Babu Lime’s Chuna Classified as Slaked Lime at 5%, Not Food Preparation at 18%, GST Tribunal Holds

The respondent manufactured and supplied chuna in slurry and paste forms, made by physically mixing purchased slaked lime with water and calcium carbonate; the slurry also contained a small quantity of glycerin. It classified the products under tariff item 2522 20 00 and paid GST at 5%.

The Revenue issued a show cause notice proposing classification under tariff item 2106 90 99 as a food preparation, with differential tax, interest and penalty. The adjudicating authority confirmed the demand, but the Commissioner (Appeals) set it aside and classified the goods as slaked lime.

The Revenue appealed to the GST Appellate Tribunal.

The GST rate notifications adopt the First Schedule to the Customs Tariff Act, 1975, including its interpretive rules and Section and Chapter Notes.

Under General Interpretative Rule 1, classification is determined by heading terms and relevant Notes; Rule 2(b) extends a material reference to mixtures, while Rule 3(a) prefers the more specific heading and Rule 3(b) classifies a mixture by the component giving it its essential character.

Note 1 to Chapter 25 excludes specified processed or mixed products, but its opening exception—“except where their context … otherwise requires”—must be read with those exclusions.

HSN Explanatory Notes are an authoritative interpretive guide where the tariff follows the HSN.

Heading 2106 covers food preparations “not elsewhere specified or included”; it does not displace a more specific heading covering the goods [pp.14–15, paras. 26–27; HPL Chemicals Ltd. v. Commissioner of Central Excise, 2006 (197) E.L.T. 324 (S.C.)].

The Tribunal held that Note 1’s mixing exclusion is subject to its opening contextual exception. Heading 2522 names slaked lime, whose production inherently involves bringing quicklime and water together; the HSN Notes likewise identify quicklime under heading 25.22 as a product that necessarily undergoes a process otherwise excluded by Note 1.

Here, the admitted process involved physical blending without chemical reaction or formation of a new article. The calcium carbonate served as filler, water as carrier or diluent, and the small amount of glycerin in the slurry as a soothing agent; the goods continued to be made, sold and used as chuna.

Slaked lime therefore gave the products their essential character under Rule 3(b).

Heading 2106 did not apply because the goods were covered by heading 2522 and were not shown to be food preparations; neither their use as an ingredient nor the respondent’s FSSAI licence established that they were food preparations.

It dismissed the Revenue’s appeals and upheld the Commissioner (Appeals)’ order setting aside the differential tax demand, interest and penalty.