Applicablity of central excise on trading in jarda(tobacco) without packing.

[Arpit Kaushal]

I want to start the wholesale and retail business of jarda (tobacco) in this i will purchase the tobacco from gujarat and will going to sell this in MP.

I will not do the packaging or labelling and will going to sell the same as it is without changing the form or nature.

So i request you to please help by telling that whether central excise duty will be applicable on that.

[YAGAY andSUN]

In our view GST will be applicable on trading of unmanufactured Zarda etc.

2019 (10) TMI 273 - AUTHORITY FOR ADVANCE RULING, TAMILNADU IN RE: M/S. A.M. ABDUL RAHMAN ROWTHER & CO. (NIZAM TOBACCO FACTORY) 

[KASTURI SETHI]

In Central Excise Act, CE duty is leviable on 'Manufacture'. You need to know what is 'manufacture' for the purpose of payment of Central Excise duty.

As per Section 2 [(f) of Central Excise Act“manufacture” includes any process, -

(i) incidental or ancillary to the completion of a manufactured product;

(ii) which is specified in relation to any goods in the Section or Chapter notes of [the Fourth Schedule] as amounting to [manufacture; or]

[(iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,]

and the word “manufacturer” shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;]

As per your query, you will not undertake any manufacturing process. So CE duty is not required to be paid for further sale to retailer and only GST is required to be paid on supply.

AI Summary

Manufacture definition: trading unprocessed tobacco without packing falls under GST, not central excise liability applies. Trading in unmanufactured jarda without packing or labelling does not constitute manufacture for central excise because the statutory definition treats packing and labelling as manufacturing processes; absent those processes, central excise duty is not leviable and GST applies on the supply.