M/s. Swastiks Masalas Pickles and Food Products Private Limited (herein after referred to as “the applicant”), # 446, Swastiks, 18th Main, 4th T Block, Jayanagar, Bengaluru-560 041 having GSTIN 29AADCS9940B1Z8 have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2017, in form GST ARA-01 discharging the fee of ₹ 5,000/- each under the CGST Act and the KGST Act.

2. The Applicant is a Private Limited Company registered under the provisions of Central Goods and Services Tax Act, 2017 as well as Karnataka Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act and KGST Act respectively). The Applicant is engaged in manufacture of spices, masalas, pickles and food products in the brand name of “SWASTIK”. The applicant, among other things, also manufactures and sells “Rava Idli Mix” under the brand name of SWASTIK, classifying the same under tariff heading 2106 9099, on discharging GST at 18%. However the applicant felt that the said product merits classification under HSN 1106 and hence filed the instant application.

3. The applicant, in view of the above, sought advance ruling in respect of the following question:

a. What is the HSN Code of the product “Rava Idli Mix” ?

4. Admissibility of the application: The question is on the issue of classification of the product “Rava Idli Mix”, which is covered under “classification of any goods or services or both” and hence is admissible under Section 97(2)(a) of the CGST Act 2017.

5. BRIEF FACTS OF THE CASE: The applicant furnishes the following facts relevant to the issue :

5.1 The Applicant stated that they are engaged in manufacture of masalas, pickles & other food products and they also manufacture & market the product “Rava Idli Mix”, which is a mix of flour of cereals / grains along with pulses added with spices & condiments. They furnished the process followed by them to manufacture the product “Rava Idli Mix”, which it as under:

a) Purchase food grains and pulses from open market

b) Such cereals/grains & pulses are sorted, washed and then sent to grinding machine, where it is grinded into flour.

c) Sometimes, the applicant purchases the flour directly from the vendors.

d) The flours of cereals/grains & pulses are mixed in certain proportion added with certain spices. The mixed content is commonly known as “Rava Idli Mix”

e) At the processing unit, the applicant does not carry on any process of cooking, but carries on only mixing process, whereby spices, condiments are mixed with flour of grains, cereals and pulses. Flour of grains, cereals and pulses are used in its primary farm.

f) The product “Rava Idli Mix” is packed in different quantities as per the marketing requirements and distributed through the marketing distribution channel.

g) On the packaging, along with other statutory disclosures, applicant also prints the recipe containing the process of preparing Rava Idli by using the subject product adding certain other ingredients such as sour curds and coriander leaves.

h) Every consumer of the product “Rava Idli Mix” is required to follow the process of mixing and adding such other ingredients later to be cooked before such product can be consumed as eatable.

5.2 The Applicant stated that, on the basis of limited understanding of the classification, they had classified the product “Rava Idli Mix” under chapter 21 with HSN 2106 9090 and have been discharging 18% GST on the said product. Further during the course of detailed examination of classification by independent expert, with the new requirement of compulsory as to HSN, it is understood that the classification under HSN 2106 9090 is not correct and the said product merits classification under HSN 1106 1010.

6. Applicant’s Interpretation of Law : The applicant furnished their interpretation of law with regard to classification of the product “Rava Idli Mix”, which is as under:

6.1 The applicant with regard to coverage of the products under heading 1106 stated as under.

a) Chapter 11 covers the products of milling industry; malt; starches; inulin; wheat gluten as per the harmonized system of nomenclature.

b) Chapter 11 does not cover

i. Roasted-malt put up as coffee substitutes (heading 0901,or 2101);

ii. Prepared flours, groats, meals or starches of heading 1901;

iii. Corn flakes or other products of heading 1904;

iv. Vegetables, prepared or preserved of heading 2001,2004 or 2005;

v. Pharmaceutical products (chapter 30); or

vi. Starches having the character of perfumery, cosmetic or toilet preparations (chapter 33).

c) Products from the milling of the cereals listed in the table below fall in this chapter if they have, by weight on the dry product:

i. A starch content (determined by the modified Ewers polarimetric method) exceeding that indicated in column (2); and

ii. An ash content (after deduction of any added materials) not exceeding that indicated in column (3). Otherwise, they fall in heading 2302. However, germ of cereals, whole, rolled, flaked or ground, is always classified in heading 1104.

d) Products falling in this chapter under the above provisions shall be classified in heading 1101 or 1102 if the percentage passing through a woven metal wire cloth sieve with the aperture indicated in column (4) or (5) is not less, by weight, that that shown against the cereal concerned. Otherwise, they fall in heading 1103 or 1104.

e) For the purpose of heading 1103, the terms “groats” and “meal” mean products obtained by the fragmentation of cereal grains, of which :

i. In the case of maize (corn) products, at least 95% by weight passes through a woven metal wire cloth sieve with an aperture of 2 mm;

ii. In the case of other cereal products, at least 95% by weight passes through a woven metal wire cloth sieve with an aperture of 1.25 mm.

