TaxTMI 
TaxTMI 
2025 (2) TMI 1307
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.... their statement of relevant facts having a bearing on the question(s) on which advance ruling is required with the CAAR-1 application: 2.1 The present application is being filed by Sri Radhakrishna Shipping Pvt. Ltd., 40 Goa Street, Off Shahid Bhagat Singh Road, Fort, Mumbai 400 001 (hereinafter referred to as "the Applicant") under Section 28H (1) of the Customs Act, 1962 (hereinafter "the Act"), seeking an advance ruling on the classification of "Roasted Areca Nuts" for the proposed imports to be undertaken by it through :- (a) the Inland Container Depot (hereinafter "ICD") at Morbi and Pipavav Port, falling under the jurisdiction of the Jamnagar Customs Commissionerate in the State of Gujarat: (b) Kandla Port and Kandla SEZ, falling under the jurisdiction of the Kandla Customs Commissionerate in the State of Gujarat. (c) ICD Dhannad and ICD Pithampur, falling under the jurisdiction of the Indore Customs Commissionerate in the State of Madhya Pradesh. 2.2 The Applicant is a logistics service provider. Apart from carrying out the business of providing services related to logistics, the Applicant also carries out the business of trading in several ....
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....the Customs Tariff Act. 1975 (hereinafter "CTA") or in the Chapter Notes or the HSN Explanatory Notes. It is for this reason that the Applicant is seeking clarification from this Authority regarding the classification of Areca / Betel Nuts which have specifically undergone the process of "roasting". 2.7 The Applicant states that the cultivation, harvesting and processing of "Roasted Areca / Betel Nut has undergone a tremendous change by bringing about mechanisation, as against the involvement of labour. Such mechanisation increases the efficiency, reduces wastage, enhances the quality and brings about uniformity in the final product. This has also brought about a drastic reduction in the preparation time of Roasted Areca / Betel Nuts as compared to the manual method of preparation. 2.8 The Applicant states that the following processes are involved in the preparation of Roasted Areca Nut. The raw/fresh Areca Nut undergoes various process of preparation before 'roasting', which are detailed as follows :- (a) Firstly, the raw areca nut is de-husked and its outer shell is removed Thereafter, the de-husked nut is scattered to check for any visible impurities and t....
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....atories, Rajkot. The said laboratory, vide its two test reports dated 08.06.2024 (for Roasted Areca Nuts which are reddish brown and blacked and which are shiny reddish brown and blacked), inter alia, confirmed the moisture content thereof as less than 10% (9.92% and 6.95% respectively).The applicant annexed and submitted the said two test reports dated 08.06.2024 of the Roasted Areca Nuts that are sought to be imported. These sample test reports are indicative in nature. 2.10 The Applicant states that pursuant to 'roasting', the areca nut undergoes a drastic change in its physical as well as chemical characteristics (change in polyphenols, moisture and arecoline contents). There is a visible change in colour from red colour to reddish brown and blackened, which is a change in the physical appearance of the areca nut. Roasting also brings about changes in the brittleness of the areca nuts. The areca nut becomes crunchier once roasted. All the aforementioned changes are physical in nature. The Tannin and Arecoline content of raw areca nut gets substantially changed by subjecting the same to roasting, which is a change in the chemical appearance of the areca nut. The roast....
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.... OTHER NUTS, FRESH OR DRIED, WHETHER OR NOT SHELLED OR PEELED 080280 - Areca Nuts 08028010 --- Whole 08028020 --- Split 08028030 --- Ground 08028090 --- Other II. Chapter 20-Preparations of vegetables, fruit, nuts or other parts of plants Notes: 1. This Chapter does not cover: (a) vegetables, fruits or nuts, prepared or preserved by the processes specified in * Chapter 7, 8 or 11 ... Tariff Item Description of goods 2008 FRUIT, 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 Nuts, ground-nuts and other seeds, whether or not mixed together: 200819 Other, including mixtures. 20081920 Other roasted nuts and seeds Supplementary Notes: 2. 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 an....
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.... 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. It includes, inter alia: (1) Almonds, ground-nuts, areca (or betel) mits 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." CHAPTER 21 "Chapter 21-Miscellaneous Edible Preparations Notes: 1. This Chapter does not cover: (a) Mixed vegetables of heading 07.12: (b) Roasted coffee substitutes containing coffee in any proportion (heading 09.01); (c) Flavoured tea (heading 09.02); (d) Spices or other products of headings 09.04 to 09.10; (e) Food preparations, other than the products described in heading 21.03 or 21.04, 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); (f) Products of heading 24.04; (g) Yeast put up as a medicament or other products of heading 30.03 or 30.04; or ....
