TaxTMI 
TaxTMI 
2023 (6) TMI 906
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....aged in the business of trading of Pan Shop related spices and betel nuts and indicated that they propose to import (1) Menthol Scented Sweet Supari; and (2) Flavoured and coated Illaichi (hereinafter referred to as the 'subject goods'). There is huge demand and business potential in import of betel nut product - bulk cutting sweet supari for use of the manufacturers of branded sweet supari as well as menthol flavoured Illaichi as used in spice-based mouth freshener. They intend to import the said goods through the seaport at Nhava-Sheva, Mumbai. Accordingly, comments from the jurisdictional Principal Commissioner/Commissioner of Customs were invited. However, no comments were received from the jurisdictional authority. 3. The applicant has submitted detailed information regarding the concerned subject goods and the procedure for manufacture of the same. The raw whole, split or ground betel nut (areca nut) provisionally preserved or not, as an agricultural product, is classifiable under CTH 0802. Arecoline is a mild parasympathomimetic stimulant alkaloid found in the areca nut, the fruit of the areca palm. It can bring a sense of enhanced alertness and energy, euphoria and ....
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.... process does not contain any materials like Lime, Katha (catechu) and tobacco. 3.2 Also, in terms of the indicated additives like sweeteners, flavours and menthol, the product is classifiable under Item 2106.90.30 in terms of Supplementary Note 5(b) to Chapter 21 which reads as : 5. Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter alia, includes : (b) preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption; Indian buyers of the applicant as industrial manufacturers of branded sweet supari may or may not further improve the products with other additives like scents and saffron before packing it in small packages for wholesale and retail, with their brand. 3.3 Flavoured and coated Illaichi : (Spice based mouth freshener - FSSAI Category 5.2.4.2) : The applicant submitted that the raw Cardamom as a mild spice has been used as a mouth freshener since ages. Preparation of Cardamom seeds coated with edible colours, silver, menthol and artificial sweetener and aromatic additives is also used as an edible preparation mouth f....
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....is a value-added product and falls under sub-heading 2106. It accordingly attracts GST at the rate of 18% (S. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017). 3.6 The applicant submits and prays that in view of the above, the Hon'ble Authority may kindly issue the advance ruling on classification of (1) menthol/scented sweet cutting supari flavoured under CTH 2106.90.30; and (2) coated illaichi under CTH 2106.90.99 at an early date. 4. Personal hearing in the matter was held on 22-9-2022 wherein Shri. Anil Kumar Mishra, Advocate represented the applicant. However, no one was present for the department/jurisdictional Commissionerates. Shri Mishra re-iterated the submission made at the time of filing of CAAR-I and invited attention to the GST Council's decision as well as C.B.I. & C. Circular based on GST Council's decision issued in October, 2021. He requested to grant 15 days' time to file additional reply in support of applicant's claim to classification. 4.1 According, the applicant has filed additional submission on 3-10-2022 bringing forth the following points. (i) Value additi....
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....nd reference in this regard is invited to Agenda of 45th Meeting of GST Council and the recommendation of the fitment committee available at https://gstcouncil.gov.in/sites/default/ files/Agenda/Detailed Agenda Note - 45thGSTCM Vol2.pdf which confirms classification of the Sweet Supari under 2106.90.30 and IGST rate as 18%. Subsequently C.B.I. & C. issued Circular No. 163/19/2021-GST, dated 6th October, 2021 clarifies the position of the Union Government to be in conformity of the GST Council. (vi) Relevance to Customs Tariff : Kind reference is invited to the explanations (iii) and (iv) appended to IGST Rate Notification 1/2017-IGST (Rate), dated 28-6-2017 which read as below : (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation ....
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....s for both these products. 5.1 Insofar as scented sweetened supari is concerned the contending classifications can be from Chapter 8 and Chapter 21 of the Customs Tariff Act, 1975. 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 CTHs 0802 80 10, 20, 30, 90, and 0802 90 00, respectively. In short, nuts including betel nut, are either partially rehydrated or treated for additional preservation or stabilization or for improving or maintaining appearance of the original product. In view of processes to which the applicant's im....
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....urther analysis of this classification issue let me examine the legal framework for deciding classification of flavoured and coated illaichi (cardamom). 5.3 Insofar as flavoured and coated illaichi (cardamom) is concerned the contending classifications can come from the Chapters 9 and 21 of the Customs Tariff Act, 1975. Chapter 9 covers coffee, tea, mate and spices and Heading 0908 covers Nutmeg, Mace and Cardamoms. The relevant extract from the Tariff headings in Chapter 9 is reproduced below : - Cardamoms : 0908 31 -- Neither crushed nor ground : 0908 31 10 --- Large (amonum) 0908 31 20 --- Small (ellettaria), alleppey green 0908 31 30 --- Small, coorge green 0908 31 40 --- Small, bleached, half bleached or bleachable 0908 31 50 --- Small, mixed 0908 31 90 --- Other The Notes to the chapter provide as follows : 1. Mixtures of the products of headings 0904 to 0910 are to be classified as follows : (a) mixtures of two or more of the products of the same heading are to be classified in that heading; (b) mixtures ....
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....dings 09.04 to 09.10; The Supplementary Note 5(b) to Chapter 21 reads as "5. Heading 2106 (except Tariff Items 2106 90 20 and 2106 90 30), inter alia, includes : (b) preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption". Further, relevant tariff item provides as 2106 Food preparations not elsewhere specified or included 2106 10 00 - Protein concentrates and textured protein substances 2106 90 - Other : 2106 90 20 --- Pan masala 2106 90 30 --- Betel nut product known as "Supari" --- Other : 2106 90 91 --- Diabetic foods 2106 90 99 --- Other 6. Now let me turn to the other legal grounds put forth by the applicant. Applicant has referred to the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 issued based on the recommendations of the GST Council in its 45th meeting held on 17th September, 2021 for clarifying classification aspects of the scented sweet supari and flavoured coated illaichi. I find that both the products would be subjected to the processes b....
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.... 1975 is reproduced below : Section 3. Levy of additional duty equal to excise duty, sales tax, local taxes and other charges. (7) Any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent as is leviable under section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8) or sub-section (8A), as the case may be. This provision has been substituted (w.e.f. 1-7-2017 vide Notification No. 25/2017-Cus., dated 28-6-2017) by S. 4 of the Taxation Laws (Amendment) Act, 2017 (18 of 2017). 6.3 Contents of the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 are applicable to the present case by virtue of legal framework discussed supra. Classification and applicable rate of duty under GST are clarified in the paras reproduced from the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 from F. No. 190354/206/2021-TRU. By virtue of application of Section 3(7) of the Customs Tariff Act, 1975 "any article which is imported into India shall....