Fact: M/s. Prem Ghan Products, Indore (“the applicant”) is engaged in the manufacture, supply and trading of various types of mouth fresheners (after mixing Kharak, Khopra, Sugar, Saunf, Mishri, fennel, Dates, Saccharin, menthol, Papaya fruit, or natural flavouring substances). The Applicant procures various raw materials like betelnut, sugar, kharak, menthol, mishri etc. and after mixing the resultant product is sold in market under HSN code 2106 as “Miscellaneous Edible preparations not elsewhere specified or included”as various product names.
Issue involved: Whether the goods manufactured (i.e. various types of mouth freshners) by the Applicant and sold prepared by mixing various inputs/raw materials like kharak, sugar, khopra, sounf, fennel, dates, mishri, saccharin, menthol, papaya fruit, or natural flavouring substances, are liable to be classified under Chapter 21 i.e. ‘Miscellaneous Edible Preparations’ – 2106 (food preparations not elsewhere specified or included) and taxed at 18% GST as currently followed or under Chapter 20 i.e. ‘Preparations of Vegetable, fruit, nuts or other parts of plants’ and taxable at 12% GST?
Applicant Interpretation of Law: The applicant contended that he was carrying out the same business, classifying and selling the aforesaid products under Chapter Heading 2106 of the schedule to the Central Excise Tariff Act 1985. It was further contended that but there are other major market players in this field who are dealing in similar products under the brand names ‘Chutki’, ‘PaasPaas’, ‘Mastana Mouth Freshner’ etc., and these particular products are being classified under Chapter 20 of the HSN attracting GST @12%. So the applicant urged in light of the similar products of other manufacturers being classified under Chapter 20, the impugned product of the Applicant would also merit classification under Chapter 20 instead of prevailing Chapter 2106.
Held: The Hon’ble AAR of Madhya Pradesh vide Order No. 17/2018/AAR/R-28/47bdated October 23, 2018 stated that there is no physical change in the ingredients/inputs/raw materials used in production/manufacture of the aforesaid goods viz. Mouth Freshener, we do not find any reason in reviewing the established and settled classification of aforesaid goods. Further the product Mouth freshener shall be aptly classified under Chapter Heading 2106 of the GST Tariff as ‘Food preparations not elsewhere specified or included and would be chargeable to GST at @18% [(9% CGST + 9% SGST) or 18% IGST, in term of Notification No.01/2017-Central Tax (Rate) dated June 28, 2017 and the corresponding notification under MPGST Act 2017 (Sr. No.23 to Schedule III).