TaxTMI 
TaxTMI 
2024 (6) TMI 57
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....f its population as consumers. It is also all about import of 15 consignments of 'API supari', or so said in the bills of entry filed between 25th September 2021 and 27th October 2021 at the 'inland container depot (ICD)' in Borkhedi, that was seized under section 110 of Customs Act, 1962 by officers of Directorate of Revenue Intelligence (DRI) for being 'arecanuts' that are not 'betelnut product known as "Supari" ' which, allegedly, was being claimed with intent to evade Foreign Trade Policy (FTP) restrictions and 'tariff value' handicap that attends on tariff item 0802 8010/ 0802 8020 of First Schedule to Customs Tariff Act, 1975 proposed as substitute. And much like the world of Alice created by Carrol in Through the Looking Glass, there is not much to choose from between 'betel nut product known as "Supari" and 'areca nuts - whole/split' either in appearance or from laboratory analysis and, yet, thereby hangs a tale of several hindrances to import of the latter that, law-enforcers allege, offer motive, means and opportunity for evasion by recourse to the former which, but for their argus-eyed vigilance over the trade, would have spun out of control. The distinction that makes f....
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....t favouring the import of pleasingly flavored betelnut bits in pouches over whole betelnut on which value addition by domestic industry has considerable potential; both impinge on the validity of conclusions in controversy over 'rate of duty' for customs assessment to fasten levy on 'bringing into India' however much protection of local farmers is protested as the persuasion. 3. Other than respective descriptions as 'betelnut product known as "supari" ' corresponding to tariff item 2106 9030 of First Schedule to Customs Tariff Act, 1975, replete with ambiguity, and as 'arecanuts' corresponding to sub-heading 0802 80 of First Schedule to Customs Tariff Act, 1975, '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 (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 they retain the character of dried fruit or nuts.' in notes to chapter 8 of First Schedul....
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.... sub-heading 0802 80 of First Schedule to Customs Tariff Act, 1975, of import value (CIF) not less than Rs. 251 per kilogram as mark of further disfavour. The prerogative of the Central Government to erect 'barriers' to international trade through tax policy and trade policy is, largely, beyond question but frequent encountering of consistently disadvantaged treatment of one which, taking the design of the tariff lines in its entirety and for classification at least, is not really distinguishable from the other and, in the absence of implied policy intent or precise articulation, does nothing but entrust absolute and unfettered power in the hands of the enforcement mechanism for whom the columns to the right of the descriptions may have pre-eminence over reckoning with law. 6. It does not, therefore, surprise that, and well before 'quantitative restrictions' were brought into play, the appellant herein, M/s Excellent Betelnut Products Pvt Ltd, preferred application under section 28H of Customs Act, 1962 before the Authority for Advance Rulings (Central Excise, Customs and Service Tax) seeking affirmation to classify several 'betel nut products', including 'API supari' impugned h....
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....f the Import Tariff appended to Customs Tariff Act, 1975 and judicial decisions fastening 'prior' onus on 'proper officer' in resolution of classification disputes as the secondary issue. The varying of value, not arising from rule 3(4) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, is only consequential to the revision of classification and has significance only for computation of duty thereof. 8. Before we proceed to the kernel of the challenge, there are certain 'mega trends' that this order exemplifies and which we may ignore only at the cost of imperiling rule of law. The most glaring is the conviction that silence in the law offers open ground to be crept into and occupied without giving thought either to the remit of another agency of the State or that exercise of statutory authority is confined to the express design of the statute and this is how persons turn outlaws and agencies turn rogue. We are fairly aghast at the foundation laid thus '32. ....Therefore I consider it to be high time that the issue is taken up for re-look about the classification of 'Betelnuts' described as 'API supari' in respect of the importer M/s Excellent B....
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.... impugned goods as 'API supari' and that the ruling subsists only subject to law and facts, on which the question of applicant was determined, remaining unchanged. The ruling is neither about tariff lines below sub-heading 0802 80 in First Schedule to Customs Tariff Act, 1975 nor about the coverage of tariff item 2106 9030 of First Schedule to Customs Tariff Act, 1975 but that 'API supari', placed before Authority for Advance Rulings (Central Excise, Customs and Service Tax) as having been prepared by boiling of arecanuts and drying, was to be classified as the latter. The correctness, or otherwise, of the ruling is not for this Tribunal to adjudge and, by extension, neither for the Commissioner of Customs to adjudicate upon nor for the investigation agency to have cavil; neither subsequent rulings to the contrary in applications of other importers nor discredit by the Hon'ble High Court of Delhi in Great Nuts Impex Pvt Ltd v. Commissioner of Customs, Delhi [(2023) 7 Centax 53 (Del)], such as it does, invalidates the impugned ruling for assessment of 'API supari' imported by M/s Excellent Betelnut Products Pvt Ltd. These prefacing remarks of ours is not measure of our graciousness ....
