CESTAT rules Nicotine Sulphate is a vegetable alkaloid, not tobacco

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled in favor of BGP International regarding the classification and valuation of Nicotine Sulphate.

The tax department had alleged that Nicotine Sulphate should be classified under tobacco-related excise duty codes rather than the vegetable alkaloid classification declared by the company. This led to a demand for approximately Rs. 4.6 crore in differential duty for the period between June 2015 and June 2017.

The Tribunal ruled that the demand was time-barred because the company had previously intimated the department regarding the manufacture of nicotine salts under the appropriate H.S. Code. Furthermore, the Tribunal determined that Nicotine Sulphate is a vegetable alkaloid, correctly classifiable under Chapter 29, as the manufacturing process involves extracting nicotine from tobacco and adding dilute sulphuric acid.