GST Classification of Breaded Cheese: UP AAAR Ruling 07/2019
The Appellate Authority ruled that breaded cheese is classified as cheese under Heading 0406, attracting a 12% GST rate.
- Ruling
- Order No. 07/AAAR/18 19 /2019 Dated: 18/4/2019
- Authority
- Appellate Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Breaded cheese is classified under Heading 0406, not as a general food preparation.
- The product attracts 12% GST (6% CGST and 6% SGST).
- Cheese remains the essential character despite breading and frying.
In short
The company asked whether 'breaded cheese' should be taxed as cheese at 12% or as a general food preparation at 18% under the Goods and Services Tax (GST).
What has changed
How it worked before
Businesses often faced uncertainty, with tax authorities frequently attempting to classify value-added dairy products under the higher-taxed 'residuary' food preparation category.
What has changed
The authority decided that because cheese makes up the majority of the product, it must be classified under the specific heading for cheese (0406). This lowers the tax burden from 18% to 12% for products where cheese remains the primary ingredient.
Who this affects
Food manufacturers producing breaded, battered, or pre-fried cheese products.
An example
A snack company produces frozen cheese nuggets containing 60% cheese coated in breadcrumbs. They previously paid 18% GST under the residuary food category. Based on this ruling, they may argue that their product should be taxed at 12% because the cheese provides the essential character of the snack.
What you should do
This ruling only binds the company that asked and its specific tax office. If you manufacture similar products, you should consult your tax advisor to determine if your specific product composition qualifies for this classification, as your local tax officer may hold a different view.
If you do nothing
If you apply this 12% rate without confirming your product's specific classification, you risk a tax demand for the 6% shortfall plus interest and penalties. A tax officer is not legally required to follow this ruling for your business and may issue a notice if they disagree with your classification.
The terms explained
- Heading 0406
- A specific category in the tax tariff list that covers cheese and curd.
- Residuary entry
- A catch-all category used for goods that do not fit into any other specific, named classification.
- Essential character
- The primary ingredient or feature that gives a product its main identity and purpose.
The ruling in detail
Appellate Authority for Advance Ruling
M/s Savencia Fromage & dairy Pvt. Ltd.
Order No. 07/AAAR/18 19 /2019 Dated: 18/4/2019 · Uttar Pradesh
Questions before the authority
- Whether the product 'Breaded Cheese' ('impugned goods') is classifiable as 'cheese' under Heading 0406, and accordingly, subject to CGST and SGST at the rate of 6 percent each under S. No. 13 of the Schedule-II appended to Notification No. 1/2017- Central Tax (Rate) dated June 28, 2017 ('Notification No. 1/2017- CT(R)') and Notification KA.NI.-2-836/XI-9(47)/17-U.P.Act-1- 2017-Order-(06)-2017 dated June 30, 2017 ('Notification No. 836/17') respectively.
Facts
The appellant manufactures 'Breaded Cheese' (also described as cheese balls), where raw processed cheese constitutes 55% of the total volume and is mixed with spices and seasonings, coated with batter and breadcrumbs, partially fried in vegetable oil, and then frozen and packed. The Authority for Advance Ruling had classified the product under Heading 2106 as 'Food preparations not elsewhere specified or included' attracting 18% GST (9% CGST + 9% SGST). Aggrieved by this classification, the appellant preferred an appeal before the Appellate Authority.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification and applicable GST rate for 'Breaded Cheese' | Heading 0406; taxable @ 12% GST (6% CGST + 6% SGST) Classified under S. No. 13 of Schedule II of Notification No. 1/2017-Central Tax (Rate) |
The Appellate Authority modified the advance ruling, holding that 'Breaded Cheese' is properly classifiable under **Heading 0406** of the Customs Tariff Act. Consequently, the impugned goods fall under S. No. 13 of Schedule II to Notification No. 1/2017-Central Tax (Rate) and are taxable at **12% GST (6% CGST + 6% SGST)**.
Reasoning
The HSN Explanatory Notes to Heading 0406 specifically state that cheeses coated with batter or breadcrumbs remain classified under Heading 0406 whether pre-cooked or not, provided the goods retain the character of cheese. Processed cheese forms 55% of the product's total volume and constitutes its primary essential character, while the coating serves merely as a substrate. Furthermore, Heading 2106 is a **residuary entry**, and under established legal principles, resort cannot be had to a residuary heading when a specific tariff entry (Heading 0406) squarely covers the goods.
Provisions relied on
- Section 100 of the Central Goods and Service Tax Act, 2017
- Section 101 of the Central Goods and Service Tax Act, 2017
- Heading 0406 of the First Schedule to the Customs Tariff Act, 1975
- Heading 2106 of the First Schedule to the Customs Tariff Act, 1975
- S. No. 13 of Schedule-II appended to Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017
- Notification KA.NI.-2-836/XI-9(47)/17-U.P.Act-1-2017-Order-(06)-2017 dated 30.06.2017
- Rule 3(b) of the General Rules of Interpretation
For the practitioner
This ruling establishes that value-added cheese preparations (such as breaded, battered, or pre-fried cheese items) fall under the **specific tariff heading 0406 at 12% GST** rather than the residuary heading 2106 at 18% GST, so long as cheese remains the dominant ingredient imparting the essential character. It affirms the strong binding reliance on HSN Explanatory Notes against department attempts to push coated dairy items into residuary food preparation entries.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/2024-02/up_aaar_07_2019-20_18.04.2019_sfadipl.pdf
Legibility of the scan, as read: high.
Prepared 13-10-2026.
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