Case Law Details

Case Name : In re Universal Import Export (GST AAR Gujarat)
Appeal Number : Advance Ruling No. GUJ/GAAR/R/24/2019
Date of Judgement/Order : 25/09/2019
Related Assessment Year :
Courts : AAR Gujarat (99) Advance Rulings (1533)

In re Universal Import Export (GST AAR Gujarat)

Question 1: At What rate GST payable on supply of MANGO PULP falling under Heading No. 08045040 of the Customs Tariff Act, 1975 and rate of GST?

Answer : ‘Mango Pulp’ will fall under the entry No. 453 of Schedule III of the Notification No.01/2017- Central Tax (Rate) dated 28.06.2017 under CGST Act and corresponding notification of GGST Act and attracts rate of GST @18% (CGST:9% & GGST: 9%).

FULL TEXT OF ORDER OF BEFORE THE AUTHORITY OF ADVANCE RULING,GUJARAT

2. The applicant, vide Form GST ARA-01 dated 06.04.2018, mentioned their queries as under:

QUERIES

At What rate GST payable on supply of MANGO PULP falling under Heading No. 08045040 of the Customs Tariff Act, 1975 and rate of GST?

2.1 The Applicant M/s. Universal Import Export, vide attached sheet “Annexure A” to their application dated 06.04.2018, has submitted the Statement of Facts as under:

Background of the applicant:

1. M/s. Universal Import Export (here in after referred to as the ‘applicant’) is a Partnership Firm, registered under the provisions of the Partnership Act, 1932 and is engaged, inter alia, in the supply / marketing of Agriculture Produce, the then time, falling under Schedule-I and Schedule-II of the Gujarat Value Added Tax Act, 2006 (in short, the ‘Act’). Registered Office of the Firm is at 15, Tirupati Complex, Gundran Road, Talala (Gir), District: Gir Somnath 362 150 The Applicant was registered under the provisions of the Gujarat Value Added Tax Act, 2003 (in short ‘Act’) & Central Sales Tax Act, 1956 and hence assessed to Value Added Tax and Central Sales Tax in the State of Gujarat under Registration No. 24121100643 and 24621100643 respectively, then on introduction of the Goods & Service Tax regime, migrated to GST regime under Registration No. 24AAEFU7782R1Z8.

Business activity and object for Advance Ruling:

2. Apart from dealing in Cereals & Pulses, the applicant now intends to undertake local trading and export of MANGO PULP, therefore, as an abundant caution to avoid probable tax rate dispute, proposes to seek Advance Ruling on the exgibility of the said Mango Pulp and at GST rate applicable.

What is Mango Pulp:

3. Mango pulp is prepared from selected varieties of Fresh Mango Fruit. Fully matured Mangoes are harvested, quickly transported to the fruit processing plant, inspected and washed. Selected high quality fruits go to the controlled ripening chambers; Fully Ripened Mango fruits are then washed, blanched, pulped, deseeded, centrifuged, homogenized, thermally processed and aseptically filled maintaining sterility. The preparation process includes cutting, de-stoning, refining and packing. In case of aseptic product, the pulp is sterilized and packed in aseptic bags. The refined pulp is also packed in cans, hermetically sealed and retorted. Frozen pulp is pasteurized and deep-frozen in plate freezers. The process ensures that the natural flavour and aroma of the fruit is retained in the final product.

Uses of Mango Pulp:

4. Mango Pulp/Concentrate is perfectly suited for conversion to juices, nectars, drinks, jams, fruit cheese and various other kinds of beverages besides its direct consumption in lieu of fresh fruit. It can also be used in puddings, bakery fillings, fruit meals for children and flavours for food industry, and also to make the most delicious ice creams, yoghurt and confectionery. Main varieties of Mango Pulp are Alphonso Mango Pulp, Totapuri Mango Pulp, Kesar Mango Pulp.

