TaxTMI 
TaxTMI 
2026 (1) TMI 958
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....gs for classification of these goods in question under 21069030 along with concession of customs duty under S. No. 39 of Table 1 of Exemption Notification No. 68/2012-Cus. dated 31.12.2012. 1. The applicant in their application, submitted as under: - 1.1. The applicant proposes to import Flavoured Supari which is Betel Nut product from Democratic Socialist Republic of Sri Lanka through port of Tuticorin. 1.2. The flavoured supari is product of betel nut. The flavoured supari in question, which the applicant intends to import is produced by subjecting betel nuts to some processing. The Applicant seeks ruling, - (i) Whether the flavoured supari is classifiable under Heading 2106, Sub-heading 210690 and Tariff Item No 21069030 of the First Schedule to the Customs Tariff Act, 1975 (Herein after referred to as "Customs Tariff)? (ii) If the item i.e. Flavoured Supari merits to be classified under tariff Item No 21069030, whether concession of Duty of Customs as provided under SI No 39 of TABLE 1 of Notification No 68/2012-Customs Dated 31.12.2012 would apply to the goods under question. View of The Applicant 1.3. The Applicant proposes to import Flavoured....
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....er Chapter 20, not being relevant any more, has not been examined 1.8. The principles for the classification of goods are governed by the Harmonized Commodity Description and Coding System (Harmonized System) issued by the World Customs Organization and the. General Rules for Interpretation specified thereunder. The General Rules for the Interpretation (GIR) specified in the Customs Import Tariff are aligned with the GIR specified in the HSN. Classification of Goods specified in the First Schedule to the Customs Tariff Act, 1957 is 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 relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require. according to the following provisions: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall al....
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....les, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character; (b) subject to the provisions of (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision does not apply when such packing materials or packing containers are clearly suitable for repetitive use. 6. For legal purposes, the classification of goods in the sub-headings of a heading shall be determined according to the terms of those sub-headings and any related sub-heading Notes and, mutatis mutandis, to the above rules, on the understanding that only sub-headings at the same level are comparable. For the purposes of this rule the relative Section and Chapter Notes also apply, unless the context otherwise requires." Scope of classification under Chapter 8 1.9. Chapter 8 of the Customs Tariff covers fruit, nuts and peel of citrus fruit or melons (including....
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....essing of Flavoured Supari. Hence, the classification of the Flavoured Supari under chapter 8 is legally unsustainable. 1.12. Therefore, in view of the above discussion the goods under consideration that is Flavoured Supari is different from Areca Nut and does not merit classification under Chapter 8 and more specifically Sub-heading 080280. Scope of classification under Chapter 21 1.13. Having examined that the goods under question does not merit classification under Chapter 8 of the Customs Tariff, the Applicant examines possibility of alternative classification of the impugned goods under Chapter 21 of the Customs Tariff. Chapter 21 includes within its ambit, 'Miscellaneous Edible Preparations' and Heading 2106 covers 'Food preparations not elsewhere specified or included'. The Chapter 21 does not cover :- (a) Mixed vegetables of Heading 07.12; (b) Roasted coffee substitutes containing coffee in any proportion (Heading 9.01); (c) Flavoured tea (Heading 9.02); (d) Spices or other products of headings 9.04 to 09.10; 1.14. Further, the supplementary note 2 to the Chapter 21 lays down that, "In this Chapter "betel nut p....
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....entry, 'Supari' under 2106 and has added under supplementary Note 2 to Chapter 21, is for a specific purpose of dealing with the said product 'Supari' under Chapter 21 alone. Giving any other interpretation to the inclusion of 'Supari' under Supplementary Note 2 to Chapter 21 would defeat the object and purpose of its inclusion under Chapter 21 specifically. Harmonious reading of Chapter 21 with supplementary Note 2, it would make it amply clear that legislature has carved out an entry for Floavored Supari which is preparation of betel nut containing pieces of betel nut and scents and floavors such as Menthol, Spices, sweetening agents etc are added to it and does not include 3 items, namely lime, katha (catechu) or tobacco. 1.18. Further, as per Rule 3 (a) of the General Rules of Interpretation (GIR) of the Customs Tariff Act, 1975, when by application of GIR 2(b) or for any other reason, the goods are, prima facie, classifiable under more than one Heading, the 'most specific description' is preferred. The Chapter 21 and Supplementary Note 2 of Chapter 21, there is a specific entry of "betel nut product known as 'supari" and Supplementary Not....
