Dismissed

AAAR/AP/03(GST)/2022 of M/s Foods and Inns Limited

GST AAAR20 Jan 2022AAAR/AP/03(GST)/2022

Case brief

AI extract

What is this about?

The Appellate Authority for Advance Ruling dismissed an appeal filed by M/s Foods and Inns Limited against an Advance Ruling. The Authority held that mango pulp/puree is classifiable under Tariff Item 0804 50 40 of the Customs Tariff Act, not Chapter 2007, and is chargeable to GST at 18% under the residuary entry.

What did the court decide?

Appeal dismissed; original ruling on classification under Chapter 0804 and tax rate of 18% upheld.

AAAR/AP/03(GST)/2022 of M/s Foods and Inns Limited — GST and Indirect Tax | GST AAAR (2022)

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BEFORE THE APPELLATE AUTHORITY FOR ADVANCE RULING for the state of Andhra Pradesh (Goods and service Tax)

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(Office at O/o Chief Commissioner of State Tax, Govt. of A.P., D NO 5-56, Block-8, R.K.Spring Valley Apartment, Bunder Road, Edupugallu, Vijayawada,

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Andhra Pradesh - 521151)

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Present:

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sri suresh Kishnani (Member) (Central Tax)

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Sri S. Ravi Shankar Narayan (Member)^(State Tax)

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The 2ofh day of )anuary,2022 order /AAAR/APl03(GST)/2022

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	Nameand appellant addressofthe	M/s.Foodsand InnsLimited, 323, Aseptic ProgressingPlant, Chittoor- VelloreRoad, GollamaduguVillage,PallurPost, Gudipalalvlandal,Chittoor District.
	GSTIN	37AAACFO521C1ZE
	Dateoffilingof	02.t2.202r
		t4.t2.2021
5	4^{ui!!ol]z e!LB.gllqse}4q!1ve	Sri R. NarasimhaMurthy
6	JurisdictionalAuthority Centre	TheSuperintendent ofCentral Tax,TirupatiDivision, ChittoorII

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(Under Section 1O1 of the central Goods and service Tax Act and the Andhra Pradesh Goods and Service Tax Act),

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At the outset, we would like to make it clear that the^provisions of both the CGST Act and the APGST 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^{provisionsunder the APGSTAct.}

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The present appeal has been filed under Section 100 of the Central Goods^and Services Tax Act, 2017and the Andhra Pradesh Goods and Services^{Tax Act,2017} [herein^{afterreferredto as "the CGSTAct and APGSTAct"]by M/s. Foodsand Inns} Limited (herein after referred to as the "Appellant")^{against the Advance RulingNo.} AAR No.16/APIGST/2021 dated 07.07.2021 issued by the^{Authorityfor Advance} Ruling, Andhra Pradesh,

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1. Background of the case:

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1,1 The Appellant, M/s Foods and^{lnns Limited is a Public LimitedCompany,engaged} in the business of supplyinq of mango^{pulp/pureewithin India including merchant} export. The manufacturing^process of^{mangopulp/pureeis detailedhereunder:} The Appellant^procures selected varieties of fresh mango fruits and transport them to the fruit^{processingplant.} The fruits are inspected,^{graded, washedand}

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sent to the controlled ripening chambers.^{The fully RipenedMango Fruitsarethen} washed, blanched. pulped, deseeded, centrifuged, homogenized,^{and thermally} processed. The preparation process includes cutting, de-stoning, refining and packing. The refined pulp/puree is packed in cans, hermetically sealed and retorted. Such extracted Mango Pulp/Puree will be sold by the applicant.

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1.2, The Appellant sought clarification with regard to classification^{of the productand} the rate payable thereon. The Appellant had flled an application for^Advance Ruling before the Authority for Advance Ruling on the following^questions:

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Question;^{Canthe Mango Pulp/puree be treated as fresh fruit and exemptionbe} claimed on it? If not whether the mango^pulp/puree falls^under the^heading 20079910 or 0804 or 2008?

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Questionr^{Whatis the rate of tax payable on outward suppliesof Mangofruit Pulp/} Puree under the GST Act?

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The Authority for Advance Ruling Andhra Pradesh in its orders in AAR No.16/APlGST/ 2021 dared 07.07,2021 held:

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Mango Pulp/Puree shall neither be treated as a fresh fruit nor be classified under headings 20079910 or 0804 or 2008.

