TaxTMI 
TaxTMI 
2023 (6) TMI 1011
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....ed chemically processed Supari in small cut-pieces (not split). 2. The applicant are manufacturer and merchant exporter/importer of betel nuts, having FSSAI No. 10016043001636 dated 17.10.2017 and UDYAM Registration No. UDYAM-KR03-0113863 Dt. 26.10.2021 and have never imported betel-nuts in any form. It is submitted that they intend to import 1) Processed API Betel-nut product known as Supari and 2) Processed Betel-nuts unflavoured chemically processed Supari in small cut-pieces (not split) (hereinafter referred to as the 'subject goods'), since they are having several orders from local markets for supply of processed betel-nuts known as Supari for local consumption. They intend to import the said goods through the ICD Whitefield, Bengaluru. Accordingly, comments from the jurisdictional Principal Commissioner / Commissioner of Customs were invited. 3. The applicant has submitted that they have neither imported Areca-nuts dried in any form which is covered under CTH 0802 80 for trading into India nor they have ever imported Betel-nut product known as Supari covered under CTH 2106 90 30. However, they came to know that there is dispute of classification among these two comp....
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....uts are dried for 15 days in open space and are dried by blowing hot air in mechanized processing with the use of heat exchangers. (vii).ln the seventh stage these dried nuts are once again subjected to removal of any metal/minor impurities by magnetic metal detecting machines and blowers. (viii). ln the eight stages these dried nuts are sorted out using automatic Sorting machines, thereafter they are graded using grading machines with pre-graded photo chromatic devices. (ix). During the above referred processes/stages the Oral Sub Mucosal Lesion(fibrosis) and Cancer-causing chemicals like Tannin and Arecoline contents are remarkably reduced, this changes the character of the original product i.e., Areca-nut. In this process it is not only change in the character of the Areca-nut but the new synthesis product will have reduced polysaccharides (Carbohydrate) contents and the resultant new / final product is hypoglycaemic, which is suitable for consumption by diabetic and elderly people. This product is a Synthesis of new Betel-nut processed product and is squarely covered under CTH 2106 90 30. (x). ln the above said preparation of Betel-nut it supersedes the process of API S....
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....Count. (viii). 3 Stage cutting of Betel Nuts are carried out (customized) and weightless particles are blowed by blower machine and gravity separation through Automatic Gravity Separation Machine. (ix). The nuts used in preparation of Unflavoured Supari are slightly more matured than those used for Kalipak / API Supari and over and above the characteristics of Chapter heading 0802. (x). As a result of the above process the Tannin content of fresh immature nuts is considerably reduced below 17%. During the course of this processing, the Carbohydrate content are reduced remarkably and the resultant final product is hypo-glycaemic which is suitable for consumption by elderly as well as diabetic people. Product obtained through the above stages of preparation are suitable and safe for human consumption and is duly covered under the characteristics of processed Unflavoured Betel-nuts cut into small pieces which are covered under the Customs Tariff Heading 2106 90 30. This is an additional process which is changing the characteristics of the raw Betelnuts into a processed Betel-nuts. 5. In this respect, the comments of the jurisdictional commissionerate were received on 11.10.2022....
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....ation as a preparation Q/ Chapter 20. The addition of small quantities Q/sugar does not affect the classification of fruit in This Chapter. The Chapter also includes dried fruit (e.g., dates and prunes), the exterior of which may be covered with a deposit of dried natural sugar thus giving the fruit an appearance somewhat similar to that of the crystallised fruit of heading 20.06. However, this Chapter does not cover fruit preserved by osmotic dehydration. The expression "osmotic dehydration" refers to a process whereby pieces of fruit are subjected to prolonged soaking in a concentrated sugar syrup so that much of the water and the natural sugar of the fruit is replaced by sugar from the syrup. The fruit may subsequently be air-dried to further reduce the moisture content. Such fruit is classified in Chapter 20 (heading 20.08). HSN Explanatory notes (HSN, 2022) to heading 0802 of the Chapter 8 reads as follows, This heading also covers areca (betel) nuts used chiefly as a masticatory, cola (kola) nuts used both as a masticatory and as a base in the manufacture Q/ beverages, and an edible, nutlike, spiny-angled fruit of the species Trapa natans, sometimes referred to as a ....
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....d Betel-nuts unflavoured chemically processed SUPARI in small cut pieces (Not split)" but the commodity undergoes further cutting of Betel Nuts and being sorted and graded. as per the processes described by the applicant, the freshly harvested areca nuts/fruits are being cleaned for removal of impurities and are boiled and dried. 5.6 One commodity is whole and the other is cut into pieces. The process of boiling is covered under general notes of Chapter 8 and boiling is part of "homogenisation" of the agricultural product. The general notes to Chapter 8 of HSN Explanatory Notes, 2022 is very categorical, wherein it states that "It should be noted that homogenisation, by itself, does not qualify a product of this Chapter for classification as a preparation of Chapter 21 Accordingly, mere boiling of the areca nuts/ fruits will not qualify them to be classifiable under tariff item 2106 9030. Further, it is opined that as per the definition of "Supari" under Supplementary note No. 2 to Chapter 21 of First Schedule to the Customs Tariff Act, 1975, the betel nut product should be a preparation. However, in the submission, no preparation details have been submitted except boiling with ch....
