BRIEF FACTS

The applicant M/s. Dipakkumar Kantilal Chotai (Talod gruh Udyog) has submitted that theirs’ is a proprietorship firm and is one of the leading and highly reputed companies in the field of selling mixed flour which is used for preparing various Indian dishes; that applicant manufactures mixed flour which is used by customers for preparing different traditional Indian dishes such as Khaman, Gota, Dhokla, Handwa, Rice & Rava Idli Dhosa, Dahiwada, Dalwada, Menduwada, Bhajiya, Vada Masala, Khichu Upma, Muthiya Pudia, Gulab Jamun, Moong Bhajiya and Cholafali; that in a nutshell the said mixed flour is used for preparing instant farsan or eatable and a special mention can be made of Khaman, Gota and Handwa mix which has been accepted in the market as a product leader.

2. The applicant has stated that he is in the business of manufacturing and selling of varied types of mixed flour under the ‘Talod’ brand name that are used to prepare instant Farsan and other similar dishes; that ready to mix/instant mix is a flour of grains and pulses mixed with spices and condiments, that recipe for preparing farsan/eatables is printed on the packet of product and by following the direction of recipe, farsan/eatables can be prepared instantly after adding such other ingredients as required. The process followed by Talod can be understood as under:

(a) Talod purchases food grains and pulses from open market.

(b) Such pulses are sorted and washed and then send to grinding machine.

(c) Pulses are grinded into flour in grinding machine for e.g. where Grams is purchased it results into gram flour by following grinding process. In certain cases, Talod purchases grinded flour directly from the vendors.

(d) Now, certain spices are mixed in flour and such mixed flour is packed in various packings.

(e) Mixed flour (commercially known as ‘Instant Mix Flour’) are sold in open market or through distributors to consumers.

(f) End consumer of such instant mix flour is required to follow certain food preparation process before such product can be consumed as eatable.

(g) Hence, instant mix flour cannot be consumed as it is, but it is required to follow certain cooking procedures before consumption. Hence the product manufactured and sold by the applicant is not ‘ready to eat’ but can be said as ‘ready to cook’.

3. The applicant has submitted an activity-wise manufacturing process flow chart for preparing final mixed flours in a diagrammatic manner and has explained the manufacturing process as under:

(a) Ready to mix/Instant mix flour contains mainly flours of grains and/or pulses like bengal gram dal, gram dal, udad dal, chana dal, Moong dal, Paddy, Sago, wheat granule, rice etc. where the content of ‘flour’ is having major weightage. Most of the mixed flour products have ‘flour’ content more than 70-90%.

(b) Powder of spices like pepper, red chilli, coriander, ajma, sounff, jeera, turmeric, tamarind, iodised salt, sugar, mustard, lemon, condiments, citric acid, sodium bicorbonate, turmeric, cumin, clove, curry leaves, adafoetida, baciliyam, black pepper, tej patta, curry leaves bundian, fennel seeds, anise seeds, bay leaf, neem leaves(sweet), flavours etc. are added in a very little quantity to make the product tasty and delicious.

(c) At the processing unit, the applicant is not carrying any process of cooking. The applicant carries on only mixing process, whereby spices, condiments and flavours are mixed with flour of grains, cereals and pulses. Flour of grains, cereals and pulses are used in its primary form.

(d) Instant mix/Ready to mix flour is packed in sealed packing of 50/90/200/250/500 grams and in 1 kgs. On packing material, preparation process/recipe is printed to prepare food from such instant mix.

(e) 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 and flavours.

4. The applicant has given the details of raw materials used in various products manufactured and flour of grains and pulses and other condiments contained in the products as follows:

5. The applicant has put forward the following question for which Advance Ruling is to be sought:

(1) “Whether on the basis of facts of the case narrated above, Mix flour mentioned above in Sr.No.1 to 17 in above table are classified under Tariff item 1106 vide Entry No.59 of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 and Notification No.01/2017-State Tax (Rate) dated 30.06.2017, Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017 (collectively referred to as the ‘Rate Notifications’).

(2) Whether on the basis of facts of the case narrated above, Chutney Powder mentioned above in Sr.No.18 in above table can be classified under Tariff item 2106 vide Entry No.100A of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 and Notification No.01/2017-State Tax (Rate) dated 30.06.2017, Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017 (collectively referred to as the ‘Rate Notifications’).

(3) If not, whether on facts and circumstances of the case, Mixed flour and Chutney Powder mentioned above are to be classified in any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit.”

(4) Chutney powder when supplied with Gota Mix flour and Bhajiya Mix flour, should be considered as Composite Supply having HSN of principal supply i.e. 1106 and 5% GST should apply.

6. The applicant has referred to Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 as well as to explanations (iii) and (iv) of the said notification which provides tax rates on intra-state supplies of goods. The applicant has described the relevant entries related to mixed flour products appearing in Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 as under:

7. The applicant has further stated that content of pulse flour is considerable and as per the common parlance test, said products are known as instant mixed flour in the market; that looking to 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; that the said grains and pulses shall very well cover 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’; that another entry related to edible and food preparation is given under heading ‘2106’ which is having brief description ‘Food preparation not elsewhere classified’; that by going through the said entry, it is deduced that the following type of transactions can be included in the said entry:

• Ready for consumption form.
• Food preparations where there is minimal process required or no process required before consuming such food preparation like Khakhra etc.
• Residual entry; if not classified in any other chapter.

