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2022 (7) TMI 967 - AAR - GSTClassification of goods - applicable rate of GST and/ or Compensation Cess - Keer Kokil/Tobacco pre-mixed with lime - HELD THAT - Unmanufactured tobacco with lime tube signifies those pouches where a tube of lime is put inside the pouch containing unmanufactured tobacco. As against, '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. In the instant case, product of the applicant is tobacco pre-mixed with lime which is not containing any lime tube. The mixing of lime in tobacco leaves does not alter the nature of the product. The addition of their volatile flavours will not amount to rendering unmanufactured tobacco to manufactured tobacco in view of judgment of Hon'ble Apex Court in case of M/s Yogesh Associates 2006 (4) TMI 503 - SC ORDER - The quality of tobacco leaves used in the product i.e. Keer Kokil' is different with the tobacco leaves used in the Chewing Tobacco or Zarda Scented Tobacco. Thus, the product is basically Unmanufactured Tobacco (without Lime tube) bearing a brand name. The HSN notes for heading 2401 specifically covers leaves in natural slate, cured tobacco and tobacco for manufacturing chewing Tobacco etc. Hence. 'Tobacco pre-mixed with lime' containing ingredients like lime is nothing but 'unmanufactured tobacco' and will be classified under heading 2401. Once it is held that the product is 'unmanufactured tobacco', the classification of the product is under CTH 2401 which specifics under the sub head 2101 20 90 as 'others' and attracts GST @ 28% as per S. No. 13 of Schedule IV of the Notification No. 01/2017-CT (Rale) dated 28.06.2017 - As far as the rate of Compensation Cess applicable to the product is concerned, the rate of Compensation Cess is provided vide Notification No. 1/2017-Compensation Cess (Rate), dated 28-6-2017 and SI. No. 5 provides the Compensation Cess Rate as 71% for the product Unmanufactured Tobacco (without Lime tube) .
Issues Involved:
1. Classification of the product "Keer Kokil" (Tobacco pre-mixed with lime) 2. Applicable rate of GST and Compensation Cess on the product Issue-wise Detailed Analysis: 1. Classification of the Product "Keer Kokil": The applicant, M/s Gyankeer Products Pvt. Ltd., sought an advance ruling on the classification of their product "Keer Kokil," which is tobacco pre-mixed with lime. The applicant argued that "Keer Kokil" should be classified under Heading 2401 as unmanufactured tobacco, which includes unmanufactured tobacco without lime tube. They contended that their product does not fall under the category of chewing tobacco (Heading 2403) because it is not used with Pan Masala and is consumed by a different consumer base (labor and farmer class). The applicant highlighted differences between unmanufactured tobacco and chewing tobacco, emphasizing that unmanufactured tobacco is cheaper and used directly after mixing lime, whereas chewing tobacco is highly scented, dry, and consumed by the elite class. The applicant also referenced various legal precedents, including the Supreme Court's judgment in Damodar J. Malpani and the Mumbai Tribunal's ruling in Yogesh Associates, which supported the classification of treated tobacco leaves under Heading 2401. The jurisdictional officer concurred with the applicant's view, stating that "Keer Kokil" would be supplied pre-mixed with lime without altering the nature of the tobacco leaves, thus classifying it under Heading 2401. 2. Applicable Rate of GST and Compensation Cess: The ruling discussed the applicable rates of GST and Compensation Cess for tobacco products under Chapter 24 of the Customs Tariff. The relevant GST rates were notified by Notification No. 1/2017-C.T. (Rate), dated 28-6-2017, and the Compensation Cess rates were provided by Notification No. 1/2017-Compensation Cess (Rate), dated 28-6-2017. For unmanufactured tobacco without lime tube, the GST rate is 28% (14% CGST + 14% SGST), and the Compensation Cess rate is 71%. The ruling concluded that "Keer Kokil" falls under the category of unmanufactured tobacco without lime tube, bearing a brand name, and thus attracts the specified GST and Compensation Cess rates. Findings and Conclusion: The ruling thoroughly examined the applicant's submissions, the jurisdictional officer's comments, and relevant legal precedents. It concluded that the product "Keer Kokil" (tobacco pre-mixed with lime) is classifiable under Heading 2401 20 90 as "others" within unmanufactured tobacco. The applicable GST rate for the product is 28%, and the Compensation Cess rate is 71%. Ruling: The product "Keer Kokil" intended to be manufactured by the applicant and supplied with the brand name is classified under CTH 2401 20 90 as "others." The product attracts GST at the rate of 28% (14% CGST + 14% SGST) and Compensation Cess at the rate of 71%, as specified in Notification No. 1/2017-Compensation Cess, dated 28-6-2017.
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