TaxTMI 
TaxTMI 
2025 (1) TMI 360
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.... the goods imported vide Bill of Entry No 2329397 dated 12.01.2021 and 2625658 dated 04.02.2021 and I order to re- determine the value of the said goods imported vide Bill of Entry No 2329397 dated 12.01.2021 and 2625658 dated 04.02.2021 as Rs. 69,12,310/ - (Rupees Sixty Nine Lakh Twelve Thousands Three Hundred Ten Only) and Rs1,49,78,696/- (Rupees One Crore Forty Nine Lakh Seventy Eight Thousands Six Hundred Ninetry Six Only) respectively as per fixed Tariff Value under sub-section 2 of section 14 of the Customs Act, 1962; iii. I confiscate the goods namely "Process Betel Nut found an Split Arecanuts" imported vide Bill of Entry No 2329397 dated iii, 12.01.2021 and 2625658 dated 04,02.2021having re-determined value as Rs. 69,12,310/- (Rupees Sixty Nine Lakh Twelve Thousands Three Hundred Ten Only) and R81,49,78,696/- (Rupees One Crore Forty Nine Lakh Seventy Eight Thousands Six Hundred Ninetry Six Only) respectively under Section 11 1(d) and 111(m) of the Customs Act, 1962. However, I gave an option to redeem the goods imported vide Bill of Entry No 2329397 dated 12.01.2021 and 2625658 dated 04,02.2021 for re-export on payment of fine of Rs 10,40,000/- (Rupees Ten Lakh F&....
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....1 83.72 53920 4514031 2.2 On examination of the said goods, it was observed by the revenue that the goods imported were "Raw Arecanuts in Split Form" against the goods declared as "process Betel Nuts". Representative samples were drawn from both the consignments and forwarded to CRCL [Central Revenue Control Laboratory] for their opinion. Samples were also drawn by FSSAI [Food Safety and Standards authority of India]. 2.3 CRCL vide test report dated,- • 24.02.2021 in respect of sample drawn from the consignment as per Bill of Entry dated 12.01.2021 reported that "sample is in form of brown coloured broken pieces of irregular shape and size arecanut along with some defective/ damaged pieces of arecanut. It does not contain any additive/ ingredients like catechu, tobacco, lime etc.. The tested parameters of sample meet the requirement of arecanuts and it is other than Betel Nut Products known as 'Supari'. • 07.04.2021 in respect of sample drawn from the consignment as per Bill of Entry dated 04.02.2021 reported that "sample is in form of brown coloured broken pieces of irregular shape and size arecanut along with some defective/ damaged pieces....
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....2 Arguing for the appellant learned counsel submits that- • The impugned order has been passed on the incorrect interpretation of tarrif entries and chapter notes of the tariff. • Appellant have correctly classified their goods under heading 21069030. The imported goods have undergone processes which had rendered them to be classifiable under the chapter 21. The processes undergone were duly mentioned in the certificate of quality filed with the customs authorities. • The reliance placed on the report of CRCL is misplaced for the reason that CRCL has commented on the classification of the product. • By the processes undertaken by the foreign supplier the character of the raw betel nut has under gone change. • The declared value has been wrongly rejected by the adjudicating authority as that was not the issue at the given time. • The rejection of the transaction value declared by the importer on the basis of circular of DGFT Circular fixing the minimum import price is contrary to the settled position in law. • Appellant request for re-export of the goods have been accepted by the adjudicating ....
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.... were found as Split Arecanuts. I also find that the importer has self assessed the duty under the provisions of section 17(1) of the Customs Act, 1962 classifying the said goods under CTH 21069030. I have gone through the CTH 21069030 and found that CTH 21069030 covers the goods namely "Betel nut product known as supari". I have also gone through the Supplementary Note 2 to the Chapter 21 which reads as under: "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 menthol." From the plain reading of the supplementary note supra, I observed that only the preparations of Betel Nuts falls under Chapter 21 and Betel Nuts/ arecanuts does not fall under this chapter 17.1 Further, Chapter Note 3 to the Chapter 8 reads as under: "3. Dried fruit or dried nuts of this Chapter may be partially rehydrated or treated for the following purposes: (a) for additional -reservation or stabilisation (for example, by moderate heat treat....