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.'Nlango pulp/puree', under the entry no. 453 of Schedule-llI of Notiflcation No. 1/2017-Central Tax (Rate) dt: 28.06.2017 attracts the tax rate of 180/0.

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Aggrieved by the impugned order, the appellant has filed the^present appeal on the following grounds.

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2. crounds of Appeal:

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2 A. Classification of the^{product'Mango} Pulp/Puree':

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2.1The appellant called for attention towards an observation made in the impugned order that the Chapter 0804 not only covers Edible fruit and nuts but also includes chilled fruits and nuts in the same heading. However, the present product being pulp, the said entry is not applicable to the product under consideration. The Appellant submitted that the product being manufactured, i.e., mango pulp is not merely fresh^pulp or dried, but it is cooked in the sense the^pulp is subject to^pre- heating to the tune of 60 to 80 degrees and also sterilized before packing. In view of the above, the contention of the oriqinal authority in discardinq the classification under Chapter 0804 is in tune with the chapter notes.

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2.2 In response to the above, the Appellant submits that the product Mango Pulp is specifically covered under Chapter Heading 0804. However, the^{present product} is not merely fresh fruit or dried fruit. As already submitted, the mango pulp is processed by pre-heating the product to the tune of 60 to 80 degrees and also sterilized before^packing. In view of the above, the Appellant alternatively requested the classification of the product under Chapter Heading 2007 in view of the following contentions:

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a. The^{product exportedby the Appellant is classifiedby the Customsunder} Chapter Heading^{2007.Therefore,the product under question specificallygets} coveredunderthechapterHeading20oTaSFruitPUreeobtainedbycooking.In view of the above,^{the product is liable to be classifiedunder 20079910'}

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b. Further, Chapter^{Heading 2OO7 includes products obtainedby cooking} including^{purees. The Appellant drawsattentionto Chapter Note5 to Chapter20'} according to^{which the expression-"obtainedby cooking"means obtainedby heat} treatment at^{atmospheric pressureor under reduced pressureto increase the} viscosity of a^{product throughreduction of water contentor other means ln the} instant case, the^{pulp is heated through a temperatuTeof 60 to 80 degreesfor} increasing the^{viscosity and thus, theprocess is nothing but cooking'}

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c. The Appellant^{further submitsthat technicallythere is no differencebetween} puree and pulp. ln this connection,^{the Appellantdraws attentionto Office} Memorandumdated6thOctober,202lissuedbytheNlinistryofFoodProcessing Industries, which clarifles^{that Mango Pulp and Puree are one and the same'} classified under^{ChaPter 2007,}

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2.3 In the impugned^{order, it was contended that mango pulp/pureeis fruit paste} and thus, Chapter^{Heading2OO7 is not applicableto the present case ln response} to the above, the Appellant^{submits the following:}

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The contention of the original^{authority is not proper since the Chapter} Heading 2007 itself covers^{fruit paste and thus, there is no scope for the said} paste to exclude from the purview of Chapter^2007.

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The Appellant submits that Chapter^{Note 2 to Chapter 20 excludesfruit} lellies, fruit pastes, sugar coated almonds etc.^which are^{in the form of sugar} confectionery. In the instant case, the^{mango pulp/pureeis not sugar} confectionery and thus, the^{exclusion clauseis not applicable as sought.} Hence, there is error in considering the Chapter^Note2

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.Moreover, since mango pulp and^puree are one and the same^{product, it is} classifiable under Chapter Heading^2007,

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2 B Rate of duty applicable on the Mango^Pulpr:

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The Appellant submits that the^product is^{classifiableunder Chapter Heading} 2007 and consequently, chargeable to GST @^{120lo in terms of SI.No.39 of} schedule II to Notification^{No.U2O17-CT(Rate) dated28-6-2017.Inview of the} above, the rate of 18o/o as held by the^{Advance Ruling Authority is not legally} correct and proper.

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3. Virtual Hearing:

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The proceedings of Hearing were^{conducted through videoconferenceon} 14.72.2O2f . The authorized representative,^{Sri R.NarasimhaMurthy attendedand} reiterated the submissions already^made.

