In a significant ruling with far-reaching implications for the GST (Goods and Services Tax) classification of food products, the Andhra Pradesh bench of the Authority for Advance Rulings has made a decisive distinction. This ruling pertains to 'N.B.S. Crackle,' a key ingredient used predominantly as a topping for ice creams. The product, manufactured and supplied by M/s Sri Venkateswara Cashew Chikky Manufacturers, contains a blend of ingredients, including sugar, cashew nuts, butter, liquid glucose, and various permitted flavors. The heart of the matter revolves around whether 'N.B.S. Crackle' should be classified under the GST as 'sugar-boiled confectionery' or if it should find its place within a different category due to its specific utilization within the ice cream manufacturing process.
The applicant is engaged in the manufacturing of ‘NBS Crackle’ and supplies it as an industrial raw material to ice cream manufacturers Hindustan Unilever Limited and Dairy Classic Ice Creams (P) Ltd. The product is primarily used as a topping for ice creams.
The two-member bench of K. Ravi Sankar and RV Pradhamesh Bhanu noted that Heading 1704 covers a wide range of sugar preparations that are typically sold in solid or semi-solid forms and are intended for immediate consumption. These products are collectively referred to as sweetmeats, confectionery, or candies, as per the Central Board of Excise and Customs. On the other hand, ‘sugar-boiled confectionery’ is a product made from sugar and water, boiled at a temperature that removes practically all water, resulting in a vitreous mass. Such products are typically purchased and consumed by end-users.
The bench held that the product ‘N.B.S. Crackle’ 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 utilized in the ice cream manufacturing process specifically as toppings.