https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=770714 https://www.taxtmi.com/caselaws?id=770714 Classification of the goods viz sada tambaku pre-mixed with lime proposed to be manufactured supplied - rate of GST compensation cess of the goods - whether the process undertaken of mixing the tobacco with lime in a big mixer amounts to manufacture or otherwise? - HELD THAT:- There is no definition for the term unmanufactured tobacco. However, the explanatory notes of HSN 24.01 covers unmanufactured tobacco in the form of whole plants in the natural state or as cured or fermented leaves, whole or stemmed/stripped, trimmed or untrimmed, broken or cut [including pieces cut to shape, but not tobacco ready for smoking]; that tobacco leaves, blended, stemmed/striped cased [sauced or liquored] with a liquid of appropriate composition mainly in order to prevent mould and drying and also to preserve the flavour are covered under this heading - the term chewing tobacco under HSN 24039910, is also not defined. However, the explanatory notes to HSN 24.03 states that chewing tobacco, are usually highly fermented and liquored. Manufacture is defined under CGST Act, 2017 under section 2 (72) to mean processing of raw materials or inputs in any manner that results in emergence of a new product having a distinct name, character and use. The process undertaken by the applicant, as is reproduced in paragraph supra, reveals that raw tobacco is mixed with lime paste in a big mixer consequent to which the same is packed in pouches of appropriate grams for supply. The applicant himself has mentioned that the tobacco leaves are never chewed/used directly but is mixed with lime and then it is consumed. The product of the applicant consequent to the process of mixing with lime is however, fit for consumption directly - the moment the tobacco is mixed with lime and subsequently supplied, it does not remain tobacco as such. It is the applicants own say that tobacco leaves are never chewed/used directly [refer para 3 of Annexure B]. A new product ie tobacco mixed with lime, which can be directly chewed/used, emerges which is a new product having a distinct name, character and use. In-fact it also falls within the ambit of the term chewing tobacco as extracted from the judgement of the Hon ble Supreme Court reproduced supra. Thus, it is concluded that the process undertaken by the applicant leads to manufacture. The moment, the process leads to manufacture, the resultant product of the applicant, sada tambaku pre-mixed with lime moves out of HSN 2401. The product will not merit classification under HSN 2402 also since it deals with Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes. The next HSN heading is 2403, whose description is other manufactured tobacco and manufactured tobacco substitutes; homogenized or reconstituted tobacco; tobacco extracts and essences. Ideally, the product, being manufactured tobacco merits classification under 24039910 under the head chewing tobacco . In terms of the explanatory notes to HSN 24.03, chewing tobacco, are usually highly fermented and liquored. The product is liquored with lime. Even otherwise, the wording used is that they are usually highly fermented and liquored, not mandatorily - highly fermented and liquored - the applicant s product sada tambaku pre-mixed with lime will fall under HSN 24039910 leviable to GST at the rate of 28%. Since it is already held that the product of the applicant sada tambaku pre-mixed with lime will be classifiable under HSN 24039910, Sr. No. 26, 26A, 27 and 27A of the notification No. 1/2017-Compensation Cess (Rate), is applicable. The compensation cess at the rate of 0.56R per unit in respect of the product with declared retail sale price or at the rate of 160% in respect of products other than goods covered under serial No. 26 above, is leviable on the said product of the applicant. Conclusion - i) The goods viz sada tambaku pre-mixed with lime proposed to be manufactured supplied by the applicant is classifiable under HSN 24039910. ii) The goods viz sada tambaku pre-mixed with lime is leviable to GST at the rate of 28% [14% + 14%] in terms of serial No. 15 of Schedule IV of notification No. 1/2017-CT(Rate) dated 28.6.2017 and compensation cess at the rate of 0.56R per unit in respect of the product with declared retail sale price or at the rate of 160% in respect- of products other than goods covered under serial No. 26 above in terms of notification No. 1/2017-Compensation Cess (Rate) dated 28.6.2017. Case-Laws GST Wed, 30 Apr 2025 00:00:00 +0530