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.... In the said Ruling, the AAR, Mumbai had examined applicability of CBIC Circular No 163/19/2021-GST dated 06.10.2021 in the present case. The relevant extract of the Ruling is reproduced below: "8. Applicant has referred to the C.B.I.C. Circular No. 163/19/2021-GST dated 6th October, 2021 issued based on the recommendations of the GST Council in its 45th meeting held on 17th September, 2021 for clarifying classification aspects of the scented sweet supari and floavored coated illaichi. I find that both the products will be subjected to the processes before their importation and hence it is pertinent to consider the contents of the CBIC circular noted earlier in view of the provisions of the Section 3(7) of the Customs Tariff Act, 1975. The relevant para of the said circular is reproduced below: "7. Applicability of GST on scented sweet supari & floavored and coated illaichi : 7.1 Representations have been received seeking clarification regarding classification and applicable GST rates on floavored and coated illaichi, and scented sweet supari. 7.2 Scented sweet supari falls under tariff item 2106 90 30 as "Betel nut product" known as "Supari" and....
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....17 (18 of 2017). 8.3 Contents of the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 are applicable to the present case by virtue of legal framework discussed supra. Classification and applicable rate of duty under GST are clarified in the paras reproduced from the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 from F. No. 190354/206/2021-TRU. By virtue of application of Section 3(7) of the Customs Tariff Act, 1975 "any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty percent as is leviable under Section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8) for sub-section (8A), as the case may be. Based on the contents of the said CBIC circular, it is clear that the provision of Section 3(7) of the Customs Tariff Act, 1975 applies to scented supari classifiable under CTH 2106 90 30 and floavored and coated illaichi classifiable under CTH 2106 more particularly CTSH 210690. In the instant case menthol scented sweet supari does not contain....
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.... Delhi High Court held that in order to be eligible for being classified under Chapter 21, there would have to be, necessarily, a preparation containing betel nuts and in the absence of such a preparation, the product would have to be classified only under Chapter 8. In this case, Hon'ble Delhi High Court heavily relied on the decision of the Hon'ble Supreme Court in the case of Crane Betel Nut Powder. 1.24. The Hon'ble High Court of Madras having examined the decision of the Hon'ble Supreme Court and after detail deliberation held that the Ruling of the AAR is just and proper. The Hon'ble High Court upheld the ruling of the AAR that Menthal Scented Supari merits classification under Tariff Item No 2106 9030. The relevant extracts of the decision of the Madras High Court is reproduced below: "19. At the outset, before we proceed to decide the moot point as to the correct classification of 'Menthol Scented Supari', we may refer to some of the relevant statutory provisions and supplementary notes. 20. Chapter 08 (02) deal with 'other nuts, fresh or dried, whether or not shelled or peeled.' Chapter Note 3 to Chapter 8 reads thus....
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....lassified under Chapter 8 or not or whether it has to be classified under Chapter 21. 22(a) We have noticed that under Chapter 8, betel nut can be whole, split, ground or other. The HSN Explanatory Notes clarifies that fruit and nut in Chapter 8 may be whole, sliced, chopped, shredded, stoned, pulped, graded, peeled or shelled and further addition of small quantities of sugar does not affect the classification of fruit in this Chapter. 22 (b) It is the specific contention of the Counsel for the Appellant that in view of the betel nut being merely cut into smaller pieces and it is sweetened, it remains a betel nut only and would therefore squarely come under the purview of Chapter 8. The further contention of the Learned Counsel for the Appellant is that Chapter 21 is only residuary in character and when Chapter 8 applies to the product in question, the Advance Ruling Authority cannot fall back on Chapter 21 and classify the product under Chapter 21. 22 (c) However, we have seen that Supplementary Note 2 specifically deals with 'Supari' and states that it is any preparation containing betel nuts, but not containing lime, katha (catechu) and tobacco....
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.... a betel nut product, only under Chapter 21 and not Chapter 8 as contended by the counsel for the appellant. The issue is also clinched from the fact that in Chapter 21, under the heading "Food preparations not elsewhere specified or included" also, under Tariff Item 21, 06, 90 and 30, Betel nut product known as 'Supari' finds a specific entry/inclusion, fixing a rate of duty @ 150% per kilogram. 26. (a) All these apart, we also notice that the process involved and referred to in Chapter 8 as seen from Note 3 is relating to treating the dried nuts for preservation, stabilization and to improve or maintain the appearance and in such cases, even if the process involved moderate heat treatment, sulphuring or adding sorbic acid or potassium sorbate or vegetable oil or small quantity of glucose syrup, as long as the product retains the character of a dried nut or fruit, it would be classified under Chapter 8. 26. (b) However, under Chapter 21 what is contemplated is a preparation containing betel nuts and not containing lime, katha (catechu) or tobacco, whether or not it contains ingredients like cardamom, copra or menthol. 26. (c) Thus, there is a fun....
