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TMI Blog2022 (7) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... obacco (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) . - RAJ/AAR/2022-23/07 - - - Dated:- 1-6-2022 - VIKAS KUMAR JEPH AND M. S. KAVIA, MEMBER Present for the applicant : Keshav Maloo, CA M.L. Patodi, Advocate Note : Under Section 100 of the CGST/RGST Act, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hes 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 Keer Kokil 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 first category i.e. 'unmanufactured tobacco without lime tube'. It is submitted that it is a residual category where all unmanufactured tobacco would fall which are not containing lime tube and accordingly, tobacco pre-mixed with lime would also fall under this category as it is not containing any lime tube. It is relevant to mention here that the tobacco leaves are never chewed/ used directly but same are mixed with lime and then only consumed. Either consumer mixes lime while consuming the tobacco or it is supplied to consumer pre-mixed with lime, there is no material change in the product, quality, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Masala. It is submitted that the unmanufactured tobacco is never used in Pam' Pan Masala. d) Customer Base: Since, unmanufactured tobacco is prices 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 Keer Kokil i.e. 'Tobacco premixed with lime' principally the product is same as 'unmanufactured tobacco' with the only difference that instead of a separate tube of lime, lime will be already mixed in it and will be sold as Keer Kokil . 5. Further, the quality of tobacco leaves in our product Keer Kokil is similar to the quality of leaves used in unmanufactured tobacco which keeps it within the same price range of unmanufactured tobacco. 6. Further, it is submitted that the making process and ingredients of our product Keer Kokil is totally different from that of the chewing tobacco or the Zarda scented tobacco. Since, chewing tobacco is a costly product it is consumed by rich and elite class of people and therefore this pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022 and 10.05.2022, the gist of the same is as under: - The firm M/s GYANKEER PRODUCTS PVT LTD is registered under GST having GSTIN- 08AAHCG3822A1Z1 w.e.f 03.10.2018. The HSN Code and product detail as per registration certificate are as under - The firm is paying tax as normal taxpayee and filing returns regularly. The firm has shown sale of Pan Masala (AAV1SHKAR PAN MASALA), Food prepared items paying GST at the applicable rate and compensation cess on Pan Masala @ 60%. As per application of the applicant he wishes to manufacture Keer Kokil i.e 'Tobacco pre-mixed with Lime'. Interpretation of facts regarding product of Keer Kokil : HSN Code Product A. 2106 - FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED B. 2401 -UNMANUFACTURED TOBACCO; TOBACCO REFUSE C. 240120 - Tobacco, partly or wholly stemmed or stripped D. 24012090 - UNMANUFACTURED TOBACCO; TOBACCO REFUS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TOBACCO 28% 01/07/2017 24011050 UNMANUFACTURED TOBACCO; TOBACCO REFUSE -TOBACCO, NOT STEMMED OR STRIPPED TOBACCO FOR MANUFACTURE OF BIRIS, NOT STEMMED 28% 01/07/2017 24011060 UNMANUFACTURED TOBACCO; TOBACCO REFUSE - TOBACCO, NOT STEMMED OR STRIPPED : TOBACCO FOR MANUFACTURE OF CHEWING TOBACCO 28% 01/07/2017 24011070 UNMANUF ACTU RED TOBACCO; TOBACCO REFUSE -TOBACCO NOT STEMMED OR STRIPPED TOBACCO FOR MANUFACTURE OF CIGAR AND CHEROOT 28% 01/07/2017 24011 080 UNMANUFACTURED TOBACCO; TOBACCO REEL SE - TOBACCO NOT STEMMED OR STRIPPED TOBACCO FOR MANUFACTURE OF HOOKAH TOBACCO 28% 01/07/2017 24011090 UNMANUFACTURED TOBACCO: TOBACCO REFUSE - TOBACC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CO; TOBACCO REFUSE -TOBACCO, PARTLY OR WHOLLY STEMMED OR STRIPPED : OTHER 28% 01/07/2017 24013000 UNMANUFACTURED TOBACCO; TOBACCO REFUSE -TOBACCO REFUSE 28% 61% 01/07/2017 i. Unmanufactured tobacco (without lime tube) bearing a brand name GST @ 28% and Compensation Cess @71%. ii. Unmanufactured tobacco (with lime tube) bearing a brand name GST @ 28% and Compensation Cess @61%. The product Keer Kokil is falling under the category of unmanufactured tobacco without lime tube HSN Code 2401 (As interpretation and explained process of product of the applicant). Keer Kokil will be supplied to consumer pre-mixed with lime and there will be no material change of tobacco leaves in the product. The tobacco leaves used in Keer Kokil remains original after adding a little aroma and menthol to avoid bad smell. The nature of the product will not be changed. E. FINDINGS, ANALYSIS CONCLUSION: 1. We have perused the records on file and gone through the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 404 and any other heading of the Chapter are to be classified in heading 2404. 