Classification details of Mango Pulp under the Customs Tariff Act, 1975:

5. The GST law mandates classification and interpretation of any article or goods as per Customs Tariff Act, 1975 (hereinafter referred to as the ‘CTA’), therefore, it may be germane to refer to the provisions of the CTA, which read as under:

The goods – Mango Pulp is specifically classified under CTA sub-heading number 0804 50 40, as reproduced under:

Chapter – 8

Edible fruit and nuts; peel of citrus fruit or melons

Tariff Item

 

Description of goods

 

Unit

 

Rate of duty
Standard Preferential Area
0804 Dates, figs, pineapples, avocados, mangos, and mangostccns, fresh or dried.
0804 50 – Guavas, mangoes and mangosteens:
0804 50 40 – Mango pulp kg. 30% 20%

Classification & applicable GST Rate, Central Excise Duty rate & VAT rate:

6. Various notification prescribing GST rates which may or may not cover Mango Pulp, as described above, are extracted hereunder:

A: GST Law:

(I) Notification No. 02/2017- Central Tax (Rate) dated 28-06-2017 – Sr. No. 51:

CGST – EXEMPTED

Sr. No. Chapter /Heading / Subheading / Tariff Description of Goods
51 0804 Dates, figs, pineapples, avocados, mangos, and mangosteens, fresh.

(II) Notification No. 01/2017- Central Tax (Rate) dated 28-06-2017 – Sr. No. 16

Schedule-II CGST Rate 6%

Sr. No. Chapter /Heading / Subheading / Tariff Description of Goods
16 0804 Dates, figs, pineapples, avocados, mangos, and mangosteens, dried.

Schedule – III

Sr. No. 453 CGST Rate 9%

Sr. No. Chapter /Heading / Subheading / Tariff Description of Goods
453 Any Chapter Goods which are not specified in Schedule I, II, V, V, or VI.

B: Central Excise Tariff Act:

Chapter No. 8 of the Central Excise Tariff Act, 1985 specifically covers Mango Pulp as under:

Tariff Item Description of Goods Unit Rate of duty
0804 50 40 Mango pulp Kg Nil

C: Gujarat Value Added Tax Act:

Sr. No. Description of Goods Rate of Tax
48 (i)……………

(ii) Processed fruits, processed vegetables including fruit jams, jelly, pickle, fruit squash, paste, fruit drink and fruit juice.

4 paise in the rupee plus Additional Tax one paise in the rupee.

7. As GST law don’t provide clear classification, as the same heading are repeated twice under two different notifications, the applicant deemed it fit to apply for Advance Ruling so that probable GST Rate dispute can be avoided.

8. Under the circumstances, the applicant hereby applies for Advance Ruling and frame Question of law as under:

“At what rate GST shall be levied for supply of MANGO PULP and applicable serial number of the notifications published, which is falling under Heading No. 0804 50 40 of the Customs Tariff Act, 1975?”

2.2 The Applicant, vide attached sheet “Annexure B” to their application dated 06.04.2018, has submitted the Statement containing the applicants interpretation of law and/or facts which is as follows:

1. Notification No. 01/2017-Central Tax (Rate) and No. 02/2017- Central Tax (Rate), both dated 28-06-2017, provides that for the purpose of this notification, “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). Therefore, classification of the any goods shall be in accordance with the classification of the CTA. Annexed hereto and marked as “ANNEXURE-C” is copy of “Rules for interpretation of Customs Tariff”.

2. Accordingly, “Rules for interpretation of Customs Tariff” read with “General Explanatory Notes” appended therewith shall be applied for determination of classification of any goods. As per CTA, HS code relating to Mango Pulp is as under:

Tariff Item Description of goods Unit Rate of duty
Standard Preferential Area
0804 Dates, figs, pineapples, avocados, mangos, and mangostccns, fresh or dried.
0804 50 – Guavas, mangoes and mangosteens:
0804 50 40 – Mango pulp kg. 30% 20%

According to Rule 3 (a) of the Rules for interpretation of Customs Tariff, the heading which provides the most specific description shall be preferred to headings providing a more general description. The goods viz. Mango Pulp is specifically mentioned in CTA under HS No. “0804 50 40″ ”  Mango Pulp”, therefore, the same shall fall within the scope of that HS code only.

