TaxTMI 
TaxTMI 
2025 (1) TMI 360
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.....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'orty Thousands Only) & Rs 22,50,000/- (Rupees Twenty Two Lakch F....
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....canuts 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 of arecanut. It does not contain any additive/ ingredients like catechu, tobacco, lime etc.. and it is other than Betel Nut Products known as 'Supari'. 2.4 FSSAI ....
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.... 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 authority. It is settled position in law that the where the goods are allowed for re-export redemption fine should not be imposed,- * Siemens Limited [1999 (113) ELT 776 (SC)] * SDS Ramdices Crop Science Pvt Ltd. [2018 (359) ELT 239 (T)] * Central Marketing Agency [2004 (178) ELT 601 (T)] ....
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....el 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 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 fruit or dried nuts 17.2 I also find that heading 080280 is as under: 0802 80 - Areca nuts .. 0802 80 10 --- Whole 0802 80 20 --- Split 0802 80 30 --- Ground I observed that sub-heading 080280 describe....
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.... 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 Chapter 8. In this case goods were declared as Boiled Betel Nut and classified under Tariff Item 21069030. Hon'ble Tribunal have observed that even if the impugned goods i.e. Boiled Betel Nuts, have undergone the process of boiling or have been boiled in water and dried, it does not take away the essential character of betel nut being whole' 17.6 I also find that Hon'ble Supreme Court in case of A. R. S. & Co Vs Commissioner of Central Excise, Trichy reported in [2015 (324) ELT 30 (S.C.)] has held that crushing betel nuts in....
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....ther 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 "Betel Nut Products" and also do not contain additive/ingredients like katha, lime, tobacco. Further, as per Chapter Note 3 to the chapter 8, dried nuts of this chapter may be partially rehydrated or undergone through moderate heat treatment, mixing of flavors still they retain the character of dried nuts. This has also been supported by the test report received from the CRCL that goods are basically Arecanuts, and are not Betel nut Products. Even otherwise, as I have discussed above that declared description of the goods as "Process Betel Nut" not as "Betel Nut Products" and as per C....
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....s 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, vide said Notification has fixed minimum import price for Arecanuts under Exim Code 080280 of Chapter 8 of ITC (HS) 2017 as Rs 251/- per kg. In the present case, goods have been imported below the minimum import price fixed as tariff value. I also find that this import is not free in view of DGFT Notification No 20/2015-2020 dated 25.07.2018 and is prohibited. Therefore, in terms of sub- section 40 of section 2 and sub-section 33 of section 2 of the Customs Act, 1962, the 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/ - an....
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....on 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 which describes goods as Process Betel Nut. This shows that goods are in fact Betel Nuts only. Further, I find that said invoices do not describe goods imported as "betel nut product known as supari". The importer even knowing the description that item is not a betel nut product but simply betel nut, still they classified the said goods under Chapter 21. I therefore, find that the importer have attempted to mis-classify the goods with sole intention to avoid assessment under fixed Tariff Value which is much higher than the declared value. I also find that said importer has mis-declared quantity of the goods as discussed above. Further,....
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....w 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 contention raised by the Learned Senior Counsel Mr. Sanghi appearing on behalf of the respondent that once the imported article is re-exported as directed by the department, there is no question of levying any penalty or redemption fine. In our view, this submission is without any substance because confiscation of goods and thereafter permitting the respondent to re-export the same would not mean that penalty under Section 112 of the Customs Act cannot be levied. The power to levy penalty under Section 112 for improper importation of goods is different from the power of confiscation of goods under Section 125 and giving an option to pay in lieu of confiscation such....
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....evy 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 adjudicating authority has based her finding on the basis of Report of Chemical Examiner (CRCL), and various decisions of the tribunal and decisions of Hon'ble Supreme Court in case of Crane Betel Nuts and A R S & Co. Appellant submission that reliance placed by the adjudicating authority on the CRCL report is erroneous as CRCL has commented on the classification of the goods by relying on the various decisions of the tribunal. However we do not find any merits in the said submission. All the arguments advanced by the appellant in respect of the classification have been considered by Chennai Bench in case of S T Enterprises [2021 (378) E.L.T. 514 (Tri. - Chennai)] and rejected observing as fol....