7.1. The applicant has further stated that in the said case, the instant mixed flour cannot be classified under Chapter heading ‘2106’ due to the following reasons:

• The said mixed flour sold to customers are not in form of ready to eat.
• For preparing various Indian dishes, one has to not only carry out mixing process but also need to add spices, condiments and flavours etc. and other things as may be required. The recipe of preparing various Indian dishes by using the said mixed flour is also described on packet itself. In nutshell, for preparing Indian dishes, one has to carry out process prescribed on food packet. Further, significant process is required to be carried out on mixed flour to prepare final Indian dish.
• As the description stated in heading 1106 suits for the said products i.e.instant mixed flour; there is no need to go under residual entry.

7.2 The applicant submitted that as per the legal provisions of erstwhile VAT Law, no VAT was payable on the cereal or pulse flour. They have reproduced the entry for classification in VAT schedule as under:

SCHEDULE-I

(See: Sub-section (1) of section 5)

GOODS, THE SALES OR PURCHASE OF WHICH ARE EXEMPT FROM TAX

7.3 The applicant has also referred to different orders determined under VAT regime in relation to classification of cereal or pulse flour which are discussed hereunder:

(a) In the case of KITCHEN EXPRESS OVERSEAS LTD.-SANTEJ, vide determination order no.2010/D/171-177/No.356-359 dated 12.08.2010, it is held and determined that instant mix products ‘Gota flour’, ‘Khaman flour’, ‘Dalwada flour’, ‘Dahiwada flour’, ‘Idli flour’, ‘Dhokla flour’ and ‘Dhosa flour’ are covered by Entry-12(ii) of Schedule-I to the G.VAT Act, 2003 and are tax free goods.

(b) In the case of VITAGREEN PRODUCTS PVT.LTD.-MATODA, RAJKOT, vide determination order no.2010/D/55-62/No.45-48 dated 27.05.2011, it is held and determined that instant mix products, ‘Dhokla flour’ ‘Dhosa flour’, ‘Dalwada flour’, ‘Dahiwada flour’, ‘Gota flour’, ‘Khaman flour’, , ‘Idli flour’ are covered by Entry-12(ii) of Schedule-I to the G.VAT Act, 2003 and are tax free goods.

(c) 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 ‘Rava idli flour’, Plain upma flour,’ ‘Rice idli flour’, ‘Vada flour’, ‘Dosa flour’, ‘Masala upma flour’, ‘Rava Dosa flour’, ‘Muruku flour’, ‘Ragi Dosa flour’, ‘Khaman Dhokla flour’, ‘Puttu flour’, ‘Uttappam flour’, ‘Masala idli flour’, ‘Bajji and Bonda flour’, ‘Ragi rava idli flour’, ‘Oats idli flour’, ‘Multi Grain Dosa flour’, ‘Oats upma flour’ are covered by Entry-12(ii) of Schedule-I to the G.VAT Act, 2003 and are tax free goods.

7.4 The applicant has stated that based on the above, it is deduced that under the erstwhile VAT regime, instant mixed flour packets available in the market, which is used to prepare various Indian dishes such as Khaman, Gota, Dhokla, Handwa, Khichu, Idli etc. will be treated as cereal and pulse mixed flour and as per rate schedule of VAT Act; Nil rate of Tax shall attract thereon. Accordingly, based on above explanation and by taking the firm base of VAT regime; the appropriate HSN and rate for the products under the consideration are listed below:

Further, applicant also supplies chutney powder on which applicant is paying GST @5% as mentioned in Sr.No.100A under HSN 2106 as under:

7.5 The applicant has submitted that he provides chutney powder in a pouch along with GotaMix and Bhajiya Mix and no extra amount is collected for such chutney powder. Hence, supply of Gota Mix and Bhajiya Mix flour alongwith chutney powder should be considered as composite supply. Accordingly, by going through GST rate schedule along with Customs and VAT classification, the applicant is of the view that all the instant mix flours should be classified under HSN 1106 and GST rate should be 5%, Chutney powder should be classified under HSN 2106 and GST rate applicable should be 5% and Chutney powder when supplied with Gota Mix flour and Bhajiya Mix flour, should be considered as Composite Supply having HSN of principal supply i.e. 1106 and 5% GST should apply. The applicant has submitted the summary of understanding of GST rates and applicability of HSN codes as under:

8. The applicant vide his additional submission dated 08.07.2020 has submitted the details of HSN codes 1106 and 1901 as appearing in the Customs Tariff Act as under:

8.1 The applicant has also submitted the details of HSNs 1106, 0713 as well as 1901 alongwith their GST rates as per the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 as under:

8.2 The applicant has stated that it can be understood from the above the both the chapter heading 1106 and 1901 covers flour and flour preparations and hence, with this additional submission, they intend to submit that the ‘Flour’ for which advance ruling is sought for is covered under Chapter heading 1106 and not under 1901; that based on the explanations (iii) and (iv) of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017, while referring to the HSN and classification for GST, Tariff item, sub-heading, heading, chapter, section, chapter notes and general explanatory notes of the First Schedule to the Customs Tariff Act, 1975 shall also apply. Also, referring to the chapter notes of Chapter 19 of Customs Tariff, the relevant extract is reproduced below:

2. For the purposes of heading 1901:

a. the term ‘groats’ means cereal groats of Chapter 11;

b. the terms ‘flour’ and ‘meal’ means:

i. cereal flour and meal of Chapter 11, and

ii. flour, meal and powder of vegetable origin of any Chapter, other than flour, meal or powder of dried vegetables (heading 0712), of potatoes heading 1105) or of dried leguminous vegetables (heading 1106)

8.3 Hence on combined reading of aforesaid entries, it is clearly understood that Chapter 19 specifically excludes as under:

– Flour, meal or powder of dried vegetables (chapter heading 0712);

– Flour, meal or powder of potatoes (chapter heading 1105);

– Flour, meal or powder of dried leguminous vegetables (chapter heading 1106);

8.4 The applicant has further submitted that dried leguminous vegetables include pulses, beans, peas etc. By referring the process chart submitted in original submission, applicant prepares the mixed flour of dried leguminous vegetables that are used for preparing instant farsan and other similar dishes. Accordingly, applicant is of the view that mixed flour should be classified under HSN 1106 and GST rate should be 5% and should not be classified under HSN 1901 as it specifically excludes flour of dried leguminous vegetables. The applicant has submitted the summary of the understanding of the GST rates and applicability of HSN codes of their products as under:

8.5 The applicant has given additional submission through email dated 20.07.2020 vide which they have submitted photocopies of the invoices showing purchase of the pulses made by them such as Moong mogar, moong kora, urad gota, gramdal kori etc.. Also vide additional submission given through email dated 21.07.2020 they have submitted the Percentage-wise break-up of the floors and other ingredients as under :

DISCUSSION & FINDINGS:

9. We have considered the submissions made by the applicant in their application for advance ruling as well as the arguments/discussions made by their representative Shri Amish Khandhar, Chartered Accountant, at the time of personal hearing. We have also considered the issues involved on which Advance Ruling is sought by the applicant.

10. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 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 similar provisions of the GGST Act.

11. As per the submission of the applicant, they are involved in the business of manufacturing and selling of varied types of mixed flour under the ‘Talod’ brand name that are used to prepare instant Farsan and other similar dishes and these ready to mix/instant mix is a flour of grains and pulses mixed with spices and condiments. They have stated that recipe for preparing farsan/eatables is printed on the packet of product and by following the direction of recipe, farsan/eatables can be prepared instantly after adding such other ingredients as required. The applicant has given the details of raw materials used in various products manufactured and flour of grains and pulses and other condiments contained in the products as follows:

11.1 Percentage-wise break-up of the flours and other ingredients has been given by the applicant as under:

12. As per the submission given by the applicant, all the aforementioned flours from Sr.No.1 to 17 above are required to be classified under heading 1106 and fall under Sr.No.59 of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 (wherein GST rate is 5%) and chutney powder is classified under heading 2106 falling at Sr.No.100A of Schedule-I of the above notification wherein GST rate is 5%. However, on going through the break-up (percentage-wise) of the flours involved in the above products, it is seen that there are a few products, in which the content of rice flour, wheat flour, wheat granules is very high and thereby falling under either of headings 1101, 1102 or 1103 instead of heading 1106. Hence all these sub-headings alongwith their chapter notes as well as explanatory notes to HSN will have to be looked into. In order to determine the classification of the above 18 items, we will be first required to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 containing the headings, sub-headings as well as the rates of Central Tax GST applicable to various goods, which are covered under 6 schedules, as under:

(i) 2.5 per cent. in respect of goods specified in Schedule I,

(ii) 6 per cent. in respect of goods specified in Schedule II,

(iii) 9 per cent. in respect of goods specified in Schedule III,

(iv) 14 per cent. in respect of goods specified in Schedule IV,

(v) 1.5 per cent. in respect of goods specified in Schedule V, and

(vi) 0.125 per cent. in respect of goods specified in Schedule VI

Further, Explanation (iii) and (iv) of the said Notification read, 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.

12.1 In order to examine the aspect as to whether the aforementioned products fall under headings 1101, 1102, 1103 and 1106, we would be required to go through the said Headings as appearing in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), which read, as under:

1106 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

1106 10 00- Of the dried leguminous vegetables of heading 0713

1106 20 Of sago or of roots or tubers of heading 0714:

1106 20 10— Of sago

1106 20 20 — Of manioc (cassava)

1106 20 90— Of other roots and tubers

1106 30 – Of the products of Chapter 8 :

1106 30 10— Of tamarind

1106 30 20— Of singoda

1106 30 30— Mango flour

1106 30 90— Other

1101 00 00 WHEAT OR MESLIN FLOUR

1102 CEREAL FLOURS OTHER THAN THAT OF WHEAT OR MESLIN

1102 20 00 — Maize (corn) flour

1102 90 – Other :