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....at the impugned ruling was erroneous, sufficed for the purpose. This section of the impugned order sums up the conceptual chaos - the singularity of a ruling under section 28I of Customs Act, 1962, the jurisdictional path for resolution of classification disputes, the distinctiveness of taxable event in the two commodity levies authorized by the Seventh Schedule in the Constitution and the purposive emphasis to be placed on one of the statutory tools, viz. tariff, crafted thereto, the intendment of advance rulings circumscribing its decisional framework and, most crucial of all, fidelity to the ratio of orders relied upon - that pervades the findings in challenge before us. Discussion of the relevant statutory provisions thereto in detail would be more apt in a manual of assessment, adjudication and appeal under Customs Act, 1962 and Central Excise Act, 1944 which is not the intended purpose of the Tribunal; these shall, however, be referred to in navigating the contours of the impugned order. 11. In effect, the outcomes in the impugned order rests upon discard of the advance ruling issued on application of the importer herein for classification of the goods imported herein agai....
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.... circumstances set out therein, the observation of the Hon'ble High Court, which, too, had not been called upon to adjudge that ruling, may, at best, be relied upon to similarly discard application of the said ruling as binding precedent to resolve classification dispute in adjudicatory capacity. More so, as the impugned ruling was, in the absence of section 28KA of Customs Act, 1962 then, not even subject to appellate challenge and the Commissioner of Customs, in seeking to undo the ruling through the impugned order, has set itself up contrarily both to legislative intent of empowering advance ruling authority and to executive disinterestedness in disputing rulings then. 13. From the records, it appears to us that the adjudicating authority placed emphasis on the decision in re Great Nuts Impex Pvt Ltd without being privy to the circumstances in which the appeal did come up before the Hon'ble High Court; we, too, are similarly incapacitated but may garner from the decision therein that the Customs Authority for Advance Ruling (CAAR) did consider a 'competing tariff line' despite the question posed being restricted to appropriateness of tariff line proposed by the applicant and,....
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....ficer' acquires jurisdiction to assess duty only on 'imported goods' as set out in section 2(25) of Customs Act, 1962. Any ruling binds only the 'proper officer' in section 17 of Customs Act, 1962. A rejection under section 28I of Customs Act, 1962 does not, of itself, discard the import or even of the proposition which may yet be revived on filing bill of entry through declaration therein. Likewise, the facility of advance ruling is not without flexibility of denial on actual import upon distinguishment from the product on which the ruling had been sought. Indeed, provision also exists for pronounced rulings to be rendered void ab initio in certain circumstances and for consequential adjudicated recovery to be ordered under Customs Act, 1962. We, therefore, find that adjudication proceedings offered neither scope for discard of a ruling for lack of merit nor even scope for repudiating a ruling at the time of assessment of goods except either within the extent set out in section 28J (2) of Customs Act, 1962 or on finding that the imported goods are not covered by the ruling. It is the alternative classification adopted by the Customs Authority for Advance Rulings (CAAR) in subseque....
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....s (BIS) for 'edible starches' in IS 4706, were reported to contain 'starch' indicating that the nuts had been processed which the adjudicating authority conveniently overlooked only to rely upon test reports obtained earlier from Food Safety and Standards Authority of India (FSSAI) and Central Revenue Control Laboratory (CRCL), Vadodara despite these having been invalidated in interim order [IR/03/2022 dated 7th February 2022] of the Tribunal. Learned Authorized Representative submitted that the impugned order has given reasons for holding the advance ruling was for 'betelnuts' of different specification. 19. We find that the appellant was before the Tribunal on two earlier occasions of which the first arose from cavil over disinclination to grant 'provisional release' on the ground that the impugned goods were unfit for human consumption and, on plea of the appellant that laboratory reports relied on for the purpose pertained to samples drawn and tested without notice to them, specific directions were issued for re-test following which it was held by the Tribunal, on the basis of report of M/s Qualichem Laboratories, that the adjudicating authority was to dispose off the reques....
