TaxTMI 
TaxTMI 
2019 (3) TMI 782
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....69030, attracting duty of 8% (effective tariff rate under Sl.No.2 of Notification No.3/2006 dt.01.03.2006). Assessee preferred appeal with the Commissioner (Appeals) who vide impugned order No.51/2012 dt. 17.02.2012 upheld the order of the original authority. Hence assessee has filed Appeal E/243/2012. 4. During the said impugned period, the betel nut powder known as 'supari' was manufactured by cracking of dried betel nuts into small pieces and gently heating pulverised betel nut with vanaspati and then coating the same with sweetening and flavouring agents and the resultant product is then packed in small pouches and marketed as 'Nizam Pakku'. Department took the view that the scented betel nut, after introduction of 8 digit classification code w.e.f. 28.02.2005 was rightly classifiable under CETH 21069030. Hence following Show Cause Notice /Statements of Demand were issued to the assessee as under : (i) SCN No.3/2014 dt. 04.02.2014 Period 07.07.2009 to 30.06.2013 Duty demand proposed - Rs.2,46,89,308 (ii) SOD No.33/2014 dt. 31.07.2014 Period July 2013 to Jan'2014 Duty demand proposed - Rs.85,83,607/- (iii) SOD No.16/2015 dt.03.02.2015 Period Feb' 2014 ....
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.... read as "betel nut powder known as supari" has been changed to "Betel nut product known as supari" and both these phrases have been defined in same manner, which indicates that there is no difference between these phrases. The said definition is reproduced below. 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. (vi) Even after the changes w.e.f. 7/7/2009, what is specifically excluded from Chapter 8 is "betel nut product known as supari" which is also defined as above. Even without this note, a product which satisfies the definition of "betel nut product known as supari" cannot be classified under Chapter 8 but under the Chapter 21 only, which has a specific heading for this. This note has been added to bring more clarity. Though some changes were brought forth w.e.f. 07.07.2009, it may be noted that Note 3 (b) of Chapter 8 is retained according to which so long as the essential character of the betel nut is maintained, the same shall re....
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....tes 3(b) of chapter of the CETA, 1985. According to the Chapter notes 3(b) of the Chapter 8, "Dried fruit or dried nuts of this chapter may be partially dehydrated or treated for the following purposes : (a) ........ (b) to improve or maintain their appearance (for example by the addition of vegetable or small quantity of glucose syrup), provided that they retain the character of dried fruit dried nuts‛ (ii) From the above, it may well be observed that the processes given under Note 3(b) of Chapter 8 to the First Schedule to the Central Excise Tariff Act, 1985, (CETA for short) are very much restrictive, limited and specific for definite purposes or processes carried on the betel nut, areca nut in different forms but certainly not on other processed products of betel nuts. (iii) Whereas in the instant case, the betel nuts are subjected to various processes, including sweetening and flavouring for rendering the products marketable. Hence, the impugned goods do not fall under the scope of the processes covered under Note 3(b) of the Chapter 8 of the CETA and thereby it does not fall under Chapter 8 of the CETA. (iv) The process of adding or mixing sweetening agen....
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....he contention that even after the amendment the product under question will remain under the Chapter 8 is accepted then the amendment made to Chapter 21 to exclude Betel Nut product known as 'Supari' from Tariff Item 2106 90 30 from Chapter 8 and Note 6 to Chapter 21 to declare certain processes as amounting to manufacture would become redundant, which was not the intention of the legislature as is evident from the clarification of the Board in the Circular D.O.F.No.334/13/2009-TRU dated 06.07.2009. (ix) Impugned order dt. 17.02.2012 in respect of Appeal E/243/2012 filed by assessee upholding the view that scented beetle nut is rightly classifiable under CETH 21069030 does not call for any interference. 6.3 In respect of Department Appeal E/40791/2016, (i) Ld. AR reiterates the grounds of appeal and submits that for the very same grounds and arguments put forth in regard to Appeal E/243/2012, the dropping of consequential demands of Central Excise duty for various periods by the Commissioner is not legal, correct or proper. (ii) Once it is held that the impugned product namely scented betel nut will only fall under Chapter Heading 21069030, the grounds and reasons given....
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....it Rate of duty 0802 Other nuts, fresh or dried, whether or not shelled or peeled - Almonds - Hazelnuts or filberts - Walnuts - Chestnuts - Pistachios - Macadamia nuts 0802 90 - Other --- Betelnuts 0802 9011 ---- Whole 0802 9012 ----Split 0802 9013 ----Ground 0802 9019 ----Other CHAPTER 21 MISCELLANEOUS EDIBLE PREPARATIONS Supplementary notes : 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. Tariff item Description of goods Unit Rate of duty 2106 Food preparations not elsewhere specified or included 2106 9....
