Court classifies Menthol Scented Sweet Supari & Flavoured Illaichi under specific categories

The ruling determined that Menthol Scented Sweet Supari should be classified under CTH 2106 90 30 as a Betel Nut Product, supported by the manufacturing process and legal framework. Similarly, Flavoured and Coated Illaichi was classified under CTH 2106 90 99 due to the value-added processes applied, as outlined in the Customs Tariff Act and relevant circulars. Both products were found suitable for classification under their respective categories for importation and taxation purposes.

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Issues Involved:
1. Classification of Menthol Scented Sweet Supari.
2. Classification of Flavoured and Coated Illaichi.

Issue-wise Detailed Analysis:

1. Classification of Menthol Scented Sweet Supari:

The applicant, engaged in trading Pan Shop spices and betel nuts, sought an advance ruling on the classification of Menthol Scented Sweet Supari. The applicant proposed to import this product and provided detailed information on its manufacturing process, which includes drying, impurity removal, garbling, polishing, sterilization, cutting, blowing, gravity separation, roasting, adding scents and flavors, and packaging. The product does not contain lime, katha (catechu), or tobacco.

The applicant argued that the product should be classified under CTH 2106 90 30, which covers "Betel Nut Product known as Supari." The classification was supported by Supplementary Note 2 of Chapter 21, which defines "Betel Nut Product known as Supari" as any preparation containing betel nuts but not containing lime, katha, or tobacco, and may include other ingredients like cardamom, copra, or menthol.

The ruling examined the contending classifications under Chapters 8 and 21 of the Customs Tariff Act, 1975. It was determined that the processes applied to the product before importation were not for partial rehydration, preservation, or stabilization, thus making classification under Chapter 8 unsustainable. Chapter 21, which includes miscellaneous edible preparations, was deemed more appropriate. The product, after processing, is used as a mouth freshener and cannot be used for any other purpose.

The ruling also referred to C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October 2021, which classified scented sweet supari under CTH 2106 90 30 with an 18% GST rate. The ruling concluded that the menthol scented sweet supari merits classification under CTH 2106 90 30, supported by the legal framework, relevant chapter notes, supplementary notes, and the circular.

2. Classification of Flavoured and Coated Illaichi:

The applicant also sought an advance ruling on the classification of Flavoured and Coated Illaichi, intended to be imported and used as a spice-based mouth freshener. The manufacturing process includes removing impurities, killing bacteria, adding aromatic spices, silver leaf, artificial sweeteners, and packaging. The product is used as an input for further processing or packing in branded packs for wholesale and retail.

The applicant argued that the product should be classified under CTH 2106 90 99, supported by Supplementary Note 5(b) to Chapter 21, which includes preparations for human consumption.

The ruling examined the contending classifications under Chapters 9 and 21 of the Customs Tariff Act, 1975. Chapter 9 covers spices, including cardamom, but the addition of substances that change the essential character of the product would classify it under Chapter 21. The processes applied to the illaichi, such as coating with edible colors, silver, menthol, and adding artificial sweeteners, made it a value-added product distinct from raw cardamom.

The ruling referred to C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October 2021, which classified flavoured and coated illaichi under sub-heading 2106 with an 18% GST rate. The ruling concluded that flavoured and coated illaichi merits classification under CTH 2106 90 99, supported by the legal framework, relevant chapter notes, supplementary notes, and the circular.

Conclusion:

(a) Menthol Scented Sweet Supari merits classification under CTH 2106 90 30.
(b) Flavoured and Coated Illaichi merits classification under CTH 2106 90 99.

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