TaxTMI 
TaxTMI 
2024 (2) TMI 1654
X X X X Extracts X X X X
X X X X Extracts X X X X
.... falling under the Commissioner of Customs, Custom House, New Harbour Estate, Tuticorin - 628004 (Tamilnadu). 2. The applicant is currently engaged in the local trading of pan shop related spices & betel nuts items. The applicant intends to import Roasted Areca Nut (Whole), Roasted Areca Nut (Split) and Roasted Areca Nut (Cut) and sought ruling of the Authority in the matter of classification of the goods which in the opinion of the applicant, are classifiable under chapter Sub-heading 20081920. The submission of the applicant are as under: 2.1 The process of "roasting" is neither defined in the Customs Tariff nor in the HSN Explanatory/Section/Chapter Note. 2.2 The process for roasting involved in the manufacture of the above said goods is as under: - 2.3 Roasted Areca Nut (Whole), Roasted Areca Nut (Split) and Roasted Areca Nut (Cut): Following processes are conducted on raw betel nut :- a) De-husking the raw betel/areca nut and drying the same before being fed into the roasting oven. b) Feeding the fresh areca nut into a seed roasting oven, heating up to 130-150 deg. C and roasting the fresh areca nuts in an oven of the seed roasting machine. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hereinafter also referred as "Tariff"). 2.7 The process of roasting changes the chemical and physical characteristics of the areca nut by reducing arecoline and tannin as well moisture. 2.8 In respect of alternate CTH 2106, the applicant draw attention to Chapter Note 2 and Explanatory Note (A) to Chapter 21, which is as under: "Betel Nut product known as Supari" means any preparation containing betel nuts but not containing any one or more of following ingredients, namely lime, katha (Catechu) and tobacco whether or not containing any other ingredients such as cardamom, copra or menthol. 2.9 As per the Explanatory note, the heading covers preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption. 2.10 The goods have undergone roasting, but they don't contain lime, Katha (catechu) and tobacco. Further, roasted betel nut can be consumed directly by merely cutting them into pieces. Therefore, the goods are equally classifiable under Chapter 21 of the Customs Tariff Act, 1975. 2.11 The applicant also referred to and discuss the case law of M/s Crane Betel nut Pow....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oasting. Therefore, roasted betel nut is a distinctive product of betel nut making it suitable for immediate consumption. 2.16 Roasting is not aimed at additional preservation or stabilization or to improve or maintain their appearance. 2.17 The applicant further submitted that as per their best knowledge and belief the items are classified under Custom Tariff heading 20081920. The said entry in Customs tariff Act' 1975 reads as under: Tariff Item Description of Goods Unit 2008 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 Kg's (Kilo grams) 2008 19 - Other, including mixtures: 2008 19 20 - Other roasted nuts and seeds 2.18 The applicant relied upon the following judgments :- a. Ruling No. CAAR/Mum/ARC/39,40&41/2023 dated 07.12.2022 passed in the matter of M/s. Universal Impex, Mumbai Vs. The Commissioner of Customs II, Chennai, The Commissioner of Customs, Nhavasheva & the Commissioner of Customs (Krishnapatnam), Andhra Pradesh in Application No. CAAR/CUS/APPL/19, 21, 22/2023-O/o Com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....H 080280. iv. Comments to points raised by the applicant vide Annexure I & Annexure II of the application are as under: The claims made by the applicant and the ruling sought is devoid of any concrete evidence and legally untenable on the following grounds: i) The applicant's claim that roasting is not defined in the Customs Tariff Act, 1975 is not correct. Though roasting as a process is not defined, it will fall under the 'moderate heat treatment' mentioned in Chapter Note 3 of Chapter 8 reproduced below for easy reference: "3. Dried fruits or dried nuts of this Chapter may be partially, rehydrated, or treated for the following purposes: a) For additional preservation stabilization (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 betel nut, fruit or dried nuts." (ii) The applicant's claim that after repeated roasting of the area nuts at the temperature of more than 100 degre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acter of betel nut and do not qualify to be considered as "preparations" of betel nut, which is sine qua non for a good to be classifiable under Chapter 20. v) To be classified under Chapter 20 there should be some preparation as the Chapter heading reads as "Preparations of vegetables, fruit, nuts or other parts of plants". Mere roasting of betel nut does not render the product to be distinctive as claimed by the applicant or does not alter the character of the original good. Roasting or mere addition of certain additives for the limited purpose of enhancing preservation or appearance or ease of consumption per se does not result in obtaining a preparation of betel nut. Hence it remains the betel nut and rightly classifiable under Chapter 08. According to Cambridge dictionary, "Preparation is a mixture of substances, often for use as a medicine". According to Collins Dictionary "A preparation is a mixture that has been prepared for use as food, medicine, or a cosmetic". However, in the process flow mentioned in para 2 it is evident that there is neither any mixture of products nor any change in the original good which tantamount to no preparation. vi) The applica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts is only for the purpose of drying without any reference to packaging and any manufacturing process. The importers have not submitted anything about the packing of the goods and generally these goods are imported in bulk in jumbo bags. The goods under dispute are Areca Nuts in the same form as those classified under Chapter 08 and hence, they are clearly excluded from the scope of the Chapter Heading 2008. Hence, the purported roasted areca nuts clearly excluded from the scope of the chapter 20 and rightly classifiable under chapter 08. viii) Further, as per Rule 3(a) of General Rules for the Interpretation of the Harmonized System since the product is more specifically classified under CTH 0802 classification under Chapter 2008 or 2106 is unwarranted. 