In Advance Ruling No. GUJ/GAAR/R/2023/21 -AAR- AAR (Gujarat) rules 'Kandi Ravo' or unprocessed tobacco supply classifiable under 24013000, subject to 28% GST without branding
Members Milind Kavatkar (SGST) & Amit Kumar Mishra (CGST) [12-06-2023]

Read Order: In Re: Devendra Kumar Rambhai Patel

Chahat Varma

New Delhi, July 10, 2023: The Gujarat bench of the Authority for Advance Rulings has classified the supply of 'Kandi Ravo' by the applicant under code 24013000 and has ruled that the applicant is liable to pay GST at 28%, subject to the condition that goods are cleared without any brand name.

The applicant, involved in the wholesale/retail trading of unprocessed tobacco, had sought clarification on the classification of 'Kandi Ravo', which is a type of tobacco waste.

The bench of Milind Kavatkar (SGST) and Amit Kumar Mishra examined the process undertaken by the applicant, which involved the procurement of unprocessed tobacco from farmers, followed by crushing the tobacco waste. The crushed tobacco waste was then mixed with natural clay and water, dried, and packed in 30-35 kg packs for supply to tobacco manufacturers.

According to Section 2(72) of the Central Goods and Services Tax Act, which defines the term ‘manufacture’, the bench concluded that no new product emerged from the process of crushing tobacco waste and mixing it with natural clay and water. Therefore, the product was classified as 'unmanufactured tobacco; tobacco refuse' under code 2401. The bench further confirmed that the supply of 'Kandi Ravo' by the applicant was classifiable under 24013000.

The bench further took note of the photographs presented by the applicant, which indicated that the goods were being sold without any brand name or labelling. Considering this, the applicant's proposal to supply 'Kandi Ravo' in 30-35 kg bags without any branding or labelling led to the determination that the applicant would be liable to pay GST at a rate of 28%, as per Notification No. 1/2017-CT (Rate), Sr. No. 13, Schedule IV.