TaxTMI 
TaxTMI 
2020 (10) TMI 814
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....er Chapter XVII of the Act shall be binding only (a). On the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b). On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104 (1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void sb-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions....
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....iled to notice the decisions of the Apex Court in A.V. Pachiappa Chettiar and Ors Vs. State of Madras and Damodar J. Malpani and Ors Vs. Collector of Central Excise and Bell Mark Tobacco Vs. Government of Madras = 2002 (9) TMI 114 - SUPREME COURT relating to Unmanufactured Chewing Tobacco. • The Lower Authority has stated unrelated facts which confuse the real process undertaken in relation to the Product leading to wrong conclusion. The Lower Authority's discussion about Tobacco curing and about Jaffna Tobacco of Ceylon and chewing Tobacco of Tamil Nadu, are irrelevant to the question on hand. The Lower Authority failed to notice that the product does not undergo any change during the process and thus ought to have held that there is no manufacturing. • The Lower Authority ought to have noticed that Chapter 2403 relates to Manufactured Tobacco while 2401 relates to unmanufactured tobacco. The Lower Authority has made a wrong finding that applying jaggery water on already cured tobacco would amount the product has been subjected to processing. Hence, amounts to manufacturing of chewing tobacco. The Lower Authority has wrongly proceeded to discuss whether t....
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....urt in Dunlop India Ltd. Vs. UOI 1983 (13) ELT 1566 (SC) = 1975 (10) TMI 94 - SUPREME COURT and in Indian Aluminium Cables Ltd. Vs. UOI 1985 (21) ELT 3 (SC) = 1985 (5) TMI 54 - SUPREME COURT has held that the basis of the reason with regard to the end use of the article is absolutely irrelevant in the context of the entry made under fiscal statute like CETA. • The Lower Authority ought to have applied the ruling of the Hon'ble Madras High Court in Sunder India Ltd & Ors Vs. CCT 86 ORs reported in [2011] 38 VST 124 (Mad) = 2009 (7) TMI 1195 - MADRAS HIGH COURT wherein it was held that if there is ambiguity with regard to the rate of tax to be collected, the benefit should go to the assessee. • The Lower Authority failed to apply the Hon'ble Supreme Court decisions in Woodcrafts Products Ltd. 1995 (77) ELT 23 (SC) = 1995 (3) TMI 93 - SUPREME COURT wherein it is held that the description in the HSN explanatory Note has persuasive value. • The Lower Authority ought to have held the product as unmanufactured as the raw tobacco leaf has not undergone any change and that the raw tobacco leaf is only liquored and cut to piece to facilitate packing. ....
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....ed on the core issue of whether the process relating to the product lead to manufactured tobacco (2403) or unmanufactured tobacco (2401). The Lower Authority (AAR) has stated unrelated facts which confuse the real process undertaken in relation to the Product leading to wrong conclusion. The AAR has proceeded with a pre-conceived notion that chewing Tobacco has to be manufactured only ignoring the fact that there can be unmanufactured chewing Tobacco (in fact many of the chewing Tobacco available in the market is only unmanufactured). Therefore, the moot question is whether it is manufactured or unmanufactured tobacco. • The AAR ruling is incorrect for the following reasons and that the product is classifiable under Chapter sub-heading 24.01 for the following reasons:- i. The process adopted by the Appellant does not amount to manufacture; ii. Chapter Notes to 2401 and Explanatory Notes to 2403; and iii. CBEC Clarification and Authorities relied. • Not a Manufacture:- The term 'Manufacture' is defined under section 2(72) of CGST Act, 2016. The term 'manufacture' means "processing of raw material or inputs in any manner that resul....