6.2 The applicant with regard to coverage of the products under heading 2106 stated as under:

a) Chapter 21 covers Miscellaneous Edible Preparations, as per the harmonized system of nomenclature.

b) As per chapter 5 heading 2106 includes

i. Protein concentrates and textured protein substances;

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

iii. Preparations consisting wholly or partly of foodstuffs, used in the making of beverages of food preparations for human consumption;

iv. Powders for table creams, jellies, ice-creams and similar preparations, whether or not sweetened;

v. Flavouring powders for making beverages, whether or not sweetened;

vi. Preparations consisting of tea or coffee and milk powder, sugar and any other added ingredients;

vii. Preparations (for example, tablets) consisting of saccharin and foodstuff, such as lactose, used for sweetening purposes;

viii. Pre-cooked rice, cooked either fully or partially and their dehydrates; and

ix. Preparations for lemonades or other beverages, consisting, for example, of flavoured or coloured syrups, syrup flavoured with an added concentrated extract, syrup flavoured with fruit juices and concentrated fruit juice with added ingredients.

c) Tariff item 2106 9099 includes sweet meats commonly known as “Mistans” or “Mithai” or called by any other name. They also include products commonly known as “Namkeens”, “Mixtures”, “Bujia”, “Chabena” or called by any other name. Such products remain classified in these sub-headings irrespective of the nature of their ingredients.

6.3 The applicant with regard to the interpretation of classification of the product “Rava Idli Mix” stated as under:

a) The applicant understands that one has to follow tariff act along with chapter notes, section notes and rules of interpretation for classifying the product.

b) GST Act 2017 has not notified Tariff Act. However Notification No.1/2017-Central Tax, under sl.no.iii of explanation specifies that “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).-Further the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to be interpretation of this notification.

c) The applicant, reproducing the rules 1 to 6 under Customs Tariff Act 1975, for interpretation of First Schedule to the said Act, stated that chapter 11 covers the products of the milling industry, malt, starches, inulin and wheat gluten as per the Customs Tariff Act 1975.

d) Sub-heading 1106 covers “flour, meal and powder of the dried leguminous vegetables of heading 0713, of sago or of roots or tubers of heading 0714 or of the products of chapter 8”. Further as per chapter note 2 of chapter 11 of first schedule to the Customs Tariff Act 1975, “this chapter does not cover products if they do not have by weight on the dry product a starch content of 45% and an ash content not exceeding 1.6%.”

e) The content of pulse flour is considerable and as per the common parlance test said products are understood to be instant mixed flour in the market; looking at the process of the preparation of instant mixed flour and proportion of ingredients used in preparation, it is deduced that flours of grains and pulses are the major component of the said finished products; the said grains and pulses shall very well be covered under heading ‘0713’ having brief description ‘Dried Leguminous Vegetables’ and accordingly, instant mixed flour made from such dried leguminous vegetables shall be classified under heading ‘1106’ having brief description ‘Meal and Powder of the dried leguminous vegetables of heading 0713’.

f) Heading ‘2106’ is related to edible and food preparation, with brief description ‘Food preparation not elsewhere classified’ from which it can be deduced that the following type of transactions can be included in the said entry.

i. Ready for consumption form

ii. Food preparations where there is minimal process required or no process required before consuming such food preparation like khakhra etc.,

iii. Residual entry; if not classified in any other chapter.

g) The instant mixed flour can’t be classified under heading 2106 due to the following reasons.

i. The said mixed flour sold to customers is not in the form of ready to eat.

ii. One has to not only carry out mixing process but also need to add sour curds & other things as may be required, for preparing the Indian dish from the said mixed flour. The recipe of preparing Indian dish by using the said mixed flour is also described on packet itself. In nutshell, for preparing Indian dish, one has to carry our process prescribed on food packet. Further, significant process is required to be carried out on mixed flour to prepare final Indian dish.

iii. Instant mix/ ready mix flour is by all means not a processed food, neither cooked food, nor semi-processed food, nor semi cooked food, nor preserved food or not a ready to eat food. Instant mixed flour is a flour of grains and pulses mixed with spices, condiments.

iv. The description stated in heading 1106 suits for the instant mixed flour and hence there is no need to go under residual entry.

h) The product being manufactured by the applicant consists of flour of grains and pulses equivalent to 90% of total quantity in the packet. There is no further processing of flours except mixing of flours in different percentages.

i) The classification of the product depends on the primary ingredient/major raw materials of the product, as no new product emerges after mixing of flour of grains.

