headings.
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The impugned product i.e. ‘Militry Malai Mithai’ is made of Skimmed Milk Powder, Sugar, Whey Powder, Emulsifiers & flavours etc. mixed together in a semi-liquid form (neither semi-solid nor in the form of Jelly) and packed in elongated pouches/sachets and ready for consumption. The ingredients, process and final shape of the impugned product takes itself out of the
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ai’ would merit classification as Miscellaneous Edible Product under Chapter Heading 2106 90 99, as ‘Sweetmeat’ and chargeable to GST as applicable.
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The impugned goods shall be aptly classifiable under Chapter Head 2106 90 99 as ‘Sweetmeats’ and shall be entitled to benefit of Notification No.01/2017-Central Tax (Rate) dtd.28.06.2017 (as amended) and corresponding notification under MPGST Act,2017 at present attracting GST @5% Adv. [(2.5% CGST + 2.5% SGST) or 5% IGST as the case may be) as envisaged under Serial Number 101 Schedule I to the said Notification.
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Ruling:- The product ‘Militry Malai Mithai’ as described in the Application will merit classification under Chapter Heading 2106 90 of the GST Tariff as ‘Sweetmeat’ and would be chargeable to GST at applicable rate under the said tariff entry, presently read with Notification No.01/2017-Central Tax (Rate) dtd.28.06.2017 (Sr. No. 101 to Schedule l) and corresponding notification under MPGST Act,2017. – Order No. 13/2018
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ours 1.3. The above product is packed into small sachets of around 4 grams each, 58 such sachets are then packed into a large pack used for selling to the distributors and retailers and the end customer would buy the small sachet and consume it after opening the same. 1.4. As per the report of government approved laboratory, the product manufactured by the applicant, having following chemical parameters., i.e.:- a. Protein : 5.12% b. Fat : 34.27% c. Sugar : 45.10% 1.5. The Applicant have further submitted that as per their view the aforementioned product should be treated as sweet meat , classifiable under tariff Heading No.21069099. In support of their view the Applicant have adduced following points: A. The Product is in the nature of sweet meat – 1. We submit that sweet meats include any product which includes sugar as ingredient. That there are no set ingredients for the composition of sweet meats and any sweet product can be called a sweet meat if they are known, sold and consumed
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further submit that we have got our product tested and verified in an approved laboratory. The findings of the laboratory are enclosed herewith. In the expert opinion of the laboratory testers the product is in the nature of a sweet and is most likely to be a sweet meat. 5. We are also marketing the said product as Mithai. That he name of the product itself is Militry Malai Mithai which is recognised in the market as such. We submit that packing the said product in such small sachets is useful in consuming the product in small quantities, which would be helpful for consumption of the product by children or other people casually. 6. Further, the CBEC, vide its FAQ on classification dated 29.09.2017, clarified that products like halwa, barfi (i.e. Khoa product), laddus, falling under HS Code 2106 are sweet meats and attract 5% GST. We submit that the Board has listed certain commonly known sweets which are similar to them. We submit that our product i.e. Rabdi, is also in the same class
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Hon ble Authority to the case of Globe Confectionery Vs. CCE, Allahabad [2005 (190) ELT 239 (Tri-Del)] = 2005 (7) TMI 194 – CESTAT, NEW DELHI, wherein the Hon ble Tribunal held in Para 4 as follows: The dispute is not whether the item is Rasgulla or Peda. Nor is classification dependent upon composition. Composition is irrelevant, since Note 10 reproduced above states that "products remain classified under 2108" irrespective of the nature of their ingredients. The scheme of the classification is to place all "misthans" or "mithai" under 2108. The terms of the note are "include sweet meats commonly known as misthans or mithai or by any other name". In view of such broad scope of the note, the appellant's claim for classification has to be accepted, because there could be no doubt that the items are sweet meat. Dictionary refers to sweet meat as "food rich in sugar". Thus, despite sugar being the pre-dominant ingredient, in view of th
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ry i.e. after paying GST at a higher rate of 18% to avoind any future tax burden on us. Without clarification if we charge a lower rate, we not be able to pass on any unforeseen future tax liability to our consumers since our product is a retail product 17. However we are of a firm opinion that our product is not a sugar confectionery. That the HSN code for sugar confectionery items i.e. heading number 1704 covers Sugar Confectionery (including white chocolate), not containing cocoa . 18. We submit that heading 1704 covers confectionery . That confectionery is a preparation in the form of candies or preserves. Confectionery means products such as candies or other flavoured sweets which are marketed as toffees. That our product is not a confectionery since we are not marketing the same in the form of candy or a toffee. 19. We further that boiled sweets in heading 1704 90 20 includes toffees. Boiled sweets are prepared using sugar syrups that are heated and then cooled so as to take a ha
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ode 1704 vide the aforementioned clarification. Since our product is in fact a liquid preparation and is not in a solid or semi solid form, it cannot be grouped in the same category as other solid forms of confectionery under heading 1704. 22. Hence our product cannot be classified as a confectionery and is also not a boiled sweet or a jelly confectionery which are specified under heading 1704. We therefore submit that our product is not classifiable under any sub heading of heading 1704. D. Classifying our product as a sugar confectionery would be unfair and unjust – 23. It is further submitted that earlier, in the pre-GST regime, VAT on confectionery items was 5% and Central Excise duty was 6%. However, Central Excise duty on dairy products and sweet meats was NIL. Now in the GST regime also the GST on sugar boiled confectionery items is 12%. However, our product cannot be called sugar boiled confectionery. Hence, if our product is classified as other sugar confectionery, it will att