Further, it can be seen that the CTA uses “-“, “”, “- -” and “—” signs in Column (2) followed by Name of the goods. Interpretation of these signs, as per Rules for interpretation of Customs Tariff is as under:

“Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has where the description of an article or group of articles is preceded by ” or the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has “-” or “- -“.

Applying the above stated principle of interpretation, Mango Pulp, the goods for which interpretation is sought fall within the group of article “mangoes – fresh” under the CTA. Accordingly, Mango Pulp falls within Tariff Item / HS Code 0804 50 whether the same is fresh or dried.

3. With this background the applicant now proceeds to interpret exigibility of Mango Pulp and GST Rate applicable, as under:

4. The entry No. 51 of the Notification No. 02/2017-Central Tax (Rate) covers the goods viz. “Dates, figs, pineapples, avocados, mangos, and mangosteens, fresh”, accordingly as stated above, the same shall apply to “Mango Pulp”, a sub classification of “Mango – Fresh” as specified under CTA falling under HS Code “0804” and as explained hereinabove. Accordingly, Mango Pulp is covered by entry No. 51 of Schedule- I of Notification No.02/2017-Central Tax (Rate).

5. Whereas entry No. 16 of the Schedule – II of Notification No. 01/2017-Central Tax (Rate) covers the goods viz. “Dates, figs, pineapples, avocados, mangos, and mangosteens, dried, accordingly the same shall apply to the goods specified therein which are dried. Mango Pulp, the product under present consideration, is not dried but fresh and that too in liquid / semi liquid form. Therefore, Mango Pulp is not covered by entry No. 16 of Schedule-II of Notification No.01/2017-Central Tax (Rate). Accordingly, classification of Mango Pulp and its coverage under this notification is ruled out.

6. Similarly, entry No.453 of Schedule-Ill of Notification No.01/2017-Central Tax (Rate) is a residuary entry, cover goods which are not specified in Schedule I, II, IV, V or VI of the notification. In other words, this entry covers all “Taxable Goods” which are not specified in this notification. But, the goods under consideration viz. Mango Pulp is specifically covered under entry No.51 of Notification No. 02/2017-Central Tax (Rate), hence being Exempted, coverage under this residuary entry is also ruled out.

7. In view of the above and as per understanding of the applicant, the goods viz. Mango Pulp merits classification under heading 0804 and falls within the ambit of entry No. 51 of the Notification No. 02/2017-Central Tax (rate), accordingly exempted from payment of GST.

2.3 The Applicant has also furnished the synopsis of oral submission at the time of personal hearing held on 14.06.2019.

3. The Central Goods & Services Tax Commissionerate, Bhavnagar, vide their letter dated 03.05.2018, has also furnished the point wise comments, which are as follows:

1. The activity / service in respect of which an Advance Ruling has been sought for is not found to be an ‘ongoing’ activity / service under the jurisdiction of the Central GST Division, Junagadh of CGST Commissionerate Bhavnagar as neither the applicant unit viz. M/s. Universal Import Export, Talala falls in this jurisdiction nor any similar unit is found registered under CGST Division, Junagadh. M/s. Universal Import Export, 15, Tirupati Complex, Gundran Road, Talala is registered under GST having GSTIN-24AAEFU7782R1Z8, and is under the jurisdiction of Veraval, State GST Authority. Further, the said unit was also not registered with Central Excise, resulting into non availability of records. Hence, it is inferred that the activity / service is ‘proposed’ one.

2. No such question/issues raised in the Application are pending or decided, in view of the (1) above.

3. The applicant is seeking “At what rate GST payable on supply of Mango Pulp falling under the Heading No. 08045040 of Custom Tariff Act, 1975 and rate of GST? Equivalent Heading under GST law is 0804 and as such they have sought for classification of goods and applicability of Notification in connection with the rate of GST chargeable on supply of their goods viz. Mango Pulp. In GST regime, no separate Tariff Schedule has been enacted and Customs Tariff Act, 1975 has been adopted for the purpose of classification of goods under GST. Whereas the rates of GST are charged on the basis Notification issued by the Government as per recommendations of GST Council.

