GST Classification of Flours and Mixes: Gujarat AAAR Decision

In re Gajanand Foods Pvt. Ltd. (GST AAAR Gujarat)

Gujarat Appellate Authority for Advance Ruling (AAAR) recently addressed a significant issue in the case of In re Gajanand Foods Pvt. Ltd. concerning the classification of flour-based products for GST purposes. The decision clarifies the applicability of tax rates on certain products categorized under Chapter 11 of the Customs Tariff Act, 1975. This analysis delves into the arguments presented, the AAAR’s reasoning, and its implications for businesses involved in the production and sale of similar goods.

Background of the Case

The appellant, Gajanand Foods Pvt. Ltd., sought clarification on the GST classification of 14 specific products, including flours and flour mixes. The primary question was whether these products should be categorized under:

• Heading 1101, 1102, or 1106, attracting a lower GST rate of 5%, or
• Heading 2106 (Others), which attracts 18% GST.

The Gujarat Authority for Advance Ruling (GAAR) had previously ruled that the products fell under Heading 2106, thereby attracting 18% GST. Dissatisfied with this decision, the appellant approached the AAAR.

Key Issues Raised

1. Nature of Products: The appellant contended that their products were primarily flours and not “instant mixes.” They argued that the goods qualified under Chapter 11, specifically under Heading 1102 or alternatively under Heading 1106.
2. Applicable Characteristics for Chapter 11 Classification: Chapter 11 of the Customs Tariff Act covers flours derived from cereals or leguminous vegetables that meet specific conditions. The appellant submitted that their products adhered to the required characteristics, including starch content, ash content, and sieve size parameters.
3. Addition of Ingredients: The products in question contained other ingredients such as spices, sugar, and iodized salt, raising the question of whether such additions disqualified the goods from classification under Chapter 11.
4. Previous VAT Determinations: The appellant also cited past determinations under the VAT regime, where similar products were classified as “flours.” They argued that consistency in tax classification should be maintained.

AAAR’s Observations and Analysis

1. Classification Under Chapter Heading 1102

Heading 1102 covers cereal flours other than wheat or meslin, including flours derived from rye, barley, oats, maize, and other cereals. However, the AAAR noted the following:

• The explanatory notes for Chapter 11 state that flours may include small quantities of minerals, vitamins, or baking powders but exclude flours mixed with other substances intended for use as food preparations.
• In the case of the appellant, the inclusion of ingredients such as spices, sugar, and baking powder in significant proportions (ranging from 5% to 37%) exceeded the allowable limit for classification under Heading 1102.

2. Classification Under Chapter Heading 1106

Heading 1106 pertains to flours, meals, and powders made from dried leguminous vegetables, sago, roots, tubers, and certain fruits or nuts. The AAAR reasoned:

• While the appellant’s products contain flours derived from dried leguminous vegetables, the addition of spices and other ingredients disqualified them from Heading 1106.
• The explanatory notes for Heading 1106 explicitly exclude products mixed with substances intended to create food preparations.

3. Heading 2106: Miscellaneous Edible Preparations

The AAAR affirmed that the products fell under Heading 2106 (Miscellaneous Edible Preparations), as:

• They were “food preparations not elsewhere specified.”
• The significant proportion of added ingredients aligned with the characteristics of products classified under Heading 2106.

Discussion on Previous VAT Decisions

The appellant argued that under the VAT regime, similar products were classified as “flours” and taxed accordingly. However, the AAAR highlighted the differences in the GST framework, particularly its reliance on the Harmonized System of Nomenclature (HSN). The ruling clarified that previous VAT classifications could not override GST provisions and the specific HSN explanatory notes.

Reliance on General Rules of Interpretation

The appellant invoked Rule 3(b) of the General Rules of Interpretation (GRI), which addresses classification of goods with mixed components. However, the AAAR rejected this argument, noting:

• Rule 3(b) applies only when goods are prima facie classifiable under two headings, which was not the case here.
• The products did not meet the criteria for classification under either Heading 1102 or 1106, leaving Heading 2106 as the appropriate category.

Conclusion

The Gujarat AAAR upheld the GAAR’s decision, classifying the products under Heading 2106, attracting an 18% GST rate. Key takeaways from the ruling include:

• The importance of adhering to HSN explanatory notes for product classification under GST.
• The impact of added ingredients on the classification of flours and flour-based products.
• The limited relevance of VAT-era classifications under the GST regime.

