The Authority of Advance Ruling (AAR) of Kerala has classified banana chips, jiggery-coated chips, jackfruit chips, and tapioca chips as “roasted/fried vegetable products.” Now, these products will attract a GST of 12%.
Till now, unbranded namkeen items attracted GST of 5%, while branded items attracted GST of 12%. Sweetmeats attract GST of 5%.
How this decision came into existence
This happened when a businessperson wanted to establish a unit for making banana chips, jiggery-coated banana chips, jackfruit chips, and masala-coated fried groundnuts. He intended to have these products manufactured under an unregistered brand name.
However, a lot of confusion persisted among manufacturers and traders regarding such products.
This businessperson knocked the doors of the AAR to find out the true rates before starting his unit. As per his application, his first three mentioned chips come under the category of “namkeen,” which means salty. He argued that most leading dealers of North India classified banana chips as “namkeen” and the “Food safety and Standards Regulations, 2011” features products like banana chips, tapioca chips, jackfruit chips, along with bhujia, namkeen, chabena, and others.
He used the GST rate tables to place his argument. According to him, banana chips attracted a GST of 5%, but when they would be marketed in packets with a registered brand name, the same chips would attract a GST of 12%.
He also argued that jiggery-coated chips fell in the category of “sweatmeat” and so should attract a GST of 5%.
After hearing the businessperson’s plea, AAR took note of the points that why he does not want to get his brand name registered. The body observed that any fruit, vegetable, nut, or edible part of a plant prepared or preserved through any process that does not involve boiling, steaming, drying, or freezing are liable to come under Chapter 20 of the Custom Tariff Act 1975.
AAR also highlighted the fact that Chapter Heading 2008 of Customs Tariff covers every roasted and fried vegetable product. Also, it is to be noted that roasting and frying are two highly popular cooking techniques.
As per AAR statement, “It is not necessary that both the conditions are to be cumulatively satisfied for classifying a product under the category of roasted and fried products.”
To put its point, AAR used the interpretation of the Custom Tariff Act that states that banana chips, tapioca chips, jackfruit chips, and jiggery-coated banana chips (from unregistered brand name) are classifiable under Customs Tariff Heading 2008 19 40.
As per AAR statement, “All products that fall under Chapter Heading 2008 of the Custom Tariff Act, 1975 attract GST at the rate of 12 per cent.”
