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2018 (5) TMI 529 - AAR - GSTClassification of goods and/ or services or both - Rate of GST - Dried Tobacco Leaves - Determination of the liability to pay tax on goods or services or both - appellant engaged in trading of Dried Tobacco Leaves - whether such 'Dried Tobacco Leaves' will be classified under Heading 2401 of HSN or the same may be classified in Heading 2403 of HSN or in any other Heading of HSN? - Held that: - It is observed that the heading 2401 of HSN covers Tobacco Leaves and Unmanufactured Tobacco. However, heading 2403 covers 'Manufactured Tobacco'. Hence, to determine the correct classification under HSN, it has to be first ascertained whether the goods proposed to be supplied are unmanufactured tobacco or the same can be considered as manufactured tobacco. It is observed that HSN notes for heading 2401 specifically mention that the said heading covers whole plants or leaves in the natural state and also cured or fermented leaves. Hence, even after the process of curing or fermenting of Tobacco Leaves, they remain covered under heading 24.01. As far as rate of GST under Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 is concerned, it is observed that 'Tobacco Leaves' attract 2.5% (CGST) and 2.5% (SGST) or 5% (IGST) under S. No. 109 of Schedule-I of Notification No. 1/2017 -Central Tax (Rate) dated 28.06.2017. Whereas, 'unmanufactured tobacco (other than tobacco leaves)' attract 14% (CGST) and 14% (SGST) or 18% (IGST) under S. No. 13 of Schedule-IV of the said Notification - All the three categories which are covered as 'Tobacco Leaves' in S.NO. 109 of Schedule-1 of Notification No. 1/2017 - Central Tax (Rate) dated 28.06.2017 as per CBEC Circular F.No. 332/2/2017-TRU dated December 2017, covers only those Tobacco Leaves which have not undergone any processing like curing, fermentation etc. Since the goods proposed to be supplied by the applicant are admittedly undergone curing by Sun-dry/ Air-dry processes, the same cannot be called 'Tobacco Leaves' and would be covered as ‘unmanufactured tobacco (other than tobacco leaves)'. Circular No. 81/5/87 - CX-3 dated 23.06.1987 issued by the Ministry of Finance - Held that: - the same is regarding classification of unmanufactured tobacco merely broken by beating and then sieved and packed for consumption as chewing tobacco (Zarda) and it was clarified that the same should be classifiable as unmanufactured tobacco under heading 2401. Hence, the same is not applicable in the present case. Circular No. 143/12/2011-ST dated 26.05.2011 - Held that: - the same is regarding levy of Service Tax on certain processes in relation to agriculture and hence, the same is not applicable in the present case. N/N. 12/2017 Central Tax (Rate) dated 28.06.2017 - Held that: - the notification pertains to levy of GST on certain processes related to agriculture. Hence, the same is not applicable in the present case. Ruling:- 'Dried Tobacco Leaves' which have undergone the process of curing after harvesting of tobacco leaves are 'unmanufactured tobacco' covered in HSN Code 2401 - However, they are not covered under S. No. 109 of Schedule-1 of Notification No. 1/2017- Central Tax (Rate) dated 28.06.2017 @ 2.5% (CGST) + 2.5% (SGST) or 5% (IGST), but the same are covered under S. No. 13 of Schedule- IV of the said Notification as 'unmanufactured Tobacco (Other than Tobacco Leaves)' @ 14% (CGST) + 14% (SGST) or 28% (IGST).
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