3. For the purposes of heading 2404, the expression inhalation without combustion means inhalation through heated delivery or other means, without combustion. SUB-HEADING Note: For the purpossses of sub-heading 2403 11, the expression water pipe tobacco means tobacco intended for smoking in a water pipe and which consists of a mixture of tobacco and glycerol, whether or not containing aromatic oils and extracts, molasses or sugar, and whether or not flavoured with fruit. However, tobacco free products intended for smoking in a water pipe are excluded from this sub-heading. SUPPLEMENTRY NOTES : For the purposes of this Chapter: (1) tobacco means any form of tobacco, whether cured or uncured and whether manufactured or not, and includes the leaf, stalks and stems of the tobacco plant, but does not include any part of a tobacco plant while still attached to the earth. (2) cut-tobacco means the prepared or processed cut-to-size tobacco which is generally blended or moisturised to a desired extent for use in the manufacture of machine - rolled cigarettes. (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 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 the aid of machine 2403 19 29 ---- Other 2403 19 90 --- Other 0 - Other : 2403 91 00 -- Homogenised or reconstituted tobacco 2403 99 -- O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2401 Unmanufactured Tobacco (with Lime tube)-bearing a brand name 65% 7 2401 30 00 Tobacco refuse, bearing brand name 61% 26 2403 99 10 Chewing Tobacco (without Lime tube) 160% 27 2403 99 10 Chewing Tobacco (with Lime tube) 142% 5. We have gone through the facts of the case and submissions made by the applicant including at the lime of hearing and as per revised submission made on 16.05.2022. 6. The applicant has submitted that their product is basically tobacco. Such raw tobacco leaves are not consumed without mixing it with lime and in their product the lime is in pre mixed condition. 7. As per applicant, they purchase dried and cut tobacco in which lime pest is mixed and thereafter it is dried, impurities and dust are removed and then it is stored in jute bags. Further while packing moisture is added so that it does not remain dried. It is finally packed in pouches for use by con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard of Excise Customs vide its Circular No. 37/90-CX. 3, dt. 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 Menthol remain Tobacco. Therefore, the explanatory notes of HSN bringing in the leaf treated with Tobacco Solution Quimam herein and thereafter with flavouring perfumes agents cannot transform Raw leaf tobacco unmanufactured to manufactured tobacco. The addition of their volatile flavours will not amount to rendering unmanufactured tobacco to manufactured tobacco following the settled position that process of treatment Raw of leaf of Tobacco by effecting various processes, e.g. sieing etc. would keep the tobacco as unmanufactured and classification under heading 2401 cannot be disturbed. Apart from above, the Jurisdictional SGST Officer vide letter dated 18.01.2022 and 10.05.2022 also stated that the product of applicant i.e. 'Keer Kokil will be supplied to consumer pre-mixed with lime and there will be no material change of tobacco leaves in the product. The tobacco leaves used in Keer Kokil'' remains original after adding lime' The nature of the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes. 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. 12. 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% (i.e. 14% CGST + 14% SGST) as per S. No. 13 of Schedule IV of the Notification No. 01/2017-CT (Rale) dated 28.06.2017. 13. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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