AI Drafter 
TaxTMI 
TaxTMI 
2024 (4) TMI 85
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.... 21069030, has preferred the present Civil Miscellaneous Appeal. 3. A brief prelude leading up to the present appeal: The respondents proposed to import 'Menthol Scented Supari' from its suppliers in Burma, Sri Lanka and Thailand. An application was filed under Section 28H of the Customs Act, 1962 seeking an advance ruling regarding the classification of the product proposed to be imported. The Customs Authority for Advance Ruling (CAAR), in and by its Ruling dated 24.02.2023 held that the product would have to be classified under Chapter 21 of the Customs Act, 1962. At this juncture, it would also be relevant to note that none of the Customs authorities who were put on notice chose to appear before the CAAR and oppose the advance ruling application filed by the respondents. 4. We have heard Mr. N.Dilip Kumar, Senior Standing Counsel for Customs, CGST & Excise for the Appellant Department and Senior Counsel, Mr.Vijay Narayan, for Mr.T.Balakrishnan, Counsel for the respondents. We have paid our anxious and careful consideration to the rival submissions advanced on either side, apart from also perusing the material records, including the impugned advance ruling of CAAR. We h....
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....of the revenue by holding that the classification of areca nuts would have to be under Chapter 8. 8. The next submission of the Learned Counsel for the appellant is that Chapter 21 is a residuary chapter dealing with miscellaneous edible preparations and it is also provided under a separate heading, 'Supplementary Note 2' under the said Chapter, covered under the subheading 'Betel nut product known as Supari'. It would mean any preparation containing betel nuts and therefore, areca nuts, whether or not flavoured with menthol, would have to be necessarily classified only under Chapter 8 and the learned counsel would contend that in order to qualify for being classified under Chapter 21, the imported product should be a preparation containing betel nuts and it should not have lost the character of areca nut. 9. The learned counsel for the appellant would therefore primarily focus on the point that 'Menthol Scented Supari' contains the flavour of menthol and does not amount to a food preparation as mentioned in Note 2 to Chapter 21 and when areca nut is edible by itself and even if it is cut, boiled, sweetened, it would not change the character of the betel nut and the p....
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....testing the matter before the CAAR, before the advance ruling came to be issued, the Learned Counsel for the Appellant would place reliance on UO Note dated 14.12.2023 and contend that the Department has never received any intimation calling for comments from the Advance Ruling Authority. 14. Finally, he would place reliance on the following decisions: i) Great Nuts Impex v. Commissioner of Customs, reported in (2023) SCC Online Del 1240, where the Division Bench of the Delhi High Court held that in order to be eligible for being classified under Chapter 21, there would have to be, necessarily, a preparation containing betel nuts and in the absence of such a preparation, the product would have to be classified only under Chapter 8. ii) Shreedhra Agro LLP reported in (2022) 382 ELT 416 (AAR) which was also confirmed by the Division Bench of the Delhi High Court, in CUSAA.130 of 2022, holding that the process of scenting or flavouring betel nut would not render it a preparation of betel nuts, resulting in classification being made under Chapter 21. He would also refer to the discussion of the Advance Ruling Authority in the said case about the effect of GST circu....
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....e Apex Court in Crane Betel Nut Work's case as well as the decision of the Delhi High Court in Great Nuts Impex Pvt. Ltd., lost its precedential value because of a subsequent new scenario that has emerged, post the Finance (No.2) Act, 2009 dated 9th August 2009 and also in view of the concept of 'manufacture' itself being of no consequence in the wake of the introduction of GST in 2017. 18. The learned Senior counsel would place reliance on the decision of this Court in The Commissioner of Customs v. M/s.Shahnaz Commodities International P. Ltd. and 2 others, rendered in CMA Nos.600, 1206 and 1750 of 2023, where a Division Bench of this Court, in and by a Common Judgment dated 01.08.2023, held that when there is a specific clause under Chapter 20, the classification cannot be made under Chapter 8. 19. At the outset, before we proceed to decide the moot point as to the correct classification of 'Menthol Scented Supari', we may refer to some of the relevant statutory provisions and supplementary notes. 20. Chapter 08 (02) deal with 'other nuts, fresh or dried, whether or not shelled or peeled.' Chapter Note 3 to Chapter 8 reads thus: "3. Dried fruit or dried nuts....