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....f a floundered investigation. Clearly, the impugned ruling did not have a life span when it was issued and, while prospective 'sunset' may have had some semblance of reasonableness, the finding of the amendment having terminated every ruling under the erstwhile provisions precludes us from having to dwell on a contingency of inconsequence. We can, however, safely conclude that, at all events, the impugned ruling was certainly not invalid on date of adjudication. 21. On the issue of jurisdictional limitation on rulings of Authority for Advance Rulings (Central Excise, Customs and Service Tax) under section 28I of Customs Act, 1962, we find the proposition of the adjudicating authority to be, ex facie, specious. Chapter VB of Customs Act, 1962 does provide for contingencies in which ruling may be repudiated but this, certainly, is not one among them. More so, when classification, as a general rule, is expected to be not only consistent qua importer but also qua imported goods and, therefore, can never be qua Commissioner; it just happens that 'advance ruling' is not intended to substitute for section 12 of Customs Act, 1962 except qua importer and, thereby, not claimable by others....
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....s Act, 1962 but was not availed of and remedy for the other lies in enabling of distinguishment in section 28J (2) of the Customs Act, 1962 which is contingent upon certainty in distinguishability of the rival tariff lines that, as we have pointed out supra, is not particularly distinctive enough here for an unprejudiced adjudicating authority to be reassured of. 23. We are unable to fathom the interpretation accorded to section 28J (1) of Customs Act, 1962 by the adjudicating authority to put forth this proposition. Leaving aside the grand vision that actuated the World Customs Organization (WCO) and the World Trade Organization (WTO) to prioritize this facilitation which was eulogized upon by Learned Counsel, procedure prescribing reference to Chairman, Central Board of Excise & Customs for supplying a representative-respondent in the event of lack of respondent-Commissioner in an application without any enlargement of applicability for that reason should, unfailingly, persuade that a respondent-Commissioner if named by applicant is, in reality, representative-Commissioner. That a prescribed form, with space provided for nomination of respondent-Commissioner, should determine ....
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.... owing to lack of any indication thereto in the relevant provisions, by the adjudicating authority was prompted, apparently and solely, to alienate a classification not agreeable for posing lesser detriment to the importer. In the light of our adducing of the provisions of law supra, it remains to be seen if any case law cited by Learned Authorized Representative is contrary to our determination of the aspect. 24. Learned Authorized Representative has placed before us the decision [order dated 7th September 2021 in writ petition no. 4156 of 2024] in writ proceedings by the Hon'ble High Court of Madras, in GE India Industrial Pvt Ltd v. Union of India and others, which was all about the validity of circular no. 44/2013 dated 30th December 2013 of Central Board of Excise & Customs (CBEC), clarifying that levy of 'special additional duty (SAD)' chargeable under section 3 of Customs Tariff Act, 1975 on all imports into India did not exclude supply from 'special economic zones (SEZ)' to 'domestic tariff area (DTA)' except where the state government concerned had exempted the levy, and the direction of Specified Officer of JMFTWZ for recovery on clearances in Tamil Nadu was challenged....
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....ly by operation of law in chapter VB of Customs Act, 1962, another tariff line more detrimental to importer is, by default, not elevated as the appropriate classification for which the adjudicating authority must, necessarily, set in motion the circumscribing framework for the revision to stand the test. 25. There is, thus, no cause for the subsistence of the proposition of alienation of jurisdiction by the adjudicating authority; the provisions of section 28J (1) of Customs Act, 1962 bind the trinity of applicant, ruling and customs administration of India, with the customs formations as surrogates according to location of import, till the span of life of the ruling unless distinguished in accordance with section 28J (2) of Customs Act, 1962 or the rescinding of the ruling by operation of section 28K of Customs Act, 1962. With all impediments to application of the impugned ruling thus erased, the classification, and consequences thereof, in the impugned ruling applies to the impugned goods. 26. Learned Authorized Representative did canvass his brief further by placing reliance on the rulings of Customs Authority for Advance Rulings (CAAR) in re Zaveri Enterprises [CAAR/Mumba....
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....ment has to adduce proper evidence and discharge the burden of proof. In the present case the said burden has not been discharged at all by the Revenue......' as onus devolving on the 'proper officer' - under section 17 of Customs Act, 1962 in relation to 'live' consignment and under section 28 of Customs Act, 1962 in relation to past imports - and, thus, constituting the test to be applied by us for affirmation or discard of findings on merit of the revised classification. The rationale for the placement of such onus was necessitated by the framework of the law, as enacted in Customs Tariff Act, 1975, that permitted discard of claimed classification by recourse to comparison only under rule 3 of the said 'interpretative rules' implying lack of incorrectness in declaration of importer as well as conformity of the counter-proposition with rule 1 of the said 'interpretative rules' simultaneously and, therefore, warranting 'tie breaker' for zeroing in on the more apt description. Conversely, disabusing of the tariff line proposed in the show cause notice for not being in conformity with rule 1, to start with, validates the declared classification without having to subject it to the....
