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July 4, 2023

Kandi ravo is subject to HSN 24013000 and 28% GST is owed to AAR Gujarat

Kandi ravo is subject to HSN 24013000 and 28% GST is owed to AAR Gujarat

Fact and issue of the case

M/s. Devendrakumar Rambhai Patel, Milkat No. 1276, Maneklal Shanabhai Parmar, Timba, Anand, Gujarat 388 170 [for short—`applicant’] is registered under GST and their GSTIN is 24BVAPP6398C1ZH.

The applicant is engaged in the business of wholesale/retail trading of unprocessed tobacco which they purchase directly from the farmers. Shri Devendrakumar Rambhai Patel, is the proprietor & carries out his business with his own name as their trade name.

The applicant, now wishes to undertake supply of the product known as `Kandi Ravo’, which is a tobacco waste.

Additionally, the applicant states that their product falls under the category of `unmanufactured tobacco without lime tube; that they will not be selling any tube of lime inside the pouches; that though the waste tobacco is mixed with natural clay and water, the nature of the product is not altered & e consumer base remains the same ie tobacco manufacturers; that it is never used in  pan masala and is never put in a paan [also called betel quid, (source Britannica)]; that it is different from chewing tobacco and zarda scented tobacco; that as per their understanding GST compensation cess is also not leviable on the product. The applicant has further informed that it is sold in 30-35 kg bags & its price range is also not similar to that of chewing/scented tobacco.

Observation of the court

We find that HSN notes for tariff item 2401, reproduced supra, covers unmanufactured tobacco in the form of whole plants/leaves in natural state, cured or fermented leaves, whole, stemmed/stripped, trimmed/semi trimmed broken/cut, blended cased with a liquid of appropriate composition prevent drying and to preserve the flavour. It also covers tobacco refuse resulting from the manipulation of tobacco leaves, eg. waste or from the manufacture of tobacco products [stalks, stems, midribs, trimmings, dust, etc). Though the applicant has undertaken the process of crushing tobacco refuse and thereafter mixing it with natural clay & water, in terms of the HSN notes, we find that it still remains an unmanufactured tobacco. This is more so because even in terms of section 2(72) of the CGST Act, 2017, which defines manufacture, since no new product emerges post the crushing of tobacco refuse & mixing it with natural clay & water, we find it appropriate that the product is classifiable under CTH 2401 as unmanufactured tobacco; tobacco refuse’. We further hold that the supply of applicant of landi ravo’ is classifiable under 24013000.

Moving on to the contention of the applicant that no compensation cess is applicable, we find that the applicant has not disclosed the fact that as to whether they are using brand name for their product. The applicant was asked to provide additional submissions on the issue. The applicant, vide his additional submission received on 10.5.2023, has informed the they are not affixing any name or label on the packing, in which the packed goods are sold to their customers in 30-35 kgs bag

The photographs adduced by the applicant depicts that the goods are being sold without any brand name, labelling etc.. In view of the foregoing, since the applicant proposes to supply/supplies the said landi ravo’ to their customers in 30-35 kg bags, without any brand name, labeling, etc, we hold that the applicant would be/is liable to pay GST @ 28% [14 % CGST and 14 % SGST] in notification No. 1/2017-CT(Rate), Sr. No. 13, Schedule IV.


In the light of the foregoing, we rule as under:

The supply of applicant of Kandi ravo’ is classifiable under 24013000. The applicant is liable to pay GST at 28% [14 % CGST and 14 % SGST] in terms of notification No. 1/2017-CT(Rate),  Sr. No. 13 of Schedule IV subject to the condition that goods are cleared without brand name.


In the result, appeal of the assessee is allowed and ruled in favour of the assessee

Read the full order from here


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