Karnataka AAR: Whole Wheat Parota will not attract the GST rate of 5% as it is not covered under Heading 1905

The Applicant M/s Fresh Food Private Limited is seeking advance ruling on whether the preparation of Whole Wheat Parota be classified under Chapter heading 1905, attracting GST at the rate of 5%? The Authority vide its Order dated May 22nd, 2020 held that parota is classified under Chapter Heading 2106 and is not covered entry No.99A of Schedule I to the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 hence will not attract GST Rate of 5%.

Contention of the Applicant:

The applicant contends that the product merits classification under Chapter heading 1905, under the product description of Khakhra, plain chapatti or roti.

The applicant stated that a new entry No.99A has been inserted with the description "Khakhra, plain chapatti or roti", without defining the said description. The applicant further quotes the aforesaid notification and claims the applicability of Customs Tariff Act 1975, explanatory notes (HSN notes) to arrive at the classification of a product, which can be analysed on the basis of the three parameters i.e.

i.                 Reference to general rules for the interpretation of tariff embedded in the Customs Tariff Act 1975.

ii.                Judicial Precedents

iii.             Reference to explanatory notes issued by World Customs Organisation.

 

The applicant intended to place reliance on the ruling passed by the Advance Ruling Authority, Maharashtra, in the case of M/s Signature International Foods India Private Limited, wherein it is held that paratha & paratha wraps are covered by the scope of entry 99A of Notification 34/2017-Central Tax (Rate) dated13.10.2017.

Observations/Findings of the Authority:

The impugned products having description "parota" does not have any specific entry in the Customs Tariff Act, 1985/ GST Tariff. The products covered under heading 1905 are already prepared or completely cooked products and no further process is required to be done on them for consumption and hence they are ready to use food preparations. In the instant case the impugned products are admittedly not ready for consumption, but need to be heated before consumption. Thus, the impugned products do not merit classification under heading 1905.

Further Explanatory Notes to the Harmonized Commodity Description and Coding System, with regard to heading 2106, at clause (A) specifies that the said heading 2106 covers Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption, provided that they are not covered by any other heading of the Nomenclature. In the instant case the impugned goods i.e. parota are not covered under any other heading and also need to be processed for human consumption. Therefore, the impugned goods are rightly classifiable, more specifically, under heading 2106 90.

Further the products khakhra, plain chapatti or roti are completely cooked preparations, do not require any processing for human consumption. Parota however require further processing for human consumption, as admitted by the applicant. Thus, the benefit of entry No.99A of Schedule I to the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 is not applicable to the instant case and the applicant is not entitled for the same.

The product parota is classified under Chapter Heading 2106 and is not covered entry No.99A of Schedule I to the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, as amended vide Notification No.34/2017-Central Tax (Rate) dated 13.10.2017

Read the full Order here.

- By Ronak Tyagi

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