Cured tobacco leaves stay within unmanufactured tobacco, but lose concessional GST treatment for tobacco leaves.

Cured tobacco leaves remain classifiable as unmanufactured tobacco under HSN 2401, but they do not qualify for the concessional GST entry for "tobacco leaves" once curing has taken place after harvesting and cleaning. The ruling draws a distinction between leaves in their natural or uncured state and leaves that have undergone sun-drying or air-drying, holding that the concessional entry is limited to leaves as such, broken leaves, or leaves with stems. The goods therefore attract the higher rate applicable to unmanufactured tobacco other than tobacco leaves.

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Issues: Whether dried tobacco leaves that have undergone curing after harvesting and cleaning remain classifiable as tobacco leaves under HSN 2401 and the lower GST rate entry, or fall within unmanufactured tobacco other than tobacco leaves attracting the higher rate.

Analysis: The classification turned on the scope of heading 2401 and the rate notifications. The authority noted that heading 2401 covers unmanufactured tobacco in the form of whole plants or leaves in the natural state, as well as cured or fermented leaves, but the specific rate entry for "tobacco leaves" was confined by the CBEC clarification to leaves as such, broken leaves, or leaves with stems, and not to leaves that had already undergone curing. On the facts, the goods were admittedly dried tobacco leaves subjected to sun-drying or air-drying after harvesting and cleaning. The authority held that once curing had taken place, the goods no longer answered the description of "tobacco leaves" for the concessional entry, though they still remained unmanufactured tobacco and did not become manufactured tobacco.

Conclusion: The goods were held classifiable under HSN 2401 as unmanufactured tobacco, but not as "tobacco leaves" under the concessional Schedule I entry. They attracted the Schedule IV rate applicable to unmanufactured tobacco other than tobacco leaves, in favour of Revenue.

Ratio Decidendi: Cured tobacco leaves may continue to fall within unmanufactured tobacco under HSN 2401, but the concessional GST entry for "tobacco leaves" is limited to leaves as such, broken leaves, or leaves with stems and does not extend to leaves that have undergone curing.

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