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....ed otherwise than as prescribed above above (Chapter 20)', 2.17.2 The Applicant submits that since 'nuts' which have undergone the process of "roasting" are specifically covered under Chapter 20 of the CTA, "Roasted Areca. Nuts" would specifically be covered only under Chapter 20 thereof (under Tariff Item 2008 19 20 covering other roasted nuts and seeds). 2.17.3 The Applicant submits that the fact that "Roasted Areca Nuts" are covered under Chapter 20 of the CTA is also evident from the HSN Explanatory Notes which, in no uncertain terms, provides that Heading 2008 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." It is clear therefrom that 'areca (or betel) nuts, which are "dry-roasted, oil-roasted or fat-roasted" and whether or not containing or coated with flavors, spices etc., are classifiable under Heading 2008. It is settled law laid down by a host of judgments including that of the Hon'ble Supreme Court in CCE y. Wood Craft Products Ltd., 1995 (77) ELT 23 (SC) and Holostock-India v. CCE, 201....
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....rt Tariff (hereinafter "General Rules for Interpretation/GRI") which, inter alia, provides that the heading which provides the most specific description shall be preferred to headings providing a more general description. Applying the said Rule to determine the classification of the goods that are sought to be imported, the Applicant submits that since the areca nuts have undergone the process of 'roasting', they would be more specifically classifiable under Chapter 20 of the CTA, as against Chapter 8 thereof. 2.17.9 It is also the settled position of law laid down by the Hon'ble Supreme Court in Santosh Maize & Industries Ltd. v. State of Tamil Nadu, (2023) 8 Centax 75(SC) that where a statute contains both, general as well as specific provision, the latter must prevail. Reliance is also placed upon the judgment of the Hon'ble Madras High Court in Shahnaz Commodities (supra) for the same. Even for this reason, "Roasted Areca Nuts" are classifiable under Chapter 20 of the CTA Reg: "Roasted Areca Nuts" are not classifiable under Chapter 8 of the CTA since the processes mentioned therein are not similar to 'roasting' 2.17.10 The Applicant further subm....
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....methods such as dehydration, evaporation etc. while roasting' is a severe heat treatment process 2.17.14 Further, the Applicant submits that 'roasting' is also different from processes such as mild heat treatment provided for in Chapter 8. It is, in fact, a severe heat treatment process (since the areca nuts are roasted well beyond 150 degrees Celsius) which brings down the moisture content of the nuts to anywhere between 8%-15%, as stated in the facts above. The treatments/processes specified in Chapter 8 for additional preservation or stabilization or to improve or maintain the appearance of the goods, is not the object of roasting. The nuts classifiable under Chapter 8 of the CTA, therefore, are to be treated only for the purpose of additional preservation or stabilization or to improve or maintain their appearance. Any treatment which is aimed at other than or beyond preservation or stabilization or improve maintain the appearance would render the nuts ineligible for classification under Chapter 8. This Applicant places reliance upon the judgment of the Hon'ble Supreme Court in CCE v. Phil Corporation Ltd., 2008 (223) ELT 9 (SC) wherein it has been held that ....
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....by the Applicant would not merit classification under Chapter 21. 2.19 For the reasons stated in the foregoing paragraphs, the Applicant prays that this Authority hold that the "Roasted Areca Nuts are classifiable only under Chapter 20 of the CTA (Tariff Item 2008 19 20). 2.20 The applicant vide his submission dated 23.10.2024 submitted that the jurisdictional Pr. Commissioner was declared as "The Commissioner of Customs (P), Jamnagar" in CAAR I Form, however, Annexure I of the application indicated three distinct ports of import under multiple Commissionerates. Accordingly, the applicant rectified the Annexure I of the application and stated the port of import as Inland Container Depot (ICD) at Morbi and Pipapav port, falling under the jurisdiction of the Jamnagar Customs Commissionerate in the state of Gujarat. 3. In terms of provisions of the Section 28-1 (1) of the Customs Act, 1962 read with Sub-Regulation no. (7) of the Regulation no. 8 of the Customs Authority for Advance Rulings Regulations, 2021, on the receipt of the said application, office of the CAAR, Mumbai forwarded copy of the said application/submissions to the concerned Jurisdictional Customs Commissioner....
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....course of personal hearing. I have also gone through the response received from the Jamnagar Customs. I therefore proceed to decide the present applications regarding classification of subject roasted areca nuts which is claimed to be boiled in catechu water before roasting, on the basis of the information on record as well as the existing legal framework having bearing on the classification of the products in question under the first schedule of the Customs Tariff Act, 1975 (hereinafter to be referred as CTA). 6. The process of classification of goods under the Customs Tariff is governed by the interpretation of the Section Notes, Chapter Notes, Sub-Heading Notes, Supplementary Notes, Headings, Sub-headings and the General Rules for Interpretation (hereinafter referred to as the "GRI") of the Customs Tariff. 6.1 As per General Rules for the interpretation of the Harmonized System, classification of goods in the Nomenclature shall be governed by the following principles : 1.The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any rel....
