TaxTMI 
TaxTMI 
2023 (11) TMI 1366
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....ree 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 as follows: I. The classification of roasted ....
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....d 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 Customs Tariff Act, 1975, then in such instances these terms have to be understood in a commonly accepted ....
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.... 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 impugned goods within the parameters of Chapter 20 more specifically under 2008 19 20. Moreover, from the above explanatory note, it is clear that the process of roasting ....
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....h 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 classification of nuts from Chapter 8 to Chapter 20. C. Chapter 21 of the Tariff covers Miscellaneous edible preparations. CTH 2106: Heading 2106 covers Food preparations not ....
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....n 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 characteristics of areca nut reducing arecoline and tannin content as well as colour and moisture. As such, the impugned product "Roasted Areca / Betel Nut" does not fall under Chapter 8 of the Tariff. V. The Applicant states th....
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....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 amendment to the Central Excise Tariff Act, 1985 vide The Finance (No.2) Act, 2009 (Act No. 33 of 2009 dated 19th August 2009), will have no barring in the instant case, since the classification of "Roasted Betel Nut" was not at all the subject matter of these decisio....
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....asons, 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 & Supreme Court judgments on the issue, GIR 3(b) application, interpretation of the Customs Advance Ruling Authority on the similar issue, it can be asserted that roasted betel nuts are correctly classifiable under the tariff item 2008 19 20 of chapter 20 of the first schedule of the Customs Tariff Act, 1975. 4. A personal ....
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....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 Chapter 8, the applicant's contention does not hold any water. After roasting, the end product remains dried areca nut, which is well defined in chapter 8 up to 6-digit level. 5.3. In the process flow to make roasted betel nut, one set of process are found to be intended for cleaning, the second set for heating and roasting. These processes are clear....
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....getable 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 specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or ....
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....he 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 import of Roasted betel nut by M/s Universal Impex (IEC No. 0313014159) based on the CAAR ruling No. CAAR/Mumbai/ARC/39,40,41/2023 dated 12.05.2023. To a specific test memo by the Customs department to ascertain whether the item under import was "roasted beetle nut" or not the Customs lab after testing the item reported as follows: "The item is in the form of grey-brown whole nuts having cracks on the upper surface. It answers tests for areca nuts active ingredients, ....
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...., 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 prevent the goods from deterioration and enable easy access to marketability. Whereas neither aspects have any bearing on 'roasted areca nuts' as roasting minimizes the moisture to the maximum level, thereby preventing insect infestation, damage and deterioration. Once, the product/goods is unaffected by outside parameters and vagaries of nature, the packaging need not be in airtight containers. Further, packaging is a means of convenience and no other significance can be attached to it. (iii) The said contentio....
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....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, Chapter 20 of the CTH specifies "Preparations of Vegetables, Fruit, Nuts or other parts of the Plants": Chapter notes states: (i) This chapter does not cover (a) Vegetables, Fruit or Nuts, prepared or preserved by the process specified in Chapter 7, 8 or 11. (ii) It is pertinent to state that the process of roasted Betel Nut does not fall under any of the above chapter 7, 8 or 11. (i) Therefore CTH 2008 specifies "Fruit, Nuts and other edible parts of the plants 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 oth....
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....r 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. It does not specifically include the process of roasting. Here it is important to understand the 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. Therefore, these terms have to be understood in a commonly accepted sense. The Hon'ble Apex Court in the case of Alladi Venkateswarlu v. Government of Andhra Pradesh 1978 AIR 945 held that "the commonly accepted sense of a term should prevail in construing the description of an article of food". In common trade parlance, "dryi....
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....il 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, heading 2008 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. Specifying what is included in this heading, the explanatory note states that 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. Dry-roasting, oil-roasting & fat-roasting, as a process, are very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes. It is also pertinent to observe that none of these proce....
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.... 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 vegetable oil are the items which all would stand covered by the said Heading 20.08." Honourable Apex Court's conclusions corroborate the finding that the process of roasting is not covered by Note 3 to Chapter 8 and hence these products, roasted betel nuts are not classifiable under chapter 8 of the Tariff. 8.6 In the CAAR, Mumbai Ruling No. CAAR/Mumbai/ARC/39,40,41/2023 in the case of M/s. Universal Impex, the Authority has stated his findings and has ruled accordingly- "in view of the specific CTH 2008 19 20: Other roasted nuts & seeds in chapter 20 of the first schedule to the Customs Tariff, HSN Explanatory note to CTH 2008, various Supreme Court rulings upholding guiding value of the HSN Explanatory notes for deciding classif....