TaxTMI 
TaxTMI 
2023 (6) TMI 1011
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....ri and 2) Processed Betel-nuts unflavoured 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 di....
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.... various industrial applications. (vi). ln the sixth stage these boiled tender nuts 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 cove....
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....ected to removal of any metal /minor impurities by magnetic metal detecting machines and blowers. (vii). Sterilization process is undertaken to remove the Bacterial 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 ....
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....zing point until it is frozen throughout. Fruit and nuts of this Chapter may be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled. It should be noted that homogenisation, by itself does not qualify a product of this Chapter for classification 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 o....
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....omatic Sorting machines and graded using grading machines with pre-graded photo chromatic devices. In this stage, the areca fruits/nuts are sorted and graded and the resultant commodity is known as "Processed API Betel-nut product known as SUPARI". 5.5 The process is same for second commodity viz., 'Processed 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 ta....
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....e - Vol 2021, (Article ID 180808, 7 pages). In the said article it has been analysed by the researcher that the Betel Nut is the dried seed of the fruit from the Areca Palm tree, which is cultivated particularly in South and South-East Asian countries. In addition, they also submitted the second original research article which is published 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 usin....
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....f Chapter 8 of the Customs Tariff Act, 1975 and the processes are duly covered under CTH 2106 90 30. 8 I have gone through the above submissions and all the documents placed before me. I have also gone through the comments from the jurisdictional commissionerate and have taken on record the rejoinder and additional write-up filed by the applicant. 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 re....
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....ption (whether as presented or after processing); whether they are fresh, frozen (whether or not previously cooked by steaming or boiling in water) or dried (including dehydrated, evaporated or freeze-dried) and whether the nuts could also be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled. The processes to which the subject goods would be subjected to, as 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 mentho....
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.... "Moreover, it can be seen that the impugned products in the case of Crane Betel Nut Powder Works (supra) have undergone much more elaborate processes like cutting into different sizes; adding essential non-essential oils, menthol, sweetening agents etc. Even when the physical appearance undergoes' a change, Apex Court held that the processes undertaken do not amount to manufacture. Whereas, the processes undertaken in 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 th....
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....papers are on the subject of extraction of Tannin from areca nuts, and the studies have been carried out under a controlled environment apparently aimed to find the best procedure of extraction in producing good quality tannins in an effective way to increase extract yield with a fairly small operational risk. Further, nowhere it has been categorically brought out that the subject goods, proposed to be imported by the applicant, are processed 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....
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....d or shelled. Further, it is also provided that the addition of small quantities of sugar does not affect the classification of fruit in this Chapter.' Thus, the HSN explanatory notes to Section I indicate that chapter 8 covers nuts intended for human consumption (whether as presented or after processing); whether they are fresh, frozen (whether or not previously cooked by steaming or boiling in water) or dried (including dehydrated, evaporated or freeze-dried) and whether the nuts could also be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled. Further, according to the description of "Supari" as provide under Supplementary Note No.2 to Chapter 21 of First Schedule to the Customs Tariff Act, 1975, the "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". However, in the applicant's submissions no preparation details are forthcoming in case of first product namely Processed API Betel-nut product known as Supari. For second product n....