Businesses dealing in flour-based products or mixes must ensure accurate classification and review their formulations to align with the applicable HSN headings. Failure to do so could result in disputes and potential tax liabilities.

This ruling sets a precedent for interpreting the classification of composite flour products under GST, reinforcing the principle that added ingredients and intended use significantly influence tax treatment.

FULL TEXT OF THE ORDER OF AUTHORITY FOR APPELLATE ADVANCE RULING, GUJARAT

At the outset we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 and Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the `CGST Act, 2017′ and `GGST Act, 2017′) are 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, 2017 would also mean reference to the corresponding similar provisions in the GGST Act, 2017.

2. The present appeal has been filed under section 100 of the CGST Act., 2017 and the GGST Act, 2017 by M/s. Gajanand Foods P Ltd., Gajanand building, Opp. Rannapark bus stop, Ghatlodia, Ahmedabad- 380 061, Gujarat [hereinafter referred to as ‘appellant] against the Advance Ruling No. GUJ/GAAR/R/28/2021 dated 19.7.2021, passed by the Gujarat Authority for Advance Ruling [GAAR].

3. The facts briefly are that the appellant is engaged in the business of manufacture and supply of the below mentioned fourteen instant mix flours viz

Gota mix flour	Dakor Gota mix flour
Khaman mix flour	Methi Gota mix flour
Ildi mix flour	Handvo mix flour
Dalwada mix flour	Rava Idli mix flour
Dhokla mix flour	Medu vada mix flour
Dahiwada mix flour	Upma mix flour
Dosa mix flour	Khichu mix flour

which as per the applicant are not in ‘ready to eat’ but in ‘ready to cook’ form under their registered brand name.

4. Before the GAAR, the appellant submitted that the below mentioned process is undertaken for manufacturing & selling the above products, viz:

(a) that they purchase food grains and pulses from open market.

(b) that such pulses are sorted and washed and then sent to grinding machine.

(c) that pulses are grinded into flour in grinding machine for eg where grams are purchased it results into gram flour by following grinding process. In certain cases, they also purchase grinded flour directly from the vendors.

(d) that after grinding process, certain spices are mixed in flour and such mixed flour is packed in various packings.

(e) that mixed hours of different varieties manufactured (commercially known as ‘Instant Mix Flour’ are sold in open market or through distributors to consumers.

(f) that the consumer of such instant mix flour is required to follow the recipe and instruction^, stated on the packing for food preparation process before such product can be consumed as eatable.

(g) That the mix flour cannot be consumed as it is, but consumers arc 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’.

5. The appellant, before the GAAR also submitted the details of raw materials used in various products viz:

6. The percentage-wise break-up of the flours and other ingredients as submitted before the GAAR, is as under:

Sr. No.	Product	Dried leguminous vegetable flours				Rice and wheat flours					Total flours	Spices and other ingredie nts
		Chang Dal flour	Udad dal flour	Moong /Math Dal flour	Total legumi -nous flours	Soji flour (wheat granules)	Rice flour	Wheat flour	Sabu Dana flour	Total of rice flouts/ wheat flours
1.	Gota Mix Flour	34	0	0	34	1 1	0	18	0	29	63	37
2.	Khaman Mix Flour	75	0	0	75	0	0	0	0	0	75	25
3.	Idli Mix Flour	0	18	0	18	0	76	0	0	76	94	6
04.	DakorGota Mix Flour	34	0	0	34	11	0	18	0	29	63	37
5.	Dalwada Mix Flour	0	5	87	92	0	0	0	0	0	92	8
6.	Dhokla Mix Flour	12	10	0	22	0	70	0	0	70	92	8
7.	Dahi- walla Mix Hour	0	65	29	94	0	0	0	0	0	94	6
8.	Dosa Mix Flour	0	20	0	20	0	59	16	0	75	95	5
9.	Methi(lot a Mix flour	55	0	0	55	10	0	10	0	20	75	25
10.	Handal:0 Mix Flour	25	8	0	33	0	47	11	0	58	91	91
11	RavaIdls Mix Flour	2	0	0	2	87	0	0	0	87	89	11
12	Meduvad a Mix Hour	0	62	0	62	. 1 ‘	0	23	0	24	86	14
13.	Uparna Mix flour	1	3	0	4	79	0	0	0	79	83	1 7
14	Khichu Mix Flour	0	0	0	0	0	90	0	4	94	94	6

7. The appellant further submitted that the composition and ingredients contained in the different types of flours does not contain the Maize flour or Wheat flour and hence, the flour of different varieties are eligible to be classified under the tariff heading 1102 & liable to GST @ 5% (2.5% CGST and 2.5% SGST). The applicant further stated that as an alternative the product is liable to be classified under tariff heading 1106.

