TaxTMI 
TaxTMI 
2023 (11) TMI 1366
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...., Thailand, Cambodia into India through three ports, e.g. (i) the Seaports/ICD's at Chennai/Ennore Port; (ii) Durgapur ICD, LCS Petrapole, Kolkata Port; & (iii) Nagpur ICD and Mumbai Port. Accordingly, three separate applications were filed with the Authority. 2. The Applicant is a proprietary firm and had sought to import Roasted Areca Nut/Betel Nut from Indonesia. The supplier is one M/s. PT. Gajamukha, Jalan Suka Bumi Lama Gang III, No.999 Dusun II, Desa Puji Mulya, Kecamatan Sunggal, Kubupaten Deli Serdang-20365, North Sumatra, Indonesia. The Indonesian supplier is in the business from the year 2010 and intends to export to the Applicant goods described as "Roasted Areca Nut/Betel Nut". In such circumstances the Applicant has made the present application to ascertain whether the product sought to be imported falls under CTH 2008 1920. All applications were shared with the three field formations, however, the response has only been received from Chennai and Kolkata and have further been communicated to the applicant. 3. Applicant has stated the relevant facts and interpretation of law having a bearing on the question(s) raised enclosed with the CAAR-1 application are a....
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.... One of the main use of the goods under consideration is masticatory. Even though, the impugned goods satisfy this note, the process of roasting is not finding mention anywhere in this Explanatory Note. Further, the roasted betel nuts - whole or cut - are fit for immediate human consumption without addition of any other ingredient, as is evident from the FASSAI approved product / samples available in the market. A.2 The processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. It does not specifically include the process of roasting. There is a wide distinction between the processes of drying and roasting. The processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. It does not specifically include the process of roasting. There is a difference between the processes of moderate heat treatment & dehydrating/drying referred in chapter 8 and processes of dry roasting, oil-roasting and fat-roasting referred in chapter 20. The terms dry-roasting, oil roasting and fat-roasting however are not defined in the Customs Tariff Act, 1975. When the terms have not been defined in the Custo....
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....otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included -Nuts, ground nuts and other seeds, whether or not mixed together: 2008 19 20 --- Other roasted nuts and seeds On perusal of CTH 2008 and the HSN Explanatory Notes under the heading 2008, it covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter. Specifically, the explanatory note states and includes: "Almonds, ground nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat- roasted, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives. " B.1 From the above observation it is evident that the "other nuts", finds specific reference in the chapter 20 of the schedule I of the Customs Tariff Act 1975 and "roasted areca / betel nuts" find specific mention in Chapter 2008 HSN Explanatory Note, both read conjointly would bring the impugne....
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....t 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, which would classify the goods therein under Chapter 8. B.3 Whereas, roasting is different from all the processes mentioned above. Roasting, as mentioned supra is carried out using firewood/ palm kernel-based ovens and the temperature of the flames is around 600 degrees Celsius, due to which betel nuts are roasted well beyond 100 degrees Celsius, usually in the range of 130-150 degrees Celsius. This clearly indicates that the roasting is much more than mere 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. Therefore, the impugned goods do not satisfy Note 3 to Chapter 8, as such the process of roasting cannot be covered under Chapter 8 of CTH. Roasting is the essential process for the preparation of impugned goods. HSN Explanatory Note to chapter 20 a reference to "dry-roasted, oil-roasted or fat-roasted" indicates the principal processes of preparation that would change the c....
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....the safe and dependable guide in the matters of classification of items and relies upon the following case laws viz. (i) Holostick India Ltd. Versus Commissioner of Central Excise, Noida Reported in 2015 (318) E.L.T 529 (S.C), (ii) M/s. L.M.L. Ltd. Versus Commissioner of Customs Reported in 2010 (258) E.L.T 321 (S.C), (iii) Collector of Central Excise, Shillong Versus Wood Craft Products Ltd Reported in 1995 (77) E.L.T 23 (S.C.) to IV. 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 nuts in cans). In most cases, however, products put up in these packing have been prepared or preserved otherwise than as provided for in the headings of this Chapter, and are therefore excluded from chapter 8 (and will fall under Chapter 20). It is further submitted that the processes mentioned in Chapter 8 is different from the processes performed on impugned goods, as such they are excluded for the purpose of classification from Chapter 8 of the Customs Tariff Act, 1975. The Applicant states that the process of roasting changes the chemical and physical cha....