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....d 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 23-11-2020 to argue that goods imported conform to betel nuts (Boiled Supari) which are fit for human consumption. 12. The betel nuts which are 'whole' nuts and classifiable under CTH 0802 80 10 are prohibited for import if the CIF value of the goods is lesser than Rs. 251/- per kg. The declared quantity of the goods in appeal filed by Ayush Overseas is 79,520 tons valued at Rs. 89,63,892/- @ Rs. 112.75 per kg. Thus, if the classification is under Chapter 8, the import of these nuts would be against the provisions of law. It is not the case of the appellants that the betel nuts are not 'whole'. In other words, appellants do not have a case that the imported goods are broken or crushed betel nut. They have imported betel n....
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.... 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 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 2106 90 30. 16. To arrive at this conclusion, we are also supported by the decision of the Hon'ble Supreme Court in the case of Crane Betel Nut Powder Works v. CC & CE, Tirupathi - 2007 (210) E.L.T. 171 (S.C.). The facts of the case before Hon'ble Apex Court was that the assessee was marketing betel nuts after cutting into different sizes and adding essential/non-essential oils, menthol, sweetening agents etc. The assessee classified the items under Chapter 21 and cleared by paying excise duty. Later, they revised classificat....
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....d. 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 classification of goods. 20. The question is whether by mere boiling and drying whole betel nut it would merit classification under 2106 90 30 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. Needless to say that the said decision is binding and applicable to the parties to the litigation only. Be that as it may, going through the ruling in the said case the goods imported are various kinds of supari namely API Supari, Chikni Supari, Unflavoured Supari and Flavoured Supari and Boiled Supari. It is stated that in para-1 of the said order that the principal raw material used by the foreign manufacturer for the proposed import of goods is raw betel nut covered under Chapter 8 specifically fallin....
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.... 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 and/or food starch for imparting good texture to product, drying, polishing and packaging. Therefore, exact hours of boiling of betel nut is not so significant in said process of preparation than its boiling in water with lemon peel and/or food starch for the purpose of imparting texture to the product as also other processes. Therefore, contention of Revenue is not correct." The goods were held to be classified under 2106 90 30 as food preparation by the Advance Ruling Authority. These rulings would apply only to the parties therein and is not a binding precedent for other cases. 18. In Empire Industries Ltd. v. UOI - 1985 (20) E.L.T. 179 (S.C.) which is seen referred, the Hon'ble Apex Court held that the "taxable event under the Excise Law is 'manufacture'. The moment there is transformation into a new commodity commerc....
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....ese 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 Hon'ble Supreme Court as reported at [2021 (378) ELT A142 (Supreme Court)]. Thus we hold that the goods imported by the appellant have been rightly held to be classifiable under the heading 0802 8030. 4.5 On the issue of valuation we find that impugned order relies on the Notification of the DGFT fixing the minimum import price for the import of the areca nuts classifiable under Chapter 0802. The minimum import price fixed by the DGFT could not be called the tariff value as has been done by the impugned order. The Tariff Value as defined by the Custom Act, 1962 is the value of the good fixed by the Board and could not have been fixed by any DGFT. Minimum Import Price fixed by the DGFT is an indicative minimum price of the goods imported and the goods if imported below this price could not have been allowed clearance for home consumption. However this ....
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....port, 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 confiscation if the Importer or Exporter contravenes any of the provisions of the CA 1962 or any other Act for the time being in force in relation to the importation and exportation of goods. In this case the goods were imported in contravention of the provisions of the EPR, 1986. They were hence 'prohibited goods'. 10. The Hon'ble Supreme Court in M/s Om Prakash Bhatia Vs. Commissioner of Customs, New Delhi [(2003) 6 SCC 161], after examining the term "prohibited goods" as defined in Section 2(33) of the CA 1962, held as under; "From the aforesaid definition, it can be stated that (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the cond....