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....te under more than one heading, the heading which provides the most specific description has to be preferred to headings providing a more general description. I observe that in the present case, goods have been described as Process Betel Nuts" but actually goods found are dried nuts only which are not Betel Nut Products. I also find that the CRCL vide its test report have not informed about involvement of any process instead confirmed that goods are in fact broken pieces of arecanuts and these are other than "Betel Nut Products known as Supari". Therefore, I find that as per terms of sub-heading 080280, Chapter Note 2 to the Chapter 21 and Chapter Note 3 to the Chapter 8 of the Customs Tariff and test report from CRCL, the said goods described as "Process Betel Nuts" which were found as Split Arecanuts are classifiable under CTH 08028020 this 17.5 To arrive at this conclusion, I take support of decision of Hon'ble Tribunal Chennai, in case of M/s S. T. Enterprises Vs Commissioner of Customs (Chennai VII) vide its final order No 40736-40737 dated 26.02.2021 had held that since the imported goods are betel nuts whole, these would merit classification under Chapt....
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.... respect of the applicant. In view of above provisions, Advance Ruling in case of Ruling no. AAR/44/CUS/03/2017 in Application filed by M/s Oliya Steel Pvt Ltd & AAR/CUS/08/2015 in an application filed by M/s. Excellent Betel nut Products Pvt Ltd are not applicable in the present case. In this regard, I take support of decision of Hon'ble Tribunal in case of in case of M/s S. T. Enterprises Vs Commissioner of Customs (Chennai VII) who vide final order No 40736-40737 dated 26.02.2021 had held that these rulings would apply to the parties and is not binding precedent for other cases (para 17 supra). Further, the contention of the importer that Betel Nut Product is one containing one or more of ingredients namely lime, katha, tobacco whether or not containing any other ingredient such as cardmum, copra or menthol is also not correct as Supplementary Note 2 to the Chapter 21 clearly states that "In this chapter Betel nut Products known as Supari means any preparation containing betel nuts, but not containing any one or more of following ingredients namely lime, katha, and tobacco. In the present case, I find that the goods have been declared as "Process Betel Nut" not as "....
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....ice which is not a correct value for the purpose of levy of duty. Therefore, I reject the declared value. I find that the CBIC board, time to time, changes such Tariff Value and in the present case, value is to be re-determined in accordance with Notification No. 117/2020-CUSTOMS (N.T.) dated 31.12.2020 & 13/2021-CUSTOMS (N.T.) dated 02.02.2021. Further, I also find that excess quantity of goods have been found in case of goods imported vide Bill of Entry No. 2625658 dated 04.02.2021. I take this into consideration while re-determining the value. In view of above, I hold the re- determined value of the goods imported vide Bill of Entry No 2329397 dated 12.01.2021 and 2625658 dated 04.02.2021 as Rs. 69,12,310/- and Rs1,49,78,696/- respectively as against declared value of Rs. 21,20,670/- and Rs. 45,14,030/- respectively 19. Now I take up the issue whether the goods imported vide Bill of Entry No 2329397 dated 12.01.2021 and 2625658 dated 04.02.2021 are liable to confiscation under Section 111(d) and 111(m) of the Customs Act, 1962. In this regard I have gone through the Notification No 20/2015-2020 dated 25.07.2018 and found that the Directorate General of Foreign Trade, vi....
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....ct, 1962. And it is found that goods were wrongly classified and quantity has also been mis-declared intentionally. I also find that to avoid assessment under fixed Tariff Value, the said importer has mis-declared value also. In view of this I hold that said goods imported vide Bill of Entry No 2329397 dated 12.01.2021 and 2625658 dated 04.02.2021 having re- determined value as Rs. 69,12,310/- and Rs1,49,78,696/-respectively are liable to confiscation under provisions of section 111 (m) of the Customs Act, 1962. 20. Now I take up the issue as to whether importing firm M/s. Ananya Overseas are liable to penalty under Section 112(a) of the Customs Act, 1962 20.1 In the present case, I find that the said Bills of Entry have been filed under the provisions of section 46 of the Customs Act, 1962. As per said provisions of said section, the importer while presenting a bill of entry shall at the foot thereof make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in support of such declaration, produce to the proper officer the invoice, if any, relating to the imported goods. The said importer has presented respective invoices....
