TaxTMI 
TaxTMI 
2025 (6) TMI 1025
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...., learned Senior Standing Counsel appearing for customs and Sri Ratnesh Chandra, learned counsel for the respondent in Custom Appeal No. 3 of 2024 and Sri Dheeraj Srivastava, learned Senior Standing Counsel appearing for customs in Custom Appeal No. 3 of 2025. None appears on behalf of the respondent in connected Custom Appeal No. 3 of 2025. (2) Since, the core issue engaging the attention of this Court in Custom Appeals filed by the Department as well as the Writ Petition filed by the importer (M/s Rawder Petroleum Pvt. Ltd.) evolves from a common set of facts and circumstances relating to the custom tariff entry and the HSN code applicable to "roasted areca nuts" and their consequential import made in India, both the two Customs Appeal as well as the Writ Petition has been heard together and is being decided by this common Judgment. (3) Briefly stating, the claim of the importer/petitioner in Writ Tax No. 71 of 2025 (M/s Rawder Petroleum Pvt. Ltd. Vs Union of India) is premised on the fact that vide a letter dated 04/06/2024, they were informed by their overseas suppliers that the production and processing of 'roasted areca nuts' is carried out by husking of the raw betel/'....
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....re chargeable under Chapter 8 of the Tariff Act. (7) The said appeals came to be filed by the department on or around 20.11.2024 and since by that time, the assesse had already imported the commodity, which, according to them, was 'roasted areca nuts' and according to the department was 'dried areca nuts', the department for determination of their true nature and character drew samples of the imported commodity and sent for testing to the laboratory, namely, M/s Fare Labs Pvt. Ltd. at Gurgaon. The said laboratory apparently seems to have submitted a preliminary report dated 22.11.2024 that the moisture content of the imported 'areca nut' was around 3.39% and subsequently, a detailed report was given on 18.12.2024, thereby giving a finding that the moisture content was 3.9% and that the commodity was 'roasted areca nuts' & fit for human consumption. However, in the intervening period, the samples sent by the department for testing to the Central Revenue Control Laboratory (CRCL), New Delhi, submitted a report dated 16.12.2024 finding that the moisture content was 7.09% and the commodity was 'dry areca nuts' and not 'roasted areca nuts', which was not fit for human consumption. ....
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....the opposite parties to make payment of warehousing or waive charges in respect of the goods which are not being released from 06/11/2024 till the actual date of release. iv. Issue a writ, order or direction in nature of mandamus commanding the opposite parties to pay exemplary damages to the petitioner due to their unprofessional attitude in not releasing the imported commodity of the petitioner ie 'roasted areca nuts'. v. issue a writ, order or direction in a nature of certiorari quashing the seizure memo dated 10/03/2025 passed by Custom Officer contained as Annexure-28 to this Writ Petition* * The said prayer was sought to be included by the importer vide their Application dated 02.05.2025. (10) At this juncture and for the sake of clarity, it would be profitable to note the prayer sought by the Appellant-Department in the connected Custom Appeal No 3 of 2024 (Commissioner of Customs, Lucknow V/s M/s Rawder Petroleum Pvt. Ltd.) filed under section 28KA of the Customs Act, 1962, against the Advance Ruling No. CAAR/DEL/ RAWDER/55/2024 dated 19.09.2024 passed by the Customs Authority for Advance Ruling (CAAR), New Delhi. The department in the said Cus....
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....iry/ investigation. It is the submission of the learned counsel that the Advance ruling is solely based on relying the process flow provided by the importer by a third party based in Singapore and not by the supplier from whom the areca nuts were actually imported from Indonesia. According to him, as per Note 3 of Chapter 08, dried fruits and nuts may also undergo treatments like moderate heat treatment, which has been undergone by the areca nuts imported by the importer and solely because these nuts were made to undergo heat treatment, as contended by the importer in the process flow, the classification of these nuts could not be made under Chapter 20 instead of Chapter 08. It has been vehemently argued that moderate heat has not been defined under the Customs Act or tariff so as to relate it with the intensity/degree of temperature and thus according to the learned Senior Standing Counsel for the department, the alleged roasted areca nuts imported by the importer having been merely subjected to moderate heat treatment ought to have been classifiable under CTH 080280, especially when the reduction in moisture, arecoline and tannin content can be performed through boiling or sun dr....
