Unbranded namkeen attracts GST at 5 per cent, while branded namkeen attracts 12 per cent
The Kerala Authority of Advance Ruling (AAR) has classified banana, jackfruit, jaggery-coated chips and tapioca chips as ‘roasted/fried vegetable products’ and said they will attract 12 per cent GST.
The applicant Aswath Manoharan happens to be an unregistered person under GST. He was in the process of setting up a unit to manufacture banana chips, jack fruit chips, jaggery-coated banana chips (called sarakaraupperi in Malyalam) and masala-coated fried groundnuts (also known as as masala kadala). He intends to use an unregistered brand name, ‘AYYAPPA’ for these products.
Confusion regarding rates
Since there was a confusion on GST rates on these products, Manoharan approached the AAR in order to know the correct rates before commencing his business. The applicant submitted that first three chips fall into the category of ‘Namkeen’ (salty). He also said that most of the leading dealers in Hindi-speaking areas classify banana chips as namkeen and the classification under ‘Food Safety and Standards Regulations, 2011’ groups banana chips, jackfruit chips and tapioca chips along with namkeens such as mixture, bhujia, chabena etc.
Using GST rate tables, the applicant was of the view that these chips would attract a GST at the rate of 5 per cent. The applicant was aware that the rate would be 12 per cent in case chips are supplied in packets containing a registered brand name. It was made clear that the brand in question is neither registered nor would the applicant make any actionable claim on the name; he was ready to provide an affidavit in this regard. It was also argued that jaggery-coated banana chips falls into the category of ‘sweetmeat’ and hence should attract a GST at the rate of 5 per cent.
After hearing, the AAR took note of the applicant’s plea for not getting the brand name registered. It observed that any vegetable, fruit, nut or edible parts of plant which is prepared or preserved by any process other than freezing, steaming, boling, drying, etc. are liable to be classified under Chapter 20 of the Custom Tariff Act 1975.
It also mentioned that Chapter Heading 2008 of Customs Tariff covers all roasted and fried vegetable products and even so, frying and roasting are two popular cooking methods. “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,” AAR said.
Accordingly, it applied interpretation of the Custom Tariff Act which holds that banana chips, jackfruit chips, tapioca chips and jaggery-coated banana chips (without registration of brand name) are classifiable under Customs Tariff Heading (CTH) 2008 19 40. “All products that fall under Chapter Heading 2008 of the Custom Tariff Act, 1975 attract GST at the rate of 12 per cent,” AAR said.