TaxTMI 
TaxTMI 
2024 (3) TMI 1535
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....lling under the Pr. Commissioner of Customs, Nhava Sheva-I, JNCH, Nhava Sheva, Tal: Urban, Dist. Raigad, Maharashtra -- 400707. 2. The applicant submits that the firm M/s A One Traders, J-3, S-4, Dilshad Colony, East Delhi, Delhi is a proprietary firm registered with the respective statutory firm viz GST, Income Tax, DGFT, New Delhi etc. having exporter-importer Code BRWPA1909A and GST number (GSTIN)- 07 BRWPA1909A1Z3. 2.1. The applicant is in the process of setting up its business of Import of various types of preparations/ products of Betel nuts commonly known as "Supari" and more particularly the goods i.e. Roasted Areca Nuts (Whole) and Roasted Areca Nuts Cut" from Burma, Indonesia, Sri Lanka and Singapore. 2.2. That the applicant is approaching the Authority for seeking advance ruling qua the goods as mentioned in the above paras as applicant intends to import the same and hence would like to have a proper understanding and clarification as to whether the goods being imported shall be covered under a particular classification or the other. 2.3. That the processes carried out on the subject goods are as under: - 1) De-husking the raw betel/ areca nut and dr....
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....Explanatory notes are guiding factors wherever any dispute arises while interpretating the classification of particulars chapters or in case of similar or competing entries and this has been held time and again in catena of judgments by the Hon'ble Courts in India L.M.L. Ltd. Versus Commissioner of Customs Reported in 2010 (258) E.L.T 321 (S.C), Holostick India Ltd. Versus Commissioner of Central Excise, Noida Reported in 2015 (318) E.L.T 529 (S.C), Collector of Central Excise, Shillong Versus Wood Craft Products Ltd Reported in 1995 (77) E.L.T 23 (S.C.) 2.6. That in fact for similar product Hon'ble CAAR Mumbai has already issued Ruling thereby declaring the above said goods falls under CTH 20 and particularly under CTH 200819 20 and not under CTH 8. The said ruling has been given in the case in Ruling dated 7.12.2022 having no. CAAR/Mum/ARC/44,45 & 46/ 2022 in Application no. AAR/Cus/APPL/70,77 & 78/2022 - O/o Commr-CAAR-Mumbai (Applicant-M/s Shahnaz Commodities International, Chennai) 2.7. Further, in fact, the customs authority challenged the said Advance Ruling before the Hon'ble High Court of Madras vide CMA No. 600, 1206 and 1750 of 2023 - The Commissioner o....
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....haracteristics of the betel nut product on account of the roasting process. That the tannin and arecoline content of raw betel nut/ areca nut gets substantially changed by subjecting the same to roasting and boiling. Therefore, roasted betel nut is a distinctive product of betel nut making it suitable for immediate consumption. 2.13. Roasting is not aimed at additional preservation or stabilisation or to improve or maintain their appearance. 2.14. That in this regard applicant takes support from the article titled "Estimation of arecoline content of various forms of areca nut preparations by high-pressure thin-layer chromatography" which throws light on the chemical composition of various forms of areca nuts. As per the article, Polyphenols (flavonols, tannins) constitute a large proportion of the dry weight of the nut. Its content in areca nut may vary depending on the degree of maturity and its processing method. The tannin content is highest in unripe areca nuts and decreases significantly with increasing maturity. The roasted nut possesses the highest average content of tannins, ranging from 5 to 41 % (mean, 1 .4%); the average tannin content of sun-dried nuts is 25%; and....
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....nder 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. Also it is held that HSN explanatory notes is normally a safe guide in determining classification under CTH. Roasted Areca / betel nut having mentioned in CTH 2008 19 20 under HSN the impugned Ruling is in consonance with HSN classification and that when there is a specific entry covering a product/ commodity, the test of common parlance is irrelevant in determining classification. 2.20. Hence, the subject goods i.e. Roasted areca nuts are squarely covered under the classification 2008 19 20 and cannot be covered under CTH 08 which has been stand taken by the customs authority before this Hon'ble Authority as well as before the Hon'ble High Court and their said contention has been rejected. 2.21. That the applicant has made the present application in bonafide and seeks the kind indulgence of this Hon'ble authority thereby seeking the subject goods under classification CTH 20 and more particularly under CTH 2008 19 20 and requested to the authority to pronounce ruling on the classification in respe....
