TaxTMI 
TaxTMI 
2024 (12) TMI 1695
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.... JNCH, Nhava Sheva. 2. Applicant has stated as follows in 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 M/s Vandana Trading Company (hereinafter referred to as the 'Applicant') is inter alia engaged in wholesale trade of Areca nuts (hereinafter referred to as the 'Areca Nuts' or 'Nuts ). The Applicant holds Importer Exporter Code (IEC) as OKNPS0384G. 2.2 The Areca nuts (commonly known as 'Betel nut' or 'Supari') is the fruit of the areca palm (Areca catechu), found in tropical Pacific regions, South Asia, South-East Asia and part of East Africa. Areca nuts are primarily used as masticatory and are also essential requisite in various religious, social and cultural functions in India. 2.3 The Applicant intends to import Areca Nuts (whole/cut/split) into India from countries like United Arab Emirates, Sri Lanka, Myanmar, Thailand and Indonesia, for wholesale trade. The Areca nuts will be imported through various ports, which will be determined based on the commercial and business exigencies. 2.4 These Areca Nuts will be imported bulk packaging....
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....ss peroxides. Sodium Benzoate solution: Nuts are treated with Sodium bicarbonate, and washing with plain water removes the excess benzoic acid. Sorbic Act: Nuts treated with Sodium bicarbonate, and washing with plain water removes excess benzoic acid. 2.5.4 After performing the above treatments, the Nuts become fit for human consumption. The removal treatment will be performed in India. The Applicant may sell the Nuts with or without the removal treatment, in which case the buyers or other parties will perform the process Category B-Roasted Areca Nuts 2.5.5 When roasted, the flavor and texture of the Areca Nuts are significantly enhanced, offering a more enjoyable eating experience. The roasting process reduces moisture content, resulting in a crunchier texture while also extending the Areca Nuts shelf life by minimizing the likelihood of mold formation. It also removes any raw or bitter taste, making the nuts more palatable and sometimes easier to digest. Roasted Areca nuts are versatile in culinary applications, adding depth and a pleasant aroma to a variety of dishes, from simple snacks to gourmet recipes. 2.5.6 Prior to the import, the Areca ....
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....Areca nuts with added preservatives shall be classified under HS 08129090 which includes goods with following description: "Fruit and nuts provisionally preserved, but unsuitable in that state for immediate consumption: Other: Other" In the following paragraphs, the Applicant submits as to why the said products should be classified as follows: 2.8.3 The Applicant intends to import Nuts into India from United Arab Emirates, Sri Lanka, Myanmar, Thailand and Indonesia. Due to their inherent properties, these Nuts are susceptible to the formation of fungus and moulds, which deteriorates the quality of Nuts and sometimes renders them inedible. 2.8.4 To prevent such spoilage, the Nuts undergo a preservation treatment to provisionally preserve the Nuts and prevent deterioration. In the instant case, the Nuts will be treated either by using (a) Sulphur-di-oxide gas, (b) Sodium Benzoate or (c) Sorbic acid. 2.8.5 The chapter relevant for the instant classification is Chapter 08, which inter alia covers edible fruits and nuts, typically intended for human consumption, whether in their existing state or after processing. 2.8.6 According to Rul....
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....is the above, the Applicant believes that it would be appropriate to classify the provisionally preserved Nuts under Chapter Heading 0812 and more specifically under sub- heading 08129090 of the First schedule of the Customs Tariff Act, 1975. Category B-Roasted Areca Nuts 2.12 In case of Roasted Areca Nuts, the Applicant firmly believes that the same shall be classified under HS 2008 19 20 which includes goods with following description: "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 Other, including mixtures: Other nuts, otherwise prepared or preserved 2.13 In the following paragraphs, the Applicant submits as to why the said products should be classified under HS 2008 1920. 2.13.1 Prior to importation, the Areca Nuts undergo a roasting process. The term 'roasting' is not explicitly defined under the Customs Tariff or related Notes. Hence, reliance is placed on dictionary definitions, which universally describe roasting as a process involv....
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....as follows: "the commonly accepted sense of a term should prevail in construing the description of an article of food". In common trade parlance, "drying" is a method of food preservation by the removal of water content. On the other hand, "roasting" means the excess or very high heat treatment that produces fundamental chemical and physical changes in the structure and composition of 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." 2.13.6 Further, in trade parlance also the term drying assumes removal of moisture whereas the term roasting involves high heat treatment causing significant chemical and physical change, resulting in charred appearance. 2.13.7 In the instant case, the process carried out by the supplier alters the appearance and chemical characteristics, hence, it is a roasting process. The above explained roasting process is confirmed by the clarification received from the vendor. 2.13.8 Reference in this regard is made to the Lab Report No. 173/MCH/ 10.08/2023 dated August 24, 2023 issued by ....