8. Further stressing that their product is classifiable under 1102 or 1106, before the GAAR, the appellant submitted as follows:

• that they wish to rely on various VAT Determination orders wherein different varieties of flour ie Gota flour, khaman flour, dalwada flour, dahiwada flour, etc have been held to be flours under entry 12 in Schedule Ito GVA1 Act; that if there is no substantial change in schedule entries then classification & interpretation adopted needs to be followed; that they wish to rely on the judgement in the case of¹West Coast Waterbase P Ltd; that they also wish to rely on the case of Samsung India Electronics P Ltd²;
• that the content of pulse flour is considerable & as per common parlance test said products are known as instant mix flour in the market; that the instant mix flour made from dried leguminous vegetable is eligible for classification under 1106;
• that they also wish to rely on the decision of GAAR dated 30.7.2020;
• that they wish to rely on the circular no. 80/54/2018-GST dated 31.12.2018, which is applicable to them; that the circular is binding in view of the judgement in the case of Dhiren Chemical Industries³;
• flour sold to customers are ‘ready to cook’ form and not in ‘ready to cat’ form;
• that when the product is eligible to be classified under specific entry 111061, general entry should not be preferred 121061;
• that they , ould like to rely on the case of Wood Polymers Ltd⁴ and Miniwool Rock Fibers Ltd’.

9. In viev of the foregoing, the appellant raised the following question [ reframed vide I- is amendment application dated 2.9.2020] before the GAAR viz:

“The applicant seeks Advance Ruling for classification & determination of rate of tax, or the following items:

Gota Mix I. ‘our, Dakor Gota Mix Flour, Methi Gota Mix Flour, Khaman Mix Flour, Dhokla   flour Idli Mix Flour, Rava Idli Mix Flour, Dosa Mix Flour, Upma Mix Flour Dahl vada Mix Flour, Dalwada Mix Flour Menduvada Mix Flour, Handvo Mix Flour and Khichu Mix Flour”

10. Vide tile aforementioned impugned order dated 19.7.2021, the GAAR ruled as follows viz:

RULING

The instant Mix Flours/Mix Flours of: (i)Gota (ii) DakorGota (iii) MethiGota (iv) Khaman (v) Dhokla (vi) Idli (vii) RavaIdli, (viii) Dosa (ix) Upma (x) Dahiwada (xi) Dalwada (xii) Menduvada (xiii) Handvo and (xiv) Khichu are classifiable under HSN. 2106 90(Others) attracting 18% GST (9% CGST + 9% SGST).

11. For arriving at the aforementioned ruling, the GAAR, gave the below mentioned findings viz:

• the reliance of the applicant on VAT determination order by the applicant does not hold good as GST clarification is based on I Harmonised System of Nomenclature (INN) & the rules framed for classification, which was not the case with Schedule I of the Gujarat Value Added Tax, 2003;
• that as per the explanatory notes, flours remain classified under heading number 1102 even if they arc improved by addition of small quantities of specified substances; that the explanator note further state that flours which have been further processed or had other substances added with a view to use as food preparations are excluded; that spices & other ingredients mixed in the flour range from 5% to 37%; that since in present case, substances other than specified, are added to flour, it gets excluded from heading number 1102;
• that as the product of the applicant contain spices and other ingredients in different proportions which are not mentioned in chapter heading 1106 or the relevant explanatory notes of 1 I5N, the said products are not covered under chapter heading 1106;
• circular dated 31.2.2018, [sattu] is not applicable since this is not a case of addition of small amounts o1 additives/spices;
• that 11SN 2 I 06 also covers preparations for use after processing such as cooking.

