TaxTMI 
TaxTMI 
2014 (5) TMI 244
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....in the applicable rate of duty is 30% Basic Customs Duty + 2% Education Cess and 1% SHE Cess and 4% Additional Duty. The goods were of Indonesian origin and shipped from Singapore. In Singapore these goods were fumigated and sulphered. On examination the goods were found to be 'dry' betel nuts in split condition. Samples of the goods were drawn and sent to the Plant Quarantine Authority and to the Central Food Laboratory (CFL) for testing. The Plant Quarantine Authority vide their reports dated 03.12.2012 and 27.11.2012 recommended release (for consumption purposes only). Central Food Laboratory (Referral Food Laboratory at Calcutta) in its report dated 10.12.2012 found the sample to be betel nuts (physical appearance : split betel nuts); SO2 present. Report further mentioned that sample is not adulterated in respect of the quality characteristics like presence of Aflatoxin, SO2 etc. As the goods were dry betel nuts in split condition, the department sought to classify the same under tariff sub-headnig 08028020 where applicable rate of duty is 100% BCD and 4% Additional duty. DGFT vide Notification No.10(RE-2012)/2009-14 dated 14.08.2012 allows importation of split betel nuts (bot....
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....uestion but that article is 'Food'. He referred to Board's Circular No.29/97-CUS dated 31.07.1997 issued from F.No.528/27/97-CUS-TU clarifying that 'vegetable oil of edible grade' appearing in the said notification will also include the vegetable oils which are not fit for human consumption at the time of import but will be fit for human consumption after further processing. He further relied on the judgement of the Hon'ble Karnataka High Court in the case of Vishista Solvent Oils Pvt.Ltd. vs. Deputy Commissioner of Sales Tax reported in 2001 121 STC 492 Kar, under para 7 of the judgement the Hon'ble Court made it clear that edible oil is genus and both refined and non-refined are its species. Aforesaid view was confirmed by the Division Bench of same High Court in the case of State of Karnataka And Another vs. Sangam Solvent Textiles Ltd. reported in 2004 137 STC 231 Kar. 3.2 He submitted that SO2 is recognized as a class II preservative as per Food Safety and Standard (Food Products Standard & Food additives) Regulation, 2011. Any preservative, not being a preservative of Class I, may be harmful, even if it is used in permitted quantity. In the light of this, the SO2 being pre....
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....submission that no market enquiry was held before fixing of redemption fine. It is submitted that under Section 125 of the Customs Act, market enquiry is necessary as the amount of redemption fine under the said provision shall not exceed the market price less duty. He referred to the Apex Court judgement in the case of Commssioner of Customs, Mumbai vs. Mansi Impex - 2011 (270) E.L.T. 631 (S.C.), in absence of any market enquiry the Hon'ble Court upheld the Tribunal's order reducing the quantum of redemption fine and penalty. He furnished copy of few invoices bearing No.SKO/201/2012-13 dated 14.03.2013, invoice dated 10.05.2013 and dated 05.08.2013 wherein the Appellant had sold the consignments of betel nuts @ Rs.70/- to Rs.84/- per Kg. 7. The Ld.Special Counsel on behalf of the Revenue has submitted that according to Chapter Note-3 to chapter 8, dried fruit or dried nuts of this chapter may be partially re-hydrated or treated for additional preservation or stabilization by heat treatment, sulphuring etc. and therefore mere presence of SO2 will not alter the classification of the imported goods which are specifically mentioned under Chapter sub-heading 08028020 as split Areca ....
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....ce, the product could only be certified as 'safe food' and as per section 3(q) of FSS Act, 2006 in which 'Food safety' means assurance that 'food is acceptable for human consumption according to its intended use'. 8. It is the submission that since the imported goods are safe good this means that they are acceptable for human consumption according to its intended use. Since the imported goods were not unsuitable in that state (in which they were imported) for immediate consumption, they cannot be classified under Heading 0812. Ld. Special Counsel submitted that DGFT Notification dated 14.08.2012 allows the import of split betel nuts of CIF value of Rs.75/- per Kg. and above and in the present case the CIF value declared is Rs.51/- per Kg. and therefore their import requires specific licence. Since the importer has not produced any such licence import of subject goods is in violation of Foreign Trade Policy (FTP) and are liable for confiscation under Section 111(d) of the Act. 9. The Ld.Special Counsel has further submitted that 'self-assessment' system has been introduced in respect of Customs clearance of imported goods under Section 17 of Customs Act, 1962 with effect ....
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....at penalty of Rs.50.00 Lakhs imposed on the Appellant is roughly 35% of the duty amount of Rs.1,42,09,369/- sought to be evaded. Considering the gravity of the mis-declaration and the potential implication of revenue this penalty is stated to be justified. 12. After hearing both sides we find that issue involved in this Appeal is whether the goods imported are split betel nuts classifiable under CTH 0802 8020 or under CTH 0812 9090. Once the imported goods are found to be classifiable under CTH 0802 8020, their import is not allowable if their CIF value is below Rs.75 per kg. as provided in DGFT Notification (supra). 13. Relevant chapter note 3 and the competing sub-headings of chapter 8 of Customs Tariff read as under :- 3. Dried fruit or dried nuts of this Chapter may be partially rehydrated, or treated for the following purpose: (a) For additional preservation or stabilization (for example, by moderate heat treatment, sulphuring, the addition sorbic acid or potassium sorbate); (b) To improve or maintain their appearance (for example, by the addition of vegetable oil or small quantities ....
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.... is the contention of the Ld. Advocate that whether an item is classifiable under two headings, as per provisions of Rule 3 of General Rules for Interpretation of the First Schedule i.e. Import Tariff, they shall be classified under the heading which occurs last in numerical order. In this regard it is noticed that Rule 3 is applicable in case where the materials or substances are contained in mixed or composite goods whereas in the present case the imported goods are not contained in mixture. 16. Ld. Advocate submitted that as per clarification of the HS on the web Zollamter(at page 73 of the paper book), it is clearly mentioned that provisionally preserved Betel Nut is classifiable in Heading 0812 of the HSN. After going through the copy of the clarification, we find that the items unsuitable in that state for human consumption are not covered under the heading 0812. Further on going through the harmonized commodity description and coding system which is a guideline to determine the scope and content of the harmonized system sub-headings, it is noticed that the products classifiable under chapter heading 081290 are - 0812.10 - Cherries 0812.90 - Other Provided they re....