TaxTMI 
TaxTMI 
2023 (8) TMI 492
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....to the Customs Tariff Act, 1975 (hereinafter referred to as "CTA"). 2. Brief Facts: (a) The respondents / importers filed applications for Advance Ruling in CAAR-1 on 29.09.2022, 15.12.2022 and 31.01.2023 respectively, seeking ruling on the classification of "roasted areca nuts / betel nuts". The respondents also submitted applications in CAAR-1 on the same issue pertaining to some other jurisdictional Commissionerates of Customs. (b) The respondents stated in the applications that they intend to import "roasted areca / betel nuts (whole, split, and cut)" from Burma, Indonesia, Sri Lanka, Singapore, etc. (c) The respondents had set out the various processes, which the areca nuts are subject to before import, and the same as stated in CMA.No.600 of 2023 are extracted hereunder for ready reference: "1. De-husking the raw betel/areca nut and drying the same before being fed into the roasting oven; 2. Feeding the fresh areca nuts into a seed roasting oven, heating up to 100 degreeCelcius and roasting the fresh areca nuts in an oven of the seed roasting machine; 3. Take the areca nuts out of the oven, cooling at room temperature and feeding back in....
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....tially altered due to roasting and boiling. It was thus submitted that roasted betel / areca nut is distinct from betel nut. iii. Reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Crane Betel Nut Powder Works v. Commr. of Customs & Central Excise, (2007) 4 SCC 155 and the order of the Tribunal in the case of S.T. Enterprises v. Commissioner of Customs, reported in (2021) 378 ELT 514 apart from a number of Advance Rulings. iv. Roasting is not meant for preservation or stabilization or to improve or enhance/maintain the appearance of the product. (g) The Advance Rulings Authority after considering the materials placed, proceeded to rule that roasted areca / betel nuts -whole, split and cut fall under Chapter Heading 2008, specifically, under Tariff entry 2008 19 20: "other roasted nuts & seeds" of Chapter 20 of the the First schedule of CTA, on the strength of the following reasons: i. That the goods covered under the applications are roasted betel nuts. ii. That the nuts are roasted at temperatures of 130 to 150 degree Celsius. The process brings about change in physical and chemical characteristics of the....
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....der of the Advanced Rulings Authority in classifying roasted betel nut under CTH 2008 is in consonance with the HSN Explanatory Note which has been consistently held by the Hon'ble Supreme Court to be of great value in determining classification under CTH, and thus, the impugned ruling does not warrant any interference. (c) That the decisions rendered in the cases of Crane Betel Nut and S.T. Enterprises and the various Advance Rulings referred to by the appellant are inapplicable to the issue on hand. (d) That the classification of roasted nut under Chapter Heading 2008 stands covered by a series of decisions of the Apex Court and Advance Rulings. 5. Heard both sides. Perused the material on record. 6. The common question that arises for consideration in all these appeals is whether the ruling of the Customs Authority for Advance Rulings that "roasted betel nut - whole, split and cut", merit classification under heading 2008 and more specifically under sub heading 2008 19 20 of the First Schedule to the CTA, warrants interference. 7. Before proceeding further, it may be necessary to refer to the General Rules for Interpretation, relevant Tariff Entries al....
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....y to ensure their provisional preservation during transport or storage prior to use (forexample, sulphurdioxidegas, in brine, insulphur water or in other preservative solutions) ,provided they remain unsuitable for immediate consumption in that state." Tariff Item Description of goods Unit Rate of duty Standard Preferential Areas (1) (2) (3) (4) (5) ...... ............ ..... ...... ....... 0802 Other nuts, fresh or dried, whether or not shelled or peeled 0802 80 - Areca nuts: 0802 80 10 --- Whole kg. 100% 90% 0802 80 20 --- Split kg. 100% 90% 0802 80 30 --- Ground kg. 100% 90% 0802 80 90 --- Other kg. 100% 90% 0802 90 00 - Other kg. 100% Chapter 20 Preparations of vegetables, fruit, nuts or other parts of plants Notes 1. This Chapter does not cover: (a) vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, 8 or 11; (b) food preparations containing more tha....
