TMI Blog2023 (9) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... old as such for human consumption. There is nothing on record which proves that mere mixing of various flavors (Not Jarda Scent) results in irreversible change and converts the nature of raw unmanufactured tobacco to manufactured tobacco. The Authority for Advance Ruling has wrongly held that process adopted by the appellant amounts to manufacture and their product to be classifiable under Ch-2403 of GST Tariff. In fact the process adopted by the appellant does not involve fermentation at all and accordingly their product may be appropriately classified under Ch-2401 of GST Tariff subject to the process adopted by the appellant as provided under Explanatory Note to Ch-2401. The impugned order passed by the Authority for Advance Ruling modified to the extent that the product of the appellant is appropriately classifiable under Ch-2401 of GST Tariff subject to the process adopted by the appellant as provided under Explanatory Note to Ch-2401. - DR. UMA SHANKER AND SMT. MINISTHY S, MEMBER, [Proceedings under Section 101 of the Central Goods and Service Tax Act, 2017 and Uttar Pradesh State Goods and Service Tax Act, 2017] The present appeal has been filed under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r mixing of scent (mixture of various perfumes and not Jarda Scent) in raw unmanufactured tobacco dust by the Appellant after procuring the same from various traders and, and its subsequent sale to customers on B to B and B to C basis, after ensuring packing from third party, would change the character of unmanufactured tobacco to manufactured tobacco. (b) Whether processing of manufactured Tobacco dust by add mixing the scent (mixture of various perfumes and not Jarda Scent) would change the character of unmanufactured tobacco to manufactured Tobacco. The Authority for Advance Ruling in its Impugned Ruling relying upon the decision of Hon'ble Apex Court in the case State of Madras Vs Bell mark Tobacco Company [ (Laws) (SC) -1966-10.4] wherein it was held that cumulative effect of various processes to which Tobacco was subjected before it was sold amount to manufacturing process ruled that addition of scent to the raw tobacco leaf changes the characteristics of unmanufactured tobacco to manufactured tobacco. 1.5 The appellant being aggrieved by the aforesaid ruling has preferred an appeal before the Appellate Authority for Advance Ruling and prays to set aside/m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case as to whether the process relating to the product leads to manufactured tobacco (Ch-2403) or unmanufactured tobacco (Ch-2401). The Authority has proceeded with pre-conceived notion that chewing tobacco has to be manufactured only, ignoring the fact that there can unmanufactured chewing tobacco too. 2.7 The Appellant submits that their product is classifiable under Chapter sub-heading 2401. Ch.2401 which covers unmanufactured tobacco; tobacco refuse as given under- 2401.10 Tobacco, not stemmed/stripped 2401.20- Tobacco, partly or wholly stemmed/stripped 2401.30-Tobacco refuse This heading covers: (1) Unmanufactured Tobacco in the form of whole plants or leaves in the natural state or as cured or fermented leaves, whole or stemmed/stripped, trimmed or untrimmed, broken or cut (including pieces cut to shape, but not tobacco ready for smoking.) Tobacco leaves, blended, stemmed/stripped and cased ( sauced or liquored ) with a liquid of appropriate composition mainly in order to prevent mould and drying and also preserve the flavour are also covered in this heading. (2) Tobacco refuse, e.g; waste resulting from the manipulation of tobacco l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments made by the Appellant during P.H. held on 27.06.2023 and the additional submissions made by them on 06.07.2023. We find that the appellant has submitted that they are engaged in mixing scent in the raw/unmanufactured tobacco dust, procured from various traders and the said raw tobacco dust after mixing of scent (mixture of various perfumes and not jarda scent) is sent for packing along with packing rolls to the third party, who with the help of pouch packing machine ensures packing of pouches bearing no marking or brand name, whatsoever, and returns it to the Appellant. The Pouches being supplied for packing contain statutory marking only in terms of Prohibition of Advertisement Regulation of Trade and Commerce production, Supply and Distribution Act, 2003 along with marking of Rate and weight in terms of legal and Metrology Act. The product manufactured by the appellant is then supplied on B to B and B to C basis classifying it under Goods and Service Tax Tariff sub-heading 24012090, as unmanufactured tobacco, under cover of proper tax invoice and on payment of applicable duty as per law. We also find that as per Appellant understanding/interpretation of law, raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obacco, 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 the nature state or as cured or fermented leaves, whole or stemmed/stripped, trimmed or untrimmed, broken or cut (including pieces cut to shape, but not tobacco ready for smoking). Tobacco leaves, blended stemmed/stripped and cases ( sauced or liquored ) with a liquid of appropriate composition mainly in order to prevent mould and drying and also to preserve the flavor are also covered in this heading. A plain reading of Ch-2401 clearly reveals that it covers tobacco unmanufactured which is naturally cured or fermented leaves, whole or stemmed/stripped, trimmed or untrimmed, broken or cut (including pieces cut to shape, but not tobacco ready for smoking). Further Chapter 2403 of the First Schedule to Customs Tariff Act, 1975 is also reproduced as under- 2403 Other Manufactured Tobacco and Manufactured Tobacco substitutes Homogenized or reconstituted Tobacco; Tobacco Extracts and essences -Smoking tob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss 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 tobacco crushed in the form of flakes when packed into smaller packets without adding any ingredients and sold (under a brand name or not) should not be classifiable as manufactured chewing toba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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, and leaves of tobacco plant are then crushed in the dust form and the dust is sold as such for human consumption. There is nothing on record which proves th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