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....it lost its original character of a betel nut or areca nut does not merit acceptance. 29. In the case before the Hon'ble Supreme Court in Crane Betel Nut Powder Work's case referred herein supra, the issue was relating to whether crushing of betel nut and adding ingredients to it would involve any 'manufacture' or not and in that context it was held that the process of boiling, slicing etc. and adding floavors to the betel nut would not result in altering the nature and characteristics of the product and therefore the classification would have to be made under Chapter 8. 30. According to the Learned Senior counsel for the respondents, post this judgment, two important subsequent factors have intervened. 31. Firstly, vide Finance (No. 2) Act, 2009 dated 19th August, 2009, there has been an insertion of Note 6 in Chapter 21, which specifically relates to Tariff Item 2106 90 30 relating to 'supari and stating that the process of adding or mixing cardamom, copra, menthol, spices, sweetening agents or any such ingredients other than lime, katha (catechu) or tobacco to betel nut, in any form, shall not amount to "manufacture". However, we ar....
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....The Hon'ble Supreme Court in Crane Betel Nut Powder Work's case was dealing with an issue that arose only under the Central Excise Tariff Act and not the Customs Tariff Act. The amendments also have been incorporated only under the Central Excise Tariff Act, clarifying that the process of adding or mixing cardamom, copra, menthol etc. would not amount to manufacture etc. 34. (d) As already discussed herein above, under the Customs Tariff Act, the question of manufacture loses its relevance since the Act deals only with the tariff applicable to the goods or products imported from outside the country, in an as is where is basis, or rather the product as imported in whatever form is the basis for levy of Customs Tariff. Thus, the judgment of the Hon'ble Supreme Court in Crane Betel Nut Powder Work's case cannot be said to be a bar u/s. 28(i) of the Customs Act. 35. (a) Here we have already found that by inserting a specific tariff entry for 'Supari' under Chapter 21, the question of classifying it under Chapter 8 does not even arise, especially when this was neither the issue before the Apex Court nor the basis on which the decision was render....
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....sification under Chapter 21 and tariff Item No 21069030 of the Customs Tariff. 1.26. Further, without prejudice to above, it is submitted that the Applicant proposes to import Floavored Supari from Sri-Lanka. It may not be out of context here to mention that Board of Investment of Sri Lanka instructed the exporters that for export of processed Areca Nut, they should obtain Advance Ruling for HS Code 2106 from respective buyers in India. This also buttresses the contention of the Applicant that the Floavored Supari which is process Areca Nut is classifiable under Heading 2106 and tariff Item No 21069030 of the Customs Tariff. 1.27. The Applicant believes with all conviction that the impugned goods i.e., Floavored Supari merit classification under Chapter 21 and tariff Item No 21069030 of the Customs Tariff. 1.28. The Applicant also believes that concession of customs duty as available under SI No 39 of Table 1 of exemption Notification No 68/2012-Customs Dated 31.12.2012 would also be applicable to the Applicant on import of Floavored Supari from Sri-Lanka. It may be seen that under of the exemption Notification No 68/2012-Customs Dated 31.12.2012 [SI No 39 of Table 1], con....
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....epending upon the requirements of the buyer. Step-2: Drying the Raw Betel Nut under the sun or oven depending upon the availability and sufficiency of the sun light. This process of drying is done for 1 to 3 weeks. Step-3: The sun/oven dried betel nuts are then de-husked to remove the skin/outer shell from the nut Step-4: The de-husked betelnuts are then boiled in water for cleaning and also to remove the bacterial count if any Step-5: The washed betelnuts are again sundried or oven dried to remove the moisture content Step-6: The dried whole betel nuts are then cut into several pieces by using cutting machines Step- 7: The cut betel nuts are then mixed with 'menthol floavor' to make it readily consumable Step 8: The cut menthol scented betelnut product known as 'supari' is then packed according to the requirement of the buyer. By virtue of the processes detailed above, the Importer submitted that 'floavored Supari' proposed to be imported by them would fall under the HS Code 21069030 as 'Betel Nut Product known as Supari' in terms of the supplementary Notes (2) to the Chapter 21: SUPP....
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....#39; means "a substance specially prepared, or made up for its appropriate use or application." As per Cambridge English Dictionary, 'contain' means to "have something inside or include something as a part'. As per Collins English Dictionary' contain' means "if a substance contains something, that thing is a part of it'. Further, as per Note 3 of Chapter 8, the ambit of the classification under Chapter 8 is defined as follows: Dried fruit or dried nuts of this Chapter may be partially rehydrated, or treated for the following purposes: a. For additional preservation 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. Whereas the processes listed out by the Importer for arriving at the impugned goods are squarely covered under the scope of Dried Nuts as defined under Chapter 8, except for adding of Menthol to the goods. Further, the addition of the ....