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....known as "supari" KG 10 % 8.6 The department has taken a stand after amendment w.e.f. 7.7.2009, the impugned product would get classified under CETH 21069030 for the following reasons : (i) As per Note 1 (b) of Chapter 8, this Chapter does not cover betel nut product known as supari of item 2106 9030; and (ii) As per Note 6 to Chapter 21, "In relation to product of tariff item 2106 9030, the process of adding or mixing cardamom, copra, menthol, spices, sweetening agents or any such ingredients other than lime, katha (catechu) or tobacco to betel nut, in any form, shall amount to manufacture". 8.7 On the other hand, Ld. Advocate has been at pains to point out that a careful reading of the relevant tariff heading would reveal that as per note 3 (b) of Chapter 8 dried nuts, of that chapter may be partially rehydrated, or treated for the purposes inter alia : (b) to improve or maintain their appearance (for example by the addition of vegetable oil or small quantities of glucose syrup), provided that they retain the character of dried fruit or dried nuts. Thus, they will continue to be classified in Chapter 8 provided they retain the character of betel nut. Ld. A....
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....t as supari. We also find credence in the contention of the Ld. Advocate that the impugned product is just betel nut and not 'betel nut products known as suprari'. The betel nut per se would therefore come within the ambit of CETH 08.01 as "Edible Fruit and Nuts; Peel of Citrus Fruit or Melons" and not under 21.07 as "Miscellaneous Edible Preparations" 8.9 This being so, the classification of the product cannot be dragged into Chapter 21 of CETA and, in particular, sought to be classified under CETH 21069030 as betel nut product known as suprai. In consequence the product satisfying the requirements of Chapter Note 3 (b) of Chapter 8 will therefore necessarily fall under 08029019 as claimed by the assessee. In arriving at this conclusion, we also follow the ratio laid down by the Hon'ble Apex Court in Crane Betel Nut Powder Works Vs CC & CE Tirupathi - 2007 (120) ELT 171 (SC). The relevant portions of the said judgment are reproduced for ready reference : "21. Appearing for the Revenue, Mr. B. Datta, learned Addl. Solicitor General, reiterated the stand taken by the Department before the Tribunal as also the High Court. He reiterated that the very process of crushing the bete....
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....ble commodity and is, therefore, excisable under Section 2(d) of the aforesaid Act. Dr. Padia referred to paragraph 11 of the said judgment which refers to the two clauses contained in Section 2(f) of the 1944 Act and instead of setting out the activities in respect of different tariff items, Sub-clause (ii) simply states that any process, which is specified, in Section/Chapter Notes of the Schedule to the Tariff Act, shall amount to "manufacture". It was also held that under Sub-clause (ii), the Legislature intended to levy excise duty on activities that do not result in any new commodity. In other words, if a process is declared to be "manufacture" in the Section or Chapter Notes, it would come within the definition of "manufacture" under Section 2(f) and such process would become liable to excise duty. 25.Dr. Padia then referred to the decision of this Court in Kores India Ltd., Chennai v. Commissioner of Central Excise, Chennai, reported in (2005) 1 SCC 385, which involved the cutting of duty-paid typewriter/telex ribbons in jumbo rolls into standard predetermined lengths. It was held that such cutting brought into existence a commercial product having distinct name, charact....
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....abour and manipulation is apposite to the situation at hand. The process involved in the manufacture of sweetened betel nut pieces does not result in the manufacture of a new product as the end product continues to retain its original character though in a modified form. 31.In our view, the Commissioner of Customs and Central Excise (Appeals) has correctly analysed the factual as well as the legal situation in arriving at the conclusion that the process of cutting betel nuts into small pieces and addition of essential/non-essential oils, menthol, sweetening agent etc. did not result in a new and distinct product having a different character and use." 8.10 We further find that the Tribunal relying upon the aforesaid Supreme Court judgment in Crane Betel Nut Powder Works (supra) for the period after introduction of 8 digit classification, dismissed the appeal of Revenue against the order of Commissioner (Appeals) holding that the product betel nut pieces is rightly classified under CETH 08029012. In appeal, the Hon'ble Apex Court affirmed the decision of the Tribunal reported in 2010 (256) A17 (SC). 8.11 In respect of the very same product 'Nizak Pakku' manufactured by the v....