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.... 3. Dried fruit or dried nuts of this Chapter may be partially rehydrated, or treated for the following purposes: (a) for additional preservation or stabilization by moderate heat treatment, sulphuring, the addition of sorbic acid or potassium sorbate); (b) to improve or maintain their appearance by the addition of vegetable oil or small quantities of glucose syrup), provided that they retain the character of dried fruit or dried nuts. ... The Chapter further excludes: (i) Fruit flour, meal and powder (heading 11.06). (ii) Edible fruit and nuts and peel of melons or citrus fruit, prepared or preserved otherwise than as described above (Chapter 20). (iii) Roasted fruit and nuts (e.g., chestnuts, almonds and figs), whether or not ground, generally used as coffee substitutes (heading 21.01) Chapter 20 This Chapter includes: (1) Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by vinegar or acetic acid. (2) Vegetables, fruit, nuts, fruit-peel and other parts of plants preserved by sugar. (3) Jams, fruit jellies, marmalades, fruit or nut purées, fruit or n....
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....s meant to cover areca nut whole, split, grounded including dried nuts subject to the process of drying which is by way of additional preservation or stabilization by moderate heat treatment, sulphuring, the addition of sorbic acid or potassium sorbate, Chapter 20 covers roasted nuts. Apparently, legislature has for the purpose of classification treated drying and roasting as processes which are distinct / different and importantly, relevant in determining whether the nuts would fall under CTH 0802 or under 2008. The submission of the learned counsel for the appellant that roasted areca nut is in common parlance treated as areca nut, in other words, by the process of roasting a different commercial commodity does not emerge and thus, keeping in view the restrictive language employed in Chapter 2008 viz., exclusion of items covered under CTH 8, the roasted areca nut would fall under CTH 0802, is misplaced. The said submission that the products that are commercially the same, must be classified under one heading, overlooks the fact that legislature is competent to classify differently or make a distinction even though the products in question are not commercially different. In this r....
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....difference in character and identity between the two. This argument, we are afraid, is not well founded. It is based on a total misapprehension in regard to the true object and intendment of entry 13-a and it erroneously seeks to project that entry in the interpretation and application of Section 5 sub-section (3) of the Central Sales Tax Act. In fact Entry 13-a as amended, supports the argument that even processed or frozen shrimps, prawns and lobsters are known commercially and in the trade as "shrimps, prawns and lobsters". It is because Entry 13-a as it stood prior to its amendment, would have, on the plain natural meaning of the expression "shrimps, prawns and lobsters", included processed and frozen shrimps, prawns and lobsters, that it became necessary for the State legislature to amend Entry 13-a with retrospective effect so as to exclude from the scope and ambit of that entry processed or frozen shrimps, prawns and lobsters. Now when the State legislature excluded processed or frozen shrimps, prawns and lobsters from the ambit and coverage of Entry 13-a, its object obviously was that the last purchases of processed or frozen shrimps, prawns and lobsters in the State should....
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....at legislature was competent to classify the products separately/differently even though they are commercially one and the same. Thus, the question of examining whether arecanut/betel nut and roasted areca nut are commercially the same or otherwise, is an enquiry which is alien in determining the classification which ought to be made on the basis of the Tariff entries. Once legislature has chosen / provided for separate and independent entry under the Tariff for roasted areca nut, it is no longer necessary nor open to examine whether roasted areca nut is commercially the same as areca nut or whether the process of roasting results in emergence of a commercially new/different commodity having a different name, character and use. It really does not matter whether roasting of betel nut results in emergence of a new commodity for even if it does not, it is still open to the legislature to classify the product differently. Once the legislature has classified roasted betel/arecanut under a separate entry, it is not open to the Revenue to discard/abandon the entries in the Tariff while examining / determining the classification of the product. 10. Relevance of HSN Explanatory Notes in ....
