Appellate authority affirms classification of Gudakhu paste under tariff item 2403 99 90.

The appellate authority upheld the Odisha Authority for Advance Ruling's decision that Gudakhu in paste form should be classified under tariff item 2403 99 90, not 2403 11 10. The appellant's arguments for reclassification were rejected as the product did not meet the criteria for the specified classification. The authority also clarified that the determination of liability to pay NCCD falls outside its jurisdiction. The appeal was dismissed, affirming the ruling of the Odisha Authority for Advance Ruling.

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Issues Involved:
1. Appropriate Classification of Gudakhu under the GST Tariff Heading.
2. Determination of the liability to pay NCCD (National Calamity Contingency Duty).

Issue-wise Detailed Analysis:

1. Appropriate Classification of Gudakhu under the GST Tariff Heading:

The appellant is engaged in the manufacture and sale of Gudakhu, a tobacco product in paste form used orally. The appellant sought to reclassify Gudakhu under tariff item 2403 11 10, which pertains to Hookah or Gudakhu Tobacco intended for smoking in a water pipe. The Odisha Authority for Advance Ruling (AAR) initially classified it under tariff item 2403 99 90, a residual category for other manufactured tobacco products.

The AAR noted that Gudakhu in paste form used as toothpaste is distinct from hookah tobacco, which is granular and used for smoking. The sub-heading 2403 11 specifically covers water pipe tobacco intended for smoking, which includes a mixture of tobacco and glycerol. The product manufactured by the appellant does not fit this description as it is not intended for smoking.

The appellant argued that the classification under 2403 99 90 was done under instructions from Central Excise officials and that Gudakhu should be classified under 2403 11 10 based on its composition and expert opinions. However, the AAR maintained that Gudakhu in paste form does not qualify as water pipe tobacco and should remain classified under the residual category 2403 99 90.

The appellate authority upheld the AAR's decision, emphasizing that Gudakhu intended for use as toothpaste does not meet the criteria for classification under 2403 11 10. The classification under 2403 99 90 is appropriate as it covers other forms of tobacco not specified in preceding sub-headings.

2. Determination of the liability to pay NCCD (National Calamity Contingency Duty):

The AAR clarified that the determination of liability to pay NCCD is beyond its jurisdiction as NCCD is levied under the Central Excise Act and not under the CGST/OGST/IGST Act. The scope of issuing a ruling under Section 98 of the OGST/CGST Act is limited to matters prescribed in Section 97(2) of the OGST/CGST Act. Therefore, the AAR cannot rule on the appellant's liability to pay NCCD.

Conclusion:

The appellate authority upheld the AAR's ruling, confirming that Gudakhu in paste form is correctly classified under tariff item 2403 99 90. The appellant's arguments regarding reclassification and expert opinions were not supported by statutory provisions. Additionally, the determination of NCCD liability was deemed outside the AAR's jurisdiction. The appeal was dismissed, and the ruling of the Odisha Authority for Advance Ruling was affirmed.

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