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....anatory Note, which states that fruit and nuts may be "whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled." D. Intended Use: The explanatory notes for heading 08.02 specifically include "areca (betel) nuts used chiefly as a masticatory." This indicates that the intended use as a masticatory does not preclude classification in Chapter 8. E. Exclusionary Principles: While Chapter 21 covers miscellaneous edible preparations, it generally excludes products more specifically described elsewhere. The specific mention of areca-nuts in 08.02 creates a strong ground against classification in 21.06. IV. Counter - Arguments A. Food Preparation Argument: The Importer contests that the addition of menthol constitutes a form of preparation, potentially shifting classification to 21.06. However, this argument is weakened by the allowances made in Chapter 8 for minor treatments and the principle of specificity favouring 08.02. B. Supplementary Note on "Supari": The supplementary note defining "betelnut product known as Supari" under 21.06 appears to target more substantially prepared products and no....
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....tion of "scented Areca Nuts" typically incorporate a diverse array of floavoring constituents, thereby falling within the ambit of food preparations classifiable under heading 21.06. (Reference:https://www.bigbasket.com/pd/40229475/kalpa-scented-sweet-betel-nut-pieces-blended-with-saffron-40-g). For illustrative purposes, representative images are reproduced below: As evidenced by the aforementioned example, commodities marketed as scented betel nuts routinely incorporate a complex mixture of ingredients, including but not limited to Vegetable Oil, Tarbuz, Menthol, Borneol, Clove Oil, Natural Spices, a blend of Saccharin, Cardamoms, permitted floavors, and preservatives. This compositional complexity stands in stark contrast to the impugned product under consideration. Consequently, it becomes apparent that the good in question is fundamentally distinct from the multi-ingredient Scented Betel Nuts that legitimately fall under CTH 2106. Thus, from both a trade and common parlance perspective, it is evident that the impugned goods do not conform to the characteristics of Supari under CTH 2106 but rather align more closely with the category of other Areca Nuts of CTI 0802 8090. ....
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....haracter of the goods viz., dried Areca/Betel Nut. In the recent advance ruling in case of M/s Betelnut Suppliers LLP, CAAR, Delhi has stated that the Port Commissionerate has correctly cited the principles of: Specificity, Essential Character, Degree of Processing, Intended Use & Exclusion to establish the Classification under 0802. It has also been stated in the ruling that the matter of classifying Areca Nut 'Whole' and Areca Nut 'Split' in relation to 'Supari' has been definitively adjudicated by the Hon'ble Supreme Court of India. The Chennai Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruling in M/s S.T. Enterprises Versus Commissioner of Customs (Chennai VII) [2021 (378) E.L.T. 514 (Tri. - Chennai)] is particularly instructive. This decision, which relied upon the seminal case of M/s Crane Betel Nut Powder Works vs Commissioner - 2007 (210) E.L.T. 171 (S.C.), established that: Imported betel nuts 'whole' that have undergone processes such as de- husking, cleaning, boiling, and drying are to be classified under Tariff Item 0802 80 10 of the Customs Tariff Act, 1975, as betel nut 'whole'. Significantly, such p....
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....n stayed by the Order dated 23.09.2024, fresh ruling cannot be issued." In consideration of the foregoing analysis and submissions, it is recommended that the advance ruling application seeking classification of the proposed item under CTI 2106 9030 be rejected. Conversely, it is advised that the classification of the impugned goods be affirmed under CTI 0802 8090, in alignment with the established legal precedents, the intrinsic nature of the product, and the prevailing commercial understanding of such goods. 2.7. Conclusion: Based on a comprehensive analysis of the HS structure, legal notes, and interpretative rules, the most appropriate classification for menthol scented betel nuts is under subheading 0802.80 and specifically under CTI 0802 8090 as other Areca Nuts. This classification is in compliance with principle of specificity, aligns with the allowances for minor treatments in Chapter 8, and recognizes that the essential character of the product remains that of a nut rather than a prepared food item. Personal Hearing 3. The personal hearing in the instant application was conducted on 17.07.2025. During the course of personal hearing, the Authorised Represent....