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.... on an alternative other than affirmation or rejection of proposition put before it; to do so would be to rule on a classification that was not for determination in the question of law or fact; the respondent-Commissioner cannot claim to be applicant within the scheme of chapter VB of Customs Act, 1962 to suggest an alternative classification and that role is limited to advising on non-adherence of proposed classification to rule 1 of General Rules for Interpretation of the Import Tariff appended to Customs Tariff Act, 1975. Furthermore, its binding effect being limited to the applicant deprives it of consideration in judicial determination. Thus, any suggestion of error in the findings of the impugned ruling is not of consequence as to merit approval of alternative classification. In Isha Exim v. Union of India and others [2023 (12) TMI 920 - BOMBAY HIGH COURT], it was contended on behalf of respondents that rulings of advance authority is limited to the parties to the dispute. There is no determination of law, let alone change in law, that permits recourse to section 28J (2) of Customs Act, 1962 as far as the rulings cited by Learned Authorized Representative is concerned. 30.....
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.... it was held that being 'whole', instead of having been broken up, is not a characteristic of 'betel nut product' and that process of boiling does not, owing to note 3 of chapter 8 in First Schedule to Customs Tariff Act, 1975, offer scope for relocating elsewhere. However, from '19 The word 'supari' only appears in Chapter 21. In ordinary parlance, the 'product of betel is known in the market as 'supari'. The appellant has no contention that they have added any ingredients. The Chemical Examiner's report states that it is free of cardamom. It is stated by the Examiner that it is not possible to ascertain whether the nuts are boiled....From the appearance of the 'betel nuts whole' (imported) placed before us we are not able to conclude whether these nuts are boiled and then dried or only dried. ....we do not find any evidence to support the various processes as stated in the write up of the supplier has been undertaken on the nut...' it would appear that, notwithstanding its appearance, processing, if established would have sufficed to hold otherwise which the impugned order has conveniently ignored. 31. The decision in re ST Enterprises does not enable us to be p....
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....st for aptness of tariff line because, in the absence of any other qualifier and mandated absence combined with optional inclusion of anything, it could be description of 'arecanuts' too without fault of any kind. He suggested that the said note should be read in harmony with the preceding note for 'pan masala' corresponding to tariff item 2106 9020 of First Schedule to Customs Tariff Act, 1975 enabling tax policy to cater to degree of compromise to health. He informed that 'pan masala' with tobacco is 'gutkha' which is banned in the country. According to him, note 3 in chapter 8 of First Schedule to Customs Tariff Act, 1975, intended as mechanism for segregation of processed dried fruit or dried nut between that chapter and chapter 20 in view of note 1 in the latter, should be applied only to such headings which distinguish between fresh and dried and amenable to classification in the latter which 'arecanuts' are not implying that no inference can be drawn from the said chapter note in the manner in which the Tribunal has done so. Furthermore, he contented that liberal use of 'manufacture', which is unknown to the customs statute, to decide between two headings renders it devoid o....
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.... is not binding precedent for other cases but it is binding to the parties to the litigation only, then by the very same logic the advance ruling in the case of the petitioner is binding on the respondents and not the decision of CESTAT Chennai Bench and the same gets confirmed by the Supreme Court. Therefore by their own showing the reliance placed by the respondents on the decision of the Chennai Bench of the CESTAT is misconceived to invoke provisions of section 28J (2) of the Act.' in Isha Exim v. Union of India and others [2023 (12) TMI 920 - BOMBAY HIGH COURT]. 34. We also note that '5. Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter alia, includes : (a) .... (b) preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption;...' suggests that excepting of the tariff items excludes coverage of retail goods from the description which negates the proposition of respondent herein and by that exclusion thereto, intended inclusion for all other forms of 'betel nut' that have undergone one or other process. That the description correspon....
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....cription for resolution of classification disputes as set out by us supra, an informed adjudication may have followed. Now it has not. Though Learned Counsel appears to be correct about his submissions on the findings of the Tribunal in re ST Enterprises, we do not have to rely on those for discarding it as binding precedent on classification in the light of the decision of the Hon'ble High Court of Bombay and, owing to non-adherence to the rules of engagement for revision of classification in the impugned order, there being no alternative classification to fall back on. 35. Revenue could not, therefore, be more wrong than in attempting to negate an advance ruling with its proposition that 'betel nut product known as "supari" ' is something other than 'arecanut' that has been 'boiled and dried' - a proposition that is designed to saddle 'betelnut products' of one tariff line with all the available barriers, viz., higher tax rate, tariff value and minimum import price, intended for 'arecanuts' of another unrelated sub-heading. Doubtlessly, by inserting the tariff line below sub-heading 2106 90, legislative wisdom drew into First Schedule to Customs Tariff Act, 1975, along with so....