4. Therefore, while observing the scope of applicability of rate in GST regime, it is required to examine the category of Fruit or of Fruit Pulp also, in absence of clear cut description of Mango Pulp. The classification may fall under either of following Chapter Heads:

1. Chapter 8: Edible fruit and nuts; peel of citrus fruit or melons

2. Chapter 20: Preparations of Vegetables, fruit, nuts or other parts of plant.

3. Chapter 22: Beverages, spirits and vinegar

5. Anyone of the following may be applicable for the sake of classification of Mango Pulp as there is no clear / specific description of Mango Pulp available in the GST Tariff:

SCHEDULE- I: LIST OF GOODS AT NIL RATE:

Sr. No. Chapter /Heading / Subheading / Tariff Description of Goods
1 0804 Dates, figs, pineapples, avocados, mangos, and mangosteens, fresh.

SCHEDULE IV: LIST OF GOODS AT 5% RATE:

S No. Chapter/ Heading/ Subheading/ Tariff item Description of Good
32 0811 Fruit and nuts, uncooked or cooked by steaming or boiling in water, frozen, whether or not containing added sugar or other sweetening matter
33 0812 Fruit and nuts, provisionally preserved (for example, by Sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that state for immediate consumption

SCHEDULE V: LIST OF GOODS AT 12% RATE

S No. Chapter/ Heading/ Subheading/ Tariff item Description of Good
16 0804 Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, dried
40 2008 Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included; such as Groundnuts, Cashew nut, roasted, salted or roasted and salted, Other roasted nuts and seeds, squash of Mango, Lemon, Orange, Pineapple or other fruits
41 2009 Fruit juices (including grape must) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter
48 2202 90 20 Fruit pulp or fruit juice based drinks

SCHEDULE III: LIST OF GOODS AT 18% RATE

As per entry No. 453 of Schedule III of Notification No. 01/2017 Central GST (Rate):

453 Any Chapter Chapter Goods which are not specified in Schedule I,II,IV,V

In the SCHEDULE I: LIST OF GOODS AT NIL RATE, the description of Mangoes (fresh) is available but it confined to only Mangoes in fresh form and no clear description of Mango Pulp is provided as the said item seems to be in their specific nature after going through the process of cutting, de-stoning, refining and packing. However, in GST regime the Chapter heading is confined to four digits only i.e.0804, and as such the concerned item may fall under nil rate of duty.

Looking to the statement of facts and write up on Mango Pulp provided by the applicant, The Mango Pulp derived by the applicant would not be termed as “FRESH” as it would be available in market for long time and after being processed and packed.

In SCHEDULE IV: LIST OF GOODS AT 5% RATE, the Chapter heading 0811 & 0812 are in relation to the Fruits and nuts…

Chapter heading 0811-the description provided under GST tariff is “Fruit and nuts, uncooked or cooked by steaming or boiling in water, frozen, whether or not containing added sugar or other sweetening matter”. That means the item should be:

1. Fruit or nut

2. Uncooked or cooked by steaming or boiling in water

3. Frozen and

4. whether or not containing added sugar or other sweetening matter.

However, the item under dispute is Fruit, and it is uncooked, it also includes the process frozen as described by the applicant in para 3 of Annexure A, but it could not be called frozen in its acute state of /stage of supply. Hence, the question will arise that the item i.e. Mango Pulp may fall under the heading of 0811 or otherwise and at applicable rate of 5% remains questionable.

Chapter Heading 0812 is not applicable in the item as it’ does not fulfill the condition of “unsuitable in that state for immediate consumption”.

In the SCHEDULE V: LIST OF GOODS AT 12% RATE,

1. As per the description of goods in question, its classification may also fall under Chapter Heading 0804 -“Dried”:-

Looking to the statement of facts and write up on Mango Pulp provided by the applicant, The Mango Pulp derived by the applicant would not be termed as “DRIED” as the process cited by the applicant do not mention any drying process and, hence, it would not be termed as “DRIED”.

