In Re: M/s. Italian Edibles Private Limited (IEPL)
GST
2018 (10) TMI 1623 – AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH – 2018 (19) G. S. T. L. 111 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH – AAR
Dated:- 18-9-2018
Order No. 13/2018 and Case No. 09/2018
GST
RAJIV AGRAWAL AND MANOJ KUMAR CHOUBEY MEMBER
Present on behalf of applicant: Shree Ajay Makhija, Director CA Pradeep Asawa And CA Palkesh Asawa
PROCEEDINGS
1. BRIEF FACTS OF THE CASE:
1.1. M/S. Italian Edibles Pvt. Ltd. Indore [hereinafter referred to as the Applicant] is engaged in the manufacture, supply and export of confectionary and dairy/ sweet product. The applicant manufactures various product including flavoured wafers, Milk chocolates, Milk compound chocolates and other dairy / sweet products. The applicant is having a GST registration with GSTIN 23AACC12746N1ZG.
1.2. Further, the applicant is also engaged in the manufacture of an edible product under the brand name “Militry M
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:
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 as sweets.
2. That the only difference between the product that is commonly sold in the market as Rabdi and our product is that our product is packed in small sized sachets. We submit that merely packing the product does not alter the inherent nature or identity of the product. That, even if it is packed in sachets which are easily marketable, it still remains a sweet meat.
3. In this context we draw the attention of this Hon'ble Authority to the observation of the Hon'ble tribunal in case of Hindustan Lever Ltd. Vs. CCE, Mumbai [2005 (189) ELT 53 (Tri-Mumbai)] = 2005 (6) TMI 361 – CESTAT, MUMBAI, wherein the Tribunal held that it is not necessary that any product must be sold at traditiona
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ted 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 as those which are covered by the CBEC circular, and hence should be classified as sweet meat.
B. Chapter 21 specifically includes sweet meats as per Chapter Note 5 –
7. As per chapter note 6 of chapter 21 of the GST tariff in India, 'Tariff item 2106 90 99 includes sweet meats commonly known as misthan or mithai or called by any other name. They also include products commonly known as 'Namkeens', Mixtures', 'Bhujia', 'Chabena' or called by any other name. Such products remain classified in these sub-headings irrespective of the nature of their ingredients.'
8. That, it is to be noted that any products which are commonly known as Mithai or Mishthan remain classified in Chapter 21,
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ope 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 the note the items can't go under sugar confectionary.'
C. Alternatively, our product may also be classified as a dairy product:
10. To 15. It has been adduced by the applicant in these paras that the product in question closely resembles a dairy product and assuming the said product may not be classified as sweet meat, then it has argued that the same may be classified as a dairy product. It has been argued that the product in question is almost completely a milk based item which is only subjected to addition of certain flavours to skimmed milk powder, whey powder and sugar. It is thus argued that the impugned product may also be considered for classification under Chapter Heading 0404 90 00 since it contains natura
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at 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 hard form. Such boiled sweets are then wrapped and marketed as toffees. We submit that our product is not a hardened boiled sweet. It is a soft preparation and hence cannot be considered as 'boiled sweet'.
20. That the Oxford Dictionary defines boiled sweets as 'A hard sweet made of boiled sugar'. We submit that our product does not contain boiled sugar and it is also not a hard sweet. It is a soft liquid preparation which cannot be called as boiled sweet.
21. We further invite the attention of this Hon'ble Authority to the CBEC's FAQs on classification released on 29.09.2017, wherein the Board clarified that HS code 1704 covers most of the sugar preparations which are marketed in a solid or semi-solid form ge
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r, 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 attract GST @18% which is unfair and unjust, considering that even boiled sugar confectionery items are chargeable at lower rate, and further, it is significantly more than the pre-GST rate.
24. It is also submitted that GST on all our major inputs, including sugar, skimmed milk powder and vegetable oil is 5%. Therefore charging GST on our product @18% would be against the trade interest and not viable for business.
1.6. In view of above, the Applicant has filed the instant application seeking clarification on classification of their product marketed under the brand name 'Militry Malai Mithai'.
2. QUESTIONS RAISED BEFORE THE AUTHORITY:
The following questions have been posted before the Authority :
Wh
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radeep 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 pleadings on behalf of the Applicant made during the course of personal hearing. At the outset, we find that the issue raised in the Application is squarely covered under Section 97(2)(a) of the CGST Act 2017 being a matter related to classification of goods, and the applicant have complied with the all the requirements for filing this application as laid down under the law. We therefore admit the application for consideration on merits.
5.2. We find that the present application seeks Ruling on appropriate classification of goods manufactured by the Applicant and marketed and supplied as Militry Malai Mithai. The Applicant have submitted that they have been manufacturing and supplying the impugned item b
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rtment 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 much help for arriving at the correct classification of the impugned product particularly for taxation purpose.
5.4. We have also considered the opinion of the department which is nothing but the reiteration of the existing position regarding classification of impugned product, as has already been admitted and narrated by the Applicant in the application. Thus we do not find the departmental opinion of any help as it does not throw any light on the merits of the issue and merely reiterates the existing position and recommends staus quo. However, we would not let ourselves be prejudiced with either the prevailing position or the insufficient information available from the documents available before us
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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. Chapter 04 essentially covers dairy products and as per Chapter Note 4 of Chapter 04, the heading 0404 applies interalia to products consisting of natural milk constituents whether or not containing added sugar or other sweetening matter or flavoured or containing added fruit or cocoa. Now while chapter head 0401 to 0406 are meant for natural dairy products viz. Milk, Cheese, Butter Milk, Butter, Whey etc. and other products made out of such items, the product in question i.e. Militry Malai Mithai contains Skimmed Milk Powder, Whey Powder, Sugar, Emulsifiers etc. as predominant ingredients, which would not make it entitles to be classified as a product of natural milk constituents as has been pl
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704 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 Confectionery (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-headin
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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 to conclude there is a residual entry as 'Others' under 2106 90 99.
5.11. Now, we find that the product in question i.e. 'Militry Malai Mithai' is a product made out of Skimmed Milk Powder, Sugar & Whey Powder as main ingredients with Emulsifiers etc. put up in small sachet/pouch in semi-liquid (paste) consistency, ready for consumption. The product cannot be termed as Dairy Product or Sugar Confectionery as already discussed above. However, there is no doubt that being edible preparation, manufactured under due license issued by concerned Government authorities, it would merit classification under Chapter 21 i.e. '
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