AI Drafter 
TaxTMI 
TaxTMI 
2025 (5) TMI 986
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....;ाण विधि। कच्ची तम्बाकू को एक बड़े मिक्सर में डाला जायेगा। ↓ फिर उसमें लाइम पेस्ट डाला जायेगा। ↓ मिक्सर मशीन से अच्छी तरह मिलाया जायेगा।. ↓ फिर पाउच पैकिंग मशीन द्वारा विभिन्न ग्रामेज में पाउच पैक किया ज&....
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....t [including pieces cut to shape, but not tobacco ready for smoking]; • that since their product does not bear any brand name, no compensation cess is leviable; that they would fall under serial number 56 of notification No. 1/2017-Compensation Cess dtd 28.6.2017; • that they would like to rely on the judgement of the Hon'ble SC in the case of Osnar Chemical P Ltd 2012-TIOL-03-SC-CX and Damodar J Malpani 2002 (146) ELT 483-SC; • that they would like to rely on the ruling in the case of M/s. Gynkeer Products P Ltd Ruling No. Raj/AAR/22-23/07 dtd 1.6.2022 and M/s. Pandey Traders Ruling No. 8/AAAR/09/08/2023 dtd 9.8.2023. 4. In view of the aforesaid, the applicant has sought advance ruling on the below mentioned questions viz 1. What will be the classification of the goods viz 'sada tambaku pre-mixed with lime' proposed to be manufactured & supplied by them? 2. What will be the rate of GST & compensation cess of the goods viz 'sada tambaku pre-mixed with lime; proposed to be manufactured and supplied by them? 5. Personal hearing in the matter was held on 26.11.2024 wherein the applicant was represented by Shri V K Agrawal,....
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....entries from the Customs Tariff, the relevant explanatory notes from HSN, the relevant rate notifications viz • Relevant entries from the Customs Tariff chapter heading 2401 CHAPTER 24 GST Tariff - Goods Chapter/Heading/Sub-heading/Tariff Item Description of goods Unit GST Rates* (1) (2) (3) (4) (5) (6) (7) Central CGST State/UT SGST/ UTGST Inter-State IGST Compensation Cess 28% IGST or 14% CGST + 14% SGST/UTGST : Heading No. 2401 Unmanufactured tobacco; tobacco fuse [other than tobacco leaves)- Vide Notification Nos. 1/2017-C.T. (Rate) & 1/2017-I.T. (Rate), dated 28-6-2017 end SGST/ UTGST Notifications. 2401 10 Tobacco, not stemmed or stripped: 2401 10 10 --- Flue cured Virginia tobacco kg. 14% 14% 28% $ 2401 10 20 --- Sun cured country (natu) tobacco kg 14% 14% 28% $ 2401 10 30 --- Sun cured Virginia tobacco kg. 14% 14% 28% $ 2401 10 40 --- Burley tobacco kg. 14% 14% 28% $ 2401 10 50 - Tobacco for manufacture of biris, not stemmed kg 14% 14% 28% $ 2401 ....
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....Schedule II, (iii) 9 per cent. in respect of goods specified in Schedule III, (iv) 14 per cent. in respect of goods specified in Schedule IV, (v) 1.5 per cent. in respect of goods specified in Schedule V, and (vi) 0.125 per cent. in respect of goods specified in Schedule VI appended to this notification (hereinafter referred to as the said Schedules), that shall be levied on intra-State supplies of goods, the description of which is specified in the corresponding entry in column (3) of the said Schedules, falling under the tariff item, sub- heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedules. Schedule IV - 14% S.No. Chapter/Heading /Sub-heading/Tariff item Description of Goods (1) (2) (3) 13. 2401 Unmanufactured tobacco; tobacco refuse [other than tobacco leaves] 15. 2403 Other manufactured tobacco and manufactured tobacco substitutes; "homogenised" or "reconstituted" tobacco; tobacco extracts and essences [including biris] • Relevant extracts of compensation cess notification Notification No. 1/2017-Compensation Cess (R....
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.... 2401.10 - Tobacco, not stemmed/stripped 2401.20 - Tobacco, partly or wholly stemmed/stripped 2401.30 - Tobacco refuse This heading covers : (1) Unmanufactured tobacco in the form of whole plants or leaves 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). Tobacco leaves, blended, stemmed/stripped and "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 also covered in this heading. (2) Tobacco refuse, e.g., waste resulting from the manipulation of tobacco leaves, or from the manufacture of tobacco products (stalks, stems, midribs, trimmings, dust, etc.). 10. The applicant manufactures 'sada tambaku pre-mixed with lime'. The manufacturing process is already mentioned supra. The applicant is of the opinion that their product premixed with lime is an unmanufactured tobacco which will fall under HSN 24012090. Per-contra Revenue feels that owing to the process carried by the applicant, the ....
