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2022 (2) TMI 630
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....ulings (CAAR, in short) in New Delhi and Mumbai w.e.f. 4-1-2021, the said application was transferred to the CAAR. Mumbai in terms of Section 28F(3) of the Act read with Regulation 31 of the CAAR Regulations, 2021. Since, the statutory limitation of 3 months, as prescribed under Section 28-I(6) of the Act had expired before 4-1-2021, the date on which the two CAARs at New Delhi and Mumbai were notified, the Secretary to the CAAR, Mumbai informed the applicant to apply afresh, in terms of sub-clause (1) of clause (6) of the CAAR Regulations, 2021, if they continue to be desirous of obtaining the rulings originally sought. Accordingly, the applicant resubmitted their application on 9-3-2021. 2. The products under consideration in these proceedings have a common primary ingredient, namely, raw areca nut/betel nut and the processes undertaken to obtain the said four items, as stated by the applicant, are summarised as follows :- • API supari - On the raw whole green nut, removal of large impurities, boiling in water for 6 hours, mixing food starch, drying, polishing, and packaging; • Chikni supari - All the processes as described above plus slici....
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....he 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" has also been emphasised by the Learned Commissioner in forming the opinion that the products under consideration are correctly classifiable under Chapter 8. This report also points out that the decisions of the erstwhile AAR, in the cases of M/s. Oliya Steel and M/s. Excellent Betelnut Products [2015 (324) E.L.T. 619 (A.A.R.)], were rendered without considering the Note 3 to Chapter 8, and suggests that as such these rulings are sub-silentio and therefore, not binding precedents. These comments have been shared with the applicant. After the fresh application was filed by the applicant in March, 2021. Principal Commissioner, Nhava Sheva-I has once again been requested to give further comments, if any. However, no reply has been received. 4. The matter was listed for hearing on 8-3-2021 through virtual mode. However, communication was received from the applicant requesting for adjournment. The request was accepted and the hearing was adjourned to 15-3-2021. S/Shri Piy....
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....udicating authorities must comply with the requirements of judicial discipline and emphasised the need for giving effect to the orders of the higher appellate authorities and that orders passed by Collector (Appeals) and Tribunal are binding on all adjudicating and appellate authorities within their respective jurisdiction. Therefore, the issue that arises here is whether the AAR, constituted under the provisions of Section 28F of the Act, prior to its substitution w.e.f. 31-3-2017, is a higher judicial/quasi-judicial authority vis-a-vis the CAAR, appointed under Section 28EA of the Act, which was inserted w.e.f. 28-3-2018. The scheme of advance rulings in customs is contained in the Chapter VB of the Act. Prior to major amendments/deletions/substitutions to the said chapter in the Finance Acts of 2017 and 2018, the advance rulings were to be given by the AAR which was to comprise of a chairperson, who was to be a retired judge of the Supreme Court, an officer of the Indian Customs and Central Excise Service who is qualified to be a member of the Board, and an officer of the Indian Legal Service who is, or is qualified to be, an additional secretary to the Government of India. Sect....
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....ce. 6. One other contention that has been raised before me is that while the importers who have obtained advance rulings from the erstwhile AAR are able to import the goods involved in the present proceedings by classifying them under sub-heading 2106 90 30, it would be unfair to deprive the applicant of the same treatment. In the case of Mahim Patram Pvt. Ltd., reported at 2007 (7) S.T.R. 110 (S.C.), the Hon'ble Supreme Court observed the following, '23. Sales tax is an indirect tax. It is leviable on transfer of goods. It is, however, well-settled that while construing a taxing statute one has to look merely at what is clearly said. [See speech of Viscount Simon referred to in State of West Bengal v. Kesoram Industries Ltd. & Others - (2004) 10 SCC 201], wherein it was noticed : "105. Justice G.P. Singh in Principles of Statutory Interpretation (8th Edn., 2001) while dealing with general principles of strict construction of taxation statutes states : A taxing statute is to be strictly construed. The well-established rule in the familiar words of Lord Wensleydale, reaffirmed by Lord Halsbury and Lord Simonds, means : The subject is not ....
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....evant chapter and section notes, as well as the explanatory notes to the harmonised commodity classification system of the World Customs Organisation. The relevant portions of my findings in that case are reproduced below :- "9. In the aforementioned backdrop, it is necessary to examine the contending chapters of the tariff. The relevant notes to chapter 8 lay down the following :- '3. Dried fruits or dried nuts of this Chapter may be partially rehydrated, or treated for the following purposes : (a) For additional preservation or stabilization (for example, by moderate heat treatment, sulphuring, the addition of sorbic acid or potassium sorbate); (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.' In the chapter 8, areca nuts, whole, split, ground, and two residuary sub-headings are accommodated under 0802 80 10, 20, 30, 90, and 0802 90 00, respectively. 9.1 Chapter 21 includes within its ambit, miscellaneous ed....
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....l that some of the processes are nothing but mere cleaning or removal of impurities, e.g., removal of small/large impurities, blowing of weightless particles, gravity/magnetic separation etc. It is nobody's case that undertaking of such activities would result in a substantially different commodity than the starting raw material, so as to be called as a preparation. The same would be the conclusion with respect to garbling, which refers to the separation of the unwanted portions from the desired end products or sterilization to remove/kill bacteria. Some of the products, namely, chikni/unflavoured/flavoured supari are subject to cutting or slicing. The relevant portion of the HSN as reproduced above makes it clear that even after cutting/slicing, the resultant products remain classified under chapter 8. Similarly, processes like drying, sorting, polishing, packaging etc. do not alter the nature of the product in any significant manner to necessitate a change of classification. The next group of processes, i.e., boiling or roasting in fire gas rotary roasters, when examined in the light of the relevant notes to chapter 8, also leads to the conclusion that even after such proce....
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..... General Mills Ltd. (supra) and the passage from the American Judgment (supra) become meaningful. The observation that manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour 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."                      (Emphasis supplied) 14. In the case of Azam Laminators Pvt. Ltd., reported at 2019 (367) E.L.T. A22 (Tri. - Chennai), where scented betel nut was being manufactured by cracking of dried betel nut into small pieces, and thereafter, gently heating it with addition of vanaspati oil, sweetening and flavouring agents and marketed in small pouches as Nizam Pakku (in Tamil)/Betel Nut (in English), the Chennai bench of the Hon'ble CESTAT held the resultant product classifiable under sub-heading 0802 90 19 of central excise tariff ....
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....the products, namely, API supari, chikni supari, unflavoured supari, flavoured supari, and boiled supari." 8. My conclusions in the said proceedings remain equally valid in the present proceedings considering the fact that the products in question are identical. The arguments of the Learned Counsel for the applicants that the products intended for import by them do not merit classification under Chapter 8 of the Customs Tariff need to be rejected when the notes to Chapter 8 are read together with the relevant HSN Explanatory Notes. So far as the argument that according to the Supplementary Note 2 to Chapter 21 the products under consideration clearly merit classification under Chapter 21 is concerned, it is very clear that so far as API supari, chikni supari and unflavoured supari are concerned, there is no doubt regarding inapplicability of the said note to these products as has been discussed in detail in my earlier ruling on this issue which has been reproduced above. The only product in respect of which the applicability of the said supplementary note has to be considered is flavoured supari. The decision of the Hon'ble Calcutta High Court in the case of Killing Valley ....