1102 90 10 – – – Rye flour

1102 90 90 – – – Other

1103 CEREAL GROATS, MEAL AND PELLETS

– Groats and meal :

1103 11 — Of wheat :

1103 11 10 — Groat

1103 11 20 — Meal

1103 13 00– Of maize (corn)

1103 19 00 – Of other cereals

1103 20 00 – Pellets

12.2 Chapter Notes of Chapter 11 of the First Schedule to the Customs Tariff Act, 1975 read, as under:

1. This Chapter does not cover :

(a) roasted malt put up as coffee substitutes (heading 0901 or 2101);

(b) prepared flours, groats, meals or starches of heading 1901;

(c) corn flakes or other products of heading 1904;

(d) vegetables, prepared or preserved, of heading 2001, 2004 or 2005;

(e) pharmaceutical products (Chapter 30); or

(f) starches having the character of perfumery, cosmetic or toilet preparations (Chapter33).

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).

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.

3. For the purposes of heading 1103, the terms “groats” and “meal” mean products obtained by thefragmentation of cereal grains, of which :

(a) in the case of maize (corn) products, at least 95% by weight passes through a woven metal wirecloth sieve with an aperture of 2 mm;

(b) in the case of other cereal products, at least 95% by weight passes through a woven metal wirecloth sieve with an aperture of 1.25 mm.

12.3 Explanatory notes of HSN to Chapter-11 read, as under:

This chapter includes:

(1) Products from the milling of the cereals of Chapter 10 and of sweet corn of Chapter 7 other than milling residues of heading 23.02. In this context, the products from the milling of wheat, rye, barley, oats, maize (corn) (including whole cobs ground with or without their husks), grain sorghum, rice and buckwheat falling in this Chapter are to be distinguished from the residues of heading 23.02 in accordance with the criteria as to starch and ash content laid down in Chapter Note 2(A).Within the Chapter, as regards the cereals mentioned by name above, the flours of heading 11.01 or 11.02 are to be distinguished from the products of heading 11.03 or 11.04 in accordance with the criterion as to passage through a sieve laid down in Chapter Note 2(B). At the same time, all cereal groats and meal of heading 11.03 must fulfil the relevant criterion as to passage through a sieve laid down in Chapter Note 3.

(2) Products also obtained from the cereals of Chapter 10 by submitting them to the processes provided for in the various headings of the Chapter, such as malting or the extraction of starch or wheat gluten.

(3) Products obtained by submitting raw materials of other Chapters (dried leguminous vegetables, potatoes, fruit etc.) to processes similar to those indicated in paragraph(1) or (2) above.

This Chapter excludes, inter alia :

(a) roasted malt put up as coffee substitutes (heading 09.01 or 21.01);

(b) cereal husks (heading 12.13)

(c) prepared flours, groats, meals or starches of heading 19.01;

(d Tapioca(heading 19.03).

(e) Puffed rice, corn flakes and the like, obtained by swelling or roasting and bulgar wheat in the form of worked grains(heading 19.04)

(f) vegetables, prepared or preserved, of heading 20.01, 20.04 or 20.05;

(g) Residues derived from the sifting, milling or other working of cereals or of leguminous plants (heading 23.02).

(h) pharmaceutical products (Chapter 30).

(ij) Products of Chapter 33(see notes 3 and 4 to Chapter 33).

12.4 Explanatory notes to HSN in respect of heading 11.01, 11.02, 11.03 and 11.06 read, as under:

11.01 Wheat or meslin flour.

This heading covers wheat or meslin flour (i.e. the pulverised products obtained by milling the cereals of heading 10.01) which fulfil the requirements as to starch content and ash content set out in paragraph (A) of Chapter Note 2(see General Explanatory Note) and comply with the criterion of passage through a standard sieve as required by paragraph (B) of that Note. Flours of this heading may be improved by the addition of very small quantities of mineral phosphates, anti-oxidants, emulsifiers, vitamins or prepared baking powders (self raising flour). Wheat flour may be further enriched by an addition of gluten, generally not exceeding 10%. The heading also covers ‘swelling’ (pregelatinised) flours which have been heat treated to pregelatinise the starch. They are used for making preparations of heading 19.01, bakery improvers or animal feeds or in certain industries such as the textile or paper industries or in metallurgy (for the preparation of foundry core binders). Flours wich have been further processed or had other substances added with a view to their use as food preparations are excluded (generally heading 19.01). This heading also excludes flours mixed with cocoa (heading 18.06 if they contain 40% or more by weight of cocoa calculated on a totally defatted basis, or heading 19.01, if less)