2. The Chapter heading 2202 90 20 is provided for description “Fruit pulp or fruit juice based drinks”, however, the same may be having the condition either of Fruit pulp based drinks or Fruit Pulp only, as the Chapter 22 is of Beverages, spirit and vinegar while the dictionary meaning of Beverages follow the condition of being in liquid form and must be drinkable other than water, herein Mango Pulp may follow the condition of Beverages, hence, it may fall under the Chapter/Heading/Sub-heading/Tariff item: 2202 90 20.

As the mango pulp is not fruit juice based drinks or beverages, hence, cannot be classified under Chapter Heading No. 2202 90 20.

6. In view of the above, it is opined that though for sake of ascertaining the applicable rate, the classification of goods is required to be considered, but in the present case the classification of item is not specified in GST Tariff, and, hence, such item would be squarely covered under the entry No. 453 of Schedule III of Notification No.01/2017 Central GST (Rate) dated 28.06.2017. Hence, applicable GST rate of Mango Pulp may be 18% as per above classification of the questioned item.

Discussion & Findings:

4. We have considered the submissions made by the applicant in their application for advance ruling as well as Synopsis of Oral submission made at the time of personal hearing. Further, we have also considered the information and views submitted by the Central Goods and Service Tax Commissionerate, Bhavnagar.

5. The issue involved in this case is regarding rate of GST of Mango Pulp falling under Chapter heading no. 08045040 of the Custom Tariff Act, 1975.

6. The Applicant submitted that the goods viz. Mango Pulp merits classification under heading 0804 and falls within the ambit of entry No. 51 of the Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017, accordingly exempted from payment of GST.

6.1 For the sake of brevity, the entry No. 51 of the Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017 is reproduced herein below:

Sr. No. Chapter /Heading / Subheading / Tariff Description of Goods
51 0804 Dates, figs, pineapples, avocados, mangos, and mangosteens, fresh.

6.2 From the above, it is clear that above entry confined to only ‘Mangoes in fresh’ form. Whereas, Mango Pulp is obtained from mango fresh after carrying out process of cutting, de-stoning, refining and packing. Thus, ‘Mangoes in fresh’ and ‘Mango Pulp’ are not same one, as both are separately classified under different Chapter sub-headings of the Customs Tariff Act, 1985, read as under:

Tariff Item Description of goods Unit Rate of duty
Standard Preferential Area
0804 Dates, figs, pineapples, avocados, mangos, and mangostccns, fresh or dried.
0804 50 – Guavas, mangoes and mangosteens:
0804 50 40 – Mango pulp kg. 30% 20%

7. We find that ‘Mango Pulp’ is specifically classified under Chapter sub-heading no. 0804 50 40 of Customs Tariff Act, 1975. However, the classification of item, ‘Mango Pulp’ is not specified in GST Tariff. The Entry No.453 of Schedule-Ill of Notification No.01/2017-Central Tax (Rate) is a residuary entry, cover goods which are not specified in Schedule I, II, IV, V or VI of the notification. In other words, this entry covers all “Taxable Goods” which are not specified in this notification. Hence, ‘Mango Pulp’ would be squarely covered under the entry No.453 of Schedule III of the Notification No.01/2017- Central GST (Rate) dated 28.06.2017, which attracts rate of GST @18%, which reads as under:

Sr. No. Chapter /Heading / Subheading / Tariff Description of Goods
453 Any Chapter Goods which are not specified in Schedule I, II, V, V, or VI.

8. In view of the foregoing, we rule as under –

RULING

Question 1: At What rate GST payable on supply of MANGO PULP falling under Heading No. 08045040 of the Customs Tariff Act, 1975 and rate of GST?

Answer : ‘Mango Pulp’ will fall under the entry No.453 of Schedule III of the Notification No.01/2017- Central Tax (Rate) dated 28.06.2017 under CGST Act and corresponding notification of GGST Act and attracts rate of GST @18% (CGST:9% & GGST: 9%).

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