TaxTMI 
TaxTMI 
2024 (12) TMI 1467
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....ods being ported shall be covered under a particular classification or the other. 1.1 That the nomenclature and details of the goods being sought to be imported by the applicant are as under :- (i) Roasted Areca Nuts (whole) (ii) Roasted Areca Nuts (split) (iii) Roasted Areca Nuts (cut) 1.2 That the processes carried out on the Roasted Areca Nut (Whole), Roasted Areca Nut (Split) and Roasted Areca Nut (Cut) are as under :- (i) De-husking the raw betel/areca nut and drying the same before being fed into the roasting oven; (ii) Feeding the fresh areca nuts into a seed roasting oven, heating up the betel nuts would be roasted well beyond 100 degree Celsius, usually in the range of 130-150 degree Celsius and roasting the fresh areca nuts is done using firewood/palm kernel-based ovens of the seed roasting machine and temperature of the flames is around 600 degrees Celsius. (iii) Take the areca nuts out of the oven, cooling at room temperature and feeding back into the oven, heat and roast them again, and perfo....
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....pter 8 of the Customs Tariff Act, 1975 (hereinafter also referred as "Tariff"). 1.6 That further HSN explanatory note qua Chapter 20 explains as bellow : 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 purees, fruit or nut pastes, obtained by cooking. (4) Homogenized prepared or preserved vegetables and fruit. (5) Fruit or vegetable juices, neither fermented nor containing added alcohol, or of an alcoholic strength by volume not exceeding 0.5% vol. (6) Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by other processes not provided for in Chapter 7, 8 or 11 or elsewhere in the Nomenclature. xx xx xx It includes, inter alia : Almonds, ground-nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted, whether or not containing or coated ....
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....of Customs II (Import), Chennai, in Application No. CAAR/CUS/APPL/95/2023-O/o Commr-CAAR-MUMBAI where identical goods are held classifiable under 2008 19 20. That the process of roasting thus changes the chemical and physical characteristics of the areca nut by reducing arecoline and tannin as well moisture. 1.12 In view of above the applicant would like to have advance ruling on the following issue : "Whether the goods sought to be imported i.e. Roasted Areca Nuts (Whole) and Roasted Areca Nuts Cut" is classifiable under the CTH 2008 19 20. That the applicant requests the Hon'ble Authority for Advance Rulings that the appropriate classification of the aforesaid goods may kindly be ruled under Section 28H of the Customs Act, 1962. Statements containing applicant's interpretation of law and/or facts, as the case may be :- 2.1 That the goods in question which are to be imported by the applicant is roasted betel nut and hence should rightly be classifiable under CTH 2008 and more particularly in 2008 19 20. That as per the explanatory note to Chapter 8 fruit and nuts of this Chapter remain classified here even if put up in airtight packing (e.g., dried prunes, dried nut....
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....ollowing food intake. The subject goods are specifically covered and are classifiable under CTH 2008 19 20 of the Customs Tariff Act, 1975. As per the HSN Explanatory Notes to Heading 2008, Dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008. 2.4 CHANGE IN THE BETEL NUT BY THE PROCESS OF ROASTING : With regard to the goods in question it is submitted that during the process of roasting, the roasting is done using firewood/palm kernel-based ovens and the temperature of the flames is around 600 degrees Celsius and as a result, the betel nuts would be roasted well beyond 100 degrees Celsius, usually in the range of 130-150 degrees Celsius. 2.4.1 That roasted betel nut undergoes a change in its appearance as well as in respect of its chemical characteristics on account of the roasting process. There is a visible deposition of an ash-like substance on the outer surface of the betel nut. There is a substantial change in the chemical characteristics also of the betel nut product on account of the roasting process. That the tannin and arecoline content of raw betel nut/areca nut gets substantially changed by subjecting the same to roasting and boilin....
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....l, Chennai). 2.5.2 Further, in fact the customs authority challenged the said Advance Ruling before the Hon'ble High Court of Madras vide CMA Nos. 600, 1206 and 1750 of 2023 - The Commissioner of Customs Chennai v. M/s. Shahnaz Commodities International (P.) Ltd. However, the said case were rejected by the Hon'ble High Court vide its judgment dated 1-8-2023. 2.5.3 The Hon'ble High Court has after considering all the other chapter including Chapter 8, and Chapter 21 of Customs Tariff and also considered the other rulings as submitted by the customs authority though qua other goods i.e. boiled areca nuts, API supari, unflavoured supari etc. 2.5.4 It has been observed by the Hon'ble High Court that the Rulings of the Advance Ruling Authority did not deal with Roasted areca nut and thus would have no relevant to the issue on hand. Further, it has been held that Roasting is a process treated to be distinct from the process of boiling and drying, in fixing the classification in respect of betel/areca nut under CTH; that roasted betel/areca nut having been specifically classified under CTH 2008 19 20, the attempt to classify under CTH 08 02 80 would fall foul of the settled rule ....