11.02 Cereal flours other than of wheat or meslin.

This heading covers flours (i.e. the pulverised products obtained by milling the cereals of chapter 10) other than flours of wheat or meslin. Products of the milling of rye, barley, oats, maize (corn) (including whole cobs ground with or without their husks) grain sorghum, rice or buckwheat are classified in this heading as flours if they fulfil the requirements as to starch content and ash content set out in paragraph (A) of Chapter Note 2(see General Explanatory Note) and comply with the criterion of passage through a standard sieve as required by paragraph (B) of that Note. Flours of this heading may be improved by the addition of very small quantities of mineral phosphates, anti-oxidants, emulsifiers, vitamins or prepared baking powders (self raising flour). The heading also covers ‘swelling’ (pregelatinised) flours which have been heat treated to pregelatinise the starch. They are used for making preparations of heading 19.01, bakery improvers or animal feeds or in certain industries such as the textile or paper industries or in metallurgy( for the preparation of foundry core binders). Flours which have been further processed or had other substances added with a view to their use as food preparations are excluded (generally heading 19.01). This heading also excludes flours mixed with cocoa (heading 18.06 if they contain 40% or more by weight of cocoa calculated on a totally defatted basis, or heading 19.01, if less).

11.03 Cereal groats, meal and pellets:

The cereal groats and meals of this heading are products, obtained by the fragmentation of cereal grains(including whole maize(corn) cobs ground with or without their husks), which, where appropriate, fulfil the requirements as to starch and ash content laid down in Chapter Note 2(A) and which in all cases comply with the relevant criterion as to passage through a sieve laid down in Chapter Note 3. As regards the distinction to be made between the flours of heading 11.01 or 11.02, the groats and meals of this heading and the products of heading 1104, see the General Explanatory note to Chapter (Item 1, second paragraph). Cereal groats are small fragments or floury kernels obtained by the rough grinding of grains. Meal is a more granular product than flour and is obtained either from the first sifting after the initial milling operation, or by re-grinding and re-sifting the groats resulting from that initial milling. Durum wheat meal or, semolina, is the principal raw material in the manufacture of macaroni, spaghetti or the like. Semolina is also used directly as a food stuff(example in making semolina puddings). This heading also includes meal(e.g. of maize(corn)) pregelatinised by heat treatment, used, for instance, as an additive in brewing. Pellets are products from the milling of cereals of this chapter which have been agglomerated either directly by compression or by the addition of a binder in a proportion not exceeding 3% by weight (see Note 1 to Section II). The heading does not cover pelletised residues derived from the milling of cereals (Chapter 23).

11.06 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:

(A) Flour, meal and powder of the dried leguminous vegetables of heading 0713:

This heading includes the flour, meal and powder made from peas, beans or lentils; they are mainly used for prepared soups or purees. The heading does not cover:

(a) Non-defatted soya flour (heading 12.08).

(b) Locust bean flour (heading 12.12).

(c) Soups and broths (whether in liquid, solid or powder form), with a basis of vegetable flours or meals (heading 21.04).

Products of this heading may be improved by the addition of very small amounts of anti-oxidants or emulsifiers. The heading also excludes:

(a) Sago pith(heading 0714).

(b) Prepared foodstuffs known as tapioca (heading 1903).

12.5 Recently, the Government has issued Circular No.80 dated 31.12.2018 containing clarification regarding GST rate and classification of some goods in which clarification has been issued with respect to classification of Chhatua or Sattu, which is a mixture of flour of ground pulses and cereals. The purpose of this circular being discussed here is that the said circular appears to be squarely applicable in the instant case. The issue regarding classification of Chhatua or Sattu as appearing in the said Circular reads as under:

3. Applicability of GST on Chhatua or Sattu:

“3.1 Doubts have been raised regarding applicability of GST on Chhatua (Known as “Sattu” in Hindi Belt).

3.2 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 (S. No. 78 of notification No. 2/2017-Central Tax (Rate) dated 28.06.2017) and if branded and packed it attracts 5% GST (S. No. 59 of schedule I of notification No. 1/2017-Central Taxes (Rate) dated 28.06.2017).”

Further the dictionary meaning of Sattu is as under:

“Sattu is flour from the Indian subcontinent consisting of a mixture of ground pulses and cereals. The dry powder is prepared in various ways as a principal or secondary ingredient of dishes.”

Thus, it can be seen from the above that HSN code1106 includes the flour, meal and powder made from peas, beans or lentils (dried leguminous vegetables falling under 0713) and such flour improved by the addition of very small amounts of additives continues to be classified under HSN code 1106.

12.6 It is seen that products obtained from milling of dried leguminous vegetable including peas, lentils are covered under heading 11.06 and by milling of cereals (in the instant case) fall under headings 11.01, 11.02 or 1103. The applicant submitted that the product at hand is manufactured by grinding of pulses, mixing of flours and addition of a small quantity of spices and the finished product is ready and packed. The flours of grams, moong dal, rice, wheat and urad dal etc. are mixed in various proportions and packed. There is a small addition of spices etc. but no further processing of the flours is done. As seen in the explanatory notes to Chapter 11 above, flours of cereals and flours of dried leguminous vegetable and lentils are classified under Chapter 11 if they are obtained only by the milling of these raw materials and no further processing has taken place and no addition of other substances with a view for their use as food preparations has been done. If that was the case, they would be classified under heading 19.01 and such products are excluded from Chapter 11. Explanatory notes to Chapter 19.01 also states that it covers food preparations with a basis of flour or meal or starch or malt extract where other substances may be added to main ingredients such as milk, sugar, eggs, fat, oil etc. Unprocessed flour obtained only by the milling and sieving of cereals, leguminous vegetable including peas, lentils etc. are to be classified under Chapter 11 alone. In the instant case, the product has a mixture of various flours such that multiple tariffs are involved i.e. headings 11.01, 11.02, 11.03 and 11.06. In this regard, we will be required to refer to Rule 3 of the General Rules for the interpretation of Customs Tariff which reads as under:

“3. When by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

(a) the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

(b) 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.