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.... an importer/exporter in his or her application in respect of any goods prior to its importation or exportation. It has been submitted by Mr. Chandra that prior to submission of application for advance ruling before the CAAR, the importer had inquired about the 'roasted areca nuts' and its production and processing, to which the overseas supplier had informed that they carry out de-husking of the raw areca nuts and dry the same, before being fed into roastry roasting oven, wherein it is roasted well beyond 100 degree Celsius usually in the range of 135-150 degree Celsius, using firewood/palm kernel based oven. Thereafter the cooling process is undertaken in room temperature to check its moisture content and the said process is repeatedly performed until the water content of the areca nuts does not go beyond 6%. The aforesaid process as explained by the supplier vide a letter dated 04/06/2024 forms a part of record before this Court as well as the CAAR, New Delhi. (16) It has been submitted that the importer enamored with the aforesaid process explained by the overseas supplier had approached the CAAR for ascertaining as to under which heading/chapter of the Customs Tariff Act, 1....
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....usive to each other. Had the dried nuts included roasted nuts, there would had been no occasion for including any entries such as 2008 19 20 and that could had been covered under CTH 08. The learned counsel has strenuously argued that once the legislature has classified the 'roasted nuts' under 2008 19 20 for which a specified duty is incorporated, then under such circumstances, it is absolutely clear that there are areca nuts, which are roasted also and which when imported would have the specified duty. The learned counsel supporting the advance ruling in favour of the importer has cited the case of STP Ltd. Vs Collector of Central Excise, Patna, (1998) 1 SCC 297, to contend that although there is no confusion between 'dry areca nuts' and 'roasted areca nuts' in the first place, however, if it is even assumed that some confusion existed, the benefit of doubt in case of taxing statute always goes in the favour of the assesse/importer. (18) It has been further submitted by the learned Counsel for the importer that 'areca roasted nuts' were dispatched to India, vide bill dated 14.10.2024 and were put to shipment on 16.10.2024, after getting clearance from the Indonesian authoritie....
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....partment against the advance ruling, the 'roasted areca nuts' arrived at ICD Panki, Kanpur. Subsequently, the department collected sample of imported 'roasted areca nuts' on 18/11/2024 and sent to Fare Labs, wherein a preliminary report was prepared on 22/11/2024 showing that the moisture content in the said "roasted areca nuts" to be of 3.39%. It has been argued that there was no role of the importer in collecting the sample nor it was done in their presence or the presence of their representative or their CHA. It is his contention that Fare Lab was again approached on 18/11/2024, which again gave a report that the moisture contents of the imported commodity was 3.9% and that the said commodity was roasted areca nuts. He says that the samples collected by the department were dehors the existing guidelines for retesting of samples issued by the government of India on 18.07.2017 & clarified by circular dated 27/07/2017, which in clear terms specify that in the first place, the samples should be drawn in the presence of the importer and after drawing the samples, the importer should be communicated of the test results and it is only in case the importer makes an application in wri....
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....ons framed therein to the "areca nuts' provided and classified under chapter 8. He submits that the commodity imported by the importer is altogether a different commodity from areca nuts as defined under FSSA and chapter 8 of the Customs Tariff Act. According to him, the commodity actually imported by the importer are "roasted areca nuts', wherein the Hon'ble Madras High Court has held that the moisture content could be upto 10%. He submits that there is no specification provided of the "roasted areca nuts' in the FSSA regulations, which essentially deals with areca nuts only. Thus, he has prayed for release of the imported "roasted areca nuts' and as to the contention of the department that 6 months has lapsed, ever since these areca nuts were imported and as such were not fit for human consumption, it has been submitted by the learned counsel that the 'roasted areca nuts' can be released subject to the treatment of these nuts by 'Gamma Irradiation process', wherein the moulds and insect's in nuts can be sterilized/ treated. He says that the said proposition of treatment has been laid down by the Bhaba Atomic Research Centre, Trombay, Mumbai and is a well-recognized process for tr....