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4. Discussion and Findings:

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We have gone through the entire submissions made by the appellant along with the Ruling pronounced by the Authority for Advance Ruling. On perusal of the appeal and submissaon made by the appellant at the time of Hearinq, it is observed that the main issue of contention is the classification of the product 'Mango Pulp/Puree' and it's taxability thereon.

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4A Classification of the oroduct Manoo Pulo/puree:

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4.1 The Appellant in paragraph 2.1 of the grounds of appeal, has contended that chapter 08 covers only the "Edible fruit and nuts and also chilled fruits and nuts" and the said entry 0804 is not applicable to the product under consideration, 'f4ango Pulp'.

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ln this context, it is pertinent to note that the Explanation to the Rate Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 reads as under:

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"For the purposes of this Notiflcation: ...

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(iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).

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(iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. "

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Therefore, while the Rate Notification under GST provides the rate of tax on goods and services, in order to interpret these Rate Notifications for purposes of levy of GST, one has to read the same along with the First Schedule (including the Section and Chapter Notes and General Explanatory Notes) of the Customs Tariff Act, 1975 ("Tariff").

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Each Section and Chapter under the Tariff is accompanied by the notes known as 'Section Notes'and'Chapter Notes'. Classification is to be determined only on the basis of description of the heading read with relevant section or Chapter notes,

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Coming to the^{product'Mango} Pulp/Puree', it finds^place under chapter heading no. 0804 5040 of the Customs Tariff Act, 1975.

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Chapter 8

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Description of goods

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0804	oatii-ngs,p-eapptes,arocaoos,rn-angoet andmangosteens, freshordried.
0804 50	Guavas, mangoes, and mangosteens
0804 50	-Mango Pulp

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Chapter 8^{deals with "Edible fruit and nuts;peel of citrus fruit or melons"'} Moreover, there^{is a specificentry for'MangoPulp' as shown aboveWhenevera} specific entry is^{available for a product,it has to be adopted in place of the} general description. It^{has been decided by the Hon'ble SupremeCourt in Moorco} IndiaLimitedvs.cclgg4(74)ELT5(sc).ThuS,theprinciplethatspecific heading overrides^{a general heading is well established in tax statutesThesame} is applicable as^{well in the instantcase Whenthere is a specificentry for'l4ango} Pulp' in chapter 8, it^{is to be preferred overother generalentries in the} subsequent chaPters.

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4.2 In^{paragraphs2.2 and 2.3, the appellant requeststhe classificationof the} product under Chapter Heading^{2OO7 and submitsthat the f4ango Pulpis 'Fruit} Puree obtained^{by cooking'. The appellantdra'Ysattentionto Chapter Note5 to} chapter 20, according to^{which the expression-"obtainedby cooking" means} obtained by heat treatment^{at atmospheric pressureor under reduced pressure to} increase the viscosity of^{a product through reduction of water content or other} means. This Authority^{disagreeswith the contention of the appellant in viewof the} following.

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There is a speciflc entry^{for'Mango pulp'underchapter 8, and it is also mentioned} categorically in Notes^{to chapter 20 that, 'the fruits or nutspreparedor preserved} by the^processes specified already^{in Chapter8 shallnotbe covered underchapter} 2O'. The excerpt of the chapter notes^{is presentedbelow.}

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"CHAPTER 20 Preparations^{of vegetables,fruit, nuts or other parts of plants}

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NOTES: 1. This Chapter does^{not cover:(a) vegetables,fruit or nuts, prepared or} preserved by the processes specified in Chapter 7, I or 11;"

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In this regard this authority opines that the^{productshall invariably fall under} chapter 8.

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In the same^paragraph, the appellant reiterate that^{technicallythere is no} difference between'puree'and'pulp',^{The appellantquoted the reference of} N4emorandum issued by Ministry of Food Processing^{Industries,Governmentof} India in F. No.E- 12l2l2OLg-ED dt: 06.10.2021,^{which states thatN1angoPulp and} Mango Puree are the same thing from a technical^{angle. Withreference to the} nomenclature of the^product, this authority does^{not differ with the above opinion.} But, the Memo cited has been issued for a^{differentpurpose, not on the} classafication of the^product or it's chapter^{heading.The claim of the appellantin} this regard stating that clarification has been issued^{on the} tariff^{code of the} product is out of place.