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....to re-export the goods. This facility of re-export may be given to the importer on payment of redemption fine under section 125 of the Customs Act, 962, in addition to payment of penalty under section of the said Act. In this regard, I rely on the following judgments: (a) AK Jewellers Commissioner of Customs, Mumbai [2003 (155) E.L.T. 585 Tribunal - Larger Bench)], in which it was held: "Redemption fine in lieu of confiscation and re-export are two independent actions, hence the view taken that in case the assessee is allowed to re-export, the confiscation and redemption fine is not justified, is not a correct view. Further we find that this view is also taken by the Hon'ble Supreme Court in the case of Commissioner of Customs v. Elephanta Oil Industries Ltd. reported in [2003 (152) E.L.T. 257 (S. C.)] rejecting the contention of the importer that once the imported article is re-exported as directed by the Department, there is no question of levying any penalty or redemption fine." Collector of Customs, Bombay v. Elephanta Oil & Industries Ltd. [2003 (152) E.L.T. 257 (S.C.)], Para Nos. 8, 9 & 10 are reproduced as follows: "8. We would first deal with the conte....
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....vides for confiscation of improperly imported goods. Section 111 provides that goods brought from the place outside India are liable to confiscation if the goods are improperly imported as provided therein. In cases where goods are liable to confiscation, discretion is given to the authority to impose penalty. Further Section 125 empowers confiscation of such goods and thereafter, confiscated goods vest in the Central Government. The Section further empowers the authority to give an option to the owner or the person from whom goods are seized to pay fine in lieu of such confiscation for return of the goods and the fine is also limited up to the market price of the goods. Therefore, levy of fine in lieu of confiscation is in addition to levy of penalty imposable under Section 112." 21.2 In view of above I allow re-export considering the provisions of the Customs Act, 1962" 4.3 From the above it is evident that the issue is in respect of mis classification of the imported goods namely "Processed Betel Nuts" imported by the appellant. Appellant has claimed the classification under heading 210609030 whereas the revenue proposed classification under the CTH 0802 8020. The ad....
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....s is to give the product a look and feel by roasting it fire gas roaster and add cardamom and any other relevant spices. Even at this stage also, any metal, if detected, is removed by magnetic metal detectors and after that the product is packed. It is thus, evident and imminently clear that with such a rigorous manufacturing process the classification of the raw material is bound to change and therefore, cannot be classified under 0802 but the merits to be classified under 2106 90 30 worldwide." 11. In this letter it has been stated that betel nuts have been subjected to several processes and then imported. However, the report of the Chemical Examiner does not show that impugned goods have been subjected to any of these processes. At the time of arguments before this Tribunal, as also before the lower authority, the main contention put forward by the Counsel for appellants is that the betel nuts were subjected to boiling in water for 6 to 8 hours and dried in sun light and the moisture content is reduced considerably. It was also argued that betel nuts are edible only and after being subjected to the process of boiling. Ld. Counsel relied on SFTS report dated 23-....
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....uts, they fall under Chapter 8. The Counsel for appellants had placed before us samples of dried whole betel nut (without husks) as well as sample of the imported goods. We were able to see that the imported goods are also whole but more dried. 15. Ld. Counsel for appellants has referred to Chapter Note 2 of Chapter 21 to strongly contend that the goods would fall under CTH 2106 90 30. From the table reproduced earlier, it can be seen that CTH 2106 90 30 takes in the items "betel nut product known as supari". To be more clear what is described therein is 'betel nut product' and not betel nut 'whole' as seen in Chapter 8. Chapter Note 2 of Chapter 21 also speaks about 'betel nut product' and not betel nut 'whole'. As per Chapter Note 2 of Chapter 21 'betel nut product' means any preparation containing betel nut, but not containing lime, katha and tobacco. It may or may not contain cardamom, copra, or menthol. 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 ....
