2024(09)LCX0428(AAR)

HIC-ABF Special Foods Private Limited

decided on 13-09-2024

KERALA AUTHORITY FOR ADVANCE RULING

GOODS AND SERVICES TAX DEPARTMENT

TAX TOWER, THIRUVANANTHAPURAM

BEFORE THE AUTHORITY OF: Smt. Gayathri P.G., IRS 86
                                      : Shri. Abdul Latheef K

ADVANCE RULING No.KER/23/2024 Dated 13/09/2024

1. M/S HIC-ABF special foods (P) Ltd., 11/630-B Aroor Industrial development area, Project colony road, Aroor, 688534. (Hereinafter referred to as the applicant) is in the business of food products and are registered under GST Act 2017 with GSTIN 32AATFD1308H1ZO.

2. In this ruling, a reference to the provisions of the CGST Act, Rules and Notifications issued there under shall include a reference to the corresponding provisions of the KSGST Act, Rules and the Notifications issued there under.

3. The issues on which advance ruling sought are stated above.

4. Contentions of the Applicant

4.1. The applicant is a company engaged in manufacture and export of value-added seafood items and ready to eat food products. The applicant claims that the items are prepared without addition of preservatives and using RETORT technology from Japan which ensures a shelf life of 18 months. In the process, food and containers are made commercially sterile, precooked food items are packed in a special multilayer pouch, vacuum sealed and made bacteria free by retort processing. Such products are ready to eat once the pouch is opened and no further cooking is necessary. The items are to be heated if required to serve hot. However, in respect of item at Sl.No. 27, they have mentioned that the same is not ready to eat, but is only ready to cook. The applicant has provided the list of ingredients in each item, and has also provided the classification as they deem fit, and wants to know whether the said classification is correct.

5. Comments of the Jurisdictional Officer

The application was forwarded to the jurisdictional officer as per provisions of Section 98 (1) of the CGST Act. The jurisdictional officer has not offered any comments and hence it is presumed that the jurisdictional officer has no specific comments to offer. It is also construed that there are no proceedings pending on the issue against the applicant.

6. Personal hearing

The applicant was granted opportunity for personal hearing on 21/06/2024. Sri. Sreejith Kuniyil, Chartered Accountant represented the applicant for personal hearing, and reiterated the contentions made in the application.

7. Discussion and conclusion.

7.1. The application is admissible as per sub section 2 (a) of section 97.

7.2. Except for Sl. No 27, which will be discussed separately, the issue involved is classification of pre-packed ready to eat items. The tax rates for goods falling under different classifications were notified vide Notification No 1/2017 Central Tax (Rate) dated 28-06-2017. As per explanation to the said notification,

(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).

(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.

    Thus, in order to arrive at the appropriate classification of the items enlisted above, we have to refer to Customs Tariff.

7.3. With regard to items 1 to 6 in the advance ruling application, viz., a-Puli Inji, b-Sambar Curry, c-Avial Curry, d-Kadala Curry, e-Kappa Puzhukku and f-Fish Kappa Biriyani, the applicant is of the opinion that they fall under HSN Code 2005 99 00. The applicant has mentioned that the products are ready to eat and can be consumed by the customer directly after opening the pack. On examination of Customs Tariff, we find that the heading 2005 includes “other vegetables prepared or pre-served otherwise than by vinegar or ascetic acid, frozen, other than...”.

        Further entries are as follows.

                            -Other vegetables and mixtures of vegetables

        20059900 -- Other.

    Thus, as per general explanatory note to General Rules for the interpretation of Tariff, by virtue of the sign '--' these items would fall under 20059900, as claimed by the applicant, only if they form sub-class of -'other vegetable and mixtures of vegetables'. It is evident that these items are not, as such, vegetables or mixtures of vegetables, but are food preparations made using vegetables and can be subject to direct use, or may be, after heating. Since no apt entries are found in Chapter 20, we need to inspect Chapter 21, which accommodates miscellaneous edible preparations.

    Supplementary notes 5 to Chapter 21 specifically states that “Heading 2016 inter alia, includes

(b) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, mil or other liquids), for human consumption.

    In the light of Rule 3 (a) of the Rules for interpretation of Tariff, we find that HSN 2106 provides a more specific description of the items in question vis-a-vis HSN 2005. Therefore, in the light of the specific inclusion under heading 2106, we are of the opinion that the above items fall under heading 2106 and not under 2005 as claimed by the applicant. More specifically, these items fall under HSN 21069099, i.e., “food preparations not elsewhere specified or included, other”.

7.4. Now let us take up item No 7 in the list, viz., thenga varutharachatu @ varutharapu. The applicant has mentioned that the product is ready to eat and can be consumed by the customer directly after opening the pack. The applicant has classified the item under HSN 20081990. As per Customs Tariff, 20081990 is 'other' and a sub-class of -- 200819, i.e., ‘other including mixtures' which, again, is a sub-class of 'Nuts, ground-nuts and other seeds, whether or not mixed together'. Heading 2008 itself covers 'Fruit, nuts and other edible parts of plants, otherwise prepared or preserved,...not elsewhere specified'. For the reasons explained in 7.3 above, we find that this is a very general description and considering the fact that the same is a ready to eat item, the same can more specifically be classified under HSN 21069099, i.e., “food preparations not elsewhere specified or included, other”.

