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TMI Blog2024 (10) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... OIDS PRIVATE LIMITED, F-150-153, Agro Food Park, Boranada, Jodhpur-342102, Rajasthan (hereinafter "the applicant") is fit to pronounce advance ruling as it falls under the ambit of the Section 97 (2) (a) given as under: (a) Classification of any goods or services or both; A. SUBMISSION OF THE APPLICANT (in brief):- M/s. Dindayal Colloids Private Ltd. (here-in-after referred to as the "applicant") are registered under GST having GSTIN 08AAECD1313JIZY. Applicant wishes to manufacture 'Tobacco pre-mixed with lime' and supply the same after packing in pouches of different units under its brand. The manufacturing of 'Tobacco pre-mixed with lime' involves the following processes: a) Raw cut tobacco is procured in bulk quantity as a raw material; b) Lime paste is mixed with raw cut Tobacco and dried to evaporate the water content; of c) After drying, the resulting semi-finished product is then stored in Silos/ sacks; d) Such semi-finished product is then processed in mixer to add aroma, mentha oil/ peppermint and moisture which becomes final product i.e. "Tobacco pre-mixed with lime" for packing in pouches and dispatch. The principal content in 'tobacco pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o substitutes are classified under Chapter 24 of the GST Tariff wherein inter alia Unmanufactured tobacco is classified under Heading 2401 chargeable to 28% GST with following two categories: S. No. Description (1) Unmanufactured Tobacco (without Lime tube) (2) Unmanufactured Tobacco (with Lime tube) Unmanufactured tobacco with lime tube signifies those pouches where a tube of lime is put inside the pouch containing unmanufactured tobacco. As against this, 'unmanufactured tobacco without lime tube' signifies those products where it is sold without any lime tube i.e. no tube of lime is put inside the pouch. The product 'Tobacco pre-mixed with lime' supplied by us is more specifically falling under this category of 'Unmanufactured tobacco without lime tube' because we will not be selling any tube of lime inside our pouches. Since, there are only two sub classification of unmanufactured tobacco, therefore, our product more appropriately falls under first category i.e. 'unmanufactured tobacco without lime tube'. It is submitted that it is a residual category where all unmanufactured tobacco would fall which are not containing lime tube and accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the contrary, chewing tobacco is priced around Rs. 10/- per pouch containing approximately less than half gram of tobacco which means a cost in the range of Rs. 18,000/- to Rs. 20,000/- per kg on the basis of MRP. c) Usage: Unmanufactured tobacco which either comes with lime tube or without lime tube is consumed directly after mixing lime in it whereas the chewing tobacco i.e. Zarda Scented Tobacco is used in Pan/ Pan Masala. It is submitted that the unmanufactured tobacco is never used in Pan/ Pan Masala. d) Customer Base: Since, unmanufactured tobacco is priced very cheap, the category of consumer of this product is the labour and farmer class or the Biri Sector whereas, chewing tobacco or Zarda Scented Tobacco is consumed by rich and elite class of people due to its high pricing. 4. It is submitted that in case of our product 'Tobacco pre-mixed with lime' principally the product is same as 'unmanufactured tobacco' with the only difference that lime will be already mixed in it and will be sold in pouches without the lime tube. 5. Further, the quality of tobacco leaves in our product is similar to the quality of leaves used in unmanufactured tobacco which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual report (i) M/s. Dindayal Colloids P. Ltd was engaged in manufacturing of Guar Dal and Guar Powder (Guar Gum) before 4 to 5 years. Stock of Guar Seed and Guar Powder is held at the premises at the time of physical verification. (ii) Machinery for production of tobacco goods were not found to be installed and stock of raw material [finished/ semi-finished was not held in the premises at the time of physical verification. (iii) The applicant has not declared commodity (tobacco) in their registration certificate. (iv) Director Shri SHAILESH KUMAR VYAS stated that guar gum production has been stopped for last 4 to 5 years. They are planning to start manufacturing of 'pre-mixed lime tobacco product' at the same premises after the decision of Advance Ruling Authority. (v) Manufacturing process as declared in application and told by Shri SHAILESH KUMAR VYAS is appended below: -Raw cut tobacco is procured in bulk quantity and raw material. -Lime paste is