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....ch is reproduced below : "5. Dried fruits or dried nuts or 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 that they retain the character of dried betel nut, fruit or dried nuts." 3.3 The applicant's claim that after repeated roasting of the areca nuts at the temperature of more than 150 degrees Celsius in a roasting oven due to which the water content is reduced to 6% is a complete misrepresentation of facts. The applicant has claimed that after roasting water content comes down to 6 per cent. It is submitted that the moisture content is normally less than 10% for various consignments of raw betel nuts imported under Chapter 8. Therefore, there is not much difference between the roasted nuts and raw betel nuts in terms of temperature. Applicant did not provide any test report before Ad....
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....here is neither any mixture of products nor any change in the original good which tantamount to no preparation. 3.6 The applicant has claimed that dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008. This is another misrepresentation of facts since the Chapter 20 cannot and does not cover any nuts or fruits prepared or preserved by the processes specified under Chapter 8 as per the Chapter Note 1 of the Chapter 20 and the Chapter Note 3 of Chapter 8 includes roasting under 'moderate heat treatment', hence the impugned goods cannot be classified under Chapter 20. The said chapter note is reproduced below : "This chapter does not cover. (a) Vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, Chapter 8, or Chapter 11; (b) Vegetables fats and oils (chapter 15); (c) Food preparations containing more than 20% by weight of sausage, meat, meat offal, blood, insects, fish or crustaceans, maltose's or other aquatic invertebrates, or any combination thereof (chapter 16); (d) Baker....
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....ariff 8. 4. The applicant was provided the comments received from the jurisdictional Commissionerate. The applicant vide reply dated 1-5-2024 submitted their counter reply on the comments of the concerned Commissionerate, wherein the applicant relied upon some rulings pronounced earlier on the identical issues and submitted at under :- 4.1 That it is submitted that submission filed by the Port Commissionerate, wherein it opposed the advance ruling sought by the applicant for the goods i.e. roasted areca nut under CTH 2008 19 20 is without any justification. 4.2 That the contention of the Addl. Comm. that the roasting is for additional preservation or stabilization is not correct as roasting involves severe heat treatment and is different form moderate heat treatment as well as dehydration. Further, the classification as far as possible must be in conformity and in consonance with the HSN explanatory notes and that whenever there is specific entry, the same would prevail over general entry as per the principle incorporated under Rule 3(A) of General Rules of Interpretation. 4.3 That in fact, the Ld. Addl. Comm. in support of its contention has relied upon certain judgmen....
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....nducted on 2-5-2024. During the personal hearing, the authorized representative/Advocate representing the applicant explained in brief the reasons for filing the application and referred to a few earlier rulings of CAAR, Mumbai on the similar question of classification for goods in question. He reiterated the submissions given in their application for advance ruling. Finding, Discussion and Conclusion 6. I have taken into consideration of all the materials placed on record in respect of the subject goods including the submissions made by the applicant during the course of personal hearing. I have gone through the response from the Customs Port Commissionerate. I proceed to decide the present application regarding classification of Provisionally preserved Areca nut (whole) and Provisionally preserved Areca nut (split) on the basis of the information on record as well as the existing legal framework having bearing on the classification of the Provisionally preserved Areca nut (whole) and Provisionally preserved Areca nut (split) under the First Schedule of the Customs Tariff Act, 1975. 6.1 The processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and p....
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....d be carried out on the dried nuts for additional preservation or stabilization or to improve or maintain their appearance. The applicant in their application has declared that the objectives of the roasting are not as specified in the said note. Further, as per the above note, the processes that could be carried out are moderate heat treatment, sulphuring, and the addition of sorbic acid or potassium sorbate by the addition of vegetable oil or small quantities of glucose syrup. Roasting is different from all the processes mentioned above. Roasting, as submitted by the applicant, is carried out using roasting ovens due to which betel nuts are roasted well beyond 150 degrees Celsius then cooled in room temperature and the cycle is repeated until the moisture content is less than 6%. This clearly indicates that the roasting is much more than mild heat treatment. Even in the generally understood meaning of the terms, it is understood that roasting involves severe heat treatment and is different from moderate heat treatment as well as dehydration. Therefore, the impugned goods do not satisfy Note 3 to Chapter 8. 6.4 While examining the scope of CTH 2008 I find that, as per HSN Expla....
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.... Chapter 20." While delivering Phil Corporation judgment Hon'ble Supreme Court has clearly spelt out importance of HSN Explanatory notes in deciding the matters of classification placing reliance on the judgment of Supreme Court in the cases Collector of Central Excise, Shillong v. Wood Craft Products Ltd. (1995) 3 SCC 454. Hon'ble Supreme Court in Paragraph 12 of the said judgment observed as under :- "Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged basis of the structure of the Central Excise Tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act." 7.1 From the Apex Court's foregoing judgments, it is observed that the roasted nuts find specific mention in the then Chapter 20 of the then Central Excise Tariff Act and the Chapter 20 of the Schedule I of the Customs Tariff Act, 1975 as well as corresponding HSN Explanatory Note. It is important to pay attention to the fact that, in the above referred HSN explanatory not....