Classification of goods— In the instant case, the appellant seeks clarification regarding the HSN code, and rate of duty on their outward supply of “flavoured milk”.

The appellant is engaged in the business of processing and sale of milk and milk products including flavoured milk. The appellant submits that flavoured Milk is obtained by adding sugar and different flavours to milk which does not change the essential character of milk. He states that it is a substitute for milk and a simple modification of milk which involves no manufacturing process.

The Authority for Advance Ruling, A.P, had ruled that 'flavoured milk' is classifiable under tariff item 2202 9930 of the First Schedule to the Customs Tariff Act, 1975 as a “beverage containing milk” under HS code 2202. The rate of tax applicable for the said tariff item is 12% GST under entry no. 50 of Schedule II of Notification No.1/2017 - Central (Rate) dated 28.06.2017 as amended.

The appellant prays that the AAR has erred in holding that Flavored Milk manufactured is classifiable under HSN Code 2202 and not under HSN Code 0402. The said Ruling is illegal and contrary to law and the HSN Codes.

Held that— The commodity 'flavoured milk' merits classification under beverage containing milk under tariff heading 2202 90 30. The rate of tax applicable for the said tariff item is 12% GST under entry no. 50 of Schedule II of Notification No.1/2017 - Central (Rate) dated 28.06.2017 as amended.