12. Fedi aggrieved, the appellant is before us ie Gujarat Appellate Authority for Advance Ruling [GAAAR] raising the following averments viz

• that the flout sold by them are in ‘ready to cook’ & not ‘ready to eat’ condition; that they are selling it in raw form which needs further process of cooking to make in consumable;
• that the con position & ingredients contained in the flour reveal that it does not contain maize flour or wheat flour.
• that flours of different varieties, other than cereal flour of wheat and maize, fall under HSN 1102 attracting 5% GST;
• that flours grains and pulses are major components and since grains and pulses fall under 0713, alternately, it would be eligible for classification under HSN 1106;
• that mere mixing of flour with spices and condiments does not change its basic characteristic; that flour purchased from flour mills do not contain these spices & condiments & except for this difference, there is no other difference;
• that as far as classification under chapter heading 1106 is concerned, they wish to rely on the circular no. 80/54/2018-GST dated 31.12.2018, which is applicable to them; that the circular is binding in view of the judgement of the Hon’ble SC in the case of Dhiren Chemical Industries, ibid;
• that heading 210690 is a general entry and is not capable of including products of the appellant falling under FISN 1106; that in terms of the principle of noscitur a sociis, the product cannot be classified under chapter heading 2106 since even as a general entry it is not capable of including the products of the appellant;
• that as far as classification under chapter heading 1102 is concerned, they wish to rely on the VAT determination orders, wherein different varieties of flour ie Gota flour, khaman flour, dalwada flour, dahiwada flour, etc have been held to be flours under entry 12 in Schedule Ito GVAT Act; that if there is no substantial change in schedule entries then classification & interpretation adopted needs to be followed; that they wish to rely on the judgement in the case of West Coast Water base P Ltd; that they also wish to rely on the case of Samsung India Electronics P Ltd;
• that the impugned order after reproducing partial submissions, has neither mentioned/recorded any reason for not accepting the proposed classification by the appellant under chapter heading 1106;
• that the first and foremost rule of interpretation and classification is that when a product is eligible to be classified under a specific entry, then classification under general entry should not he preferred; that they wish to rely on the case of Bradma of India Ltd’ and Mauri Yeast India P Ltd’;
• that the essential character of the instant flour mixes is given by the Flour & hence in terms of Rule 3(b) of the General Rules of Interpretation [GRI], it would fall under chapter heading 1101, 1102 or 1106; that they wish to rely on the case of Wood Polymers Ltd⁸;
• that the common parlance test also clearly suggest that the products are nothing but flours of different mixes; that they wish to rely on the case of Delhi Cloth & General Mills Co Ltd⁹;
• that even otherwise, in terms of the judgement of the Hon’ble Supreme Court, in the case of Minwool Rock Fibers Ltd’^° the entries most beneficial to the applicant arc 1102 and 1106; that general entry 2106 must be avoided.

In view of the aforementioned averments, the appellant stated that the fourteen products as listed in paragraph 3 supra would fall under the heading 1106 and should be charged to tax @ of 5% [2.5% CGST & 2.5 % SGST].

13. Personal hearing in the matter was held on 26.09.2024 wherein Shri Nishant Shukla, Advocate appeared on behalf of the appellant. He reiterated the written submissions made in the appeal.

14. We have carefully gone through and considered the appeal filed by the appellant, their written submission, oral submissions made during the course of personal hearing and the impugned order.

15. The issue involved in this case is regarding proper classification and determination of rate of tax in respect of the fourteen items listed in paragraph 3 above. As is already mentioned supra, GAAR has held that the aforementioned products are to be classified under 1-ISN 2106 90 (Others) attracting 18% GST (9% CGST and 9% SGST).

16. We find that the appellant in his averments has stated that the product would fall under 1101, 1102 or 1106. However, in the prayer, the appellant has sought classification under chapter heading 1106.

17. The appellant’s primary claim is that their products are in the nature of flours and not instant mix and that it should fall under chapter heading 1102. On going throu0 para 2(A) of the explanatory notes of HSN for Chapter 11, it is observed that the products from the milling of the cereals listed in the table (wheat and rye, 1)arley, oats, maize and grain, sorghum, rice, buckwheat) fall in this chapter if they satisfy some characteristics. Further, in terms of para 2(B) of the explanatory notes of HSN for Chapter 11, products falling in this Chapter under the provisions of para 2(A) shall be classified in heading 11.01 or 11.02, if the percentiles passing through a woven metal wire cloth sieve with the aperture of 315 micro meters (microns) / 500 micro meters (microns) is not less, by weight than I hat shown against the cereal concerned, otherwise, they fall in heading 11.03 or 11.04. It has also been inter-alia mentioned that this Chapter includes products obtained by submitting raw materials of other Chapters (dried leguminous ver potatoes, fruit, etc.) to processes similar to those indicated in pantograph (1) or (2) mentioned therein. Thus, the products from the milling of the c..reals, dried leguminous products etc. are covered in Chapter 11 of the Customs l’ariff Act, 1975.

