TC09592 - [2025] UKFTT 00891 (TC)

The Appellant’s grounds of appeal raise a short point of law, namely that excise duty on gutka should be calculated on the weight of the tobacco contained in the gutka, and not on the net weight (ie net of packaging) of the gutka itself. The Appellant has not contested any other aspect of HMRC’s calculations.

Excise duty is due on the importation of chewing tobacco at a rate that is expressed as a certain number of pounds and pence per kilogram. Chewing tobacco is defined to include any product that is not cigarettes, cigars, hand-rolling tobacco, or other smoking tobacco, consists of or includes tobacco, and has been prepared so that it can be chewed.

The Appellant, in its grounds of appeal, did not expressly state that gutka is not chewing tobacco, but stated that the customs tariff code under which the tobacco product content [emphasis added] of the gutka was declared was “2403 9910 00 Chewing tobacco and snuff (nasal tobacco)”. The Appellant’s objection to the strike-out application expands on the “tobacco product content” point by stating that “the tobacco that is added to Gutkas is chewing tobacco” which “can be chewed on its own or added to Gutkas”.

As I understand it, this amounts to an argument by the Appellant that chewing tobacco is an ingredient of gutka, but gutka is not itself chewing tobacco.

I have no hesitation in finding that this proposition has no basis in the law. The definition of chewing tobacco includes a product that “includes tobacco”. Neither the fact that the product contains only a small percentage of tobacco, nor anything concerning how the product was manufactured, alters this. The law does not provide that a product containing less than a certain percentage of tobacco will not be classified as chewing tobacco. Gutka is a product that contains tobacco and the Appellant has not disputed that it can be chewed. It follows that gutka is, itself, chewing tobacco.

The Appellant’s objection to the strike-out application states:

“The tobacco that is added to Gutkas is chewing tobacco that has already reached its Production Account Point (PAP) and removed from the factory as it can be chewed on its own or added to Gutkas. It follows that the duty payable at the exercise duty point is the weight of tobacco products (other than cigarettes) is their weight at the time of time of their entry into the productions account which is only the net weight of tobacco that is added to the Gutkas and not the net weight of the Gutka.”

The references in this extract to the “production account” derive from the incorrect citation of Regulation 14 of the 2001 Regulations in HMRC’s application to strike out the appeal (which in turn may have derived from the incorrect reference to Regulation 14 in the Appellant’s grounds of appeal). As I have already described, Regulation 14 relates to the manufacture of tobacco products in registered factories. The disputed excise duty point in this case arose on importation, not on manufacture, and so the references to the production account have no relevance in this case. For completeness I note that there is nothing in the Appellant’s grounds of appeal to suggest that the gutka in question, or the tobacco product that was subsequently incorporated in that gutka, were manufactured in a factory that had been registered by HMRC under Regulation 4 of the 2001 Regulations.

I can also find no basis in the law for the proposition that excise duty is payable only on the weight of the tobacco content of the gutka, as opposed to the weight of the whole product (net of packaging). Excise duty is payable on chewing tobacco at a certain price per kilogram. If duty were payable only on the tobacco content of the chewing tobacco, there would be wording to that effect in the law.

The grounds of appeal also make what may be regarded as a policy argument: that applying excise duty to the entire weight of gutka would make it commercially unviable to import into the UK, and result in an unintended windfall based on the weight of substances other than tobacco which are not subject to excise duty.

The Tribunal’s task is to apply the law as it stands. It is therefore not within my powers to consider a submission based on public policy, or on whether the law has undesirable consequences.

The Appellant’s case, as expressed in its grounds of appeal, rests on this short point of law. The outcome does not require the Tribunal to make further findings of fact. It follows that this is, in my view, the type of situation listed in paragraph (vii) of First De Sales: a short point of law or construction where the Tribunal has before it the evidence necessary to determine the question properly and where the parties have had an adequate opportunity to address it in argument. I find that the Appellant does not have a realistic prospect of succeeding on this point of law. I therefore consider the Appellant’s grounds of appeal to have no reasonable prospect of success.

A further point I mention for completeness is that, in compliance with the Tribunal’s directions, the Appellant had provided HMRC and the Tribunal with a list of the documents on which it intended to rely at the hearing of the strike-out application. All of the documents in that list appear in the hearing bundle other than an undated document described as a “Memo from Vishnu”. Mr Holt confirmed that the “Memo from Vishnu” had not been provided by the Appellant. I decline to speculate on what that document might have contained and do not consider that the possibility that there might be something in it that could be relevant to the appeal means that I should refuse the strike-out application. Otherwise, I would in effect be failing to follow the guidance in First De Sales, that I should not allow a case to proceed to a hearing because “something may turn up which would have a bearing on the question of construction”.

I note that HMRC are aware that there may be large assessments on imports of products with a low tobacco content. Their published guidance on tobacco products duty (TPD18080) states as follows:

“Tobacco products intended for chewing include both the traditional type (originally used by miners) which is basically moist plugs of tobacco and the Asian type of chewing tobacco products. Whereas the first consists mostly of tobacco, the Asian products such as tulsi mix and guhkta may contain only a small percentage of tobacco. In either case the duty is based on the weight of the whole product i.e. excluding packaging but including any other ingredients such as nuts, leaves spices etc. This can make the product subject to an amount of duty which may seem disproportionate but that is the legal position and there is no policy to apportion duty to the tobacco content only. There have been instances of significant amounts being imported under misdescribed tariff headings and large assessments have resulted.”

The Appellant’s case plainly involves a large assessment of this type. I recognise that the Appellant may consider the outcome to be unfair, but I consider the law to be clear. I also note that this is not an instance where I have any discretion, as is shown by the extract from Kevan Denley that I have set out above.

I further note that the Appellant has appealed the whole of the demand made by HMRC on 23 March 2023, and that this demand was for import VAT as well as excise duty. The grounds of appeal, however, only relate to excise duty. As the Appellant’s grounds of appeal raise no argument that relates to import VAT, this element of the appeal also has no reasonable prospect of success.

For the reasons set out above, I find that the Appellant’s case has no reasonable prospect of succeeding. I therefore grant HMRC’s application and I strike out the appeal.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the FTT Rules. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.