j) As per rule 3(a) of the general rules for the interpretation of customs tariff, “when goods are prima facie classifiable under two or more headings, classification shall be the heading which provides the most specific description shall be preferred to headings providing a more general description”

k) As per rule 3(b) of the general rules for the interpretation of customs tariff, “mixtures, 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 the criterion is applicable.”

l) The more specific heading, on the basis of rules 3(a) & 3(b) of general rules for interpretation of customs tariff, would be 1106 as the tariff item 2106 is a residual entry. As the items are specifically covered under rule 3 (a) of general rules, the need for seeing rule 3(c) may not arise.

m) The product is required to be classified under chapter 11 under sub-heading 1106 as the major raw material for “Rava Idli Mix” is a flour of grains which are produced by milling industry.

n) The Central Government has clarified vide circular No.80/54/2018-GST dated 31.12.2018 that Chhatua or Sattu is a mixture of flour of ground pulses and cereals. HSN code 1106 includes the flour, meal and powder made from peas, beans or lentils (dried leguminous vegetables falling under 0713). Such flour improved by the addition of very small amounts of additives continues to be classified under HSN code 1106. If unbranded, it attracts NIL GST (Sl.No.78 of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017) and if branded and packed it attracts 5% GST (Sl.No.59 of schedule I to the Notification No.2/2017-Central Tax (Rate) dated 28.06.2017).

o) The Gujarat Authority for Advance Ruling, vide order No.GUJ/GAAR/R/43/2020 dated 30.07.2020, in the case of Dipak kumar Kantilal Chotai held that “Instant Mix flours are required to be classified under chapter 11 under sub-heading 1106 provided starch content is more than 45% and ash content is less than 1.6%. Otherwise the product is required to be classified under chapter 2302 as per the chapter note 2 of chapter 11 of Customs Tariff Act 1975.

p) In the case of M.T.R. Foods Pvt. Ltd., Ahmedabad, vide determination order No.2013/D/197/219 dated 20.12.2013, it is held and determined that instant mix products like Rava Idli floour are covered by entry 12 (ii) of Schedule-I to the GVAT Act, 2003 and are tax free goods.

q) Independent laboratory has provided the following report, as per the said report the ash content is more than the specified percentage, of 2.5%, in chapter notes of Chapter 11.

r) As per chapter note 3 of chapter 11, Rava Idli Mix could fall under chapter 2302 and the applicable rate of tax is 5% as per notification 01/ 2017-Central Tax.

7. Ms. Neeharika Inti, Deputy Commissioner of Central Tax, Division-6, Bengaluru South Commissionerate, Bengaluru, vide their letter dated 17.09.2021, offered comments on the question raised by the applicant inter alia stating that the product in question is a mix of various ingredients & all the ingredients are equally important and hence does not merit classification based on the major constituent of the product. Therefore this office is of the opinion that “Rava Idli Mix”, manufactured and marketed by the applicant, is correctly classifiable under tariff heading 2016, which attracts 18% GST.

PERSONAL HEARING-PROCEEDINGS HELD ON 07.10.2021.

8. Shri. Lokesh Chartered Accountant & Authorised Representative of the applicant appeared for personal hearing proceedings and reiterated the facts narrated in their application.

FINDINGS & DISCUSSION

9. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act.

10. We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant & the submissions made by their learned representative during the time of hearing.

11. The applicant is a manufacturer of various food products, one amongst which is the product “Rava Idli Mix”. The applicant, at present, are classifying the said product under tariff heading 2106 9090 & have been discharging 18% GST. An independent expert, on examination of the classification, felt that the classification of the said product under tariff heading 2106 9090 is incorrect and it merits classification under tariff heading 1106 1010. Hence the applicant filed the instant Application, seeking the right classification of the impugned product.

12. In view of the above, the issue before us to decide is the right classification of the product “Rava Idli Mix”. We invite reference to the explanations (ii) &, (iv) to the Notification No.01/2017-Central Tax (Rate) dated 28.07.2017, with regard to classification issues, which specify as under:

(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.

13. The applicant, though at present are classifying the impugned product under tariff heading 2106 9090, filed the instant application contending that the impugned product is classifiable under tariff heading 1106 1010. We proceed to examine and discuss the classification of the impugned product. The applicant submitted that the impugned product is prepared/manufactured by mixing certain flours of cereals/grains & pulses in certain proportion added with certain spices and condiments. However, the applicant has neither indicated the specific constituents (grains and pulses) nor the proportion in which they were mixed. Applicant submitted that the subject product is an instant ready mix, which needs to be mixed with sour curd and other ingredient as required for preparing rava idlis.

