TaxTMI 
TaxTMI 
2006 (6) TMI 395
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....e wake of enactment of CETA (Amendment) Act, 2004 on 28-2-2005. CSH 21062 hitherto adopted by the appellants reads as betel nut product known as supari, whereas the new CSH they sought to adopt reads as betel nut 'other', viz. betel nuts in forms other than whole, split, powdered and ground. As per the impugned order, the subject item is classifiable under CSH 08029019. 3. The product, "Nizam Pakku", is manufactured by pulverizing dried betel nuts into pieces and treating those pieces with vanaspathy, sugar, saccharin, glucose syrup, cloves, cardamom, and at times also mixing with borneoflakes. According to the respondents, the broken nuts are mildly roasted with vegetable oil and treated with the other materials to produce "scented supari". In the process, the pieces of nuts mildly heated with vegetable oil are flavoured with spices, sweetened with sugar and saccharin, perfumed with menthol and then packed in small paper pouches in which it is sold. The paper packets bear the name "Nizam Pakku" (pakku is tamil for betel nut and Nizam, the brand name). The packets also carry the description "sugantha supari" in a few vernacular languages and its English version "scented bet....
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....he following arguments to canvass the classification discarded by the lower appellate authority. The subject product was marketed by the respondents as ready to eat food product and they had been classifying the same under the CH 2106 before the CETA (Amendment ) Act, 2004 was passed. The product was known as scented betel nut or scented supari. From 28-2-2005, the following supplementary note defining betel nut product known as supari was introduced in Chapter 21 :- NOTE 2. "In this chapter "Betel nut product known as supari" means any preparation containing betel nuts but not containing any one or more of the following ingredients, namely lime, katha (catechu) and tobacco, whether or not containing any other ingredients, such as cardamom, copra and menthol." 8. On 12-4-2005, in CCE v. Crane Betel Nut Powder Works, Bangalore Bench of the Tribunal vide Final Order No. 562/2005 and in appeal against that order, the honourable Andhra Pradesh High Court in their judgment dated 5-9-2005 in Central Excise Appeal No. 20 of 2005 had rejected the claim of M/s. Crane Betel Nut Powder Works to classify a similar product produced and marketed by them as unmanufactured betel nuts....
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....fect from 28-2-2005 did not affect the existing classification of various commodities. 12. With effect from 28-2-2005, the erstwhile Chapter 8 was enlarged to cover, inter alia, various edible nuts in various forms such as shelled, whole, split, ground etc. under separate and specific headings. Thus betel nut was covered under Chapter Heading 0802 with sub-headings for betel nuts whole, split, ground etc. The relevant entries under CSH 0802 90 for betel nuts and other nuts not mentioned by name in the tariff were as follows: "Tariff item Description of goods Unit Rate of duty 1 2 3 4 Betel Nuts 0802 90 11 -----whole Kg. Nil 0802 90 12 -----Split Kg. Nil 0802 90 13 -----ground Kg. Nil 0802 90 19 -----Other Kg. Nil 0802 90 90 -----Other Kg. Nil 13. Note 3 was introduced to Chapter 8 w.e.f. 28-2-2005 to the effect that treatment of betel nuts for preservation and to improve appearance did not alter its classification as betel nuts. These notes existed all along in the HSN explanatory notes which governed classification of the impugned goods. Cover....
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....d in Chapter 8 on 28-2-2005 and the revision of classification was sought owing to changes in the Tariff Act. Since the amendment to the act, betel nuts (in various physical forms) were specifically covered under Heading 0802. As per the ratio of the Gujarat High Court in the case of Darshan Hosiery Works v. UOI [1980 (6) E.L.T. 390 (Guj.)] such food preparations alone would be covered by Chapter Heading 2106 which were "not elsewhere specified or included", whereas the subject product figured in Chapter 8 as betel nuts. The decisions on the subject product cited by revenue were rendered before the item "betel nuts" was enlisted (by name) in a Tariff heading and therefore, the earlier decisions did not apply in the changed legal context. There was no estoppel against the correct classification as held by the apex Court. They were producing betel nut pieces and not powder and were not marketing the same as ready to eat product. The amendment to the tariff with effect from 28-2-2005 also introduced new Chapter Notes relevant to the issue on hand. The betel nuts retained the character of dried betel nuts even after subjecting them to various processes to produce the impugned goods. Th....
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....tion in the Central Excise Tariff under Chapter 8. In their case, betel nuts were not roasted but mildly heated for mixing with vanaspathy. The HSN covered betel nuts under heading 0802 and described its use as masticatory. Their product betel nuts were also used as masticatory. Therefore, the product fell under Chapter 8. It was also submitted that the judgment in the case of CCE v. Crane Betel Nut Powder Works delivered by the Hon'ble High Court of Andhra Pradesh and the Bangalore Bench of the Tribunal were rendered prior to the introduction of Note 3 to the Chapter 8 and so were not relevant to the issue on hand. Moreover, in the present tariff "betel nuts" was specifically mentioned under Chapter 8. It was to be noted that the heading 2106 covered only food preparations not elsewhere specified or included. The betel nuts purchased by the respondents were used as masticator. Their product was therefore masticator. There was no change in the name, character or use of betel nut purchased by the appellants and the betel nuts made and sold by them. The processes involved did not therefore amount to manufacture. Since the betel nut was specifically mentioned in Chapter 8 it could not....
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....s existed in the explanatory notes to the Chapter 8 in HSN and the present Heading for edible nuts was in Chapter 8 of the CETA Schedule for a very long time. 20. Classification of excisable goods is governed by the Interpretative Rules. As per Rule 1, classification shall be determined according to the terms of the Heading and any relative Section or Chapter notes and, provided such Headings or Notes do not otherwise require, according to the other Rules. If for any reason the classification of the product appears appropriate under more than one heading, the heading which provides the most specific description has to be preferred to headings providing a more general description. 21. In the subject case the rival headings canvassed for the product are 08029019 and 21069030. Chapter Note 3 to Chapter 8 provides that the dried nuts of that chapter may be treated for additional preservation or stabilisation and/or to improve or maintain their appearance by addition of vegetable oil or small quantity of glucose syrup etc. provided the dried nuts do not lose their character as dried nuts. Chapter sub-heading 08029019 "other" covers betel nuts other than whole, spli....
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....aining betel nut, but not containing any one or more of the following ingredients, namely, lime, katha(catechu) and tobacco whether or not containing any other ingredients, such as cardamom, copra and menthol." The subject product fully conforms to the description preparation containing betel nut along with several other permitted ingredients. There cannot be any dispute that the impugned item is a product manufactured with betel nuts as the main raw material, sold and known in the market as "Supari". In G.S. Auto International Ltd. v. CCE, Chandigarh [2003 (152) E.L.T. 3 (S.C.)] the Apex Court ruled that the goods are to be classified as to how they are referred to in the market by those who dealt with them. Therefore, the impugned goods are correctly classifiable under Chapter Sub-Heading 21069030. 25. In the case of M/s. Crane Betel Nut Powder Works, the Bangalore bench of the Tribunal, while deciding if a similar product manufactured by M/s. Crane Betel Nut Powder Works, constituted manufacture as defined in the Central Excise Act made the following observations. "In our view, the end product of the above process is surely different from the original material. Defini....