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....ed whether they can be classified in any other heading under the nomenclature. 4.4.2. Ground No. 2 of the Department: Supplementary note 2 to Chapter 21 of the Customs Tariff defines betel nut product known as supari betel nut product in three pertinent parts: 1. As any preparation containing betel nuts; 2. But not containing lime, katha (catechu) and tobacco, cardamom, copra or menthol; 3. May contain any other ingredients, such as cardamon, copra or menthol. As per Oxford English Dictionary, 'preparation' means "a substance specially prepared, or made up for its appropriate use or application". As per Cambridge English Dictionary, 'contain' means to "have something inside or include something as a part'. As per Collins English Dictionary 'contain' means "if a substance contains something, that thing is a part of it". 4.4.3. Ground No. 3 of the Department: Dried fruit or dried nuts of this Chapter may be partially rehydrated, or treated for the following purposes: a. For additional preservation or stabilisation (for example, by moderate heat treatment, sulphuring, the addition of sorbic acid or potas....
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...."manufacture" must lead to emergence of a new commercial product, different from the one with which the process started. In other words, it should be an article with different name, character and use. Thus, a process which simply changes the form or size of the same article or substance would not ordinarily amount to manufacture and no excise duty would be payable unless in a particular case by Section Note or Chapter Note of the Tariff or by wording of the relevant heading or sub-heading the said process has been specified as amounting to manufacture. 4.4.7. It is pertinent to mention here that Crane betel nut case was of Central Excise and after the judgment of Crane Betel Nuts, Central Excise Tariff Act, 1985 was amended in July 2009 to exclude 'betel nut product known as supari' from purview of Chapter 8. The Government of India, Ministry of Finance had issued a D.O. Letter also under F. No. 334/13/2009-TRU dated 06.07.2009 clarifying the aforesaid changes in para 2 under the heading Legislative Amendments. Same is reproduced as under : "2. Amendments in First Schedule to the Central Excise Tariff Act, 1985: - (i) Note 1 of Chapter 8 in the First Sc....
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....cation which reads as under: "7. Applicability of GST on scented sweet supari & flavored and coated illaichi: 7.1 Representations have been received seeking clarification regarding classification and applicable GST rates on flavored and coated illaichi, and scented sweet supari. 7.2 Scented sweet supari falls under tariff item 2106 90 30 as "Betel nut product" known as "Supari" and attracts GST rate of 18% vide entry at S. No. 23 of Schedule III of notification No. 1/2017-Central Tax (Rate) dated 28.6.2017. 7.3 Flavored and coated illaichi generally consists of Cardamom Seeds, Aromatic Spices, Silver Leaf, Saffron, Artificial Sweeteners. It is distinct from illaichi or cardamom (which falls under heading 0908). It is clarified that flavored and coated illaichi is a value-added product and falls under sub-heading 2106. It accordingly attract GST at the rate of 18% (S. No. 23 of schedule III of notification No. 1/2017-Central Tax (Rate) dated 28.06.2017)." 4.4.11. Thus, it may be seen that CBIC has clarified that scented supari would be classifiable tariff item 2106 90 30 as "Betel nut product" and would attract GST @ 18%. The Board's Circul....
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....held that in order to be eligible for being classified under Chapter 21, there would have to be, necessarily, a preparation containing betel nuts and in the absence of such a preparation, the product would have to be classified only under Chapter 8. In this case, Hon'ble Delhi High Court heavily relied on the decision of the Hon'ble Supreme Courtin the case of Crane Betel Nut Powder. 4.4.14. The Hon'ble High Court of Madras having examined the decision of the Hon'ble Supreme Court and after detail deliberation held that the Ruling of the AAR is just and proper. The Hon'ble High Court upheld the ruling of the AAR that Menthal Scented Supari merits classification under Tariff Item No 2106 9030. The relevant extracts of the decision of the Madras High Court is reproduced below: "19. At the outset, before we proceed to decide the moot point as to the correct classification of 'Menthol Scented Supari', we may refer to some of the relevant statutory provisions and supplementary notes. 20. Chapter 08 (02) deal with 'other nuts, fresh or dried, whether or not shelled or peeled.' Chapter Note 3 to Chapter 8 reads thus : "3. D....
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....hapter 8 or not or whether it has to be classified under Chapter 21. 22(a) We have noticed that under Chapter 8, betel nut can be whole, split, ground or other. The HSN Explanatory Notes clarifies that fruit and nut in Chapter 8 may be whole, sliced, chopped, shredded, stoned, pulped, graded, peeled or shelled and further addition of small quantities of sugar does not affect the classification of fruit in this Chapter. 22 (b) It is the specific contention of the Counsel for the Appellant that in view of the betel nut being merely cut into smaller pieces and it is sweetened, it remains a betel nut only and would therefore squarely come under the purview of Chapter 8. The further contention of the Learned Counsel for the Appellant is that Chapter 21 is only residuary in character and when Chapter 8 applies to the product in question, the Advance Ruling Authority cannot fall back on Chapter 21 and classify the product under Chapter 21. 22 (c) However, we have seen that Supplementary Note 2 specifically deals with 'Supari' and states that it is any preparation containing betel nuts, but not containing lime, katha (catechu) and tobacco, whether or not ....