mixed with raw cut tobacco and dried to evaporate the water content. -After drying the lime mixed tobacco is processed to segregate uneven leaves and dust. -The resulting semi-finished product is then stored in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pouch whereas unmanufactured with lime tube signifies those products lime tube is put inside the pouch. Undersigned is of the opinion that the product 'tobacco premixed with lime' is specifically unmanufactured tobacco where the lime is mixed with tobacco raw cut leaves during the process. Lime tube is not put inside the pouch at the time of packing which keep out the product from Serial No. 6 (2401: Unmanufactured tobacco -with lime tube). It is classifiable under CTH-2401 (sl. No. 13) Notification No. 1/2017-Central Tax (Rate) Schedule IV and Notification No. 1/2017-Compensation Cess (Rate), (St. No. 5) dated 28th June, 2017. Extract of related notifications is appended below: - Extract of Notification No. 1/2017-Central Tax (Rate) Schedule IV S.No. Chapter / Heading/ Subheading / Tariff item Description of Goods (1) (2) (3) 13. 2401 Unmanufactured tobacco; tobacco refuse [other than tobacco leaves] Extract of Notification No. 1/2017-Compensation Cess (Rate) dated 28th June, 2017 S. No. Chapter / Heading/ Sub-heading / Tariff item Description of Goods (1) (2) (3) 5. 2401 20 90 Unmanufactured tobacco; Tobacco refuse ---other F. FINDINGS, ANALYSIS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder GST, the First Schedule to Customs Tariff Act is only 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 Notification No. 1/2017-Compensation Cess (Rate), dated 28-62017. Chapter 24 of Customs Tariff is as under: - CHAPTER 24 Tobacco and manufactured tobacco substitutes; products, whether or not containing nicotine, intended for inhalation without combustion; other nicotine containing products intended for the intake of nicotine into the human body Note: (1) This Chapter does not cover medicinal cigarettes (Chapter 30). (2) Any products classifiable in heading 2404 and any other heading of the Chapter are to be classified in heading 2404. (3) For the purposes of heading 2404, the expression-inhalation without combustion means inhalation through heated delivery or other means, without combustion. SUB-HEADING Note: For the purposes of sub-heading 2403 11, the expression -water pipe tobacco means tobacco intended for smoking in a water pipe and which consists of a mixture of tobacco and glycerol, whether or not containing ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; Water pipe tobacco specified in Sub-heading Note to this Chapter : 2403 11 10 --- Hookah or gudaku tobacco 2403 11 90 --- Other 2403 19 -- Other 2403 19 10 --- Smoking mixtures for pipes and cigarettes --- Biris : 2403 19 21 --- Other than paper rolled biris, manufactured without the aid of machine 2403 19 29 --- Other 2403 19 90 --- Other - Other : 2403 91 00 -- "Homogenised" or "reconstituted" tobacco 2403 99 -- Other 2403 99 10 --- Chewing tobacco 2403 99 20 --- Preparations containing chewing tobacco 2403 99 30 --- Jarda scented tobacco 2403 99 40 --- Snuff 2403 99 50 --- Preparations containing snuff 2403 99 60 --- Tobacco extracts and essence 2403 99 70 --- Cut-tobacco 2403 99 90 --- Other 10) The applicant has submitted that their product to be supplied is basically tobacco. Such raw tobacco leaves are not consumed without mixing it with lime and in their product the lime is in pre mixed condition. 11) As per submission of applicant, they will purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Apex Court in the State of Madras Vs Bell mark Tobacco Company [(loss) (SC) -1966-10.4] dated 04.10.1966 wherein it was held by the Hon'ble Court that cumulative effect of various processes to which Tobacco was subjected, before it was sold, amount to the manufacturing process. In the instant case also the cumulative effect of various processes i.e. mixing of Lime paste in raw cut tobacco, evaporation of the water content from the said tobacco mixed with lime paste, addition of aroma, menthol and moisturizer amounts to the manufacturing process and the same is resulting in a new distinct marketable product. 15) We find in the instant case that mixing lime and other ingredients with the tobacco leaves would result into emergence of a new product with distinct name and character. 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 to be supplied by the applicant is "manufactured tobacco product for chewing'. Once, it is decided that the product is 'manufactured chewing tobacco', the classification of the product merit under CTH 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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