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....tion 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 from other consequences. Having regard to the contentions urged and the background features of these appeals, the root question is as to how the goods in question are to be dealt with under Section 125 of the Customs Act? The relevant part of Section 125 of the Customs Act reads as under :- Section 125(1) of the Customs Act, 1962 "125. Option to pay fine in lieu of confiscation. - (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit : xxxx xxxx xxxx" 69.1 A bare reading of the provision aforesaid makes it evid....
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....day 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 specified set of circumstances, it is imperative upon him to exercise his authority in a manner appropriate to the case when a party interested and having a right to apply moves in that behalf and circumstances for exercise of authority are shown to exist. Even if the words used in the statute are prima facie enabling the Courts will readily infer a duty to exercise power which is invested in aid of enforcement of a right -public or private-of a citizen. In Julius v. Bishop of Oxford it was observed by Cairns, L.C., at pp. 222-223 that the words "it shall be lawful" conferred a faculty or power, and they did not of themselves do more than confer a faculty or power. But there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the....
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....ct to a tax or penalty, under an obligation". In Black's Law Dictionary (sixth edition), the word "liable' means, "bound or obliged in law or equity; responsible; chargeable; answerable; compellable to make satisfaction, compensation, or restitution.... Obligated; accountable for or chargeable with. Condition of being bound to respond because a wrong has occurred. Condition out of which a legal liability might arise.... Justly or legally responsible or answerable." 31. When we examine Rule 173Q it does appear to us that apart from the offending goods which are liable to confiscation the person concerned with that shall be liable to penalty up to the amount specified in the Rule. It is difficult to accept the argument of the appellant that levy of penalty is discretionary. It is only the amount of penalty which is discretionary. Both things are necessary : (1) goods are liable to confiscation and (2)) person concerned is liable to penalty." (emphasis added) Hence there is no discretion with the Proper Officer, not to confiscate goods that are found liable to such action as per section 111(d) of the CA 1962. As per the discussion above the Customs Act only provides a di....
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....ption fine. Such a stance would only encourage importers smuggling / making improper import of goods, to take a chance with the law and if caught request for re-export of the offending goods without a fine. It would also be discriminatory that for the same offence the intended nature of clearance of the confiscated goods would determine the imposition of fine i.e. if the offending goods are cleared for home consumption fine is to be imposed and if the importer requests for its export, no fine can be imposed. The position is legally untenable. The offence does not get cured by the intended destination of the goods. Confiscated goods can be redeemed either for home consumption / warehousing or for export only on payment of a fine. I find that the impugned order is legal and proper and no interference in the discretion exercised by the Proper Officer is called for. The Hon'ble Supreme Court in its judgment in Duncan Industries Ltd. and Anr Vs Union of India [AIR 2006 SC 3699 / 2006 (3) SCC 129] held as under; "We are broadly in concurrence with the reasoning of the High Court that in matters of administrative discretion it is not open to the courts to interfere in minute details, e....
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....ption fine or duty cannot be imposed. We find that the Hon'ble Supreme Court has not laid down any such law in the said case. Its decision to order refund of the redemption fine were based on the peculiar facts of the case. So also in the case of the Hon'ble High Court in Sankar Pandi. The other judgments cited by the appellant are based on decisions of the Tribunal. In this regards I propose to examine the Larger Bench decision in the case of Hemant Bhai R. Patel (supra), cited by Revenue, which is binding on a Bench of lesser strength. The question examined was that when re-export is permitted no redemption fine can be imposed, which is the same issue involved here. The Larger Bench of this Tribunal answered the question as under; "Section 112 authorizes imposition of penalty. Section 125 contains the provisions enabling the Customs Officer to grant an option to the owner or the person from whose possession the goods have been seized to pay a fine in lieu of confiscation. In an adjudication proceeding as in the present case these are the provisions which would come into play. If the owner gets the goods released after payment of redemption fine, he may either clear it for home....