14. Chapter 11 covers products of the milling industry; malt; starches; inulin; wheat gluten. While Note 1 to the Chapter details the products which are specifically not covered under the Chapter, Note 2 aides the classification of products under various Tariff headings of the Chapter as under:

2. (A) Products from the milling of the cereals listed in the table below fall in this Chapter if they have, by weight on the dry product :

(a) a starch content (determined by the modified Ewers polarimetric method) exceeding that indicated in column (2); and

(b) an ash content (after deduction of any added minerals) not exceeding that indicated in column (3).

(3). Otherwise, they fall in heading 2302. However, germ of cereals, whole, rolled, flaked or ground, is always classified in heading 1104.

(B) Products falling in this Chapter under the above provisions shall be classified in heading 1101 or 1102 if the percentage passing through a woven metal wire cloth sieve with the aperture indicated in column (4) or (5) is not less, by weight, than that shown against the cereal concerned. Otherwise, they fall in heading 1103 or 1104.

From the above it is seen that the Tariff headings from 1101 to 1104 covers products of milling of specific cereals listed in Column(1) of the table, with a defined starch and ash content, and having a particular size/texture. In the instant case it is an admitted fact that the impugned product is manufactured by mixing the flours of certain cereals and pulses, the details of which have not been disclosed by the applicant, and hence it is a mixture and neither tallies with the content at column (1) of the above table nor meet the specific requirement of starch and ash content. Thus the compliance requirement is not fulfilled and hence the impugned product does not merit the classification under tariff headings from 1101 to 1104. Also the Tariff heading 1105 covers FLOUR, MEAL, POWDER, FLAKES, GRANULES AND PELLETS OF POTATOES, which is not the case with the impugned product.

15. Further tariff heading 1106 covers flour, meal and powder of (i) the dried leguminous vegetables of heading 0713, (ii) of sago or of roots or tubers of heading 0714 or (iii) of the products of chapter 8 as under:

From the above it is clear that Tariff heading 1106 covers flour, meal and powder of individual raw materials of either leguminous vegetables(of heading 0713) or roots or tubers(of heading 0714) or of products of Chapter 8. Like other tariff headings in the Chapter, tariff heading 1106 also covers products of individual raw material and not mixtures. “Rava Idli mix” is admittedly a mixture of flour of pulses, cereals and other ingredients resulting in a different product. Thus the impugned product does not get covered under this tariff heading i.e. 1106.

16. The applicant contended that their product “Rava Idli Mix” merits classification under tariff heading 1106, on the basis of circular No. 80/54/2018-GST dated 31.12.2018 wherein it is clarified at para 3 that Chhatua or Sattu is a mixture of flour of ground pulses and cereals. HSN code 1106 includes the flour, meal and powder made from peas, beans or lentils (dried leguminous vegetables falling under 0713). Such flour improved by the addition of very small amounts of additives continues to be classified under HSN code 1106. In the instant case, the applicant has not stated any primary ingredient and merely submitted the product to be mixture of flour of cereals, pulses and other constituents. It is very clear that the circular is in respect of flour of individual pulses with addition of flour of cereals as additive, but not in respect of mixture of the flours of cereals and pulses. Further it says- bout addition of very small amounts of additives, but not addition of different flours of cereals and pulses resulting in a different product. Thus the circular supra is not applicable to the instant case.

17. Chapter 21 covers Miscellaneous edible products and tariff heading 2106 covers food preparations not elsewhere specified or included. In view of the above, the impugned product merits the classification under tariff heading 2106, as the same is an edible product & food preparation not specified elsewhere. Further Rule 3(a) of the general rules for the interpretation of customs tariff specifies that “when goods are prima facie classifiable under two or more headings, classification shall be the heading which provides the most specific description shall be preferred to headings providing a more general description”. Thus the tariff heading 2106 is more specific classification of the impugned product.

18. Rule 3(b) of the general rules for the interpretation of customs tariff specifies that “mixtures, 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 the criterion is applicable.” In the instant case the impugned product is admittedly a mixture and does not give the character of either of the constituent flour but altogether a different new product with the different character as “Rava Idli Mix”. Therefore the impugned product is rightly classifiable under Rule 3(a) supra and hence Rule 3(b) is not applicable. Further as the impugned product is covered under rule 3(a), there is no need to look into rule 3(c).

19. In view of the above, the impugned product “Rava Idli Mix” merits classification under tariff heading 2106 and attract the GST rate of 18%, in terms of entry number 23 of schedule-III to the Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 which covers all kinds of food mixes including instant food mixes.

20. In view of the foregoing, we pass the following

RULING

The product “Rava Idli Mix” merits classification under tariff heading 2106 and attracts 18% GST in terms of entry number 23 of Schedule-III to the Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017.