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.... betel nut' 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 also stated by the Examiner that it is not possible to ascertain whether the nuts are boiled. Though the Food Safety authority in their certificate has used the words 'boiled supari', it is of not much support to the appellants as this authority has only to look into whether goods imported are fit for human consumption or not. Even sun dried/or machine dried betel nut 'whole' would be fit for human consumption if it does not contain fungi and other harmful elements. 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. Although in the report of Chemical Examiner and FSSAI the competing classifications have been mentioned, we do not find any evidence to support that various processes as stated in the write up of the supplier has been undertaken on the nuts. We do not have quarrel with the position that the Chemical Examiner, FSSAI authority or the Foreign Supplier cannot decide the classif....
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....ariff by way of Chapter Note No. 6 to Chapter 21. In view of said ruling of this Authority in case of M/s. Excellent Betel Nut Products Pvt. Ltd. it is clear that Supplementary Note 2 to Chapter 21 to the Customs Tariff does not require any change in the nature of the end product and also reliance on the Hon'ble Supreme Court judgment in case of M/s. Crane Betel Nut Powder Works (supra) is not appropriate. It is further noticed that CTH 0802 covers only fresh and dried Areca Nuts/Betel Nuts. All items proposed to be imported except "Unflavoured Supari" are boiled. These items, after boiling, do not remain "fresh and dried". Therefore, we agree with the contention of the applicant that said items would not merit classification under 0802. 11. Revenue also submits that in respect of applicant's claim that in case of "API Supari", Betel nut is boiled for 6 hours, cannot be conclusively proved and hence not ascertainable, it is noticed from the process of preparation submitted by the applicant in respect of "API Supari" that it is not restricted to boiling betel nut for 6 hours but includes removing of large impurities by labour, boiling in water for 6-8 hours with lemon peel ....
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....be and as such would not be of much help in deciding the classification of impugned goods. 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. 22. From the above, we have to say that since the import goods are 'betel nuts whole', these would merit classification under Chapter 8 and specifically under Chapter 0802 80 10 as classified by the department. We cannot refrain from stating that the Commissioner (Appeals) has made detailed discussion of facts and the law and arrived at the correct classification." 4.4 This decision of Chennai Bench ahs been affirmed by....
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....ides. The question that needs to be answered is whether; A) when the goods have been re-exported, the question of confiscation of goods under Section 111(d) of the CA 1962 arises. B) no redemption fine is imposable on the goods that are reexported. C) no penalty under Section 112(a) can be imposed when goods are re-exported. We shall examine the issues below. When the goods have been re-exported, the question of confiscation of goods under Section 111(d) of the Customs Act, 1962 does not arise? 7. We find that this is a case where the appellant had imported eight diesel engines and one industrial engine on 04.12.2021. The imported goods being Diesel Engines were found not to comply with the provisions of Sr No 95 of Schedule I of the EPR 1986, as amended. Due to their inability to produce the requisite certificates and comply with the mandatory provisions of import, the appellant requested that the matter may be adjudicated. 8. Para 10 and 11 of the adjudication order dated 14/09/2022 passed in the matter, which is self-explanatory are reproduced below; "10. ......" 9. Goods become liable to confiscati....
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....o in that section applies to every type of "prohibition". That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression "any prohibition" in section 111 (d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947, uses three different expressions "prohibiting", "restricting" or "otherwise controlling", we cannot cut down the amplitude of the word "any prohibition" in Section 111(d) of the Act. "Any prohibition" means every prohibition. In other words all types of prohibitions. Restriction is one type of prohibition. . ." 11. In Union of India v. Raj Grow Impex LLP [2021 (377) E.L.T. 145 (S.C.)], the Hon'ble Supreme Court examined the issue of absolute confiscation of prohibited goods and stated as under; "Whether the goods in question are liable to absolute confiscation? 69. Once it is clear that the goods in question are improperly imported and fall in the category of 'prohibited goods', the provisions contained in Chapter XIV of the Customs Act, 1962 come into operation and the subject goods are liable to confiscation apart fr....