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....ould cover roasted areca / betel nuts. The AAR being in conformity with the HSN Explanatory Notes, which are treated to be a safe guide in matter of Tariff classification, is yet another reason as to why it would not warrant interference. 11. Rule of Specific vis-a-vis General Entry in determining classification - Process of Roasting of Betel nuts vis-a vis other process, such as, drying, boiling, etc Thirdly, it is trite law that whenever there is specific entry, the same would prevail over general entry. The said general principle is statutorily incorporated in General Rules of Interpretation, in particular, under Rule 3(a) of the General Rules of Interpretation, which reads as under: "3. When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows : (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for....
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....t other than betel nut (roasted) which is involved in the instant case. 11.3. We would think that CTH 2008 19 20 is a special entry covering nuts subject to the process of roasting, when contrasted with CTH 08 02 90 which covers dried nuts. Having come to the conclusion that the classification of areca nut is made on the basis of the process which it is subject to with a distinction between dried and roasted nut being maintained, we would think that CTH 2008 19 20 which covers roasted nuts including areca nut is a specific entry when contrasted with the entries/ items covering nuts under CTH 08. 11.4. It is well established that when a general law / entry and a special law/ entry dealing with same aspect are in question, the rule adopted and applied is one of harmonious construction, whereby the general law to the extent dealt with by the special law, would yield to the Special Law/Entry. This principle finds its origins in the Latin maxim of generaliaspecialibus non derogant i.e. general law yields to special law should they operate in the same field on same subject. The maxim generaliaspecialibus non derogant is dealt with in Vol. 44(1) of the 4th Edn. of Halsbury's Law....
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....arer to the description should be preferred. Where the class of goods manufactured by an assessee falls say in more than one heading one of which may be specific, other more specific, third most specific and fourth general, the rule requires the authorities to classify the goods in the heading which satisfies most specific description...." (emphasis supplied) 11.6. We are of the view that CTH 20 08 is a specific entry insofar as it covers roasted nuts and would thus prevail over CTH 08, in view of the above settled rule that specific entry would prevail over general. This is yet another reason, we would think that the conclusion of the Advance Rulings Authority does not warrant interference. 12. Relevance of the judgment in S T Enterprises : Having found that roasted areca / betel nuts ought to be classified under CTH 20, let us examine the order of the Tribunal in the case of ST Enterprises on which reliance was placed by the appellant to see, if it would have any relevance / bearing on the issue. Reliance was sought to be placed by the learned counsel for the Revenue on the decision of the Tribunal in the case of S.T.Enterprises which on being carried in Civil Appeals....
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....pter 8". The Court's attention was never drawn to CTH 20081920 which covers roasted nuts including areca/ betel nuts, inasmuch as the facts as set out by the Tribunal in its order was not concerned with the process of roasting. In this regard, the following portions of the order are relevant to extract hereunder: "15. ......The appellants do not have a case that their goods contain cardamom, copra or menthol or any additives. Counsel for appellants has made much effort to contend that after boiling though "whole" the betel nut becomes "betel nut product". In our view, since betel nut has retained its character of being whole and it does not contain any other ingredients such as cardamom, copra or menthol, it cannot be said that impugned goods are "preparations containing betel nut" or "betel nut product/supari" so as to fall under tariff heading 21069030. .............. 20. The question is whether by mere boiling and drying whole betel nut it would merit classification under 21069030 so as to surpass the prohibition of import. Ld. counsel for appellants has relied upon Advance Rulings in the case of M/s.Excellent Betelnut and M/s. Oliya Steel Pvt. Ltd....
