In re United Breweries Limited (GST AAR Karnataka)
Whether the non-alcoholic malt drink ‘Kingfisher Radler’ is covered as “Carbonated beverages of fruit drink or carbonated beverages with fruit juice” of chapter heading 2202, Under Entry 12B of Notification No. 1/2017 dated: 28.06.2017 (as introduced by Notification No. 8/2021-Central Tax (Rate) dated: 30.09.2021)?
The product “Kingfisher Radler’ has different variants and all the variants merit classification as carbonated beverages of fruit drink, all covered under tariff heading 2202 99 90. Accordingly the product attracts GST @ 28% along with applicable Compensation Cess of 12% in terms of Sl.No.12B of Schedule IV to the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, KARNATAKA
M/s. United Breweries Limited (herein after referred to as ‘Applicant), Level 4, UB Tower, UB City, Vittal Mallya Road, Bengaluru-560 001, having GSTIN 29AAACU6053C1ZH, 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 Rs.5,000/- each under the CGST Act, KGST Act.
2. The applicant submitted that they are a company, primarily engaged in manufacturing (brewing), bottling, marketing and sale of alcoholic and nonalcoholic beverages. The applicant also registered under CGST/KGST Act 2017. The applicant launched a non-alcoholic malt drink called ‘Kingfisher Radler’, in 2018, classified the said product under tariff heading 2209 9100, as non-alcoholic beer.
3. In view of the above, the applicant has sought advance ruling in respect of the following question:
Whether the non-alcoholic malt drink “Kingfisher Radler’ is covered as “Carbonated beverages of fruit drink or carbonated beverages with fruit juice” of chapter heading 2202, under Entry 12B of Notification No. 1/2017 dated 28.06.2017 (as introduced by Notification No.8/2011-Central Tax (Rate) dated 30.09.2021).
3(b) Admissibility of the Application : The applicant is seeking advance ruling in respect of classification their product “Kingfisher Radler.” The advance ruling on the question “classification of any goods or services or both” can be sought by the applicant under Section 97(2)(a) of the CGST Act 2017. Hence the instant application is admissible in terms of Section 97(2)(a) of the CGST Act 2017.
4. BRIEF FACTS OF THE CASE: The applicant furnished the following facts relevant to the issue having bearing on the question raised.
4.1 Applicant launched non-alcoholic malts on a commercial basis in 2018 as an alternative to alcoholic beer and sweetened aerated waters. As a manufacturer of alcoholic beer, the Applicant was able to leverage its expertise to create nonalcoholic malt beverages. Non-alcoholic malts are agri-based products containing barley malt and substantially lesser sugar. While beer contains 1.2% to 8% alcohol by volume (ABV), non-alcoholic malt has 0% ABV. They are manufactured out of 100% natural ingredients of agricultural origin such as barley, hops etc along with antioxidants and preservatives.
4.2 The Applicant launched a non-alcoholic malt drink called ‘Kingfisher Radler’ (hereinafter referred to as the product’) in 2018. The product is akin to a beer, albeit without containing alcohol. The product replicates the ingredients, taste, feel and packaging of beer. It caters to the growing consumer market which does not wish to consume alcohol or sweetened aerated beverages but would prefer an alternative drink containing less sugar and carbonation. The product is classified under Tariff Entry 2202 9100 as Non-alcoholic beer.
4.3 The Manufacturing process of the products commences with procurement of barley from farmers. The barley is processed into barley malt and screened to remove dust. Post removal of dust, milling and mashing of the malt is undertaken to obtain wort (liquid extract made from gain). The wort so obtained is filtered and transfered to a tank where it is blended with sugar along with small quantity of juice compounds, flavors and additives to complete the beverage. The beverage is then either canned or bottled and the same is transferred for pasteurization and final packaging. The manufacturing process of the product is depicted at Exhibit ‘A’
4.4 The product is available in three flavours-Ginger lime, Mint Lime and Lemon. Illustrative product images and labels can be referred at Exhibit – ‘B’. The primary ingredient providing the product its distinct characteristic and flavour is barley malt. Since barley malt has a peculiar bitter taste, sugar and in small quantity juice compounds are added to make it more suitable for the Indian Palate.
4.5 Note that the sugar content in the product is substantially lesser than in sweetened carbonated drinks. To put things in perspective, the product contains up to 32% less sugar as compared to sweetened carbonated waters or carbonated fruit-based beverages. The product is minimally carbonated to add effervescence and freshness to the drink and contains additives to regulate acidity and preserve the drink. A distinction between the product and carbonated beverage of fruit juice is tabulated below:
