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TMI Blog2025 (1) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... ved, according to which the subject goods have been manufactured. On being specifically asked during the course of personal hearing, the appellant failed to inform the name of the authoritative book of Ayurved. Further, during the course of personal hearing it was also informed that they do not hold any license permitting them to manufacture the said goods. This being the fact, leads us to a conclusion the appellant has failed in making out a case of their product falling under the category of medicinal cigarettes . Whether the cigarettes manufactured by the appellant, containing certain types of products are specifically formulated to discourage the habit of smoking? - HELD THAT:- The product of the appellant is a substitute of cigarette and is also manufactured and marketed with the said aim in mind. Therefore, the averment of the appellant in para 13 to the effect that It is submitted that such understanding is factually incorrect as the herbal smokes manufactured by the appellant are not intended to assist the smokers to stop smoking , belics fact - the product is classifiable under HSN 24029010 more so since it is not a medicinal cigarette and secondly since the appellant hims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Maharashtra, regarding. - IGST. 2. Determination of the liability to pay Tax on Sales of Aorom Herbal Smokes (regular flavour) as per Tax Invoice enclosed herewith of Gujarat Sales regarding CGST and SGST. 5. Consequent to hearing Aorom Herbotech, the Gujarat Authority for Advance Ruling [GAAR], recorded the following findings viz that in terms of section note 1(b) of chapter 30, the chapter does not cover, preparations such as tablets, chewing gum or patches [transdermal systems] intended to assist smokers to stop smoking; the appellant has not made a case that the subject goods are ayurvedic medicines manufactured in accordance with the Authoritative Ayurvedic books as specified in the first schedule to the Drugs and Cosmetic Act, 1940; that in common parlance, goods are bought as cigarettes without tobacco/nicotine not as an ayurvedic medicament; that applicant s proposed HSN 3004, is not applicable to the goods; that explanatory notes to chapter 24 specifies that it covers not only unmanufactured and manufactured tobacco but also manufactured tobacco substitutes, which do not contain tobacco; that cigarettes of tobacco substitutes are covered at Sr. No. 14 of Schedule IV to n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the matter was held on 15.10.2024, wherein Shri Amish Khandhar, CA, Ms. Dhwani Shah, Ms. Amrin Alwani, CA, Ms. Bhagyashree Dave, CA, appeared and reiterated the submissions made in the appeal. During the course of personal hearing the authorized representative submitted a case summary, reiterating the averments already raised, as listed out supra. They also submitted a certificate of analysis of their product issued by M/s. Accupre Research Labs P Ltd, Ahmedabad. FINDINGS 9. We have carefully gone through and considered the appeal papers, written submissions filed by the appellant, submissions made at the time of personal hearing the Advance Ruling given by the GAAR and other materials available on record. 10. Before adverting on to the main issue, we note that the appellant has filed the appeal against the impugned ruling dated 29.10.2021 on 12.3.2022. section 100 of the CGST Act, 2017, which deals with appeal to appellate authority states as under: [relevant extracts] Appeal to Appellate Authority. 100. (1) The concerned officer, the jurisdictional officer or an applicant aggrieved by any advance ruling pronounced under sub-section (4) of section 98, may appeal to the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of GST to be paid by appellant on sales of Aorom Herbal Smokes. While determining the rate of GST, the impugned ruling classified the appellant s product under HSN 24029010. It is the appellant s claim that their product should be classified under HSN 3004. 13. Before recording our findings, we would like to reproduce the relevant portions of the Customs Tariff Act and the Explanatory notes of the HSN, in respect of the rival chapters/entries, viz 2. Any products classifiable in heading 2404 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. ] [I] Chapter Notes of Customs Tariff Act, 1975 SECTION-IV CHAPTER-24 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 cone medicinal cigarettes (Chapter 30); (2) Any products classifiable in heading 2404 and any other heading of the Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er packing. Tobacco so treated is packed in bundles, bales (of various shapes), in hogsheads or in crates. When packed, the leaves are either aligned (Orient) or tied in hands (several leaves tied together with a band or with another tobacco leaf), or simply left as loose leaves. They are always tightly compressed in order to ensure preservation. In some cases, in addition to (or instead of) fermentation, flavouring or moistening substances are add (casing) in order to improve the aroma or keeping qualities. This Chapter covers not only unmanufactured and manufactured tobacco but also manufactured tobacco substitutes which do not contain tobacco. 