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48 Rate of duty applicable on the^{Mango Pulp:}

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4.3 In^paragraph 28 the Appellant^{claimsthat the productis classifiable under} Chapter Heading 2OO7 and consequently,^{chargeableto GST} @^{12olo in termsof} Sl.No.39 of Schedule II to Notiflcation No.tl20l7-Cf^{(Rate) dated 28-6-2017.} Now we examine the applicable rate of tax for the^{product'Mango Pulp' in GST}

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tariff notifications. There are three entries related to 'Mangoes and Mango Products'that find a mention at various schedules, with different tax rates in the tariff notification.

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(r) The entry No.51 of 0804 ofthe above notification reads as,

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0804^" Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh."

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The above entry exempts only fresh mangoes from being exigible to tax. It is worthwhile to mention in this context, that there is no dispute with the classification of the product under chapter B but the description under entry no.51 of 0804enlists only fresh l.4angoes.

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(ii) The tariff rate changes brought about by Notification No. 35/2017 Integrated Tax (Rate) dt: 30.10.2017, amending notification No. 1/2017-Integrated Tax (Rate), dt: 28.06.2017 added the following entries:

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"In the said notification

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(A) In Schedule I - 5o/o,-

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After S. No. 30 and the entries relating thereto, the following serial number and the entries shall be inserted, namely:

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'30a O8O4 Mangoes sliced, dried";

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(iii) In Schedule II-72qo,-

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(i) In S, No. 76, in column (3), for the words and brackets "Dates (soft or hard), figs, pineapples, avocados, guavas, mangoes and mangosteensl dried", the words and brackets, "Dates (soft or hard), figs, pineapples, avocados, guavas and mangosteens, dried", shall be substituted"

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The above amended notiflcation reveals that rta ngoes sliced, dried" arc

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taxable @ 596- while it is silent on'l4ango Pulp'.

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As there is no specific description of "mango pulp/puree", under GST tariff notification, the entry no. 453 of Schedule -III of Notification No.1/2017Central Tax (Rate) dt: 2A,06,2017 is applicable, which is a residuary entry covering goods which are not specified in Schedules I, II, IV, V, VI of the Notification, attracting the tax rate of 18o/o.

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S.No	chapter/ Heading/Sub- heading/ Tariffitem
l+s:	Anychapter	Goodswhichare notspecified in ScheduleI, ILIV.V orVI

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ln view of^{the foregoing,we rule as under'}

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ORDER

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We hereby^{modifythe orderpassed by the Authorityfor Advance Ruling vide} AAR No. 16/AP/GST/2021^{Dated 07} 'O7^{2O2land hold that the'NlanqoPulp /} Puree' is classifiable^{under Tariff ItemO8O450 40 and chargeable to GST @} 18o/o,byVirtueofentryNo.453ofSchedulelllinNotificationNo.l/2017Central Tax^{(Rate) Dated 2A.06 2077} '

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Sd/-Suresh^Kishnani Chief Commissioner^{(Central Tax)} l,lember

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Sd/- S. Ravi^{ShankarNarayan} Chief Commissioner^{(State Tax)} Member

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Deputy commis!ioner^(ST) DEPUW^{COMMISSIONEi(ST} -O/t.^{ChitlCammissiaoar .{ Slat' lar'} IGrvrrnmcnt^{ol a P. villvawrta}

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Aseptic Progressing^{Plant, Chittor-Vellore}

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1. M/s. Foods and^{Inns Limited,323,} Post, Gudipala^{lYandal,Chittor District -517132}

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Road, Gollamadugu^{Village, Palllur}

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(By Registered Post).

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Copy to

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l,TheAssistantCommissionerofstateTax,ChittortCircle,ChittoorDivision' (By Registered Post)

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The Superintendent^{of CentralTax, Chittoor ll Range, Tirupati Division (By} Registered Post)

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Copy submitted to

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The Chief Commissioner^{(State Tax), O/o Chief Commissionerof StateTax'} Eedupugallu, VijaYawada,^(A.P)

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2.Thechiefcommissionerolcustoms&centralTax,o/ochiefcommissionerof Central Tax & Customs,^{Visakhapatnam Zone,GST Bhavan' Port area'} Visakhapatnam-530035.A.P^{(By RegisteredPost)'}

AAAR/AP/03(GST)/2022 of M/s Foods and Inns Limited

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AAAR/AP/03(GST)/2022 of M/s Foods and Inns Limited

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