25.04.2023: Wooden ice-cream sticks, spoons to attract 12% GST, says Karnataka AAR

Karnataka’s Authority for Advance Rulings (KAAR) has held that wooden ice-cream sticks and spoons are tableware made of wood. Accordingly, these will attract Goods & Services Tax (GST) at the rate of 12 per cent.

The key issue was not here about the rate, but classification. This is critical because various wood and bamboo products attract either 12 or 18 per cent depending upon classification.

Bengaluru-based Ragu Packaging is a supplier of wooden ice cream sticks and wooden ice cream spoons. The applicant submitted the process of producing the semi-finished wooden spoons and wooden sticks that are imported by them. These semi-finished products are manufactured from wooden logs out of European white Birch (Betula Pendula) taken from Siberian forest.

In this process, the wooden logs are cut into required size and boiled for 24 hours. Later they are fed into peeling machine for required size of thickness below 2 mm sheets, which are further fed into cutting machine, which is specified size die cutting for sticks or spoons. In this process, no chemicals are added and also the wood is not compressed, but directly peeled from logs and packed in bulk poly bag and shipped to the applicant.

Post import, the applicant sort wood into multiple grades i.e. some are sorted by machines and some are sorted manually; bundles them through machines, as per customer’s requirement, packed into cartons and dispatched to ice cream factories and other places. The applicant is also part of a FSSAI-certified industry.

AAR’s observations

After going though facts presented and submissions made, AAR observed that Chapter 44 of the first schedule to the Customs Tariff Act, 1975 covers wood and articles of wood; wood charcoal. Some exclusion has been provided but products in questions are not excluded. The bench noted that wooden sticks and wooden spoons are made of specific wood and thus they are qualified to be articles of wood.

While the applicant contended that the products in question merit classification under HSN code 4421 91 90 (Harmonised System of Nomenclature), however the heading 4421 pertains to other articles of wood such as cloth hangers, spools, cops, bobbins etc., for cotton machinery, jute and other machinery; and also covers parts of wood. This means wooden sticks and wooden spoons do not merit classification under the HSN code 4421 91 90.

It highlighted that the heading 4419 covers tableware and kitchenware of wood and specifically 4419 90 covers tableware and kitchenware of other wood i.e. other than bamboo wood. Further, HSN explanatory notes provide that the heading 4419 covers spoons, crumb-scoops, in addition to other articles.

“The impugned products, being the wooden spoon and wooden stick, qualify to be covered under spoons and crumb-scoops respectively. Thus, the more specific classification of the impugned products would be 4419 90 90 as tableware made up of wood other than bamboo,” the bench said while adding that these are exigible to GST at the rate of 12 per cent.

Source: The Hindu Business Line 

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