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....ted betel nuts are classifiable under Heading 2008 based on the terms of the Heading 2008 and HSN Explanatory Notes to Chapter 20. Further, since the impugned goods are already included in Heading 2008 of the Customs Tariff Act, 1975, they stand excluded from the scope of Chapter 21. VII. The Applicant further states that in order to confirm the classification of the impugned good viz. Betel Nut, they had requested for the sample of the goods from the Indonesian Supplier and sent it for testing with M/s. Edward Food Research & Analysis Centre Limited (EFRAC). The said Accredited Food Testing Agency, by its Test Report dated 20.07.2023 had opined and certified that the sample of goods are indeed "Roasted Areca Nut", having a Moisture content of 3.28%. This report fortifies the contention that the goods sought to be imported is "Roasted Areca Nut" which would appropriately be classifiable under CTH 2008 19020. Further, the judgments passed in the case of M/s. Crane Betelnut Powder Works -Vs- Commissioner of Customs & C. EX, Thirupathi reported in 2007 (210) E.L.T 171 (S.C) and the Advance Ruling passed in the matter of M/s. Excellent Betel Nut Products in pursuance of amendm....
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....rmally a safe guide in determining classification under CTH. Roasted areca / betel nut having been mentioned in CTH 2008 19 20 under HSN. (d) When there is a specific entry covering a product/commodity, the test of common parlance is irrelevant in determining classification. 17. For all the above reasons, we are not inclined to interfere with the findings of the Advance Ruling Authority, which stands affirmed." X. Further, even as per General Rules of Interpretation (GIR) 3(a) of the Customs Tariff Act 1975, when the goods are classifiable under more than one Heading, the 'most specific description' is preferred. When, Section notes along with terms of heading and explanatory notes are examined for both Headings 0802 and 2008, it is observed that roasted nuts which include roasted betel nuts find a specific description in Heading 2008. Therefore, on the application of GIR 3(b), the subject goods merits classification under Heading 2008 and more specifically under Subheading 2008 19 20 as "Other roasted nuts and seeds". The Applicant states that from all perspective namely taking recourse to HSN explanatory note to Tariff Heading 2008, High Court &....
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....uantities of glucose syrup), provided that they retain the character of dried betel nut, fruit or dried nuts." 5.2 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 percent. However, as per the test reports available with this office, the moisture content is normally less than 10% for various consignments of raw betel nuts imported under Chapter 08. 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 Advance Ruling authority. Hence, it is clear that the applicant did not provide the complete process before the CAAR and have mis-represented the facts. The applicant states that processes mentioned in chapter 8 are different from the processes performed on impugned goods. Since the claimed process by the applicant is devoid of any test report and roasting is well inclusive in heat treatment mentioned in Chapter note 3 of C....
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....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: 1. 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. Vegetable fats and oils (chapter 15); c. Food preparations containing more than 20% by weight of sausage, meat, meat offal, blood, insects, fish or crustaceans, molluscs or other aquatic invertebrates, or any combination thereof (chapter 16) d. Bakers' wares and other products of heading 1905; or e. Homogenized composite food preparations of heading 2104. 5.5 Further, as per Rule 3(a) of General Rules for the Interpretation of the Harmonized System since the product is more specifically classified under CTH 08020 classification under Chapter 2008 or 2106 is unwarranted. When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: The heading which provides the most....