(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 consideration.”

13. On going through the percentage-wise break of the flours of the ingredients involved in the products (bearing brand name ‘Talod’) manufactured by the applicant at para 11.1 above, it is found that in respect of the products mentioned at Sr.Nos.1, 2, 4, 7, 8, 9, 10, 11, 12 and 13 of the list, we find that the flour content of leguminous flour is more in these products. Details of the same are, as under:

(a) Khaman mix flour at Sr.No.1 containing 66% leguminous flour and 34% spices and other ingredients.

(b) Gota mix flour at Sr.No.2 containing 75% leguminous floor and 25% spices and other ingredients.

(c) Handwa mix flour at Sr.No.4 containing 50% leguminous floor, 35% rice flour and 15% of spices and other ingredients.

(d) Dahi wada mix flour at Sr.No.7 containing 94% leguminous floor and 6% of spices and other ingredients.

(e) Dalwada mix flour at Sr.No.8 containing 95% leguminous floor and 5% of spices and other ingredients.

(f) Meduvada mix flour at Sr.No.9 containing 86% leguminous floor, 9% of rice flour and 5% of spices and other ingredients.

(g) Pudla mix flour at Sr.No.10 containing 96% leguminous floor and 4% of spices and other ingredients.

(h) Moong bhajiya mix flour at Sr.No.11 containing 95% leguminous floor and 5% of spices and other ingredients.

(i) Chorafali mix flour at Sr.No.12 containing 98% leguminous floor and 2% of spices and other ingredients.

(j) Bhajiya mix flour at Sr.No.13 containing 93% leguminous floor and 7% of spices and other ingredients.

As per Rule 3(b), 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. Accordingly, all the 10 products mentioned at (a) to (j) above have the essential characters of leguminous flour and therefore would be classifiable under sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975(1 of 1975). On going through the entry of the above product in the Notification No.01/2017-Central Tax(Rate) dated 28.06.2017(hereinafter referred to as the said notification), we find that the same appears at entry No.59 of Schedule-I of the said Notification(as amended vide Notification No.27/2017-Central Tax (Rate) dated 22.09.2017, on which GST payable is 5% (2.5% CGST + 2.5% SGST) which reads as under:

13.1 As regards the branded products mentioned at Sr.Nos.3, 5 and 6 of the list containing percentage-wise break of the flours of the ingredients involved in the products manufactured by the applicant mentioned at para 11.1 above, we find that the flour content of leguminous flour and rice flour is equal in these products. Details of the same are, as under:

(a) Dhokla mix flour at Sr.No.3 containing 45% leguminous flour, 45% of rice flour and 10% spices and other ingredients.

(b) Idli mix flour at Sr.No.5 containing 45% leguminous flour, 45% of rice flour and 10% spices and other ingredients.

(c) Dosa mix flour at Sr.No.6 containing 45% leguminous flour, 45% of rice flour and 10% spices and other ingredients.

In this case, Rule 3(c) is applicable i.e. when goods cannot be classified by reference to Rule 3(a) or 3(b) of the Rules of interpretation of the Customs Tariff, they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. Rice flour is classifiable under heading 1102 whereas leguminous flour is classifiable under heading 1106 and specific sub-heading 11061000. Hence the aforementioned products would be rightly classified under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (1 of 1975). The same will fall at Sr.No.59 of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 (as amended vide Notification No.27/2017-Central Tax (Rate) dated 22.09.2017 on which GST payable is 5% (2.5% CGST + 2.5% SGST).

13.2 Further, as per the percentage-wise break of the flours of the ingredients involved in the branded products manufactured by the applicant and mentioned at para 11.1 above, we find that the products mentioned at Sr.Nos.14 and 15 namely Upma mix flour and Rava mix flour each contain 70% of Suji flour (wheat granules), 20% of leguminous flours and 10% of spices and other ingredients. Similarly, Muthiya mix flour which appears at Sr.No.16 contains 90% of wheat flour and 10% of spices and other ingredients, whereas the product mentioned at Sr.No.17 i.e. Khichu mix flour contains 95% of rice flour, 2% of Sabu dana flour and 3% of spices and other ingredients. As per Rule 3(b), 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. Accordingly, (i) Upma mix flour and Rava idli mix flour each containing 70% of suji flour(wheat granules) and 20% of leguminous flour and 10% spices and other ingredients, have the essential characters of suji flour (wheat granules) and would be classifiable under heading 1103 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). (ii) Muthiya mix flour containing 90% wheat flour and 10% spices and other ingredients have the essential characters of wheat flour and would be classifiable under heading 1101 of the First Schedule to the Customs Tariff Act,1975. (iii) Khichu mix flour containing 95% rice flour, 2% Sabu dana flour and 3% spices and other ingredients shows the essential characteristics of rice flour and would be classifiable under heading 1102 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975).