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.... as chewing tobacco is under chapter subheading 24.01. • The Lower Authority (AAR) has made a wrong finding that applying jaggery water on already cured tobacco would amount that the product has been subjected to processing amounting to manufacturing, which is totally wrong and misconceived. • They rely on the decision of the Hon'ble Madras High Court in A.V. Pachiappa Chettiar & Another Vs. The State of Madras reported in 1962 (13) STC 202 (Mad) = 1961 (9) TMI 48 - MADRAS HIGH COURT wherein it is held that sprinkling of jaggery water on the tobacco and cutting into piece does not amount to manufacture. • The Hon'ble New Delhi Tribunal in the case of Commissioner Of Central Excise, Kanpur Vs. Ravindra & Company reported in 2000 (120) E.L.T. 699 (Tribunal) = 2000 (6) TMI 70 - CEGAT, COURT NO. IV, NEW DELHI has under similar facts and circumstances of their case, held that the product is classifiable under 2401 of CETA. The relevant portion of the judgement is reproduced below. "11. Even the Tribunal in number of cases has taken consistent view that cutting of unmanufactured tobacco leaves into small pieces, labelling with strings and p....
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....ame 'Kavi cut Tobacco' for the purposes of chewing. The appellant contends that the Lower Authority has • wrongly proceeded to discuss whether the product is chewing tobacco or not and has not focused on the core issue of whether the process relating to the product lead to manufactured tobacco (2403) or unmanufactured tobacco (2401) ; • stated unrelated facts which confuse the real process undertaken in relation to the Product leading to wrong conclusion. • proceeded with a pre-conceived notion that chewing Tobacco has to be manufactured only, ignoring the fact that there can be unmanufactured chewing Tobacco (in fact many of the chewing Tobacco available in the market is only unmanufactured) and had failed to notice the decisions relied upon by them. Therefore, the mute question is whether it is manufactured or unmanufactured tobacco. The appellant has relied on the clarification issued by CBEC vide F. No. 81/5/87-CX.3, dated 23-6-1987 and the decision of CESTAT in the case of Ravindra & Company reported in 2000 (120) E.L.T. 699 (Tribunal) = 2000 (6) TMI 70 - CEGAT, COURT NO. IV, NEW DELHI; & Hon'ble Madras High Court in A.V. Pachiappa Chetti....
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....lanation given by ICAR-CTRI Central Tobacco Research Institute and Explanatory General notes to chapter 24, it is seen that only tobacco which is cured at farm level for before supply to market would fall under this classification as Vnmanufactured tobacco'. The fermentation that the applicant claims is by adding jaggery water does not get covered under this. As seen in the Explanatory General notes to chapter 24, only natural fermentation is covered. Therefore, the product of the applicant does not fall under CTH 2401. Thus we find the contention of the appellant that the Lower Authority has wrongly proceeded to discuss whether the product is chewing tobacco or not and has not focused on the core issue of whether the process relating to the product lead to manufactured tobacco (2403) or unmanufactured tobacco (2401) do not hold any merit. Reliance on the ICAR-CTRI(Central Tobacco Research Institute) website in relation to the 'Chewing Tobacco of Tamilnadu' cannot be termed as 'unrelated facts' in as much as CTRI is the arm of Indian Council of Agricultural Research and involved in the various types of Tobacco grown in the country and the product under consideration is supplied ....
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....hat raw tobacco crushed in the form of flakes when packed into smaller packets without adding any ingredients and sold (under a brand name or not) should not be classifiable as manufactured chewing tobacco. The conference with a view that marketing the product as 'Zarda' may not be enough to bring the product when packed into smaller packets in the category of manufactured tobacco and considering the HSN description of unmanufactured tobacco under corresponding Heading No 24.01, has inclined to support the classification of such product under heading No. 24.01 in the category of unmanufactured tobacco while noting that normally understood 'Zarda' preparation which come in the category of chewing tobacco as manufactured tobacco product would not be entitled to classification under 24.01 since these are squarely covered by the description appearing in sub-heading 2401.41 or 2404.49. The clarification of the Board, given under Para 5 of the said circular is given below: "5. The Board has accepted the above views of the conference. Accordingly, it is clarified that un-manufactured tobacco merely broken by beating and then sieved and packed in retail packets with or without bra....
