In a recent ruling, the Andhra Pradesh Authority for Advance Ruling ( AAR ) has ruled that the crackle manufactured by the applicant with Sugar, Cashews, Butter, Liquid glucose and other permitted flavours should not be classified under ‘Sugar Boiled Confectionery’ for 12% Goods and Services Tax ( GST ) as the products were used as industrial inputs.
The applicant, Sri Venkateswara Cashew Chikky manufacturers is engaged in manufacturing and supply of an edible product under thc name “Crackle”, which is, as per applicant, identically known and recognised as ‘N.B.S Crackle’ and contains ingredients in following proportion.
The product manufactured by the applicant was supplied as industrial raw material to the manufacturer of ice creams i.e. Hindustan Unilever Limited, Dairy Classic Ice Creams (P) Ltd etc. The said product is used as toppings in ice creams.
The Applicant has been classifying the impugned product under Chapter 17049020 till date and discharging GST at the rate of 18%. The Applicant sought ruling from thc AAR on appropriate classification of the impugned product.
The applicant sought AAR on whether the product by name “Crackle”, manufactured and supplied by the applicant containing the ingredients Sugar, Cashew Nuts, Butter, Liquid glucose and other permitted Flavours , should be classified under the Tariff Heading 1704 enumerated at Serial number 32AA of Schedule III of Notification No. 01/2017 as a Sugar boiled confectionery?
The applicant submitted that impugned product i.e. NBS Crackle is classifiable under tariff head 11704′ enumerated at Serial number 32AA of Schedule II of Notification No. 01/2017, dated 28-6-2017.
The Chapter 17 of the HSN is for ‘Sugar & Sugar Confectionery’. While 1701 to 1703 headings relate to Sugars in different forms, the Heading 1704 mentions ‘Sugar Confectionery’. ‘Sugar Confectionery’ or ‘Confectionary’ has nowhere been specifically defined under the GST law or for that matter under HSN and therefore, one has to go by the plain or dictionary meaning. As per this Dictionary, the word ‘confection’ means to prepare for use with sugar, syrup, or the like; to make into a confection; to mix, make up as a condiment or seasoned delicacy.
The AAR bench referenced the HS explanatory notes, noting that Heading 1704 of the HSN typically encompasses sugar preparations intended for immediate consumption, commonly known as sweetmeats, confectionery, or candies. Specifically, “sugar boiled confectionery” refers to sugar and water boiled to the point where almost no water remains, forming a vitreous mass, and is typically purchased and consumed by end users.
However, in the present case, the contested product is exclusively sold to ice cream manufacturers. According to the applicant’s submissions, these products are not intended for direct consumption by end users but are instead utilised in the ice cream manufacturing process, primarily as toppings. Therefore, the product in question, named “N.B.S. Crackle,” serves as an industrial input and cannot be classified as “sugar boiled confectionery.”
Hence, the AAR bench ruled that the product by name “Crackle”, manufactured and supplied by the applicant containing the ingredients Sugar, Cashew Nuts, Butter, Liquid glucose and other permitted Flavours, should not be classified under the Tariff Heading 1704 enumerated at Serial number 32AA of Schedule III of Notification No. 01/2017 as a Sugar boiled confectionery.
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