The Telangana Authority of Advance Ruling, consisting of members B. Raghu Kiran and S.V. Kasi Visweswara Rao, has ruled that 18% GST is payable on 'ready to eat' popcorn sold in retail packages.The applicant, M/s. Agro Tech Foods Limited, is in the business of selling, among other commodities, Ready to Eat (RTE) popcorn. The popcorn is usually flavoured with salt, caramel,...
The Telangana Authority of Advance Ruling, consisting of members B. Raghu Kiran and S.V. Kasi Visweswara Rao, has ruled that 18% GST is payable on 'ready to eat' popcorn sold in retail packages.
The applicant, M/s. Agro Tech Foods Limited, is in the business of selling, among other commodities, Ready to Eat (RTE) popcorn. The popcorn is usually flavoured with salt, caramel, strawberry, chocolate, or kettle popcorn without any flavour. "Ready to eat" popcorn is obtained by popping the maize corn using a heating process, which is subsequently coated with palmolene oil, salt, natural or artificial flavouring, and spices.
The applicant submitted that Heading 1904 includes prepared foods obtained by swelling or roasting of cereals or cereal products that are covered under Tariff Heading 1904. Thus, the popcorn being manufactured by the applicant by using the process of swelling by heating would merit classification under Heading 1904. The classification has been confirmed by the courts in India and overseas.
However, in certain cases, RTE popcorn has also been held to be classified under Tariff Heading 2008, i.e., 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.
The tariff heading 2106 is a residuary entry which covers food preparations which are not covered elsewhere, like mithai, mishtans, sweetmeats, namkeen, etc. Thus, for an item to be classified under this entry, it must not fall under any other chapter heading. Popcorn with a flavouring element (strawberry or chocolate) may also be classified under Heading 2106.
The applicant has sought an advance ruling in respect of the HSN classification and consequent rate of GST applicable to "Ready to Eat" popcorn sold in retail packages.
The AAR relied on the decision of the Supreme Court in the case of Indian Metals & Ferrous Alloys Vs. CCE, in which it was held that in the classification of goods, a specific entry will be preferred to a general entry. Similarly, in the case of State of Karnataka vs. Durga Projects, the Supreme Court ruled that only goods that could not be brought under specific tariff entries could be attempted to be brought under residual entry.
The AAR observed that when a specific entry is available for enumerating the commodity 'RTE popcorn," relegating it to the orphanage of the residuary entry will be against the principle of classification as held by the Supreme Court. Hence, RTE popcorn is classifiable under tariff head '1904' enumerated at Serial No. 15 of Schedule III of Notification No. 01/2017 dated 28.06.2017.
Applicant's Name: M/s. Agro Tech Foods Limited
Citation: TSAAR Order No.17/2022
Dated: 29.03.2022