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....f the import goods. 6.2 It can be inferred from the above rules that classification of goods is done in accordance with GRI 1, through the primacy of terms of headings and Section Notes and Chapter notes. When the nature and description of goods match the terms of headings in a chapter and further the goods fall within the scope of Section notes and Chapter Notes of the Customs Tariff, such goods are classifiable as per Rule 1 of GRI. 6.3 The Customs Tariff is aligned up to the 6-digit level with the Harmonized System of Nomenclature (HSN) issued by the World Customs Organization (WCO) For uniform interpretation of the HSN, the WCO has published detailed Explanatory Notes to the HSN which have long been recognised as a safe guide to interpret the Schedules to the Customs Tariff. 6.4 Thus, it becomes necessary to refer to relevant Section notes, Chapter notes and Heading notes to decide the classification of the subject goods under consideration. 7. I have examined the scope of CTH 2008 and I find that, Heading 2008 covers 'FRUIT, NUTS AND OTHER EDIBLE PARTS OF PLANTS, OTHERWISE PREPARED OR PRESERVED, WHETHER OR NOT CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER O....
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....ca nuts are boiled with mixture/solvent containing water and catechu, the colour of areca nuts becomes red and this boiling procedure with catechu and water reduces the polyphenols/tannins in the areca nut. After boiling, the areca nuts are dried under the sun for 2-3 days, which strengthens the red colour of the areca nuts. Once the areca nuts are completely dried, the same are fed into the seed roasting oven/machine and heated in the temperature of above 100 degree Celsius. The roasting is done using firewood/palm kernel- based overs/machines and the temperature of the flames is around 400 to 600 degree Celsius. As a result, the betel nuts would be roasted well beyond 100 degrees Celsius, usually in the range of 130 to 150 degree Celsius. Further, when the areca nuts have cooled and attained normal room temperature, they are again fed back into the oven at enormous heat, so as to evenly roast the areca nut. Roasting the areca nuts multiple times leads to a change in appearance of such nuts, from red colour to reddish brown and black on the outside. Such roasting of the areca nuts also changes the texture thereof. The whole process not only ensures that the mould growth is chec....
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.... becoming a component of or otherwise affecting the characteristics of such food but does not include "contaminants" or substances added to food for maintaining or improving nutritional qualities. Boiling the areca nuts in catechu water gives it bitter, astringent earthy flavors of catechu at one hand while at the same time, it gives a darker and reddish-brown color appearance on the other hand. In view of above facts and circumstances it can safely be deduced that the areca-nuts undergoing such boiling process in the presence of catechu holds the qualities of mixture of arecanuts and catechu in the subject goods. Thus catechu is found to be a significant ingredient along with the areca-nuts in the subject goods. Therefore, in accordance with the supplementary note 1 of chapter 21 of the CTA, 1975, the areca nuts boiled in catechu water and further roasted is clearly becomes a distinct and well known product/ preparation satisfying the parameter of Pan Masala. The applicant has submitted that these products are mainly used in manufacturing of Gutkha and mouth fresheners etc. This also endorses the actual nature of product as Pan Masala in terms of above Supplementary Note. 8.....
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....wing ingredients, namely: lime, Katha (catechu) and tobacco whether or not containing any other ingredient, such as cardamom, copra or menthol. It is important to note that the Supplementary Note 1 does not differentiate the preparation containing raw/dried betel nut and roasted one. In this instant case, it is amply clear that the betel nuts are boiled in the catechu water before roasting. Boiling in catechu water changes the physical and chemical characteristics of the product. Hence there is not iota of doubt that the colour, texture, flavour and composition are changed due to the presence of catechu absorbed by the betel nut in the boiling process. Thus, it can safely be concluded that boiling of areca nut in catechu water is nothing but addition of catechu during/before the roasting process. It is also observed that intensity, concentration and presence of catechu in the subject goods may vary depending upon various factors like the concentration of catechu in the boiling water, boiling time taken, individual tolerance/quality of the catechu and areca nuts in the preparation etc. which is another subject. It is also to note that such process or preparation of betel....
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....obacco" or any one or more of these ingredients 47. Parliament Act 22 of 1995, substituted Note-3 to Chapter 21 of the CET Act. "Pan Masala" was described as "any preparation containing betel nuts and any one or more of the following ingredients, viz., lime, katha, katechu or tobacco, whether or not containing any other ingredients such as cardamom, copra and menthol". The primary ingredient of pan masala therefore, is betel nut, which could be mixed with other ingredients in combination or in isolation. This position prevailed as on 01.03.1988. In 1995, the definition underwent a change. Betel nuts remained the essential ingredient along with "lime, katha or tobacco" together, or separately. Whether the product contained cardamom, copra, and menthol or not was irrelevant: yet one of the three ingredients (lime, katha and tobacco), had to be found in the preparation known as 'pan masala'. 9. The classification of the goods under the Customs Tariff is governed by the principles as enumerated in the General Rules of Interpretation ('GRI') set out in the First Schedule to the Customs Tariff Act, 1975 ('Tariff'). As per Rule 1 of the GRI, classificat....