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.... in "Advances in Foods Sciences, Sustainable Agriculture and Agro-industrial Engineering (AFSSAAE) 2018, 1(2), 27-331SSN 2622-5921". This research article is with the title 'Combination of kinetic maceration digestion in the extraction of the Areca Seeds (Areca catechu L.) '. In the said article they have defined Pinang (Areca catechu L.) as one of the planation commodities from the palm group. One of the secondary metabolites contained in areca nut is tannin. Extraction of the tannin and other alkaloids (arecoline) is defined in this particular article with the chemical process for extraction of tannin and arecoline for achieving the reduced levels of these substances in areca nuts which is less harmful for the human consumption. In the introduction part under para 2, extraction of tannins from the seeds of areca nuts is discussed by using the methods of maceration & soxhletation these are the processes involving the various chemicals as solvents. They also submitted a Chapter having title 'Tannins: Extraction from Plants' which has been jointly authored by 7 scientists who are working in the 7 different universities. This is an authentic article published in 2019 ....
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....pplicant. Before any further analysis, I must note that I completely disagree with the way facts are represented before me by the applicant. Applicant has deliberately described the products along with their CTH on their own classifying both products under chapter 21. Such attempt by the applicant is not acceptable. I proceed to deliberate upon the issue on the basis of documents and submissions placed on record. The applicant proposes to import (i) Processed API Betel-nut product known as Supari and (ii) Processed Betel-nuts unflavoured chemically processed Supari in small cut-pieces (not split). Therefore, in this context, it is necessary to examine the competing chapters and tariff headings of the tariff for both the products. For the present case I find that the classification of proposed betel nuts is required to be examined by examining relevant entries in Chapter 8 and Chapter 21 of the schedule I of the Customs Tariff Act, 1975 read with HSN Explanatory notes to these relevant headings under these chapters. General Rules of Interpretation (GRI), specifically rule 1 and rule 3(a), to the Customs Tariff Act, 1975 provide further context for understanding of various tariff ent....
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.... described in their submission, appear more of a process for additional preservation or stabilization and/or to improve or maintain their appearance only and they retain their original character. 8.2 Classification claimed by the applicant for the subject goods is from the chapter 21. Chapter 21 includes within its ambit, miscellaneous edible preparations and tariff item 2106 covers Food preparations not elsewhere specified or included. Further, the supplementary note 2 to the said chapter lays down that: '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 or menthol'. 21.06- Food preparations not elsewhere specified or included. 2106.10 - .......... 2106.90 -Other 2106 90 30 --etel nut product known as "Supari" In this classification the word 'preparation' is a guiding factor. The applicant has submitted the detailed processes carried out on the raw products i.e., betel nut as described in para 4.1 and 4.2 above. As claimed by the ....
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....n the instant case are less complex and simple like de-husking, cleaning, boiling and drying. For the reasons cited above, the processes cannot be held to be amounting to manufacture so as to necessitate the movement of goods from Chapter 8 to Chapter 21." In this context the decision of the Hon'ble Calcutta High Court in the case of Killing Valley Tea Co. v/s Secretary to State (A.I.R. 1921, Cal.) is worth mentioning, wherein it was held that a tea leaf remains the same even after being subjected to mechanical processes like withering, crushing, roasting, fermenting etc. is a definite pointer to the principle that needs to be applied for classification in such matters. The same principle was also applied by the Hon'ble Supreme Court's in their decision dated 11.09.1979 in the case of D. S. Bist and Ors. wherein it was held that all agricultural produce undergoes some processing on or outside the farm in order to make it non-perishable, transportable, and marketable and just because processing is a bit longer or complicated wouldn't rob the produce of its agricultural character. The observations of the Hon'ble Supreme Court in the case of M/S. Crane Betelnut ....
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....essed and treated with employing the same methods. All throughout the said imperial papers it has been emphasised that these are the processes and methods carried out for extraction of tannin / arecoline from the areca nut seeds. In my opinion these are indeed study papers that showcase the various extraction methods, which may or may not have been employed upon the impugned subject goods since nothing is adduced to evidence the same. Further, the claim of applicant that these processes are very crucial for changing the essential characteristics of raw tendered betel nuts with the resultant betel nut product which, as argued by the applicant, is chemically processed and is most appropriately classifiable under CTH 2106 90 30 falls flat solely due to the fact that these are carried out to preserve or to stabilize and/or to improve or maintain their appearance, and in fact they aid to retain the character of betel nut. In my opinion the applicant has failed to substantiate their claim that the subject goods are chemically processed. Notwithstanding the claim of the applicant to any chemical process discussed above it is observed that the resultant product remains the same - betel nut....