TaxTMI 
TaxTMI 
2024 (10) TMI 779
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....he issue raised by M/s. DIN DAYAL COLLOIDS PRIVATE LIMITED, F-150-153, Agro Food Park, Boranada, Jodhpur-342102, Rajasthan (hereinafter "the applicant") is fit to pronounce advance ruling as it falls under the ambit of the Section 97 (2) (a) given as under: (a) Classification of any goods or services or both; A. SUBMISSION OF THE APPLICANT (in brief):- M/s. Dindayal Colloids Private Ltd. (here-in-after referred to as the "applicant") are registered under GST having GSTIN 08AAECD1313JIZY. Applicant wishes to manufacture 'Tobacco pre-mixed with lime' and supply the same after packing in pouches of different units under its brand. The manufacturing of 'Tobacco pre-mixed with lime' involves the following processes: a) Raw cut tobacco is procured in bulk quantity as a raw material; b) Lime paste is mixed with raw cut Tobacco and dried to evaporate the water content; of c) After drying, the resulting semi-finished product is then stored in Silos/ sacks; d) Such semi-finished product is then processed in mixer to add aroma, mentha oil/ peppermint and moisture which becomes final product i.e. "Tobacco pre-mixed with lime" f....
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.... to our product because it is also same. B. INTERPRETATION AND UNDERSTANDING OF APPLICANT ON QUESTION RAISED (IN BRIEF) 1. Applicant understands that Tobacco and unmanufactured tobacco substitutes are classified under Chapter 24 of the GST Tariff wherein inter alia Unmanufactured tobacco is classified under Heading 2401 chargeable to 28% GST with following two categories: S. No. Description (1) Unmanufactured Tobacco (without Lime tube) (2) Unmanufactured Tobacco (with Lime tube) Unmanufactured tobacco with lime tube signifies those pouches where a tube of lime is put inside the pouch containing unmanufactured tobacco. As against this, 'unmanufactured tobacco without lime tube' signifies those products where it is sold without any lime tube i.e. no tube of lime is put inside the pouch. The product 'Tobacco pre-mixed with lime' supplied by us is more specifically falling under this category of 'Unmanufactured tobacco without lime tube' because we will not be selling any tube of lime inside our pouches. Since, there are only two sub classification of unmanufactured tobacco, therefore, our product more appropriately falls under fir....
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....nd totally dry. b) Price: Where unmanufactured tobacco is priced at around Rs. 5 per pouch containing approximately 5-7 grams of tobacco, which means a cost in the range of Rs. 800/- to Rs. 1,200/- per Kg on MRP basis. On the contrary, chewing tobacco is priced around Rs. 10/- per pouch containing approximately less than half gram of tobacco which means a cost in the range of Rs. 18,000/- to Rs. 20,000/- per kg on the basis of MRP. c) Usage: Unmanufactured tobacco which either comes with lime tube or without lime tube is consumed directly after mixing lime in it whereas the chewing tobacco i.e. Zarda Scented Tobacco is used in Pan/ Pan Masala. It is submitted that the unmanufactured tobacco is never used in Pan/ Pan Masala. d) Customer Base: Since, unmanufactured tobacco is priced very cheap, the category of consumer of this product is the labour and farmer class or the Biri Sector whereas, chewing tobacco or Zarda Scented Tobacco is consumed by rich and elite class of people due to its high pricing. 4. It is submitted that in case of our product 'Tobacco pre-mixed with lime' principally the product is same as 'unmanufactured tobacco' w....
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....ling/ judgments. Physical verification of the declared business premises F-150153, Agro Food Park, Boranada, Jodhpur was carried out and statement of one of the Company Director Shri SHAILESH KUMAR VYAS was recorded and understood process of manufacturing. (A) Factual report (i) M/s. Dindayal Colloids P. Ltd was engaged in manufacturing of Guar Dal and Guar Powder (Guar Gum) before 4 to 5 years. Stock of Guar Seed and Guar Powder is held at the premises at the time of physical verification. (ii) Machinery for production of tobacco goods were not found to be installed and stock of raw material [finished/ semi-finished was not held in the premises at the time of physical verification. (iii) The applicant has not declared commodity (tobacco) in their registration certificate. (iv) Director Shri SHAILESH KUMAR VYAS stated that guar gum production has been stopped for last 4 to 5 years. They are planning to start manufacturing of 'pre-mixed lime tobacco product' at the same premises after the decision of Advance Ruling Authority. (v) Manufacturing process as declared in application and told by Shri SHAILESH KUMAR VYAS is appe....
