In re Shri Shalesh Kumar Singh (AAR Delhi)
The proposed activity of the applicant is to purchase ‘Dried Tobacco Leaves’ and after cleaning and removal of unwanted particles, to supply the same in the wholesale market without addition of any essence or foreign particle and without any branding. Such ‘Dried Tobacco Leaves’ are not fit for direct human consumption.
The goods to be supplied by the applicant are explained to be ‘Dried Tobacco Leaves’ which have been harvested and then undergone the process of curing by the process of Sun-dry or Air-dry, removal of dust particles, straw/bhusa and other unwanted particles.
The issue for decision is 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. Further, if the same are classified under Heading 2401, whether the same will be covered in S. No. 109 of Schedule-I of Notification No. 1/2017 – Central Tax (Rate) dated 28.06.2017, being ‘tobacco leaves’ or the same will be covered under S. No. 13 of Schedule-IV of the said Notification which covers ‘Unmanufactured Tobacco and Tobacco Refuse (other than tobacco leaves)’.
It is held that the ‘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).
RELEVANT TEXT OF AAR RULING IS AS FOLLOWS:
