2023 (10) TMI 1512 - AAR - Customs

Roasted areca nuts classified under Chapter 20 not Chapter 8 as roasting exceeds specified processing methods

M/s. Shree Ganesh Traders Versus The Commissioner of Customs, Chennai-II (Import)

The Customs Authority for Advance Rulings, Mumbai ruled that roasted areca/betel nuts should be classified under Chapter 20 (CTH 2008 19 20) rather than ... Classification of Roasted Areca/Betel Nuts (whole or cut) intended to be imported - to be classified under Chapter 8, which covers 'edible fruits and nuts,' or under Chapter 20, which covers 'preparations of vegetables, fruit, nuts or other parts of plants? - HELD THAT:-The processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. It does not specifically include the process of roasting. Here it is important to understand the difference between the processes of moderate heat treatment & dehydrating/drying referred in chapter 8 and processes of dry roasting, oil-roasting and fat- roasting referred in chapter 20. The terms dry-roasting, oil roasting and fat-roasting however are not defined in the Customs Tariff Act, 1975. Chapter 20 of the Tariff covers the Preparations of vegetables, fruit, nuts or other parts of plants. As per Chapter Note 1 (a) to Chapter 20, the Chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in Chapters 7, 8 or 11. Therefore, vegetable, fruit or nut products or preparations made other than by the processes specified in Chapters 7, 8 or 11 are classifiable in Chapter 20. The processes specified in Chapters 7, 8 or 11 mainly include freezing, steaming, boiling, drying, provisionally preserving and milling. Therefore, any vegetable, fruit, nut or edible parts of a plant which is prepared or preserved by any other process than these are liable to be classified under Chapter 20. As per HSN Explanatory Notes, heading 2008 covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter. Specifying what is included in this heading, the explanatory note states that almonds, ground nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives. Dry-roasting, oil-roasting & fat-roasting, as a process, are very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes. It is also pertinent to observe that none of these processes are mentioned in the chapter note 3 to Chapter 8 of the Customs Tariff Act, 1975 as well as HSN Explanatory Notes to Chapter heading 0802. The Honourable High Court of Madras in its recent judgement on 01.08.2023 [2023 (8) TMI 492 - MADRAS HIGH COURT], has upheld the classification of Roasted Betel Nuts under CTH 2008 19 20. Conclusion - The Roasted areca/betel nuts fall under Custom Tariff Heading 2008, specifically under CTI 2008 19 20 'Other roasted nuts & seeds' of Chapter 20 of the First Schedule of the Customs Tariff Act, 1975. 1. ISSUES PRESENTED and CONSIDEREDThe core legal question considered in this judgment was the classification of 'Roasted Areca/Betel Nuts (whole or cut)' under the Customs Tariff Act, 1975. Specifically, the issue was whether these nuts should be classified under Chapter 8, which covers 'edible fruits and nuts,' or under Chapter 20, which covers 'preparations of vegetables, fruit, nuts or other parts of plants.'2. ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe classification of goods under the Customs Tariff Act, 1975 is guided by the General Rules for the Interpretation of Import Tariff and the Harmonized System of Nomenclature (HSN) Explanatory Notes. The applicant argued that roasted areca nuts should be classified under Chapter 20, specifically under HS Code 2008 19 20, which covers 'Other roasted nuts and seeds.' The applicant cited several Supreme Court rulings emphasizing the importance of HSN Explanatory Notes in classification matters.Court's Interpretation and ReasoningThe Court analyzed the processes involved in the preparation of roasted areca nuts, noting that roasting is not explicitly mentioned in Chapter 8, which includes processes like drying and moderate heat treatment. The Court highlighted that roasting involves severe heat treatment, distinct from the processes listed in Chapter 8. The Court relied on the HSN Explanatory Notes, which explicitly include dry-roasted nuts under Chapter 20, to support its reasoning.Key Evidence and FindingsThe applicant provided details of the roasting process, which includes heating the areca nuts at temperatures above 150 degrees Celsius until the moisture content is reduced to less than 6%. The Court found that this process differs significantly from the preservation methods described in Chapter 8. The applicant also referenced a test report from Chennai Customs, which classified similar roasted areca nuts under Chapter 20.Application of Law to FactsThe Court applied the HSN Explanatory Notes to determine that roasted areca nuts, due to the roasting process, fall under Chapter 20. The Court emphasized that the specific mention of roasted nuts in Chapter 20 takes precedence over the general classification under Chapter 8.Treatment of Competing ArgumentsThe Department argued that roasting could be considered a form of moderate heat treatment under Chapter 8. However, the Court rejected this argument, stating that roasting involves a more intense heat treatment than what is described in Chapter 8. The Court also dismissed concerns about the method of packing and moisture content, finding the applicant's explanations satisfactory.ConclusionsThe Court concluded that roasted areca nuts should be classified under Chapter 20, specifically under HS Code 2008 19 20, as 'Other roasted nuts and seeds.'3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal ReasoningThe Court stated: 'Roasting is a process used for bringing into existence roasted nuts and as discussed earlier I find that the processes mentioned in chapter 8 do not cover roasting process.'Core Principles EstablishedThe judgment reinforced the principle that the HSN Explanatory Notes are a crucial guide for classification under the Customs Tariff Act. The Court reiterated that specific classifications take precedence over general ones, and that the process of roasting is distinct from the preservation methods outlined in Chapter 8.Final Determinations on Each IssueThe Court determined that roasted areca nuts are correctly classifiable under Chapter 20, specifically under HS Code 2008 19 20, as 'Other roasted nuts and seeds.' The ruling aligned with the HSN Explanatory Notes and previous Supreme Court judgments.