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....(with lime tube) - bearing a brand name Conclusion: The applicant M/s. Dindayal colloids P. Ltd bearing GSTIN 08AAECD1313JIZY w.e.f. 01.07.2017 has filed application u/r 104 (1) for classification of goods u/s 97(2) before Authority for Advance Ruling, Rajasthan. Unmanufactured tobacco without lime tube signifies those products where it is sold without lime tube i.e. no tube of lime is put inside the pouch whereas unmanufactured with lime tube signifies those products lime tube is put inside the pouch. Undersigned is of the opinion that the product 'tobacco premixed with lime' is specifically unmanufactured tobacco where the lime is mixed with tobacco raw cut leaves during the process. Lime tube is not put inside the pouch at the time of packing which keep out the product from Serial No. 6 (2401: Unmanufactured tobacco -with lime tube). It is classifiable under CTH-2401 (sl. No. 13) Notification No. 1/2017-Central Tax (Rate) Schedule IV and Notification No. 1/2017-Compensation Cess (Rate), (St. No. 5) dated 28th June, 2017. Extract of related notifications is appended below: - Extract of Notification No. 1/2017-Central Tax (Rate) Schedule IV S.No. Chapter ....
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...."sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. Thus for the purposes of classification under GST, the First Schedule to Customs Tariff Act is only applicable. Further the first schedule to the Customs Tariff Act, 1975, and the Rules of interpretation therein are to be followed for classifying a product, in terms of Explanation 1 and 2 to Notification No. 1/2017-Compensation Cess (Rate), dated 28-62017. Chapter 24 of Customs Tariff is as under: - CHAPTER 24 Tobacco and manufactured tobacco substitutes; products, whether or not containing nicotine, intended for inhalation without combustion; other nicotine containing products intended for the intake of nicotine into the human body Note: (1) This Chapter does not cover medicinal ciga....
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....manufacture of chewing tobacco 2401 20 70 --- Tobacco for manufacture of cigar and cheroot 2401 20 80 --- Tobacco for manufacture of hookah tobacco 2401 20 90 --- Other 2401 30 00 - Tobacco refuse 9) CTH 2403 covers "Other manufactured tobacco and Manufactured Tobacco substitutes; "Homogenised" or "Reconstituted" Tobacco; Tobacco Extracts and Essences". CTH 2403 99 10 - covers 'Chewing Tobacco'. 2403 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES; "HOMOGENISED" OR "RECONSTITUTED" TOBACCO; TOBACCO EXTRACTS AND ESSENCES - Smoking tobacco, whether or not containing tobacco substitutes in any proportion : 2403 11 Water pipe tobacco specified in Sub-heading Note to this Chapter : 2403 11 10 --- Hookah or gudaku tobacco 2403 11 90 --- Other 2403 19 -- Other 2403 19 10 --- Smoking mixtures for pipes and cigarettes --- Biris : 2403 19 21 --- Other than paper rolled biris, manufactured without th....
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....as 'manufacture' under GST. 14) We find that under Notification No. 01/2017-Central Tax (Rate) no definition of manufactured or unmanufactured tobacco has been provided and accordingly we have to mainly rely upon the decision of Hon'ble Court and the Tribunals decisions in the matter. There is no doubt that chewing tobacco may be both manufactured and unmanufactured. The difference between the manufactured and unmanufactured tobacco is dependent on the process being undertaken to prepare the product. In the present case the process being undertaken by the Appellant involves mixing of Lime paste in raw cut tobacco, evaporation of the water content from the said tobacco mixed with lime paste, addition of aroma, menthol and moisturizer. We relied upon the decision of the Apex Court in the State of Madras Vs Bell mark Tobacco Company [(loss) (SC) -1966-10.4] dated 04.10.1966 wherein it was held by the Hon'ble Court that cumulative effect of various processes to which Tobacco was subjected, before it was sold, amount to the manufacturing process. In the instant case also the cumulative effect of various processes i.e. mixing of Lime paste in raw cut tobacco, eva....