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2020 (7) TMI 108 - AAR - GSTClassification of goods - Chewing Tobacco - product intended for manufacture - applicable rate of Compensation Cess - HELD THAT:- The cutting process prescribed in this note is along with the remarks ‘but not tobacco ready for smoking’. This explanation of HSN clearly brings out the classification in the Customs tariff at 240120, which covers tobacco products for further manufacture and not for consumption as such as in the case of the applicant. From the explanation given by ICAR-CTRI Central Tobacco Research Institute and Explanatory General notes to chapter 24, it is seen that only tobacco which is cured at farm level for before supply to market would fall under this classification as ‘Unmanufactured tobacco’. The fermentation that the applicant claims is by adding jaggery water does not get covered under this. As seen in the the Explanatory General notes to chapter 24, only natural fermentation is covered. Therefor, the product of the applicant doesnot fall under CTH 2401. The product in question is a processed one in as much as the same is cured in jaggery water, undergoes the process of stalking and semi-drying, then cut into small pieces in minced form which is stored in a separate area for a few hours/days on which some natural/agricultural preservatives for maintaining the product in wet form is applied, packed in pouches/pottlams for supply. Also, the test reports of the chewing tobacco- before processing and after processing furnished by the applicant shows that the chemical parameters Moisture, total ash and acid insoluble ash are different in % content, indicating the product has been subjected to processing. Therefore, the product of the applicant does not merit classification as “unmanufactured tobacco” under CTH 2401 but rightly classifiable under CTH 2403 9910 as “Chewing tobacco”. Rate of Compensation cess applicable to the Product - HELD THAT:- The rate of Compensation cess is provided vide Notification no. 01/2017-Compensation Cess/rate) dated 28.06.2017 and Sl.No. 26 provides the Compensation Cess Rate as 160% for the product “chewing tobacco” which is supplied “without lime tube”.
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