Cooking Cream attracts 18% GST, No infirmity in the Ruling of AAR: AAAR [Read Order]

The Haryana Appellate Authority of Advance Ruling ( AAAR ) has held that ‘Cooking Cream’ attracts 18% GST and there was no infirmity in the ruling of AAR.

The appellant M/s Khera Trading Company is inter alia engaged in the distribution of various dairy and non-dairy products. The goods "Cooking Cream" sold by the appellant under the name ‘Cooking Delite’ is a proprietary food consisting of Water, Edible Vegetable Fat (hydrogenated palm kernel oil), Milk Solid, Sugar along with premixes of emulsifiers and stabilizers. It is ideal for use in truffles, soups, sauces, gravies, and all types of cuisines. The impugned good comprises 26% edible oil (hydrogenated palm kernel oil) to which other ingredients such as milk solids, sugar, and premixes are added, thus, forming a mixture/preparation of vegetable oil.

The contention of the appellant was that since "cooking cream" contains 26% edible oil along with some other ingredients, it forms a mixture/preparation of vegetable oil and that it is classifiable under chapter heading 1517 as “edible mixture or preparations of animal or vegetable fats or oils or fractions of different fats or oils of this chapter, other than edible fats or oils or their fractions of heading 1516”, Hence, the appellant contended that this product is chargeable to 5% IGST.

The Advance Ruling Authority held that “The impugned item, i.e. non-dairy cooking cream, does not merit classification under heading 1517 of the First Schedule to the Customs Tariff Act, 1975. Rather the same is classifiable under chapter heading 2106 of the schedule to the Customs Tariff Act, 1975 and chargeable to 18% IGST”. Aggrieved by the ruling appellant approached AAAR.

The Appellant submitted that impugned good is similar to margarine (as per HSN Explanatory Notes, this heading covers margarine and other edible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this Chapter, other than those of heading 1516) insofar as it is a preparation of vegetable oil in the nature of an emulsion of water-in-oil type and it resembles a regular cream which, like butter, is a dairy product. Similar to margarine which imitated butter by using vegetable fat instead of dairy fat, the impugned product imitates cream by using vegetable fat instead of dairy fat. In their defense appellant relied upon the decisions in the cases of Aluva Sugar Agency vs State of Kerala 20lI (2721 EW 649 (SC) and Parisons Foods Plt Ltd vs Joint Commissioner of Commercial Taxes, Thiruvananthapuram 2018 (11) GSTL 44(Ker.).

AAAR in its ruling observed that it may be seen that butter consists of milk fat contents of 80% or more but not more than 95% by weight. In the case of Aluva Sugar Agency also the fat contents of Margarine are around 80% and thus the same is used as the substitute for butter. However, in the case before us, the fat content is only 26%. Thus the product 'Cooking Cream' cannot be said to be a substitute or imitation of butter. Thus Cooking Cream is not similar to Margarine and hence the case law relied upon by the appellant holds no wait.

To Read the full text of the Order CLICK HERE

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