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2020 (10) TMI 814 - AAAR - GSTClassification of goods - Chewing tobacco with the brand name “Kavi cut tobacco” - classifiable under CTH 2403 9910 or not - applicable rate of Compensation Cess - Sl. No. 26 of the Notification No. 01/2017-Compensation cess dated 28.06.2017 ct 160% - challenge to AAR decision. ‘Chewing tobacco’ can be both ‘unmanufactured’ and ‘Manufactured’. The question is whether the product of the appellant is ‘unmanufactured’ or ‘manufactured’? - HELD THAT:- The Lower Authority relying on the standards given by ICAR-CTRI, in para 6.3 of their ruling has established that the process undertaken by the appellant is not equivalent to that of ‘curing/bulking’ done at ‘farm’ which may be classified as unmanufactured Tobacco for chewing’ but is similar to the process undertaken in manufacture of ‘Chewing tobacco’ as acknowledged by the ICAR-CTRI in as much as the raw tobacco is processed by smoking, stored and given jaggery water / salt water treatment. ‘Customs Tariff’ which gives the classification for determination of rates of goods as per Notification No. 01/2017-C.T.(Rate) do not define what is ‘Manufactured tobacco’ and Unmanufactured tobacco’ and hence we need to look into the interpretations of judiciary. Any process on the raw material resulting in emergence of a new product with a distinct name, character and use is defined as ‘manufacture’ under GST. The appellant has stated to have purchased Raw dried tobacco leaves’ from wholesale dealers/farmers and then undertakes the process of grading, drying, dipping in jaggery water, stalking, semi-drying, mincing, subjecting to natural/agricultural preservatives, weighing and packing for supply. Thus, the raw material which is ‘Raw dried tobacco leaves’ undergoes the above process and the end product ‘Chewing Tobacco’ with distinct character and use emerges. This is established by the test reports furnished by the appellants before the lower authority. 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 it is 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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