14. The appellant has submitted brochure in respect of their products. The relevant extracts, is reproduced below for ease of reference. 15. The appellant has mentioned the list of ingredients used, the manufacturing process as under, viz 2. The appellant is start-up and is engaged in manufacturing of herbal smoke, which is free from nicotine and tobacco. List of ingredients used, and manufacturing process thereof is explained as under: List of Ingredients used to manufacture herbal smoke: Tendu leaves, Nutmeg, Fennel powder, Propylene gly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d like to reproduce the HSN explanatory notes to the said heading, for ease of understanding, viz; 24.02 - Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes. 2402.10 - Cigars, cheroots and cigarillos, containing tobacco 2402.20 - Cigarettes containing tobacco 2402.90 - Other This heading is restricted to cigars (wrapped or not), cheroots, cigarillos and cigarettes, made of tobacco or of tobacco substitutes. Other smoking tobacco, whether or not containing tobacco substitutes in any proportion, is excluded (heading 24.03). This heading covers : (1) Cigars, cheroots and cigarillos, containing tobacco. Such products may be made wholly of tobacco or of mixtures of tobacco and tobacco substitutes, regardless of the proportions of tobacco and tobacco substitutes present in the mixture. (2) Cigarettes containing tobacco. Apart from cigarettes containing only tobacco, this heading also includes those made from mixtures of tobacco and tobacco substitutes, regardless of the proportions of tobacco and tobacco substitutes in the mixture. (3) Cigars, cheroots, cigarillos and cigarettes of tobacco substitutes , for example, cigarettes ( smokes ) made from speciall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakh. We met the Joint Commissioner, FDCA (Ayurvedic) for information regarding Ayurvedic license. But they have refused to grant us Ayurvedic license stating our product does not fall under any category in Ayurvedic books. [emphasis supplied] 18. The second question that arises is whether the cigarettes manufactured by the appellant, containing certain types of products are specifically formulated to discourage the habit of smoking. In the brochure submitted by the appellant during the course of personal hearing, under the question Who are we , it inter alia states as follows: [relevant extracts] After doing intensive research on the smoking pattern behaviours of chain smokers, wo come to the conclusion that its not only the nicotine that makes avoiding smoking difficult, rather it is the sensation of the smoking which at times forces the newly qualities to start smoking again. Our goal is to provide a solution to those who just want to smoke because it will look cool to those addicts who really want to quit but are a victim of the sensation and the habit. This clearly shows that the product of the appellant is a substitute of cigarette and is also manufactured and marketed with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tis, asthma; it also helps increase kapha and vata for treating or preventing the diseases; that dhumapana literally means smoking medicinal drugs; that dhumapana in ayurveda is recognized as approved method by Ministry of Ayush as well as National Institute of Ayurveda. However, the appellant in the additional submission, vide email dated 18.10.2024 to the Registry, has stated as follows: Registration with Aayush and MSME: The Appellant submitted an email with Aayush Department for requirement of registration of products manufactured whereas no further communication on the email is received till date. Alongside, the email was submission was done with Industrial Commissionerate to inquire on all industrial licenses required by the Appellant for listed products whereby a letter was received from the Office of MSME Commissionerate stating the Appellant is required to obtain registration from UDYAM and no other certification / licensing is required to be obtained. Considering the guidelines from MSME Commissionerate, an application was made with Ministry of Micro Small and Medium Enterprise and the Appellant was awarded with UDYAM Registration No. UDYAM-GJ-04-0003206 with classificati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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