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be classified under the Tariff Heading 2106 as Sweet Meats or under Tariff Heading 0404 as other dairy product consisting of natural milk constituents or under the Tariff Heading 1704 as a Sugar confectionery.? 3. DEAPRTMENT S VIEW POINT: The CGST & Central Excise Commisionerate has furnished its opinion through the Joint Commissioner, CGST & Central Excise, Indore. The department has merely opined that since the Applicant had been classifying the impugned product under Chapter Head 1704 as Confectionery, during the pre-GST as well as GST regime, the same should be classified under Chapter Head 1704 as Confectionery item. 4. RECORD OF PERSONAL HEARING: 4.1. Shree Ajay Makhija, Director CA Pradeep Asawa And CA Palkesh Asawa, appeared on behalf of the applicant for Personal Hearing and he reiterated the submissions already made in the application. 5. DISCUSSIONS AND FINDINGS: 5.1. We have carefully considered the submissions made by the applicant in the application, the pleading
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er confectionery products ;like Chocolates & toffees etc which are undisputedly classifiable under Chapter 17, and thus this new product when initiated by them, they chose to classify the same under Chapter 17. However, they wish to seek a ruling from the AAR on appropriate classification of the impugned product. 5.3. The Applicant have given detailed description of the product in question along with chemical examination report, obtained by the Applicant on their own, giving the composition of the impugned product. They have also submitted the necessary licence and certificates issued by different Governmental authorities connected with manufacture and sale of food items such as FDA, FSSAI, Department of Legal Metrology etc. However, on going through these licences and certificates, we find that these only give a circumspect description of the impugned goods and that too as declared by the Applicant before respective authorities. We thus do not find these reports/certificates of mu
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things, by financial grounds. Because, against Chapter Head 1704 they would have to cough up GST @18%. We also sense a similar but tacit approach from the department to maintain the status quo by placing the impugned product under Chapter 17 with an eye on higher rate of tax that is attracts. However, we observe that the endeavour of the department should be to decide appropriate classification irrespective of the rate of tax attached to it. To be precise, while deciding classification of any product we have to take a subjective route covering all the aspects related to the product. 5.6. The applicant has, on his own understanding of the issue, pushed forward two alternate classification of the impugned product. One as a Dairy Product covered under Chapter 04 and the other as Sweet Meat covered under Chapter 21. We would like examine each of these alternate classification and also Chapter 17 under which the impugned product is being manufactured/supplied by Applicant at present. 5.7.
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oduct under Chapter 1704, under which the Applicant have been classifying their impugned product till date. We find that the Chapter 17 of the HSN is for Sugar & Sugar Confectionery . While 1701 to 1703 headings relate to Sugars in different forms, the Heading 1704 mentions Sugar Confectionery. Sugar Confectionery has no where been specifically defined under the GST law or for that matter under HSN. However, going by the trade parlance and prevailing practice, the Sugar Confectionery has been classified as under: 1704 Sugar Confectionery (Including white chocolate), not containing cocoa 1704 10 00 – Chewing Gum, whether or not sugar coated 1704 90 – Other: 1704 90 10 Jelly Confectionery 1704 90 20 Boiled Sweets, whether or not filled 1704 90 30 Toffees, Caramels and similar sweets 1704 90 90 Others 5.9. Now, putting the impugned product to test against each of the entries above, we find that the product Militry Malai Mithai cannot be terms as Chewing Gum (1704 10 00) or Jelly C
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family of Sugar Confectionery in any form. We are thus of a firm view that the impugned product cannot be termed and classified as Sugar Confectionery under Chapter 17 of the GST Tariff. 5.10. Finally we come to examine the impugned product vis-å-vis Chapter 2106. We observe that Chapter 21 essentially covers Miscellaneous Edible Products . Obviously, the term Miscellaneous indicates that this particular chapter would contain all such edible products which are not specifically covered elsewhere under the Tariff. The Chapter Headings further describes various edible preparations such as extracts of Coffee, tea, Yeast, Soups, broths, Sauces etc under Heading 2101 to 2105. Further as is the convention, Heading 2106 has been given to include all those items which are not elsewhere specified. Furthermore, 2106 further sub-divides and classifies various edible items like Protein Concentrates, Pan Masala, Sharbats, Supari, Custard Powder etc. under Sub-headings 21061000 to 21069080 and
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lassification as Miscellaneous Edible Product under Chapter Heading 2106 90 99, as Sweetmeat and chargeable to GST as applicable. 5.12. Having observed as above, we further hold that the impugned goods shall be aptly classifiable under Chapter Head 2106 90 99 as Sweetmeats and shall be entitled to benefit of Notification No.01/2017-Central Tax (Rate) dtd.28.06.2017 (as amended) and corresponding notification under MPGST Act,2017 at present attracting GST @5% Adv. [(2.5% CGST + 2.5% SGST) or 5% IGST as the case may be) as envisaged under Serial Number 101 Schedule I to the said Notification. 5.13. We also find it necessary to mention here that the classification decided by this Ruling shall be effective prospectively and this ruling shall not entail any right of the Applicant to claim refund of any tax which they may have paid prior to this Ruling. RULING 6. The Advance Ruling on question posed before the authority is answered as under: 6.1 The product Militry Malai Mithai as described
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