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....r 21. 22 (a). We have noticed that under Chapter 8, betel nut can be whole, split, ground or other. The HSN Explanatory Notes clarifies that fruit and nut in Chapter 8 may be whole, sliced, chopped, shredded, stoned, pulped, graded, peeled or shelled and further addition of small quantities of sugar does not affect the classification of fruit in this Chapter. 22 (b). It is the specific contention of the Counsel for the Appellant that in view of the betel nut being merely cut into smaller pieces and it is sweetened, it remains a betel nut only and would therefore squarely come under the purview of Chapter 8. The further contention of the Learned Counsel for the Appellant is that Chapter 21 is only residuary in character and when Chapter 8 applies to the product in question, the Advance Ruling Authority cannot fall back on Chapter 21 and classify the product under Chapter 21. 22(c). However, we have seen that Supplementary Note 2 specifically deals with 'Supari' and states that it is any preparation containing betel nuts, but not containing lime, katha (catechu) and tobacco, whether or not containing cardamom, copra or menthol. In our view, the said Supplementary Note 2 plac....
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.... "Food preparations not elsewhere specified or included" also, under Tariff Item 21, 06, 90 and 30, Betel nut product known as 'Supari' finds a specific entry/inclusion, fixing a rate of duty @ 150% per kilogram. 26 (a). All these apart, we also notice that the process involved and referred to in Chapter 8 as seen from Note 3 is relating to treating the dried nuts for preservation, stabilization and to improve or maintain the appearance and in such cases, even if the process involved moderate heat treatment, sulphuring or adding sorbic acid or potassium sorbate or vegetable oil or small quantity of glucose syrup, as long as the product retains the character of a dried nut or fruit, it would be classified under Chapter 8. 26(b). However, under Chapter 21 what is contemplated is a preparation containing betel nuts and not containing lime, katha (catechu) or tobacco, whether or not it contains ingredients like cardamom, copra or menthol. 26(c). Thus, there is a fundamental distinction even in the object and purport of both the Chapters. Therefore, applying the General Rules of Interpretation for Import Tariff, there is no difficulty in holding that there being a speci....
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....of betel nut and adding ingredients to it would involve any 'manufacture' or not and in that context it was held that the process of boiling, slicing etc. and adding flavours to the betel nut would not result in altering the nature and characteristics of the product and therefore the classification would have to be made under Chapter 8. 30. According to the learned Senior counsel for the respondents, post this judgment, two important subsequent factors have intervened. 31. Firstly, vide Finance (No.2) Act, 2009 dated 19th August, 2009, there has been an insertion of Note 6 in Chapter 21, which specifically relates to Tariff Item 2106 90 30 relating to 'supari' and stating that the process of adding or mixing cardamom, copra, menthol, spices, sweetening agents or any such ingredients other than lime, katha (catechu) or tobacco to betel nut, in any form, shall not amount to "manufacture". However, we are conscious of the fact that this amendment was only under the Central Excise Tariff Act and not the Customs Tariff Act. 32. Secondly, w.e.f. 1.7.2017, the GST Act was introduced and the concept of taxation itself has undergone a change from 'manufacture' to 'supply'. The Supp....
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....o manufacture etc., 34 (d). As already discussed herein above, under the Customs Tariff Act, the question of manufacture loses its relevance since the Act deals only with the tariff applicable to the goods or products imported from outside the country, in an as is where is basis, or rather the product as imported in whatever form is the basis for levy of Customs Tariff. Thus, the judgment of the Hon'ble Supreme Court in Crane Betel Nut Powder Work's case cannot be said to be a bar U/s. 28(i) of the Customs Act. 35 (a). Here we have already found that by inserting a specific tariff entry for 'Supari' under Chapter 21, the question of classifying it under Chapter 8 does not even arise, especially when this was neither the issue before the Apex Court nor the basis on which the decision was rendered. It is also trite law that a decision is only an authority for what is decided and it cannot be extended to something which has not been decided by applying the process of a logical deduction. 35 (b). In fact, in P.Rajendran Vs. The Assistant Director, in Crl.O.P. No.19880 of 2022 dated 14.09.2022, the Division Bench of this Court, in fact, one of us being a part of the Ben....