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.... 2403 99 30 ---Jarda scented tobacco kg. 14% 14% 28% + 2403 99 40 --Snuff kg. 14% 14% 28% + 2403 99 50 ---Preparations containing snuff kg. 14% 14% 28% + 2403 99 60 ---Tobacco extracts and essence kg. 14% 14% 28% + 2403 99 70 ---Cut-tobacco kg 14% 14% 28% + 2403 99 90 --- Other kg 14% 14% 28% + The HSN notes for 24.03, which Revenue has proposed as the classification of the impugned goods, states as under: 24.03 - 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 Subheading Note I to this Chapter 2403.19 - - Other - Other : 2403.91 - - "Homogenised" or "reconstituted" tobacco 2403.99 - - Other This heading covers : (1) Smoking tobacco, whether or not containing tobacco substitutes in any proportion, for example, manufactured tobacco for use in pipes or for mak....
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....nd both the members of the Tribunal namely, technical members and judicial members are ad idem on the issue of the manufacturing process of the goods and the product in question namely, they all agree that tobacco flavouring substance is added and the judicial member has clearly held that the product is marketed as "flavoured chewing tobacco". This addition of scent or flavour in the 'chewing tobacco' was contended to be 'zarda/jarda scented tobacco' by the Revenue, whereas the assessee has taken a stand that by addition of the scent or flavour, it would not partake the character of the 'zarda/jarda scented tobacco' but continues to be 'chewing tobacco'. In this background, the difference between 'chewing tobacco' and 'zarda/jarda scented tobacco' if attempted to be ascertained from the definition found in the glossary of Bureau of Indian Standards, particularly in terms of definition and preparation, it is classified as under: "2.27 'Chewing Tobacco' - Chewing tobacco, as its name suggests is a tobacco preparation for chewing purpose, also taken with paan (betel leaf). Gutka, surti, zarda, quiwam and dokta are some of the different types of chewing tobacco preparations. ....
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.... the term 'chewing tobacco' as extracted from the judgement of the Hon'ble Supreme Court & reproduced supra. Thus, we hold and conclude that the process undertaken by the applicant leads to manufacture. 17. 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. 18. In view of the foregoing, we find that the applicant's product 'sada tambaku pre-mixed w....
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....manufacture as chemical change not brought about by impugned process; that the products remain the same at starting and terminal points of the process. (v) Technoweld Industries 2003 (155) ELT 209 (SC). The Hon'ble SC held that process of drawing wires from wire rods does not amount to manufacture, as both products being wires. (vi) Meltex (I) P Ltd 2004 (165) ELT 129 (SC). The Hon'ble SC held that laminating/metallising of duty paid film does not amount to manufacture; that the product is a film to start with and remains a film after lamination or metallisation and no new and distinct product comes into existence. (vii) S R Tissues P Ltd 2005 (101) ECC 505 (SC). The Hon'ble Supreme Court held that slitting/cutting of jumbo rolls of plain tissue paper/aluminium foil into smaller size does not amount to manufacture as character and end-use did not undergo any change; that just because raw material and finished product come under two different headings, it cannot be presumed that process of obtaining finished product from such raw material constitutes manufacture. The aforementioned case laws are not applicable owing to the fact that these case laws pert....
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....is regard of commercial understanding of the entity. Appellants had produced materials in the form of affidavits of the buyers and actual, admittedly industrial, users of the entity under dispute to establish that the product under dispute is not understood as 'chewing tobacco' by the persons dealing with the same. There is no material to conclude that Raw tobacco leaf has undergone irreversible change. Since the applications on Raw leaf do not result in proven irreversible change, the Raw leaf tobacco remains Raw leaf tobacco unmanufactured. In present case the application is of a solution of quimam (which is tobacco flavoured water) and other flavours including saffron water which admittedly serve no other purpose than to prepare a blend of unmanufactured tobacco for purposes of use in further manufacture of Gutkas/Pan Masala. The process indulged herein is found to be casing of Raw tobacco leaf relying upon material from internet. Therefore, classification under 2401.10 is upheld. Board vide its Circular No. 37/90-CX. 3, dated 17-7-90 in case of flavours/scents added in preparation of scented snuff held the view that snuff tobacco even after addition of 'Perfumes, Scents and Men....
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....th the cases they have reported that product manufactured by them is preparations containing tobacco i.e. manufactured tobacco. (xi) Pandey Traders Appeal Order No. 8/AAAR/09//08/2023 dated 09.08.2023. In this case, raw unmanufactured tobacco dust, as a result of screening of raw tobacco wherein leaves, stem & other tender parts are separated through the process of drying, winnowing, crushing & separating through sieving and the better part are used for chewing tobacco while the remaining part in raw form ie stems, hard veins and leaves of tobacco plants are then crushed in dust form which is subsequently sold as such for human consumption. As is evident the facts are not similar therefore, reliance on this appellate ruling is not tenable. 20. As far as compensation cess is concerned, the appellant has stated that no compensation cess is leviable since their product does not have a brand name. 21. Since we have 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, which states as under: 26. 2403 99....