3. When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be affected as follows: a. The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in view of the fact that the processes to which raw green fresh betel nuts have been subjected to obtain the said five goods are squarely in the nature of processes mentioned in Note 3 to Chapter 8, and have not materially changed the essential character of betel nuts, further these goods are not classifiable under sub-heading 21069030. d. Chennai CESTAT order in M/s S.T. Enterprises v/s Commissioner of Customs (Chennai-vii) (2021(378) E.L.T.514(Tri. Chennai). "The Hon'ble Tribunal has addressed the question whether the mere boiling and drying whole betel nut it would merit classification under 21069030 and held that since the import goods are betel nuts whole, these would merit classification under Chapter 8." xi) The CESTAT judgement in case of M/s. S.T. Enterprises vs Commissioner of Customs (VII) in Customs Appeal No.40002 & 40003 of 2021 is applicable mutatis mutandis to the present case, wherein the question decided in the said case was classification of "boiled betel nuts" The importers submission is that the process roasting is not covered under the process mentioned under Chapter Note 3 of Chapter 8. It is pertinent to mention here that the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hi in its order CUS AA 17/2022 dated 01-03- 2023 has held that the order of CAAR in case of M/s Excellent betel nut is erroneous. The relevant portion of the judgment is reproduced below: "The decision of the learned AAR in Re: Excellent Betelnut Products Put. Ltd. (supra) to the extent that it runs contrary to the decision of the Supreme Court in Crane Betel Nut Powder Works v. Commissioner of Customs and Excise, Tirupathi & Anr. (supra), is erroneous". In order to arrive at the appropriate classification of the impugned goods, all originating from common source viz. raw green fresh betel nut, a more comprehensive view needs to be taken than in the aforesaid M/s Excellent Betel nut case, as has been done by AAR, Mumbai in the case of a. M/s. Samreen International Put. Ltd. (Ruling No. CAAR/ Mum/ARC/3/2021 dated 15th of March, 2021) "I find the observations of the Hon'ble Supreme Court in the case of Crane Betel Nuts and the decision of Hon'ble Tribunal in the case of Azam Laminators to be extremely enlightening" "In view of the aforesaid discussions, I have reached the conclusion that all the five products placed before me for c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich is as under: - This is an additional reply to the views/comments received from the Office of Commissioner of Customs, Tuticorin. Reply to Point no (i), (ii), (iii), (iv), (v) and (vi) -: i) The vital question as to whether roasted nuts would fall under Chapter 0802 or Chapter 2008 was affirmatively answered in favour of Chapter 2008 by the Hon'ble Supreme Court in the case of Commissioner of Customs & Central Excise, Goa vs Phir Corporation Ltd. reported in 2008 (223) E.L.T 9 (S.C). Hence, the settled position of law is that nuts falling under Chapter 08 would be classified under Chapter 20, if the same is subjected to the process of roasting. ii) It is pertinent to mention and draw attention of the authority to the Lab Report No.173/MCH/10.08.2023 dated 24.08.2023 issued by CRCL Chennai in respect of import of Roasted betel nut by M/s Universal Impex (IEC No. 0313014159) based on the CAAR ruling No. CAAR/Mumbai/ARC/39,40,41/2023dated 12.05.2023. To a specific test memo by the Customs department to ascertain whether the item under import was "roasted beetle nut" or not the Customs lab after testing the item reported as follows: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....kaging is a means of convenience, and no other significance can be attached to it. The applicant further submitted that the last but not the least, it is respectfully submitted that the issue in hand has been unequivocally dealt with CAAR, Mumbai and CAAR, Delhi in various orders and the Rulings on the subject matter is endorsed by the Hon'ble Madras High Court in it order dated 01.08.2023 in respect of CMA No .- 600, 1206 and 1750 of 2023. By leaving no stone unturned, all the aspects and grounds raised by the Chennai Customs is clearly answered by the Authority as well as the Hon'ble High Court in the said orders. 6. I have taken into consideration of all the materials placed on record in respect of the subject goods including the submissions made by the applicant during the course of personal hearing. I have gone through the response from the Customs Port Commissionerate of New Harbour Estate of Tuticorin, Tamilnadu. However, as the matter and questions before the Authority being the same, I therefore proceed to decide the present application regarding classification of roasted Areca nut on the basis of the information on record as well as the existing legal framew....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cified or included. Roasting is a process used for bringing in to existence roasted nuts and I find that the processes mentioned in chapter 8 do not cover roasting process. 7.3 I also note submissions of the applicant that Note 3 to Chapter 8 specifies certain treatments that could be carried out on the dried nuts for additional preservation or stabilization or to improve or maintain their appearance. The applicant in their application has declared that the objectives of the roasting are not as specified in the said note. Further, as per the above note, the processes that could be carried out are moderate heat treatment, sulphuring, and the addition of sorbic acid or potassium sorbate by the addition of vegetable oil or small quantities of glucose syrup. Roasting is different from all the processes mentioned above. Roasting, as submitted by the applicant, is carried out using roasting ovens due to which betel nuts are roasted in the range of 150 degrees Celsius then cooled in room temperature and the cycle is repeated until the moisture content is less than 6%. This clearly indicates that the roasting is much more than mild heat treatment. Even in the generally understood meanin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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." From the Apex-Court's foregoing judgments, it is observed that the roasted nuts find specific mention in the then Chapter 20 of the then Central Excise Tariff Act and the Chapter 20 of the Schedule I of the 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 ExplanatoryNote, 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 Corpor....