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....evant period read with the definition of 'Manufacture' prevailed at the period. Also, in both the circular and the CEGAT Order, it is clearly spelt out that by mere repacking from bulk to smaller quantities of 'unmanufactured tobacco' without any further processing on the bulk inputs the same remains 'unmanufactured tobacco' and it cannot be said to have undergone any process of manufacture. 9.4 Coming to the judicial decisions relied un by the appellant before us, in the case of Ravindra & Company reported in 2000 (120) E.L.T. 699 (Tribunal) = 2000 (6) TMI 70 - CEGAT, COURT NO. IV, NEW DELHI;, the product emerges after beating, crushing and sieving the purchased tobacco leaves as seen in Para 9. The extract of the said para is given under: 9. In the instant case, it is not the case of the Revenue that the tobacco being dealt with by the respondents is meant for smoking. It is rather admittedly meant for chewing. The process adopted for preparing this tobacco under the brand name of "Bandar Dholak Chhap and Hari Chhap" by the respondents also remains undisputed as the same has not been challenged by the Revenue in their grounds of appeals. They prepare this tobacco by b....
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....er Authority relying on the standards given by ICAR-CTRI, in para 6.3 of their ruling has established that the process undertaken by the appellant is not equivalent to that of 'curing/bulking' done at 'farm' which may be classified as unmanufactured Tobacco for chewing' but is similar to the process undertaken in manufacture of 'Chewing tobacco' as acknowledged by the ICAR-CTRI in as much as the raw tobacco is processed by smoking, stored and given jaggery water / salt water treatment. 'Customs Tariff' which gives the classification for determination of rates of goods as per Notification No. 01/2017-C.T.(Rate) do not define what is 'Manufactured tobacco' and Unmanufactured tobacco' and hence we need to look into the interpretations of judiciary. 10.2 We find that Hon'ble High Court of Madras in the case of Bell Mark Tobacco Company & Ors Vs. Government of Tamilnadu = 1960 (7) TMI 60 - MADRAS HIGH COURT, while answering the issues raised before them, observed "what is to be considered as Unmanufactured chewing tobacco' and 'Manufactured chewing tobacco' when the same is not defined in the Act". The relevant portion are extracted as under: 17. The relevant factors to be c....
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....ubjected to a manufacturing process is again subjected to a further manufacturing process by the purchaser it will fall under Section 5(vii) does not arise for consideration in this case, and we express no opinion of ours on that question. Factually the position was that what the assessee purchased had not been subjected to any manufacturing process, and, therefore, the sale of the tobacco, no doubt known even at that stage to the trade as chewing tobacco, did not bring that sale within the scope of Section 5(vii). It was the sale of the manufactured product effected by the assessee, manufactured from the tobacco that he had purchased, that came within the scope of Section 5(vii). No doubt, soaking in jaggery water and the process of bulking were processes common both to the seller and to the assessee who purchased the tobacco. In other words, the assessee subjected the tobacco he had purchased to the same process. Had he stopped with that alone, it might be possible to contend that what he sold subsequently was not a manufactured product. Taking, however,- the cumulative effect of the various processes to which the assessee subjected the tobacco before he sold it, it is clear that....
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....manufacture" as understood in these decision, involves the connotation of some change in the article in question. Though basically the material might remain the same, it is being adopted to a particular use which in the original form it was not capable of; that we conceive to be the essence of manufacture...... and has held that in the factual position of that case, the resultant product is Unmanufactured Tobacco'. Again we see that in the said case, the tobacco taken out of the warehouses is unbundled and kept in a heap at the place where it is converted into pieces; there it is periodically sprinkled with palm jaggery water to keep it soft and wet; the tobacco so treated is taken out little by little and cut into pieces, bundled (as per Para 1) whereas in the case at hand, the process undertaken is different in that the raw material are graded and dried categorizing age-wise, undergoes dipping in jaggery water, undergoes the process of stalking and semi-drying, mincing, added with natural/agricultural preservatives after storing for few hours/days and then weighed & packed 10.4 We see that Customs Tariff/HSN do not define Unmanufactured/ manufactured tobacco' in the Section....