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....uct, only under Chapter 21 and not Chapter 8 as contended by the counsel for the appellant. The issue is also clinched from the fact that in Chapter 21, under the heading "Food preparations not elsewhere specified or included" also, under Tariff Item 21, 06, 90 and 30, Betel nut product known as 'Supari' finds a specific entry/inclusion, fixing a rate of duty @ 150% per kilogram. 26. (a) All these apart, we also notice that the process involved and referred to in Chapter 8 as seen from Note 3 is relating to treating the dried nuts for preservation, stabilization and to improve or maintain the appearance and in such cases, even if the process involved moderate heat treatment, sulphuring or adding sorbic acid or potassium sorbate or vegetable oil or small quantity of glucose syrup, as long as the product retains the character of a dried nut or fruit, it would be classified under Chapter 8. 26. (b) However, under Chapter 21 what is contemplated is a preparation containing betel nuts and not containing lime, katha (catechu) or tobacco, whether or not it contains ingredients like cardamom, copra or menthol. 26. (c) Thus, there is a fundamental distinct....
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....nal character of a betel nut or areca nut does not merit acceptance. 29. In the case before the Hon'ble Supreme Court in Crane Betel Nut Powder Work's case referred herein supra, the issue was relating to whether crushing of betel nut and adding ingredients to it would involve any 'manufacture' or not and in that context it was held that the process of boiling, slicing etc. and adding floavors to the betel nut would not result in altering the nature and characteristics of the product and therefore the classification would have to be made under Chapter 8. 30. According to the Learned Senior counsel for the respondents, post this judgment, two important subsequent factors have intervened. 31. Firstly, vide Finance (No. 2) Act, 2009 dated 19th August, 2009, there has been an insertion of Note 6 in Chapter 21, which specifically relates to Tariff Item 2106 90 30 relating to 'supari and stating that the process of adding or mixing cardamom, copra, menthol, spices, sweetening agents or any such ingredients other than lime, katha (catechu) or tobacco to betel nut, in any form, shall not amount to "manufacture". However, we are conscious of th....
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....upreme Court in Crane Betel Nut Powder Work's case was dealing with an issue that arose only under the Central Excise Tariff Act and not the Customs Tariff Act. The amendments also have been incorporated only under the Central Excise Tariff Act, clarifying that the process of adding or mixing cardamom, copra, menthol etc. would not amount to manufacture etc. 34. (d) As already discussed herein above, under the Customs Tariff Act, the question of manufacture loses its relevance since the Act deals only with the tariff applicable to the goods or products imported from outside the country, in an as is where is basis, or rather the product as imported in whatever form is the basis for levy of Customs Tariff. Thus, the judgment of the Hon'ble Supreme Court in Crane Betel Nut Powder Work's case cannot be said to be a bar u/s. 28(i) of the Customs Act. 35. (a) Here we have already found that by inserting a specific tariff entry for 'Supari' under Chapter 21, the question of classifying it under Chapter 8 does not even arise, especially when this was neither the issue before the Apex Court nor the basis on which the decision was rendered. It is also tr....
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....3/19/2021-GST dated 6th October, 2021, clarifying that Scented Sweet Supari is classifiable under 21069030 as "Betel Nut Product' known as 'Supari' had put all the controversies in respect of classification of the impugned item in rest. 4.4.17. It is submitted that there cannot be a situation where same product when imported is subjected to levy of basic customs duty under one CTH and levy of IGST under another CTH of the Customs Tariff Act, 1975. Hence, in view of supplementary Note 2 of Chapter 21 of Schedule 1 of the Customs Tariff Act, 1975 read with Para 7 of the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 from F. No. 190354/206/2021-TRU and the provisions of Section 3(7) of the Customs Tariff Act, 1975 the scented sweetened supari merits classification under CTH 2106 90 30. 4.4.18. Since, the Hon'ble Madras High Court being the jurisdictional court in the present case has distinguished the decision of Hon'ble Supreme Court in the case of Crane Betel Nut Powder Works, hence the decision of CESTAT in the case of M/s S T Enterprises Vs Commissioner of Customs, (Chenna VII)[2021 (378)ELT 514 (Tri-Chennai) cited by the Commissioner o....