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....ses which are distinct/different and Importantly, relevant in determining whether the nuts would fall under CTH 0802 or under 2008 2.15 Further, reference is made to the ruling of Hon'ble Supreme Court in case of Commissioner of Customs and Central Excise, Goa vs. Phil Corporation Ltd (2008 (223) ELT 9 (SC)), wherein it was held that roasted nuts are classifiable under heading 2008 and not 0802. Hence, it is a settled position that nuts falling under Chapter 08 would be classifiable under Chapter 20, if the same is subjected to the process of roasting 2.16 Additionally, reference is made to the following judicial precedents: 2.16.1 Shahnaz Commodities International Pvt. Ltd ((2023) 9 Centax 183 (Mad.)) in this case the Hon'ble Madras High Court had held that areca nuts roasted at 130-to-150-degree Celsius temperature are classifiable under heading 20081920 instead of heading 0802 80 or under Chapter 21 2.16.2 Shapphire Trading Corporation ((2024) 21 Centax 444 (CAAR Mumbai) In this case, the CAAR Mumbai observed that roasting involves a severe heat treatment, distinct from the moderate heat treatment, dehydration. or other preservation methods mentioned in Note ....
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.... consumption in that state? 2. What shall be the tariff classification of Roasted Areca Nuts, proposed to be imported by the Applicant in India? Upon review of recent developments, the Applicant has become aware that the issue covered in Question 1, concerning the tariff classification of temporarily preserved nuts, is currently sub-judice before the Hon'ble Madras High Court. In adherence to the principles of judicial propriety and to avoid any conflict with the ongoing judicial proceedings, the Applicant seeks leave to withdraw the advance ruling application to the extent of Question 1. Accordingly, the Applicant request to withdraw the application as it relates to Question 1. However, as regards, Question 2, which pertains to the tariff classification of roasted Areca Nuts, the Applicant continues to seek the advance ruling. They, therefore, request this office to pronounce a ruling on this question to facilitate clarity and compliance with customs laws and regulations for the proposed import activity. They request for a partial withdrawal of the application and continued consideration of the remaining question. 3. In terms of provisions of the Section 28-1....
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....mportant 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, "drying" is a method of food preservation by the removal of water content. On the other hand, "roasting" means the excess or very high heat treatment that produces fundamental chemical and physical changes in the structure and composition of 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". 5.3 Chapter 20 of the Tariff covers the Preparations of vegetables, fruit, n....
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....ing, 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 and none of these processes are mentioned in the chapter note 3 to Chapter 8 of the Customs Tariff Act, 1975 as well as HSN Explanatory Notes to Chapter heading 0802. 5.6 I also find that in the Food Safety and Standard (Food products Standards and Food Additives) Regulation 2011, there are certain provisions mentioned in respects of processed nuts and nut mixtures etc. Para 15.2 of the regulation (version XXVI 20.12.2022) reads as follows :- 15.2: Processed nuts including coated and nut mixtures -includes all type of whole nut processed including dry roasting, roasting ... The above provisions incorporated in FSSAI Regulations endorses the 'roasted nuts' as a specific and Processed product. 5.7 Classification as far as possible must be in conformity and in consonance with the HSN Explana....
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....he Customs Tariff Act 1975 as well as corresponding HSN Explanatory Note. It is important to pay attention to the fact that, in the above referred HSN explanatory note, a process of roasting is not specifically mentioned as a process of preservation or stabilization or a process to improve or maintain the appearance. Specific attention is invited to the paras 10 & 11 of the SC judgment (M/s Phil Corporation) in which paras 6 & 7 of SC judgment in case of M/s Amrit Agro are relied upon. Para 6 inter alia reads as follows: "roasted peanuts are covered by Chapter 20. Even according to the Explanatory notes of HSN under Heading 20.08 ground- nuts, almonds, peanuts etc. which are dry- roasted, fat-roasted whether or not containing vegetable oil are the items which all would stand covered by the said Heading 20.08." 7. 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'). The HSN Explanatory Notes released by the WCO aid in the interpretation of the Headings of the Tariff and may be used as a safe guide for the same. It has been held so by the Supreme Court in the cas....
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....9 (S.C.)), it was held that "Classification of goods- Determination of- it cannot be under residuary entry in presence of specific entry, even if it requires product to be understood in technical sense-Residuary entry can be taken refuge of only in absence of specific entry". In the case of Western India Plywoods Ltd. Versus Collector of Customs, Cochin (2005 (188) E.LT. 365 (S.C.)) it was held that "Classification of goods-application of residuary entry to be made with extreme caution, being attracted only when no other provision expressly or by necessary implication applies to goods in question". 11. 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, classification of the imported products 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 remaining Rules of the GRI. GRI 1 stipulates that the goods under consideration should be classifie....
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....chedule of the Customs Tariff Act, 1975." 14. The Hon'ble High Court of Madras in its judgement dated 01.08.2023 in the case of M/s. Shahnaz Commodities International P. Ltd. and M/s. Universal Impex has upheld the classification of Roasted Betel Nuts under CTH 2008 19 20. The Honourable High Court went on to analyse the various aspects in determining classification and summed up that (a). "Roasting is a process treated to be distinct from the process of boiling and drying, in fixing the classification in respect of betel/areca nut under CTH; (b) Roasted betel/areca nut having been specifically classified under CTH 2008 19 20, the attempt to classify under CTH 08 02 80 would fall foul of the settled rule of construction that specific entry would prevail over general entry; (c) HSN explanatory notes is normally a safe guide in determining classification under CTH; (d) When there is a specific entry covering a product/commodity, the test of common parlance is irrelevant in determining classification; . (e) There is considerable force in the submission that the classification as far as possible must be in conformity and in consonance....