Classification of Goods — The issue in the present case is regarding the determination of correct classification and applicable rate of GST of Prohance D- Chocolate variant.
Accordingly, in order to obtain the correct clarification and guidance, the Appellant had filed an application for Advance Ruling in Form No. ARA-1 before the Learned Authority for Advance Ruling, State of Maharashtra (hereinafter referred to as “Ld. AAR”) for obtaining an Advance Ruling on the issue as to what would be the appropriate classification of the Prohance-D - Chocolate variant/flavor. A copy of application filed by the appellant bearing no. Advance Ruling No. 88/2018/GST is enclosed herewith as Annexure-4 collectively.
Prohance-D Chocolate contains some extra special ingredients which differentiate from the normal Prohance. All the ingredients in it especially Isomaltulose, Gum Arabic, Inulins, Myo-Innositol, Sucralose, Fructose are sugar replacements or sugar substitute. Gum Arabic is used as a ‘soluble dietary fiber’. The fact that these products are used in the Prohance-D shows that it is specially meant for people suffering from diabetes and is also marketed as meal replacement for diabetics.
The AAR has also observed that the product is not a diabetic food because it does not contain high amount of dietary fiber and although the fact that it contains Gum Arabic, Gum Arabic is not a great source of dietary fiber. However, the AAR has not given any references in support of the statement that ‘Diabetic Foods’ have to contain dietary fibre. Also, it is felt that such a qualification would not be required to classify a product as diabetic food. As the HSN also considers food containing sugar replacements as diabetic food, the above product would also classify in it.
The AAR classifying the product Prohance-D (Chocolate) under heading 21069050 is hereby set aside. The product would instead classify as a diabetic food covered under chapter heading 21069091. — Sun Pharmaceutical Industries Ltd., In Re…  17 TAXLOK.COM 122 (AAAR-Maharashtra)