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....e treated as a precedent for the question that we are now required to resolve viz., whether roasted areca / betel nut is classifiable under CTH 2008 1920 for the following reasons: (a) The question which needs to be resolved in the present appeals, was never under consideration before the Tribunal, which order stands affirmed by the Hon'ble Supreme Court. It is trite law that a decision is a precedent only for what it decides. (b) Where a question passes sub-silentio, then, it may have no precedential value. (c) A little difference or additional fact or absence of certain facts can have a bearing on the precedential value. 13.1. In this regard, it may be useful to refer to the following judgments, which would make the above position on precedents clear: (i) Sub-Silentio - Value as a Precedent Municipal Corpn. of Delhi v. Gurnam Kaur , (1989) 1 SCC 101 at page 110: "11. Pronouncements of law, which are not part of the ratio decidendi are classed as obiter dicta and are not authoritative. With all respect to the learned Judge who passed the order in Jamna Das case [ Writ Petitions Nos. 981-82 of 1984] and to the learned Judge who agreed with ....
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....n. Sir Wilfrid Greene, M.R., said that he could not help thinking that the point now raised had been deliberately passed sub silentio by counsel in order that the point of substance might be decided. He went on to say that the point had to be decided by the earlier court before it could make the order which it did; nevertheless, since it was decided "without argument, without reference to the crucial words of the rule, and without any citation of authority", it was not binding and would not be followed. Precedents sub silentio and without argument are of no moment. This rule has ever since been followed. One of the chief reasons for the doctrine of precedent is that a matter that has once been fully argued and decided should not be allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere casual expressions carry no weight at all. Not every passing expression of a judge, however eminent, can be treated as an ex cathedra statement, having the weight of authority." (emphasis supplied) 13.2. Precedent only on the basis of Facts (a) Padma Sundara Rao v. State of T.N., (2002) 3 SCC 533: "9. Courts should not place reliance on decisions w....
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....19 20. 14. Relevance of judgment in the case of C rane Betel Nut Powder Works: Now, coming to the decision in Crane Betel Nut powder's case, there importantly, the question was whether the process of boiling and drying would constitute manufacture. However, in the instant case, the question is not as to whether the activity of roasting of betel nut would constitute manufacture, but whether in view of a separate entry for roasted betel nut, it is permissible to continue to classify the roasted betel nut under CTH 08 02 80 which covers fresh or dried areca nuts. We have already found that when there is a specific entry for roasted nut and HSN Explanatory notes specifically include roasted betel nuts under Chapter 20, the same cannot be classified under Chapter 8. The question as to whether the process of roasting would constitute manufacture and whether a new product would emerge as a result of the above process are questions that are alien, while determining the classification in terms of the Customs Tariff Headings. In view of the same, the reliance on the judgment of the Hon'ble Supreme Court in the said case is misplaced and irrelevant. 15. Relevance of Rulings by Ad....
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....r HSN 21 06 90 Addition of flavouring agents and boiling do not change the character of goods, hence betel nut continues to remain nut and not becomes preparations of betel nut classifiable under Chapter 21. 7 In Re: Great Nuts Impex Pvt Ltd 2021 (378) E.L.T. 692 Cleaning, preservation process of the betel nut would change the character of the betel nut and therefore it is liable to be classified under Chapter 21 Cleaning, enhancing preservation or presentation and certain materials added at end of the process would not change the character of betel nut and essential character of betel nut not materially changed. Therefore it does not qualify to be considered as "preparation" of betel nut, which is sin qua non for goods to be classifiable under Chapter 21 and it will more precisely to classify under HSN 0802 8 Globe Impex CAAR/Del/Gl obe Impex/02/2021 Great Nuts Impex Pvt Ltd CAAR/Del/Gr eat Nuts/05/2021 Perfect Trading CAAR/Del/Per fect/04/2021 PG International CAAR/Del/PG International/2 2/2021 Sarveshwari Industries Star spices UBS Exports Whether the goods being processed betel nut containing ingredients such as food starch, species, mulethi, flavours....