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TMI Blog2023 (9) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... ons under UPSGST Act, 2017 and the vice versa. 1.0 Brief facts of the case The instant appeal has been preferred against Advance Ruling No. UP ADRG-21/2023 dated 02.03.2023 passed in the case of Appellant i.e. M/s Pandey Traders, Siyapuram, Station Road Mainpuri, Uttar Pradesh-205001 The Brief facts of the case are as under: 1.1 The Appellant is a proprietorship concern registered under GST vide GSTIN-09FOSPP6028C1ZI having its principal place of business at Siyapuram Station Road Mainpuri, Uttar Pradesh. The Appellant is engaged in the manufacturing of unbranded unmanufactured tobacco from unmanufactured raw tobacco dust after procuring it from various traders and subsequently selling it to various customers on B to B and B to C basis after mixing of scent and ensuring packing from third party. 1.2 As per Appellant understanding raw tobacco dust which is result of screening of raw tobacco through which leaves, its stem, and other tender parts are separated through the process drying, winnowing, crushing and separating through sieving and better part are used for chewing tobacco and remaining parts in form i.e. stem, hard veins, and leaves of tobacco plant are then crushed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaf treated with tobacco solution Quimam and other flavors including saffron water-Raw Tobacco leaf not undergone any irreversible change and remains raw leaf tobacco unmanufactured- Mixture too concentrated for comfortable consumption by human beings and fails to meet test of marketability of product as 'Chewing Tobacco'- Classification under subheading 2401.10 of Central Excise Tariff appropriate. ''This decision of the Tribunal is squarely applicable to the present case. 2.3 The Appellant relies upon the decision of Hon'ble Tribunal in the case of Suresh Enterprises Vs Commissioner of Central Excise Pune, reported in 2006 (203) ELT 432 (Tri-Mumbai) wherein it was held by the Honble Tribunal "Tobacco-Raw Tobacco with Quimam and perfumes-classifiable under sub-heading 2401.10 of Central Excise Tariff and not under sub-heading 2404.40." 2.4 The Appellant has submitted that the Authority for Advance Ruling has failed to adduce any material to conclude that Raw Tobacco Leaves have undergone any proven irreversible change. In fact, raw tobacco leaf after addition of perfume (not Jarda Scent) remains raw leaf tobacco unmanufactured. 2.5 The mixing of scent does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t its classification under Ch-2403. Thus for tobacco product to be classified under Ch-2403 higher fermentation and liquoring are the basic requirements whereas in the present case the process intended to be adopted is mixing of slight perfume only to give flavor to the raw tobacco dust and does not involve fermentation at all. 2.8 The Appellant has relied upon the judgment of AAR : Gujrat Cooperative Milk Marketing Federation Ltd., reported in 2021 (53) GSTL 368 (A.A.R.-GST-Guj) wherein it has been held that- " adding flavors to milk does not change essential character of milk; flavored milk, a substitute for milk, being simple preparation of milk and no manufacturing process is involved nor does milk change its composition in any way-Classifiable under Tariff item 2202 99 30 of First Schedule to Customs Tariff Act, 1975 as a Beverage containing milk" 3.0 The Appellant was granted the opportunity of personal hearing on 27.06.2023. Shri, Rajeev Pandey, the proprietor of M/s Pandey Traders, appeared before the Authority. He reiterated the submission already made by them vide their application and argued the appeal. He submitted a written brief prepared by their counsel and assured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the Customs Tariff Act is made applicable. Further, the First Schedule to the Customs Tariff Act, 1975 and the Rules of interpretation therein are to be followed for classifying a product in terms of Explanation 1 and 2 to the Notification No. 01/2017-Compensation Cess (Rate) dated 28.06.2017. For the sake of reference, the Customs Tariff Classification in respect of Chapter 2401 is reproduced below- 2401 Unmanufactured Tobacco; Tobacco refuse. 240110 --Tobacco not stemmed or stripped 24011010 -- Flue cured Virginia Tobacco 24011020 --- Sun cured country (natu) tobacco 24011030 --- Sun cured Virginia Tobacco 24011040 -- Burley Tobacco 24014050 ---Tobacco for manufacture of biris, not stemmed 24011060 --- Tobacco for manufacture of chewing tobacco 24011070 --- Tobacco for manufacture of Cigar and cheroot 24011080 -- Tobacco for manufacture of Hookah Tobacco 24011090 Other 240120 ----Tobacco, partly or wholly stemmed or stripped; 24012090 --- Unmanufactured tobacco; tobacco refuse-tobacco, partly or wholly stemmed or stripped; other Further as per Explanatory Note (1) Chapter 2401 covers Unmanufactured Tobacco in the form of whole plants or leaves in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merit its classification under Ch-2403. Thus for tobacco product to be classified under Ch-2403 higher fermentation and liquoring are the basic requirements whereas in the present case the process intended to be adopted mixing of perfume only (Not Jarda Scent) to give flavor to the raw tobacco dust and does not involve fermentation at all. 4.4 We find that under Notification No. 01/2017-Central Tax (Rate) no definition of manufactured or unmanufactured tobacco has been provided and accordingly we have to mainly rely upon the decision of Hon'ble Court and the Tribunals decisions in the matter. There is no doubt that chewing tobacco may be both manufactured and unmanufactured. The difference between the manufactured and unmanufactured tobacco is dependent on the process being undertaken to prepare the product. In the present case the process being undertaken by the Appellant involves screening of raw tobacco through which tobacco leaves, its stem, and other tender parts separated through the process of drying winnowing, crushing and separating. Reference is made to the order CEGATE in the case of CCE, Pune Vs M/s Jai Kisan Tobacco Co. wherein it was held by the Tribunal "raw tobacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Tariff Act, 1985 as unmanufactured tobacco and not under sub-heading 2404.41 ibid." 4.8 Having gone through the above referred case law we find that in the referred cases it has been clearly held by the Hon'ble Court that mere mixing of flavours (not Jarda Scent) to preserved raw tobacco does not convert it to manufacturing tobacco. 5.0 From the discussions in foregoing paras we find that case laws cited by the Appellant hold ground in favour of the appellant and the process carried out by the Appellant does not amount to manufacture as defined under Section 2(72) of the CGST Act- (72) 'Manufacture' means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the 'Manufacturer' shall be construed accordingly." Undoubtedly, in the present case the raw tobacco dust is the result of screening of raw tobacco through which tobacco leaves, its stem, and other tender parts are separated through the process of drying, winnowing, crushing and separating through sieving and the better parts are used for chewing tobacco and remaining part in raw form i.e. stems, veins, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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