Case Title | Kavi Cut Tobacco |
Court | Tamil Nadu AAAR |
Honorable Judges | Member Thiru G.V.Krishna Rao & Member Thiru M.A. Siddique |
Citation | 2020 (9) GSTPanacea 21 HC Tamil Nadu AAAR/03/2020(AR) |
Judgement Date | 29-September-2020 |
Council for Petitioner | Sathiyanarayana Srinivasan |
Council for Respondent | NA |
Section | Section 100(1) |
In Favour of | In Favour of Revenue |
The Tamil Nadu Bench of Member Thiru G.V.Krishna Rao & Member Thiru M.A. Siddique has held that it is evident that the raw material undergoes a set of processes and emerges as a distinct product which makes it marketable/consumable for the chewing needs. Therefore, the product supplied by the appellant is “Manufactured Tobacco product for Chewing”.
FACTS OF THE CASE
The Appellant is the supplier of the product which is stated to undergo the below process in the brand name Kavicut tobacco.
Process followed: Raw dried tobacco leaves are purchased from wholesale dealers /farmers.; Stems and dust particles are removed.; The First step is liquoring i.e. the dried tobacco leaves are cured using jaggery water for the purpose of preventing it from moulding or further decaying (the shelf life of the produce being very short).;
Secondly, it will be cut into small pieces in a cutting machine to facilitate easy manual packing.; Then the cut tobacco will be packed in packets /pottalams for the purpose of retail sale in the shops.
The product doesn’t undergo any change in the essential character and remains in its original nature
Accordingly the Appellant claims that the product is classifiable under 24012090. (“Unmanufactured tobacco partly or wholly stemmed or stripped “Others”). The Appellant made an Application to AAR vide Application No. 13 dated 21.03.2019 seeking advance ruling on the,- “Classification of the product intended for manufacture and applicable rate of Compensation Cess.”
The Original Authority has ruled as follows:-
The product intended to be manufactured by the applicant and supplied as “Chewing tobacco” with the brand name “Kavi cut tobacco” is classifiable under CTH 2403 9910-Chewing Tobacco
- The applicable rate of Compensation Cess is provided under SI. No. 26 of the Notification No. 01/2017- Compensation cess dated 28.06.2017 @ 160%
Aggrieved by the above decision, the Appellant has filed the present appeal
COURT HELD
Considering the facts as recorded, held that it is evident that the raw material undergoes a set of processes and emerges as a distinct product which makes it marketable/consumable for the chewing needs. Therefore, the product supplied by the appellant is “Manufactured Tobacco product for Chewing”.
Once itis held that the product is ‘Manufactured Chewing tobacco’, the classification of the product is under CTH 2403 9910 which specifies ‘Chewing Tobacco’ under the head”2403-Other Manufactured tobacco and manufactured tobacco substitutes….”as held by the lower authority and there appears to be no need for our intervention with the order of the Lower Authority.
ANALYSIS OF THE JUDGEMENT
The applicant vide their letter received on 05.07.2019 furnished the test report of the raw material and the finished product from Enviro Care India Private Limited, a NABL certified lab and also photographs of the manufacturing process as undertook by them during the hearing. The test report for the sample marked ‘Chewing Tobacco before processing’ and ‘Chewing Tobacco after processing’ are furnished. On perusal of the report sit is seen that the chemical parameters in both consists of Moisture, Total Ash, Acid Insoluble Ash and Nicotine. While the Nicotine content remains unchanged, the Moisture content is more than doubles and the content of Total Ash and Acid insoluble Ash are reduced …………….” Thus, it is evident that the raw material undergoes a set of processes and emerges as a distinct product which makes it marketable/consumable for the chewing needs.
Therefore, the product supplied by the appellant is “Manufactured Tobacco product for Chewing”. Once itis held that the product is ‘Manufactured Chewing tobacco’, the classification of the product is under CTH 2403 9910 which specifies ‘Chewing Tobacco’ under the head”2403-Other Manufactured tobacco and manufactured tobacco substitutes….”as held by the lower authority and there appears to be no need for our intervention with the order of the Lower Authority.
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Kavi Cut Tobacco
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AAAR Tamil Nadu
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