Page 138 - GSTL_ 28th May 2020_Vol 36_Part 4

584 GST LAW TIMES [ Vol. 36
6. Emulsifier and To Emulsify and stabilize (small quantity)
stabilizers
7. Acidity regulator To regulate acidity (small quantity)
8. Iodized salt For taste and balance

The process of manufacture involves heating (UHT sterilization) and cooling of
milk. The ingredients as listed above are added to the milk at different points of
the heating/cooling process. Thereafter the milk is filtered and de-
aerated/homogenised. The UHT Sterilized Flavoured Milk is thereafter pack-
aged. The applicant has stated that the product is being classified by them under
Tariff Item 2202 90 30 as ‘beverages containing milk’. However, judicial prece-
dents and the relevant GST tariff entries support classification under Chapter 4 of
Customs Tariff [Act].
2.2 The Applicant on the interpretation of law has stated that the prod-
uct is UHT (Ultra High Temperature) Sterilized Milk. On the basis of the essen-
tial character of the product, the common parlance understanding of the product
and judicial precedents, the product in question, i.e. flavoured milk is classifiable
under Chapter 4 of the Tariff. The product under consideration, i.e. flavoured
milk is a dairy produce. It is essentially milk added with sugar and permitted
additives. The single largest ingredient in the product, in quantity and essence, is
milk which constitutes more than 80-90% of the product. The remaining ingredi-
ents in the product, i.e. sugar, cocoa, vanilla, salt etc. are added for flavour and
sweetening and other additives viz. Recodan MS G 4683 and ICL - Joha T New
are added for stabilising, buffering, emulsifying and thickening purposes. In oth-
er words, the additions to milk are only to ensure that the natural dairy product
is flavoured such that it is the most tasty/favoured milk, while the other addi-
tives allow for effective packing and shelf-life. These additions do not in any
manner change the essential nature of the product, i.e. milk. The product is mar-
keted under the brand name ‘Winkin’ Cow thick shake’ to make it more attrac-
tive to consumers. It is pertinent to mention here that the product is targeted to-
wards children, and hence, the packaging, labelling and marketing of the prod-
uct as a fun, colourful and tasty drink is essential. At the same time, it is as im-
perative that the drink holds the necessary nutrition to ensure that it is chosen by
purchasers (adults) as a preferred choice for consumption. The Applicant has
submitted that the essential nature and character of the product under considera-
tion is milk. They relied upon the decision of the Hon’ble High Court in Gujarat
Coop. Milk Marketing Federation Ltd. v. State of U.P. [2017 (5) G.S.T.L. 351 (All.)].
2.3 The applicant has relied on the position and treatment adopted by
the Food Safety and Standards Authority of India, the regulator for the Food sec-
tor, and has stated, inter alia, as follows :
 The Food Safety and Standards (Food Products Standards and Food
Additives) Regulations, 2011 (The FSS Regulations’) set out the cat-
egorisation of foods for prescribing standards and permitted ingre-
dients and additives. Relevant to the present issue is the following :
 The FSS Regulations covers Flavoured Milk under the same
category as Milk, i.e. under ‘Milk and dairy based drinks’ (Catego-
ry 1.1). The said Regulations define Flavoured Milk as fol-

GST LAW TIMES  28th May 2020  138