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<h1>Betel nut products misclassified for customs exemption as processing didn't meet transformation criteria.</h1> <h3>M/s Naman Agri Impex Private Ltd Versus Principal Commissioner of Customs, Maharashtra, Principal Commissioner of Customs, Vijayawada, Commissioner of Customs, Mundra</h3> M/s Naman Agri Impex Private Ltd Versus Principal Commissioner of Customs, Maharashtra, Principal Commissioner of Customs, Vijayawada, Commissioner of ... Issues Involved:1. Classification of various types of processed betel nut products.2. Applicability of Notification No. 50/2017-Customs dated 30.06.2017 for exemption.Detailed Analysis:1. Classification of Various Types of Processed Betel Nut Products:The applicant, M/S Naman Agri Impex Private Ltd., sought an advance ruling on whether their processed betel nut products (API supari, Chikni supari, Unflavoured supari, Flavoured supari, and Boiled supari) should be classified under Chapter 8 or Chapter 21 of the Customs Tariff.Applicant's Argument:The applicant argued that the processes involved in making these products (such as boiling, mixing with food starch, drying, polishing, and packaging) transform the raw betel nuts into preparations, thus meriting classification under Chapter 21, specifically sub-heading 21069030.Authority's Analysis:The Authority examined the processes involved in making the five products and referred to Chapter Note 3 of Chapter 8, which allows certain processes (e.g., boiling, drying, adding preservatives) without changing the essential character of the nuts. It was noted that these processes do not constitute substantial transformation into a preparation.Precedents Considered:The Authority referred to previous rulings by the erstwhile AAR, which classified similar products under Chapter 21. However, it was emphasized that these rulings did not adequately consider the implications of Chapter Note 3 to Chapter 8. The Authority also reviewed the Supreme Court judgment in the case of M/S Crane Betel Nut Powder Works, which held that processes like boiling and adding flavor do not change the essential character of betel nuts.Conclusion:The Authority concluded that the processes applied to the betel nuts (boiling, drying, adding starch, etc.) are covered by Chapter Note 3 to Chapter 8 and do not transform the nuts into preparations. Therefore, all five products (API supari, Chikni supari, Unflavoured supari, Flavoured supari, and Boiled supari) are classifiable under Chapter 8, specifically heading 0802.2. Applicability of Notification No. 50/2017-Customs dated 30.06.2017:The applicant also sought a ruling on whether the processed betel nut products qualify for exemption under Notification No. 50/2017-Customs.Authority's Ruling:Since the products were classified under Chapter 8 and not Chapter 21, the exemption under Notification No. 50/2017-Customs, which applies to products classified under sub-heading 21069030, is not applicable to the betel nut products in question.Final Ruling:The Authority ruled that the processed betel nut products (API supari, Chikni supari, Unflavoured supari, Flavoured supari, and Boiled supari) are classifiable under Chapter 8, heading 0802, and not under Chapter 21. Consequently, the exemption under Notification No. 50/2017-Customs is not applicable to these products.