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TMI Blog2019 (7) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... ling pronounced by the Advance Ruling Authority, is thus correct and justified - appeal dismissed. - Order No. 01/ODISHA-AAAR/2019-20 - - - Dated:- 3-6-2019 - SHRI NARESH PENUMAKA, AND SHRI BISHNUPADA SETHI, MEMBER Present For the Appellant. Sri Bhagban Panda, Advocate. Aravind Kumar Agrawal, Propreitor, Prabhat Gudakhu Factory (Appellant) has filed an appeal before AAAR, Odisha on 12.03.2019 aggrieved by advance ruling no 06/ ODISHA-AAR/ 2018-19 dated 05.02.2019 = 2019 (2) TMI 1525 - AUTHORITY FOR ADVANCE RULINGS, ODISHA pronounced by the Odisha Authority for Advance Ruling, Bhubaneswar (AAR) under Section 100 of the Odisha Goods and Service Tax Act, 2017/CGST Act, 2017. 2.0. Aravind Kumar Agrawal, having GSTN 21AACHA8243B2Z2 is registered in Koraput Circle within the jurisdiction of State of Odisha. The Appellant is stated to be engaged in manufacturing and sale of Gudakhu , a tobacco product in a paste form which is applied orally on the teeth and gums, especially in the rural belts of Odisha and neighbouring states. The appellant s submission is that the tobacco content in gudakhu manufactured by them is about 20% while molasses acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 24. In no way it refers to any non-smoking tobacco irrespective of the nomenclature and composition. Commercially Hookah or Gudakhu Tobacco is sold in granular form which is not the case in gudakhu manufactured by the appellant. Gudakhu manufactured by the appellant is sold as a paste and is used as a tooth paste. Hence, it is distinctly different from hookah tobacco by its essential character and use. While hookah or gudakhu tobacco as classified under 2403 11 10 is used as a smoking tobacco through a water pipe, gudakhu manufactured by the appellant is sold in the form of a paste for use as a tooth paste and not as a smoking tobacco. In the scheme of classification of tobacco product for the purpose of assigning HSN Code under tariff sub-heading 2403 11, only water pipe tobacco intended for smoking in a water pipe are included and not any other form of tobacco. 4.3. As per the scheme of classification, tariff sub-heading 2403 99 is a residual sub-heading under which all forms of tobacco not specified under other sub-headings of Chapter heading 2403 are classified. The said subheading is not just confined to chewing tobacco only such as khaini, gutkha and zarda etc.; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect from 01.10.2002. Though, the product remained the same under the GST regime, the appellant now wants to reclassify it under the code 2403 11 10 . In this regard the appellant submitted as follows:- i. That, the Central Excise Duty under Code 2403 99 90 has not been paid by the appellant by himself. In Para 3 of the written submission made by the appellant before the Ld. Authority for Advance Ruling, the appellant submitted that Upon specific instructions from the Central Excise Officials then, the appellant had to classify their product under tariff heading 2403 99 90 which is the residual category for manufactured tobacco that is used for chewing . Though the appellant was of the belief that gudakhu would be covered by the tariff heading no. 2403 11 10, in view of the instruction from the central excise officials, the tariff heading was declared as 2403 99 90 and applicable taxes and duties were paid as applicable to the latter tariff heading. This submission has not been considered at all by the Ld. AAR, Odisha. ii. That, Duty on 2403 99 90 has been paid on specific instructions of the Departmental Officers and the appellant to maintain a h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That, when there is a specific entry referring to the goods by its very name, it is incorrect to classify and group the product under the residual category. It is now a well settled law that when the nomenclature of a product is mention by its very name, it is not correct to group them under the residual category. In the instant case, the name Gudakhu is mentioned against CETH 2403 11 10 and therefore, should be rightly classified under that CETH only. The order of the Hon'ble High Court in the above referred case law also goes on to say that the products are same with exactly similar composition. v. It may also be worthwhile to mention that compensation cess is fixed on tobacco products basing on the extent of harm that different tobacco products are perceived to cause to the human body. Therefore, cigarettes and gutkha are taxed at substantially higher rates than other tobacco products. Basing on this logic, it would be irrational to classify the gudakhu used as tooth paste at a higher rate (by classifying it under 2403 99 90) while it is taxable at a lower rate in granular form) when it is used for smoking by classifying the same under 2403 11 10. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... digit code. Under GST, the taxpayer has to indicate HSN code in their tax invoice depending on their turnover. In terms of Notification No. 12/2017-C.T., HSN (Harmonised System of Nomenclature) code shall be used in the invoices for classifying the goods under the GST regime. 7.3. For easy reference and discussion, we hereby re-produce the relevant portion of Tariff item 2403 from the First Schedule to the Customs Tariff Act, 1975. Tariff Item Description of goods 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 --- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms Tariff, goods of the same class have been grouped together. Also, the residuary items have been provided separately for each class of goods under each chapter. The Notes to the Tariff, giving explanation to the scope and ambit of the respective chapter have statutory backing. In the appeal petition, the appellant has stated that Gudakhu manufactured by them is intended to be used as a tooth paste. No-where, the appellant contends that the Gudakhu being dealt by them are intended for smoking, which is an essential requirement to qualify for classification under sub-heading 240311. Hookah or Gudaku tobacco intended for smoking is only classifiable under 24031110. By applying the interpretative rules, which are statutory guidelines for interpreting the tariff and taking into consideration the relevant sub-heading note, we are in agreement with the rulings of the Advance Ruling Authority that Gudakhu being manufactured by the Appellant for use as a tooth paste is appropriately classifiable under residuary tariff item 2403 9990. 7.4. The appellants in their grounds of appeal have mentioned about the case law of the Hon'ble High Court of Odisha in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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