18. The appellant has further stated that though his product falls under chapter headift,2, 1102, alternatively it would also fall under chapter heading 1106. To exam i ne this claim, we reproduce the explanatory notes of both HSN 1102 and 1106. viz

11.02

11.02 – Cereal flours other than of wheat or meslin.

1102.20 – Maize (corn) flour

1102.90 – Other

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 re uirements 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 standardsieve 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 beading 19.01).

The beading 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 beading 19.01 if less).

11.06 – Flour, meal and powder of the dried leguminous vegetables of heading 07.13, of sago or of roots or tubers of heading 07.14 or of the products of Chapter 8.

1106.10 – Of the dried leguminous vegetables of heading 07.13

1106.20 – Of sago or of roots or tubers of heading 07.14

1106.30 – Of the products of Chapter 8

(A) Flour, meal and powder of the dried leguminous vegetables of heading 07.13.

This heading includes the flour, meal and powder made from peas, beans or lentils; they are mainly used for prepared soups or purées.

The heading does not cover :

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

(b) Locust bean flour (heading 12.12).

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

(B) Flour, meal and powder of sago or of roots or tubers of heading 07.14.

These products are obtained by the simple grinding or grating of the pith of the sago palm or of the dried roots of the manioc, etc. Some of these products are often subjected to heat treatment in the course of manufacture to eliminate toxic substances; this treatment may entail pregelatinisation of the starch.

The heading does not cover starches obtained from these sources (it should be noted that the starch obtained from sago is sometimes called ” sago flour “). These starches fall in heading 11.08 and can be distinguished from the flours of this heading, because flours, unlike starches, do not crackle when rubbed between the fingers. Pelletised flour, meal and powder of sago or of roots or tubers of heading 07.14 are also excluded (beading 07.14).

(c) Flour, meal and powder of the products of Chapter 8.

The principal fruits or nuts of Chapter 8 which arc made into flours, meals or powders arc chestnuts, almonds, dates, bananas, coconuts and tamarinds.

The heading also includes flour, meal and powder of peel of fruits.

However, the heading does not cover tamarind powder in packings for retail sale fur prophylactic or therapeutic purposes (heading 30.04).

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 07.14).

(b) Prepared foodstuffs known as tapioca (heading 19.03).

We find that the flours remain classified under chapter heading 1102 even if the flour has been improved by the addition of very small quantities of specified substances. I lowever, if substances (other than specified substances) are added to the flours with a view to use as ‘food preparations’, then the same gets excluded from the Chapter Heading 11.02. A glance at paragraph 6, supra, which mentions the percentage-wise break-up of the flours and other ingredients, depict that the various products supplied by the appellant, contain spices and other ingredients apart from flour of dried leguminous vegetables, rice and wheat, in different proportions. The spices and other ingredients contained in these products include sugar, semolina, iodised salt, sesame seed, red chili powder. garam masala, black pepper, coriander, sodium bicarbonate, garam masala, etc.. These spices and ingredients are other than those substances mentioned in the explanatory notes of HSN for Chapter Heading 1102 which could be added in very small quantities to improve or enrich the flours for the resultant product to still remain classified in those Chapter Headings. The proportion of spices and other ingredients contained in these products ranges from 5% to 37% A. which is already mentioned in the table supra in paragraph 6. It is also evident from the recipe submitted by the appellant that the spices and other ingredients have been added to the flours for their use as food preparations. Further, description of the goods under chapter heading 1102, states as follow : “Cereal flours other than that of wheat or meslin”. The HSN notes pertaining to chapter heading 1102 also clearly states that the heading covers flours ie, the pulverised products obtained by milling the cereals of chapter 10) other than flours of wheat or meslin. We find that Gota mix flour, Dakor Gota min flour, Dos mix flour, Methi Gota mix flour, Handavo mix flour, Menduwada m flour, contains wheat flour. Thus, in view of the explanatory notes of the HSN, all the fourteen products are excluded from the Chapter Heading 11.02.