13.3 Further, as per the Chapter notes of Chapter 11, products falling under heading 1101 to 1104 have to meet the following criteria in order to be classified under the said headings, otherwise they fall under heading 2302. Chapter notes of Chapter 11 reads as under:

(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).

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.

3. For the purposes of heading 1103, the terms “groats” and “meal” mean products obtained by the fragmentation of cereal grains, of which :

(a) 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;

(b) 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.

13.4 Since the details in respect of ash content/starch content/rate of passage through a sieve etc. in respect of the products mentioned in para 13.2 above have not been furnished by the applicant, it would not be possible for us to decide whether these products fulfil the criteria or otherwise. In view of the above, we are left with no option but to conclude that the above products do not fulfil the aforementioned criteria and would therefore be classifiable under Heading 2302 of the First Schedule to the Customs Tariff Act, 1975 (1 of 1975). Heading 2302 of the First Schedule to the Customs Tariff Act, 1975 (1 of 1975) reads as under:

2302 BRAN, SHARPS AND OTHER RESIDUES, WHETHER OR NOT IN THE FORM OF PELLETS, DERIVED FROM THE SIFTING, MILLING OR OTHER WORKING OF CEREALS OR OF LEGUMINOUS PLANTS

2302 10 – Of maize (corn) :

2302 10 10— Maize bran

2302 10 90— Other

2302 30 00- Of wheat

2302 40 00- Of other cereals

2302 50 00- Of leguminous plants

On going through the above, we find that Upma mix flour and Rava idli mix flour each containing 70% of suji flour(wheat granules) and 20% of leguminous flour and 10% spices as well as Muthiya mix flour containing 90% wheat flour and 10% spices are classifiable under sub-heading 23023000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) whereas Khichu mix flour containing 95% rice flour, 2% Sabu dana flour and 3% spices and other ingredients would be classifiable under sub-heading 23024000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).

13.5 On going through the entry of the above product in the Notification No.01/2017-Central Tax(Rate) dated 28.06.2017(hereinafter referred to as the said notification), we find that the same appears at entry No.103A of Schedule-I of the said Notification(after amendment of the said notification vide Corrigendum No.2 dated 12.07.2017 vide which entry No.103A was inserted) on which GST payable is 5% (2.5% CGST + 2.5% SGST) which reads as under:

13.6 As regards the branded product mentioned at Sr.No.18 at para 11.1 above, i.e. Chutney powder, the applicant has given the percentage-wise break-up as 90% wood apple powder and 10% spices. Further, chutney powder being a food preparation (as chutney can be prepared instantly by simply adding/mixing water to it and stirring) is classifiable under heading 2106 of Chapter 21 of the First Schedule to the Customs Tariff Act, 1975 (1 of 1975). Heading 2106 as appearing in the First Schedule to the Customs Tariff Act, 1975 reads, as under:

2106 FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED OR INCLUDED

2106 10 00 – Protein concentrates and textured protein substances

2106 90 – Other:

— Soft drink concentrates :

2106 90 11 —- Sharbat

2106 90 19 —- Other

2106 90 20 — Pan masala

2106 90 30 — Betel nut product known as “Supari”

2106 90 40 — Sugar-syrups containing added flavouring or colouring matter, not elsewhere specified orincluded; lactose syrup; glucose syrup andmalto dextrine syrup

2106 90 50 — Compound preparations for making non-alcoholic beverages

2106 90 60 — Food flavouring material

2106 90 70— Churna for pan

2106 90 80 — Custard powder

— Other :

2106 90 91 —- Diabetic foods

2106 90 92 —- Sterilized or pasteurized millstone

2106 90 99 —- Other

13.7 On going through the entry of the above product in the Notification No.01/2017-Central Tax(Rate) dated 28.06.2017(hereinafter referred to as the said notification), we find that the same appears at entry No.23 of Schedule-III of the said notification on which GST payable is 18% (9% CGST + 9% SGST), which reads as under:

However, the above entry was amended vide Notification No.41/2017-Central Tax (Rate) dated 14.11.2017(with effect from 15.11.2017) and reads as under:

Further, vide the aforementioned notification, chutney powder was excluded from the above entry and Sr.100A of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 was amended with effect from 15.11.2017 wherein idli/dosa batter and chutney powder was added to roasted gram wherein GST rate involved was 5%(2.5% CGST + 2.5% SGST). The same reads as under:

13.8 In view of the above, we conclude that chutney powder is classifiable under Sub-heading 21069099 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) on which GST rate was 18%(9% CGST + 9% SGST) upto 14.11.2017 and 5%(2.5% CGST + 2.5% SGST)with effect from 15.11.2017.

