GST classification and rates for Popcorn – AAR Ruling for HSN Code and CGST / SGST / IGST rates
ABCAUS Case Law Citation:
ABCAUS 3329 (2020) (07) AAR
Important case law relied upon by the parties:
M/s Alladi Venkateshwaralu and Others v. Govt. of A.P. [(1978) 41 STC 394 (SC)]
M/s Frito Lay India [2009 (242) ELT 3 (SC)
In the instant case, the applicant was a proprietorship concern which was manufacture PopCorn which was sold in a sealed plastic bag bearing a registered brand name under the Trade Marks Act, 1999.
The Pop Corn product was manufactured by using corn/maize grains. The Raw corn-grains were heated in an electric machine/oven and due to the heat given to the grains, they turned into puffed corns/popcorns.
Then after they are sieved so as to remove some grains which are left un-puffed. During the process Salt, Edible Oil and Turmeric Powder are mixed in required quantity. Thereafter the product is packed in a plastic pouch.
Before the Authority for Advance Ruling (AAR) GST, The applicant raised the question of classification and rate of CGST/SGST that would be applicable to said Pop Corn.
The AAR stated that the clarification by the applicant that though a simple process of heating is done on Maize and to make it palatable other ingredients like salt and turmeric powder are added to it and a negligible quantity of oil is used for the purpose of sticking the salt and turmeric on the maize/corn, makes it clear that the product does not remain GRAIN and amounts to have gone under processing/ preparation of food.
AAR noted that the said POP CORN, manufactured from raw corn/maize grains, which, by heating turn into puffed corns/popcorns and then to make it palatable other ingredients like salt and turmeric powder along with oil are added to it fits the description as ‘Prepared foods obtained by the roasting of cereal’.
The AAR opined that the above description attracts classification under Chapter Sub-Heading 1904 10 of the First Schedule to the Customs Tariff Act, 1975. Since it was not Corn flakes (tariff item 1904 10 10), Paws, Mudi and the like (tariff item 1904 10 20) or Bulgur wheat (tariff item 1904 10 30), it will fall under the residual tariff item 1904 10 90 of the First Schedule to the Customs Tariff Act, 1975.
Therefore, the said PoPCorn would falls under entry at Sr. No. 15 of Schedule III of Notification No. 1/2017 CENTRAL TAX (Rate) Dated 28-6-2017 and attracts 9% CGST and 9% SGST or 18% IGST.
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