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....lly rehydrated, or treated for the following purposes: (a) for additional preservation or stabilisation (for example, by moderate heat treatment, sulphuring, the addition, if 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. 4.3. In this regard kind attention is invited to following Court/ tribunal case Laws :- I. Hon'ble CESTAT (Chennai), final order bearing nos. 40736- 40737/2021 dated 26- 02- 2021, in Appeal Nos. C/40002- 40003/2021 (Appellants- M/s. ST Enterprises and M/s. Ayush Business Overseas, wherein Hon'ble CESTAT (Chennai), ordered that Betel nuts "whole" subjected to processes like de-husking, cleaning, boiling and drying, are classifiable under HS CODE 08028010. The said order of Hon'ble CESTAT (Chennai) has been further endorsed by Hon'ble Supreme Court of India stating that they are not inclined to interfere with the Hon'ble CESTAT's order, in Civil Appeal Nos. 850-51 of 2021-M/s. Ayush Business Overseas-vs-Commissioner of Customs (Chennai VII). ....
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....Pvt. Ltd. Versus Commissioner of Customs Delhi & Ors vide order dated 01.03.2023 has decided the classification of "Betel nut product known as Supari" under 0802 and has observed that it would not be apposite to classify the products in question as those covered under Chapter 21 of the Customs Tariff. 4.4. Further, as per Para 8 of Annexure-1 of CAAR Application submitted by M/s. A One Traders, processing of the goods involves de-husking the raw betel nut/areca nut, roasting, cooling and again roasting. The process is performed repeatedly. It is observed that the purpose of roasting here is to remove the moisture content to 10%-15% and making it brittle. Hence as per chapter note 3 of Chapter 8, which pertains to dried nuts, it retains the essential character of Arecanuts. Merely roasting and cooling doesn't change the essential character. 4.5. Therefore, in view of above Roasted Areca Nut are classifiable under Heading 080280 and not under sub-heading 20081920. Because the processing as mentioned by the importer De-husking/ Removing Skin, Roasting in the oven/machine and cooling do not change the character of the Betelnuts and the Betelnut have not attained the character....
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....eserved 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) 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. (2) "Peanut butter", consisting of a paste made by grinding roasted ground- nuts, whether or not containing added salt or oil. (3) Fruit (including fruit-peel and seeds) preserved in water, in syrup, in chemicals or in alcohol. (4) Fruit pulp, sterilised, whether or not cooked. E. Further, the Chapter note 1(a) of chapter 20 has excluded vegetables, fruits or nuts, prepared or preserved by the process specified in Chapter 7, Chapter 8, or chapter 11. One of the processes specified in Chapter 8 is moderate Heat Treatment. The imported goods have gone through De-husking, Roasting in the oven/machine and cooling. Therefore, Roasted Areca nuts are excluded from Chapter 20 as per the chapter notes of chapter 20 and also as per explanation in the explanatory notes and so fits for classification i....
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.... of the Addl. Comm. that the roasting is for additional preservation or stabilization is not correct as roasting involves server heat treatment and is different form moderate heat treatment as well as dehydration. Further, the classification as far as possible must be in conformity and in consonance with the HSN explanatory notes and that whenever there is specific entry, the same would prevail over general entry as per the principle incorporated under Rule 3 (A) of General Rules of Interpretation. 5.3. That in fact, the Addl. Comm. in support of its contention has relied upon certain judgments however, with due respect the said judgments are in the case wherein the challenge was between CTH 08 and CTH 21 whereas the present is case of CTH 20 and hence the said judgment are not applicable. 5.4. Further, this Hon'ble Authority has also issued an advance Ruling No. CAAR/Del/Perfect/ 01 /2024 In application No. 32/2023-Delhi dated 28.11.2023 in the case of Perfect Trading Co., wherein this Authority has allowed the advance ruling for the goods i.e. roasted area nut under CTH 20081920 only. 5.5. Also there are other Advance Rulings on the similar contention issued by the A....
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....at the processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. It does not specifically include the process of roasting. Here, it is important 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 vs. 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 invol....
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....dration. Therefore, the impugned goods do not satisfy Note 3 to Chapter 8. 7.4 While examining the scope of CTH 2008, I find that as per HSN Explanatory Notes, heading 2008 covers fruit, nuts and other edible parts of plants, whether whole, in pieces or 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. Specifying what is included in this heading, 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. It is also pertinent to observe that 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. 7.5 Moreover, it is an established fact that in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in th....
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.... "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." Honourable Apex Court's conclusions corroborate the finding that the process of roasting is not covered by Note 3 to Chapter s and hence these products, roasted betel nuts are not classifiable under chapter 8 of the Tariff. 8.1 Further, in the CAAR, Mumbai Ruling No. CAAR/Mumbai/ARC/39,40,41/2023 in the case of M/s. Universal Impex, the Authority has stated his findings and has ruled accordingly- "in view of the specific CTH 2008 19 20: Other roasted nuts & seeds in chapter 20 of the first schedule to the Customs Tariff, HSN Explanatory note to CTH 2008, various Supreme Court rulings upholding guiding value of the HSN Explanatory notes for deciding classification under Customs Tariff Act, 1975 and previously mentioned two Supreme Court judgments classifying roasted nuts which include almonds, betel nut and other nuts under chapter 20 by taking recourse to HSN explanatory....