19. The next averment of the appellant is that under the VAT determination order, different varieties of flour have been held to be ‘flours’ falling under entry 12 in Schedule I to GVAT Act & that since there is no substantial change in schedule entries, classification and interpretation adopted needs to be fowl lowed. The applicant has also relied on the judgement in the case of West Coast Waterbase P Ltd and Samsung India Electronics P Ltd, ibid, to substantiate the averment. We note that the averment stands addressed in paragraph 12 of the impugned order dated 19.7.2021. Further we are in agreement with the said findings of GAAR. Even otherwise, there is nothing produced on record before us by the appellant, compelling us to interfere with the said findings.

20. “The appellant has further stated that their product would alternately fall under HS \I code 1106. The expl. -at,ory note to chapter 1106 is already reproduced supra. However, it would be prudent to reproduce the chapter heading 1106 of Customs Tariff for ease of understanding viz

Chapter Heading 1106 as per Customs Tariff:

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

Now, as is evident, Chapter Heading 11.06 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”. As per Rule 1 of the General Rules for the Interpretation of Customs Tariff Act, 1975, for legal purposes, classification shall be determined according to the terms of the headings and any relative section of Chapter Notes. Thus, the classification of the product is required to be determined in accordance with the terms of the headings. As per Chapter Heading 1106, it covers Flour, Meal and Powder of the dried leguminous vegetables of Chapter Heading 07.13 and other specified products. As the products of the appellant contain spices and other ingredients in different proportions, which are not mentioned in the Chapter Heading 11.06 or the relevant explanatory notes of HSN, we find that the said products are not covered under Chapter Heading 11.06.

21 The appellant has further relied on Rule 3(b) of the General Rules of Interpretation [GRI], to aver that the product would fall under chapter heading 1102 or 1106. To substantiate this averment they have relied on the judgement in the case of Wood Polymers Ltd., ibid. We reproduce Rule 3(b) of the GRI, viz

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 he 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 _;⁴1 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, c. imposite goods consisting of different materials or made up of different components, and goods pm up in sets for retail sale, which cannot he classified by reference to 3 (a), shall be classified as if hey consisted of the material or component which gives them their essential character, insofar as this .Titerion is applicable.

(c) When goocc cannot be classified by reference to 3 (a) or 3 (b), they shall be classified under the heading whicl, ()coifs last in numerical order among those which equally merit consideration

What Rule 3(b). i hid, encapsulates is that mixtures consisting of different material which cannot be classified by reference to 3(a) shall be classified as if they consisted o the material or component which gives them their essential character. The ^–gument put forth is that as the essential character of the instant flour mixes is given by the Flour, so in terms of Rule 3(b) of the GRI, it would fall under chapter heading 1102 or 1106. The argument is not legally tenable owing to the fact that in the paragraphs above, we have already held that on account of the composition, etc. the product gets excluded from falling under chapter headings 1102 and 1106. Therefore, the question of relying on Rule 3(b) of the GRI to classify the goods based on the essential character, does not arise. It is owing to t lis finding, that the averment of the appellant that entry most beneficial to the appellant needs to be preferred, also stands rejected.

22. The appellant’s next submission is that the rationale of CBIC’s circular No. 80 54/2018-GST dated 31.12.2018 classifying “Sattu’ is applicable to their products also.

23. To examine the claim of the appellant, the relevant portion of the circular relied [ ipon is being reproduced for ease of reference viz C13IC circular No. 80/54/2018-GST dated 31.12.2018

relevant extracts

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 ‘every small amounts of additives continues to be classified under HSN code 1106. 1 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 If schedule I of notification No. 1/2017-Central Taxes (Rate) dated 28.06.2017).

The CBIC has clarified in the aforesaid circular that the flour of ground pulses and cereals, improved by the addition of very small amounts of additives  continues to be classified under HSN Code 1106. However, the said clarification is not applicable in the present case as the products being supplied by the appellant contain spices and other ingredients in proportions which cannot be held to be in very small amounts, which is not the case with the `Chhatua or Sattu’.

24. In view of the foregoing, we hold that none of the products of the appellant merit classification under Chapter 11 of the Customs Tariff Act, 1975 and specifically under Chapter Headings 1102 or 1106 of the Customs Tariff Act, 1975.

25. The appellant we find has also questioned the classification of the products in question by GAAR under HSN 2106 90, which covers “Food Preparations not elsewhere specified or included”. The appellants further averment is that in terms of the principle of noscitur a sociis,[which means that the meaning of the word is to be judged by the company it keeps], their products cannot be equated with “misthan” or “mithai” or `namkeen’ or `chabena’ or bhujia’ that it can neither be consumed by human in the form they are sold & are not ready to eat products. We reproduce the HSN explanatory notes [relevant extracts I for the ease of understanding, Viz.