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....ection 111(d) is an action precedent to allowing the same to be redeemed under section 125 of the CA 1962. The permission for export of prohibited goods that have been confiscated and redeemed, is an administrative order emanating from the importers request for re-export of the goods and is not flowing from Section 125 of the CA 1962. It comes into operation only after the importer gets back title to the confiscated goods on paying the redemption fine. That the permission for re-export has been bundled and passed in a quasi-judicial order pertaining to the confiscation and redemption of goods is only for administrative convenience. Further it gives certainty to the action the importer is permitted to take post redemption of the goods. It also makes it easier for the importer, who does not have to file a fresh application for export post redemption of the goods and await an uncertain outcome. The exercise of such powers by the Proper Officer finds approval from the Apex Court. The Hon'ble Supreme Court in Hirday Narain vs Income-Tax Officer, Bareilly [1971 SCR (3) 683 / AIR 1971 SC 33] held that; "If a statute invests a public Officer with authority to do an act in a specif....
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....g of the word "liable" in the context of section 11AC of the Central Excise Act, 1944 ("the person who is liable to pay duty as determined under sub-section (2) of section 11A shall also be liable to pay a penalty equal to the duty so determined :") and Rule 173Q of the Central Excise Rules, 1944, ("then, all such goods shall be liable to confiscation and the manufacturer, producer, registered person of a warehouse or a registered dealer, as the case may be, shall be liable to a penalty."), which are similar to the context in this case. The Hon'ble Court held as under; 30. . . . What is the significance of the word "liable" used both in Rule 173Q and Section 11AC? Under Rule 173Q apart from confiscation of the goods the person concerned is liable to penalty. Under Section 11AC the word "also" has been used but that does not appear to be quite material in interpreting the word "liable" and if liability to pay penalty has to be fixed by the adjudicating authority. The word "liable" in the Concise Oxford Dictionary means, "legally bound, subject to a tax or penalty, under an obligation". In Black's Law Dictionary (sixth edition), the word "liable' means, "bound or obl....
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.... to be redeemed on payment of a fine. To release prohibited goods without imposing a fine is not a valid option. After the appellant informed the Proper Officer that they were not in a position to fulfill the conditions of EPR 1986, it was incumbent on the Officer to confiscate the prohibited goods imported in violation of the said Rules. Once the offending goods are confiscated the title of the goods comes to be held by government and the mechanism for the importer to get back possession of the goods is by paying a redemption fine as decided by the Proper Officer. Hence the goods can only be taken repossession of with title by the importer, if he pays a fine. 16. The appellant has stated that it is a settled position of law that no redemption fine is imposable on the goods that are to be re-exported. We have earlier seen that for the Proper Officer to allow the redemption of prohibited goods is part of his discretionary jurisdiction. No court has laid down the law that prohibited goods, imported without authorization, are to be released for re-export without payment of redemption fine. Such a stance would only encourage importers smuggling / making improper import of good....
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....Collector of Customs [1999 (113) E.L.T. 776 (S.C.)]. (b) Sankar Pandi v. Union of India [2002 (141) E.L.T. 635 (Mad.)], upheld by the Hon'ble Supreme Court in Union of India v. Sankar Pandi [2018 (360) E.L.T. A214 (S.C.)]. (c) M.K.A. Chinnasamy Nadar & Sons v. CC, Tuticorin [2021 (378) E.L.T. 511 (Tri. - Chennai)] (d) M/s. Akshara & Co. v. CC, Chennai [2022 (3) TMI 825 - CESTAT CHENNAI] 14 C/40256/2023 (e) Royal Import and Exports v. CC, Tuticorin [2021 (377) E.L.T. 865 (Tri. - Chennai) (f) Selvam Industries Ltd., v. Commissioner of Customs, Tuticorin reported in 2021 (377) ELT 458 (Tri Chennai) (g) Lalkamal Enterprises v. Commissioner of Customs, Chennai I reported in 2018 (364) ELT 856 (Tri Chennai) (h) Skylark Office Machines v. Commissioner of Customs, Chennai [2020 (374) E.L.T. 99 (Tri. - Chennai) (i) M/s. SDS Ramcides Crop Science Pvt. Ltd. v. CC, Chennai II [2023 (7) TMI 891 - CESTAT CHENNAI] 20. As regards the judgments, the appellant has stated that as per the decision of the Hon'ble Supreme Court in Siemens Limited (supra) and Sankar Pandi (supra), in a case of re-export, redemption fine or d....