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....(catechu) and tobacco. Betel nut product containing any floavor could be imported. The point of the Commissioner of Customs, Tuticorin is not clear and does not merit consideration. 4.5.3. Further, the point raised by the Commissioner of Customs, Tuticorin does not appears to be in consistent with law as prevailed. But, it appears to be an attempt to somehow oppose the proposed classification of the impugned goods under heading 2106. In this regard, it is to be noted that the subject goods i.e., scented supari falls under heading 2106. Therefore, making a comment that impugned goods is more akin to chapter 8 product is bereft of any rationale and legal principles. So, the grounds taken by the Commissioner of Customs, Tuticorin in this paragraph requires to be ignored. 4.6. Ground 6 of the Department : It is pertinent to note that the valuation of goods falling under CTSH 080280 is bound by sub-section (2) of Section 14 of the Customs Act, 1962 (52 of 1962). The Central Board of Indirect Taxes & Customs, being satisfied that it is necessary and expedient to do so, makes the periodical amendments in the notification of the Government of India in the Ministry of Finance (Depa....
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....gned goods through Port of Tuticorin. Thus, cause of action in the instant case falls within Jurisdiction of Commissioner of Customs, Tuticorin and within the territorial Jurisdiction of Madras High Court. 4.8.2. As discussed in forgoing paragraphs that Hon'ble High Court of Madras has upheld the decision of Advance Ruling Authority that Methanol Scented Supari would be classified under CTH 21069030. Since Madras High Court being the jurisdictional Court in the present case, the decision of the Hon'ble Madras High Court would prevail over the conflicting decisions of any other High Court. Moreover, the stay order in case of BAG Industries was obtained by the department ex parte and in any case, it is an interim order which can never prevail over the detailed judgment of the Hon'ble Madras High Court. 4.8.3. It is settled position in Law that in case of conflicting decisions of different High Courts, the decision of the jurisdictional High Court would prevail. The Applicant in this regard relies on the decision of the Larger Bench of Tribunal in the case of Collector of Central Excise Chandigarh vs Kashmir Conductors. The relevant extract of the decision is reprodu....
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....uthorities within their jurisdiction with reference to assessees within such jurisdiction. The respondents/assessees in the two appeals viz. M/s. Kashmir Conductor and M/s. Laldee (P) Ltd. are not situated in the jurisdiction of either of the above two High Courts and., therefore, will be bound by this Larger Bench order." In view of the above, the order of the Hon'ble Delhi High Court which is contrary to the decision of the High Court of Madras, will not have any bearing and decision of Madras High Court would prevail. 4.8.4. A full Bench of the CESTAT in in Madura Coats v. CCE - 1996 (82) E.L.T. 512 also clarified that where a conflict of decisions among High Courts does not relate to interpretation of statutory provisions or a notification (and not vires thereof) the decision of the jurisdictional High Court which has jurisdiction in respect of the authority which adjudicated the matter initially and of the assessee and has taken a particular view of interpretation or proposition of law, must be followed in cases falling within that jurisdiction. 4.8.5. In view of the above comments read with the grounds stated in the Application No 101/2025, CBIC Circular No 163/1....
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....fication under Chapter 21 of the Customs Tariff under Heading 2106, Sub-heading 210690 and Tariff Item No 21069030 of the Customs Tariff. 5.4 The applicant has also discussed the competing headings of classification, namely (1) Chapter 8, Heading 0802, Sub-heading 080280 and (2) Chapter 21, Heading 2106, Sub-heading 210690 and Tariff Item No 21069030 of the Customs Tariff including classification under Chapter 20 of Customs Tariff in their application as mentioned in para 1.6 to 1.18 above. 5.5. However, I note that the jurisdictional Commissionerate, in its comments, has contended that the most appropriate classification for the impugned goods i.e. menthol scented betel nuts is under subheading 0802.80 and specifically under CTI 0802 8090 as other Areca Nuts as discussed in details in para 2.2 to 2.6 above. They further stated that advance ruling was sought for menthol scented supari by M/s Harnath Stock Nuts, Cuddalore, Tamilnadu from CAAR Mumbai. CAAR, Mumbai in their recent Ruling No. CAAR/Mum/ARC/27,28,29/2025-26 dated 16.06.2025 stated that "a Ruling passed by this Authority in a similar/identical matter in the case of M/s Bag Industries is pending before Hon'ble De....
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....owder --- Other: 21069091 --- Diabetic foods 21069092 --- Sterilized or pasteurized millstone 21069099 --- Other 5.8. In the case on hand, I note that since the subject goods are "floavored supari", the tariff heading 2106 merits consideration. The tariff heading 2106 covers "Food Preparations not elsewhere specified or included". I have also gone through the supplementary note 2 to the Chapter 21 wherein it is stated that, "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 any other ingredients, such as cardamom, copra or menthol." 5.9. I also note that Heading 2106 covers the word 'preparation' in the description of Heading is fulfilled in this case as a detailed process is carried out on the betel nut to arrive at the product 'floavored Supari' viz. removing impurities, polishing, cleaning, cutting, grading and separation, dehydration and mixing of floavor. The betel nut after being subjected to the stated processing, a specific preparati....