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....e ruling can be sought in respect of classification of goods under the Custom Tariff Act, 1975. Section 28I relates to the procedure on receipt of Application and section 28J significantly declares that the advance ruling pronounced by the Authority shall be binding only on - (a) On the applicant who had sought it; (b) In respect of any matter referred to in sub-section (2) of section 28H; (c) On the Principal commissioner of customs or commissioner of Customs, and the customs authorities subordinate to him, in respect of the applicant. (26) Further, Section 28J (2) specifically provides that the advance ruling shall be binding, unless there is a change in law or facts on the basis of which the advance ruling has been pronounced. (27) This Court finds that the 'customs authority for advance ruling' New Delhi, after noting the process-flow of the commodity proposed to be imported by the importer and taking into consideration of the material brought on record, has vide an order dated 12.09.2024 ruled that 'roasted areca nuts' both split and cut, falls under Custom Tariff heading 2008, specifically under sub-heading 2008 19 20 covering 'other roasted n....
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....the goods, bringing about a charred physical appearance. Therefore, drying is a moisture removal process involving methods such as dehydration, evaporation, etc., whereas roasting is a severe heat treatment process". 6.3 I also note that Chapter 20 of the Tariff covers the Preparations of vegetables, fruits, nuts or other parts of plants. As per Chapter Note 1 (a) to Chapter 20, the Chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in Chapters 7, 8 or 11. Therefore, vegetable, fruit or nut products or preparations made other than by the processes specified in Chapters 7, 8 or 11 are classifiable in Chapter 20. The processes specified in Chapters 7, 8 or 11 mainly include freezing, steaming, boiling, drying, provisionally preserving and milling. Therefore, any vegetable, fruit, nut or edible parts of a plant which is prepared or preserved by any other process than these are liable to be classified under Chapter 20. Heading 2008 covers fruits, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere, specified or included. ....
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....over, it is, an established fact that in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Tariff Act. While delivering Phil Corporation Judgment Honourable 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 case of Collector of Central Excise, Shillong v. Wood Craft Products Ltd. (1995) 3 SCC 454, Honourable 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." 6.7 Further, 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 20....
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...." fall under Custom Tariff Heading 2008, specifically under Sub-heading 2008 19 20 covering "Other roasted nuts & seeds" of the First Schedule of the Customs Tariff Act, 1975. 8. I rule accordingly." (28) This Court finds that the CAAR, New Delhi has in no manner missed the woods for the tree and has addressed all the points meticulously, including the issues, which are presently being agitated by the department in the present Appeals. In the Appeal filed by the department, it has been submitted that the basis of classification of 'roasted areca nuts' is a letter dated 04.06.2024, explaining the phenomena/activity undertaken on these areca nuts. It has been contended by the department that the said letter has been issued by one M/s ANL(S) Trading & services Pte Ltd., Singapore, which according to them is a third party as the country of origin of the goods in question is Indonesia, for which they have relied on the Bill of entry filed by the importer. It has been contended by them that since the letter of process of roasting has not been issued by the owner of goods, the letter dated 04.06.2024, explaining the process of roasting is meaningless and cannot be the actual p....
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....ys that the authority may after examining the application and records called for, by order, either allow or reject the application and proviso appended to its says that the application for advance ruling has to be rejected in two situation (a) when the question raised in the application is already pending in the applicant's own case before any officer of customs or Appellate Authority or any court or (b) the question raised has already been decided by the Appellate Authority or any court. Similarly, section 28I (4) of the Act says that where an application is allowed under sub-section (2), the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application. A conjoint reading of these Sections 28I (2) & 28I (4), clearly demonstrates that 28I (4) envisages a situation wherein the advance ruling already decided in terms of section 28I (2) is sought to be reviewed, by examining further materials placed by the applicant or obtained by the Authority. No doubt, the advance ruling ought to be based on the materials brought on record of the advance ruli....