7.5. The applicant has classified item No 8 to 12, which include Mutton Curry, Mutton Roast, Beef Fry and Beef Roast, under 1602 50 00. They have mentioned that the products are ready to eat and can be consumed by the customer directly after opening the pack. Chapter 16 contains 'Preparations of meat, of fish...etc. 1602 50 00 is 'Other prepared or preserved meat, meat offal, blood ... of bovine animals. Mutton Curry, Mutton Roast, Beef Fry and Beef Roast, when packed in ready to eat form, constitutes “ready to eat packaged food” more specifically than 'prepared or preserved meat'. For the reasons explained in paragraph 7.3 above, we are of the opinion that these items also deserve classification under HSN 21069099.

7.6. The next set of items constitute 'Kerala Chicken Curry', 'Chettinadu Chicken Curry', 'Chicken Stew' and 'Chicken Biriyani', which the applicant claims to be classifiable under 1602 32 00. The applicant has mentioned that the products are ready to eat and can be consumed by the customer directly after opening the pack. The classification adopted by the applicant covers 'Other prepared or preserved meat, meat offal, blood of fowls of the species 'Gallus domesticus'. However, based on the ratio discussed in the previous paragraphs, we find Kerala Chicken Curry', 'Chettinadu Chicken Curry', 'Chicken Stew' and 'Chicken Biriyani', described in the literature provided by the applicant constitutes 'ready to eat packaged food” more specifically than 'prepared or preserved meat of fowl'. For the reasons explained in paragraph 7.3 above, we are of the opinion that these items also deserve classification under HSN 21069099.

7.7. The next three items are items of fish, two types of 'curries' and fish biriyani, which the applicant proposes to classify under 1604 14 10. The description is the same as in paragraph 7.5 and 7.6 above, but in place of bovine animals and fowl, the content is prepared or preserved fish. The applicant has mentioned that the products are ready to eat and can be consumed by the customer directly after opening the pack. This sub-heading, viz., 16041410 specifically pertains to Tunas'. Irrespective of the fact that the classification applicable to an item of tuna fish cannot be made applicable to all fish items, we find that the items involved are to be more specifically included under the category of 'ready to eat packaged food' rather than 'prepared or preserved fish'. The reason for arriving at this conclusion are as explained in paragraph 7.3 above. Thus, we are of the opinion that the right classification of these items is HSN 21069099.

7.8. This discussion applies to 'Prawn Chutney powder' which the applicant proposes to classify under 1605 29 00. This is a classification applicable to 'Aquatic Invertebrates' which is prepared or preserved. The applicant has mentioned that the product is ready to eat and can be consumed by the customer directly after opening the pack. We find that the Prawn Chutney powder' merits specific classification under HSN 21069099, since is 'ready to eat packaged food”. The ratio applied to earlier discussions is squarely applicable in this case as well.

7.9. The next list consists of Soya Coconut Fry, Masala Rice, Coconut Rice, Vegetable Pulavo and Tomato Rice which they propose to classify under HSN 2106 90 99. The applicant has mentioned that the product is ready to eat and can be consumed by the customer directly after opening the pack. We find that this classification is correct. But there are different items with different rates which are classified under this HSN. Out of these items falling under 2106 90 99, we find that the above listed items fall under the specific description “food preparations not elsewhere specified or included, other”.

7.10. The last item in the list is “Boiled Chinese Potato' @ Koorka. The applicant has mentioned that this is cooked but is not suitable for immediate consumption. The applicant has classified this item under 0710 10 00, which is an HSN applicable to Vegetables uncooked or cooked by steaming or boiling in water-Potatoes), frozen. While 07101000 broadly cover this item, we also find that this item can be included under 0711 (Vegetables provisionally preserved, but unsuitable in that state for immediate consumption) and also under HSN 2004 10 00 (Other vegetables prepared or preserved otherwise than by vinegar or acetic acid-Potatoes), Frozen. The process involved herein is not cooking per se, but the application says that it is 'prepared through cooking by boiling in water and preserved through retort technology'. Thus we find that the apt classification is 2004 10 10, since both preparation and preservation is applicable to the vegetable). Further, as per rules for interpretation of Tariff-3. (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 classification. On account of this rule as well, the item merits classification under 2004 10 10.

Given the observations stated above, the following rulings are issued;

RULING

Question No. 1. Whether the appropriate classification of the below goods is as follows.

Ruling: The classification of item No 22 to 26 in the list are as furnished by the applicant. With regard to the remaining items in the list, the classification furnished by the applicant is incorrect.

Question No. 2. If not, then what is the appropriate classification to be adopted for the above goods?

RULING: All items, other than item at Sl.No. 27 merits classification under HSN 2106 90 99. Item at Sl.No. 27 merits classification under HSN 2004 10 10.

To,

M/ s. HIC—ABF SPECIAL FOODS PRIVATE LIMITED
11 / 630—BAROOR INDUSTRIAL DEVELOPMENTAREA,
PROJECT COLONY ROAD AROOR, 688S34.

Copy submitted to:

1 . The Chief Commissioner of Central Tax and Central Excise, Thiruvananthaporam Zone , C.R.Building, I.S.Press Road, Cochin - 6820 18. |E-mail ID: cccochin@nic.in; ccu-cexcok@nic.in]

2. The Commissioner of State Goods and Services Tax Department, Tax Towers, Karamana, Thiruvananthapuram 695002 .
(email: cst.sgst@kerala.gov. in).

3. The Commissioner of Central Tax & Central Excise , Thiruvananthapuram Commr. ’te, GST Bhavan, Statue, Thiruvananthapuram -. (E-mail id cornmr-tvmhqrs@gov.in ) .

Copy to:

1 . The joint Commissioner, TPS, HQ, Thiruvananthapuram.

2. The Deputy Com missioner, ITMD, CCT, Thiruvananthapuram.
(for uploading in the Website of the department).

3. Tax payer services Clrcle , Alappuzha.

4. Supdt. Central Tax, Cherthala Range, Alappuzha Division.