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.... goods may be fresh (including chilled), frozen (whether or not previously cooked by steaming or boiling in water or containing added sweetening matter) or dried (including dehydrated, evaporated or freeze-dried): provided they are unsuitable for immediate consumption in that state, they may be provisionally preserved (e.g., by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions). The note specifies the physical status of the goods along with corresponding processes that could be carried on those goods under this chapter. Note 3 to Chapter 8 further states that Dried fruit or dried nuts of this Chapter may be partially rehydrated, or treated for the following purposes: (a) for additional preservation 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." 5.13. I observe that the areca/betel nut is mentioned in Heading 0802, specifically under sub-heading 080280. In the....
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....e court held that the subject goods i.e. floavored/scented supari is classifiable under 21069030 in their order as mentioned in para 1.24 and 4.4.14 in detail. As the aforesaid entry is specifically provided for "Supari" which was also accepted by the department. I have examined the contention of department as well as applicant and find that: (i) Contention of department that in view of stay on operation of ruling pronounced in case of M/s Bag Industries, (in which ruling was given in favour of classification of menthol scented supari under 21069030) by Hon'ble Delhi High Court (vide order dated 23.09.2024 which is further continued vide order dated 29.07.2025), the applicant's claim should be rejected. (ii) The contention of department that both Delhi and Mumbai Advance Rulings Authorities in their previous orders in 2021-22 has issued ruling of the same product (Menthol Scented Supari) under chapter 0802 8090. Therefore, contention of applicant for classification under 21069030 should be rejected. 5.17. I have examined both arguments carefully. I find that stay on operation of Mumbai Advance Ruling order by Hon'ble Delhi High Court dated 23.09.202....
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....vance Ruling impossible. In any case as the act is specific about the applicant only. In view of above I hold that stay on operation of Mumbai Advance Ruling order is not coming in way deciding the application on merit as applicant has mentioned that in their case no such question is pending before any officer of Customs or appellate Tribunal or Court. 5.20. So far as question of following previous rulings as contented by the department is concerned, I am of opinion that the authority being creation of law; requires to follow the judicial discipline. In present case, the applicant has quoted a High Court decision (in case of M/s A.K. Impex) which has decided the classification of identical product under 21069030. The department in its comment has neither disputed the applicability of ratio of this judgement nor they have produced any evidence that this order has been challenged by the department and Hon'ble Supreme Court has granted any stay on operation of this order. I have observed that in all previous rulings, where the Authority of Advance Ruling in Delhi or Mumbai had decided the classification of the product in chapter 8; this judgement was not considered (as judgemen....
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....7-Central Tax (Rate), dated 28-6-2017)." 5.22. I find that in this context, it is essential to understand the explanations (iii) and (iv) appended to IGST Rate Notification 1/2017-IGST (Rate), the relevant text is reproduced hereunder: '(iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification.' Further, I find that identical provisions have already been incorporated in CGST rate Notification No. 1/2017-CGST (Rate), dated 28-6-2017. 5.23. Applicability of the CBIC circular read with the explanations to the IGST rate notification to the present case can be properly understood by referring to the Section 3(7) of the Customs Tariff Act, 1975. Section 3(7) of the Customs Tariff Act, 1975 is reproduced below : "Section 3. Levy of....
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....er chapter 21 i.e., CTH 2106 9030 than in any of the headings under Chapter 8. CBIC circular legally supports this view. There cannot be a situation where same product is subjected to levy of basic customs duty under one CTH and levy of IGST under another CTH of the Customs Tariff Act, 1975. Hence, in view of supplementary Note 2 of Chapter 21 of Schedule 1 of the Customs Tariff Act, 1975 read with Para 7 of the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 from F. No. 190354/206/2021- TRU and the provisions of Section 3(7) of the Customs Tariff Act, 1975 the scented sweetened supari merits classification under CTH 2106 90 30." 5.25. Given the above discussion, I am of the view that the subject goods covered under this application merit classification under CTI 21069030. Issue regarding notification exemption 5.26. Now, I examine the issue whether the impugned goods are eligible for benefit of Sr. No. 39 of Table 1 of exemption Notification No 68/2012-Customs Dated 31.12.2012 which provide concession of customs duty is extended to all goods classified under Chapter 21 except compound of alcoholic preparations of a kind used for the manufacture ....