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....e content less than 5% (3 to 4% in general) depending upon the duration and intensity of roasting, needs not packed in cans, jars or airtight containers or in casks, barrels or similar containers as the same is less susceptible to deterioration. These kinds of packing are required for products that are not roasted and are susceptible to deterioration due to exposure to atmospheric moisture. It is clear that except for roasted nuts other products may require the packing as indicated in the relevant HSN Explanatory Note. ii. As to the Department Representative's request to fix the moisture content at 1.5% to make the subject item qualify for classification under the CTH 2008, it is submitted that such a proposal is without any reasoning either scientific or otherwise. Driving out the moisture of the betel nut to its extremity (1.5%) may result in the product being completely burn out to become ash, literally. By this the department is attempting to achieve what could not be achieved through legal process. Rather it is pertinent to mention and draw attention of the authority to the Lab Report No.173/MCH/10.08.2023 dated 24.08.2023 issued by CRCL Chennai in respect of impo....
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....;roasted areca nuts' are packed in bags. In this regard it is was submitted that the moisture content in 'raw areca nut' is anywhere between 10% to 15%. After, the process of drying the moisture content is reduced to a maximum of 6% to 7%. Further any amount of drying or moderate heat treatment cannot remove the moisture content below the said level of 6%. Further, only by the process of roasting, by use of roasting ovens / furnace, the moisture content in "Roasted Areca Nut" is brought below 4%. Further, the contention of the respondent Commissionerate that the moisture content has to be brought below 1.5%, cannot be sustained, as it would only turn the 'areca nut' into ash. (ii) With respect to the second contention that the 'roasted areca nuts' needs to be 'generally put up in cans, jars or airtight containers, or in casks, barrels or similar containers', it is submitted that the term generally, has a broad connotation, as such the product need not be restricted to the aforesaid containers. Moreover, the packaging of a product, cannot decide the description of the goods, which would lead to absurdity. Further, the packaging is made to....
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....d or pealed" CTH 0802 80- Areca Nuts: (i) 0802 80 10 - Whole (ii) 0802 80 20 - Split (iii) 0802 80 30 - Ground (iv) 0802 80 90 - Other I. From the Bare reading of the aforesaid Chapter and the Chapter notes it could be seen that though "Areca Nut" has been mentioned in the chapter, it only refers to Areca Nut in its Natural form, wherein no modification is done to change its original characteristics. Further the chapter permits moderate heat treatment for additional preservation/stabilization and to maintain the appearance. Importantly the character of the Dried Nuts is to be maintained. II. Invariably "Roasted Areca Nut" cannot be compared with "Dried Areca Nut", wherein Dried Areca Nut has only undergone the process of moderate heat treatment, whereas the process of roasting is different which involves frying the Nuts in High Intense Flaming Ovens, such as to make the brittle by removing substantial moisture content to less than 4% and changing its character, by altering the tannin and arecoline content so as to make it masticatory and suitable for immediate consumption. III. In comparison to Chapter 8, Chapt....
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....alysis Centre Limited (efrac) dated 20.07.2023, which has not been disputed, wherein the sample tested mentions the Moisture Content @ 3.28%, which is well within the prescribed parameters. And the report clearly specifies the sample product as "Roasted" Areca Nut. 8. I have taken into consideration 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 Commissionerates of Chennai and Kolkata and the rebuttal to that filed by the applicant against both the submissions. No response has been received from the Nagpur Customs Port Commissionerate. However, as the matter and questions before the Authority being the same, I therefore proceed to decide the present application regarding classification of roasted Areca nut on the basis of the information on record as well as the existing legal framework having bearing on the classification of the roasted areca nut under the first schedule of the Customs Tariff Act, 1975. 8.1. The processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving....
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....n 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. 8.4. While examining the scope of CTH 2008, I find that as per HSN Explanatory Notes, he....
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....e 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." 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 note, a process of roasting is not specifically mentioned as a process of preservation or stabilization or a process to improve or maintain the appearance. Specific attention is invited to the paras 10 & 11 of the SC judgment (M/s Phil Corporation) in which paras 6 & 7 of SC judgment in case of M/s Amrit Agro are relied upon. Para 6 inter alia reads as follows: "roasted peanuts are covered by Chapter 20. Even according to the Explanatory notes of HSN under Heading 20.08 ground- nuts, almonds, peanuts etc. which are dry- roasted, fat-roasted whether or not containing vegeta....