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....elons". The relevant Tariff item 0802 is set out below: 0802 Other nuts, fresh or dried, whether or not shelled or peeled 0802 11 00 • Almonds: 0802 12 00 • In Shell • Shelled 0802 21 00 • Hazalnuts or filberts 9Corylus sup.) 0802 22 00 • In Shell • Shelled 0802 31 00 • Walnuts 0802 32 00 • In Shell • Shelled 0802 41 00 • Chestnuts (Castanea spp.) 0802 42 00 • In Shell • Shelled 0802 51 00 • Pistachios 0802 52 00 • In Shell • Shelled 0802 61 00 • Macadamia nuts 0802 62 00 • In Shell 0802 70 00 • Shelled 0802 80 • Kola nuts (Cola Spp.) 0802 80 10 • Areca nuts 0802 80 20 • Whole 0802 80 30 • Split 0802 80 90 • Ground 0802 80 00 • Other • Other (31) Chapter 20 of the Customs Tariff covers goods under the heading 'preparation of vegetables, fr....
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....on, etc., whereas roasting is a severe heat treatment process. The end product changes with the degree of heat it is subjected at the time of processing. (33) Further, it also has to be understood that as per Note 1 (a) to Chapter 20, the Chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in Chapters 7, 8 or 11. Therefore, vegetable, fruit or nut products or preparations made other than by the processes specified in Chapters 8 like freezing, steaming, boiling, drying, provisionally preserving and milling etc. are liable to be classified under a different head, which is Chapter 20. It is easily verifiable that the Heading 2008 covers fruits, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere, specified or included. (34) This Court finds that roasting is a process used for bringing in to existence roasted nuts and finds that the processes mentioned in chapter 8 do not cover roasting process. Further, this court cannot be oblivious to the fact that roasting, as submitted by the importer by virtue of letter dated 04.06.2024....
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.... 20. The grounds raised by the department in Custom Appeal No. 3 of 2024, challenging the advance ruling dated 19/09/2024 is unmerited and, as such, the same is, accordingly, dismissed. As a result of dismissal of Custom Appeal No. 3 of 2024, connected Custom Appeal No. 3 of 2025 also stands dismissed on similar terms. (38) As far as the second issue relating to whether the commodity imported by the importer/petitioner of the Writ Tax No. 71 of 2025 are "roasted areca nuts", so as to be classifiable under CTH 2008 19 20 or are merely dried areca nuts and could be classified under CTH 080280 is concerned, the test reports gains prominence. It is pertinent to mention herein that the commodity was imported on 06.11.2024 and samples were drawn from the said commodity from time to time. The test report drawn from the samples drawn from the commodity imported by the importer, along with the date of collection of samples and the testing, whether being in conformity with the existing guidelines or not, can be displayed in a tabular chart in the following manner: Date of Collection of Sample Date of Receiving of sample Date of preparation of Report Consonance with g....
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....same is merely directory and not mandatory and did not effect the issue raised in the present petition. No doubt the guidelines mentioned and relied upon herein above are directory, however this court finds that the elaborate process mentioned for sample testing is in aid of the principle of natural Justice. In the present case, the very conduct of the department in drawing the samples behind the back of the importer and not providing them with the sealed samples and test memo by taking shelter of Section 144 of the Customs Act, 1962 cannot be countenanced. Further, the rules specifically provides the importer for applying for re-testing, in case they are not satisfied with the first test report, this court fails to understand as to how the department cannot be satisfied with any test report in the first place. The act of the department apparently seems to be motivated and suspicious, in not providing the impugned letter dated 27.12.2024 in the first instance and then not taking the importer in confidence while sending for re-testing, if at all re-testing was permissible by the state as per the rules. (40) Time and again, this Court has held that in a welfare state, the power an....
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.... the department against the test-reports of First Lab, Gurgaon, nor any reasons have been forthcoming disputing the test results of the said First Lab, Gurgaon. This Court finds that the test-result obtained from First Lab for samples drawn by the department, immediately after its import, shows the moisture content of 'roasted areca nuts' to be 3.39%. The said test-report has been obtained for a sample, which was collected on 18.11.2024 and was received in the testing agency on 19.11.2024 and most importantly, the report was prepared within 5 days of its receipt i.e on 22.11.2024. Seemingly, the said report, which is the earliest report, appears to be the most authentic report meeting the guidelines of the FSSA as well as the Customs Department and this court finds no plausible reasons for denying the benefit of the said earliest and/or first report to the importer. (43) The lackadaisical attitude of the department in not following the established guidelines relating to drawing samples and sending for testing cannot be given concession to in any manner. Apparently, it seems the department indiscriminately drew samples and sent to testing Centre at its own whims and wanted to kee....