14. Next issue required to be decided is whether chutney powder when supplied with Gota mix flour and Bhajiya mix flour, should be considered as Composite supply as stated by the applicant. For this we need to refer to Section 2(30) of the CGST Act, 2017, which reads as under:

“composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;

Illustration.- Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply;”

On going through the aforementioned definition and comparing it with the issue in hand, we find that chutney powder is a food preparation i.e. chutney can be prepared instantly by simply adding/mixing water to it and stirring it whereas the other items are not food preparations but flours. In order to prepare farsan/eatables from these flours, the directions printed on the packets of the respective flours has to be followed i.e. adding water to the flour, adding the required vegetables if required, and adding other ingredients (such as spices etc.) to it as directed, boiling it for some time etc. Further, it is not necessary that bhajiyas or gotas are consumed along with chutney only as they can be consumed with tomato sauce or with pieces of cut onion or alongwith shredded mangoes or even without these items. In view of the above, we find that Chutney powder and Gota mix flour or Chutney powder and Bhajiya mix flour are not naturally bundled and are not supplied in conjunction with each other in the ordinary course of business as they can be supplied separately or independently in the ordinary course of business. We therefore conclude that Chutney powder supplied with Gota mix flour or Bhajiya mix flour cannot be considered a ‘composite supply’.

14.1 Now, since the aforementioned supply is not a composite supply of goods, the next issue required to be verified is whether chutney powder when supplied with Gota mix flour or Bhajiya mix flour, is covered under the definition of Mixed supply or otherwise. For this we need to refer to Section 2(74) of the CGST Act, 2017, which reads as under:

“ ‘mixed supply’ means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.

Illustration.- A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately;”

The applicant has submitted that he provides Chutney powder in a pouch along with Gota Mix and Bhajiya Mix and no extra amount is collected for such Chutney powder and that he is charging a single price for the combined supply of Gota Mix and Chutney powder or Bhajiya Mix and Chutney powder. Further, as discussed earlier, since the aforementioned supply is not a composite supply of goods and a single price is being charged for the combined supply of Gota Mix and Chutney powder or Bhajiya Mix and Chutney powder, it will be considered as a ‘Mixed supply’ of goods.

14.2 Now, since it has been established that the above supply of goods made by the applicant is a ‘mixed supply’ of goods, we are required to examine the classification and tax liability on the same. For this purpose, we will be required to refer to Section 8 of the CGST Act, 2017, which reads as under:

“The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:-

(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and

(b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.”

14.3 So, in view of Section 8(a) above, it can be seen that a mixed supply comprising of two or more supplies, shall be treated as a supply of that particular supply which attracts the highest rate of tax. However, in the instant case, we find that the rate of tax of all the three products i.e. Gota mix, Bhajiya mix and Chutney powder is the same i.e. 5% GST (2.5% CGST + 2.5% SGST), that a single price is being charged by the applicant for the ‘mixed supply’ of Gota Mix and Chutney powder or Bhajiya Mix and Chutney powder and no extra charge is collected for the Chutney powder. Hence, we conclude that the mixed supply of Gota Mix and Chutney powder will be considered as a supply of Gota Mix (falling under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)) on which the GST liability will be 5%(2.5% CGST + 2.5% SGST). Similarly, the mixed supply of Bhajiya Mix and Chutney powder, will be considered as a supply of Bhajiya Mix (falling under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)) on which the GST liability will be 5%(2.5% CGST + 2.5% SGST).

15. In light of the foregoing, we rule as under –

R U L I N G

The following products manufactured and supplied by the applicant Shri Dipakkumar Kantilal Chotai(Talod Gruh Udyog)bearing brand name ‘Talod’ are classified as under:

(1) Khaman mix flour, Gota mix flour, Handwa mix flour, Dahi wada mix flour, Dalwada mix flour, Meduvada mix flour, Pudla mix flour, Moong bhajiya mix flour, Chorafali mix flour, Bhajiya mix flour, Dhokla mix flour, Idli mix flour and Dosa mix flour are classifiable under sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). They appear at Entry No.59 of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 and the GST liability on all these products is 5%(2.5% CGST + 2.5% SGST).

(2) Upma mix flour, Rava idli mix flour and Muthiya mix flour are classifiable under sub-heading 23023000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) whereas Khichu mix flour is classifiable under sub-heading 23024000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). They appear at Entry No.103A of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 and the GST liability on these products is 5%(2.5% CGST + 2.5% SGST).

(3) Chutney powder is classifiable under Sub-heading 21069099 of the First Schedule to the Customs Tariff Act, 1975(1 of 1975). The said product appeared at Entry No.23 of Schedule-III of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 till 14.11.2017 and at Entry No.100A of Schedule-I of the said notification with effect from 15.11.2017. The GST liability on the said product was 18%(9% CGST + 9% SGST) upto 14.11.2017 and 5%(2.5% CGST + 2.5% SGST)with effect from 15.11.2017.

(4) The supply of Gota Mix and Chutney powder will be considered as a ‘mixed supply’ of goods and will be considered as a supply of Gota Mix (falling under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)) on which the GST liability will be 5%(2.5% CGST + 2.5% SGST). The supply of Bhajiya Mix and Chutney powder will be considered as a ‘mixed supply’ of goods and will be considered as a supply of Bhajiya Mix (falling under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)) on which the GST liability will be 5%(2.5% CGST + 2.5% SGST).