21.06 – Food preparations not elsewhere specified or included.

2106.10 – Protein concentrates and textured protein substances

2106.90 – Other

Provided that they are not covered by any other heading of the Nomenclature, this heading covers :

(A) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption.

(B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter 38).

However, the heading does not cover enzymatic, preparations containing foodstuffs (e.g., meat tenderisers consisting of a proteolytic enzyme with added dextrose or other foodstuffs). Such prepare ions fall in heading 35.07 provided that they are not covered by a more specific heading in the Nomenclature.

As is evident from the explanatory notes, it covers food preparations not elsewhere specified or included. Further of 21.06 covers the preparation for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.) for human consumption, and preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption, are classifiable under Chapter Heading 21.06 of the CTA, 1975.

26. The appellant has already stated that his 14 products of mix flour / instant mix flour are preparations consisting wholly of foodstuffs viz. flours of leguminous vegetables and cereals as well as spices and condiments, and these products are used in the making of food preparations for human consumption. It is a fact that these products are preparations for use, after processing, such as cooking, dissolving or boiling in water, milk, etc., for human consumption. Thus, we are of the view that all the aforementioned 14 products of Mix flour / Instant Mix floe it are appropriately classifiable under chapter heading 2106, more so since thy are not mentioned under any other headings. Further, as these products are not specifically mentioned under any specific Tariff Item of Chapter Heading 2106 of the CTA, 1975, these products are classifiable under the residuary entry i.e. Tariff Item 2106 90 99 as “Other”.

27. The Appellant has further also submitted that the Mix Flour / Instant Mix Flour is not a ready-to-cat food. In this regard, we observe that Chapter I leading 21.06 and specifically Tariff Item 2106 90 99 is not confined to processed or semi processed food, cooked or semi cooked food, preserved food and ready to eat food. In fact, any product which is a food preparation and which is not elsewhere specified or included in the CTA, 1975, gets covered under Chapter Heading 2106 of the CTA, 1975. Therefore, merely because the end consumer of the Instant Mix Flour is required to follow certain food preparation processes before such product(s) can be consumed, is no ground to take these products out of Chapter Heading 2106 of the CTA, 1975.

28. The appellant has further relying on the common parlance test submitted that the products are nothing but flours of different type. Reliance has also been made to the judgement of the Hon’ble SC in the case of Delhi Cloth and General Mills Company Limited. Nothing has been produced before us to substantiate the averment that the products are understood in the trade, by the dealer and the common man to be akin to Flour. The common understanding is that a customer while purchasing flour from the market place, never desires an instant mix flour, akin to what is being supplied by the appellant. We do not find this argument legally tenable, having been made without any substantial material on records.

29. We agree with the findings and the ruling of the GAAR vide the impugned order dated 19.7.2021 in so far as classification of the fourteen products and the rate of GST is concerned. The Appellant, we find has not produced anything compelling us to interfere with the findings of the GAAR.

30. The aforementioned findings are also substantiated by the appellate advance ruling in the case of [a] Shri Dipakkumar Kantilal Chotai (Talod Gruh Udyog (No. GUJ/GAAAR/APPEAL/2021/17, dated 21.05.2021) I b I M/s. Kitchen Express Overseas Ltd (No. GUJ/GAAAR/APPEAL/2024/01, dated 29.05.2024 and [c] M/s Krishna Bhavan Foods and Sweets (No. TN/AAAR/02/2022, dated 13.01.2022.

31. In view of the above findings, we reject the appeal filed by appellant M/s. Gajanand Foods P Ltd against Advance Ruling No. Guj/GAAR/R/28/2021 dated 19.7.2021, passed by the Gujarat Authority for Advance Ruling.

Notes: 

¹ 2016 (95) VST 370 (Guj.)

² Judgement dated 28.3.2019 in SCA 6109/2019

³ 2002 (149) ELT 3 SC

⁴ 1998 (97) ELT 193 SC

⁵ 2012 (278) ELT 581 SC

⁶ AIR 2005 SC 956

⁷ 2008 (225) ELT 321 SC

⁸ 1998 (97 (ELT) 193 (SC)]

⁹ 1980 46 STC 256

¹° 2012 (278) ELF 581