TaxTMI 
TaxTMI 
2024 (8) TMI 1688
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....asted Areca Nuts (Cut)" from Myanmar, Indonesia, Sri Lanka, Bangladesh, UAE and Singapore etc. 1.1 The applicant submits as under: That the applicant, M/S. LUJEE INTERNATIONAL COMPANY LIMITED, 140/7, Soi Nabg Linchi 6 Lane, 1 Babg Linchi RD, Thungmahamek, Sathan, Bangkok- 10120, Thailand is a registered company having registered office at 140/7, Soi Nabg Linchi 6 Lane, 1 Babg Linchi RD, Thungmahamek, Sathan, Bangkok- 10120 Thailand and is represented by Mr. Phumravit Chaiyaponggosone. That the company is a reputed company based in Thailand and duly registered with the respective statutory authorities at Thailand and other tax departments. 1.2 That the company is in the business of trading, import and export of various items. The applicant is in the process of setting up its business of trading/Export of Roasted Areca Nut (Whole), Roasted Areca Nut (Split) and Roasted Areca Nut (Cut) from Thailand, Burma (Mynmaar), Indonesia, Sri Lanka, Bangladesh, UAE and Singapore. 1.3 That the applicant is approaching this Hon'ble Authority, seeking advance ruling qua the goods as mentioned in the following paras as applicant intends to export the same and hence would like to have....
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....ed under Chapter Heading 2008. 1.4.4 That the CTH headings describe as bellow: CTH 2008- Furit, 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 & CTH 2008 19 20- Other Roasted Nuts and seeds. 1.4.5 That as per the Explanatory Notes to Chapter 8, fruits and nuts of this Chapter remain classified here even if put up in airtight packing (e.g. dried prunes, dried nuts in cans). In most cases, however, products put up in these packing have been prepared or preserved otherwise than as provided for in the headings of this Chapter and are therefore excluded from chapter 8 (and will fall under Chapter 20). 1.4.6 The processes mentioned in Chapter 8 are different from the processes performed on impugned goods they are excluded for the purpose of classification from Chapter 8 of the Customs Tariff Act, 1975 (hereinafter also referred as "Tariff"). Further HSN explanatory note qua Chapter 20 explains as below: Chapter 20- This Chapter includes: (1) Vegetables, fruit, nuts and other edible parts of plants prepared or preserve....
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....ein the Division Bench of Hon'ble Madras High Court after elaborately hearing all the parties dismissed the CMA's of the Customs Department, thereby upholding the aforesaid ruling of the CAAR, Mumbai. 1.4.9 That Ruling No. CAAR/Del/Shree Durga/26, 27 & 28/2023 dated 17.11.2023 of Hon'ble Authority passed in the matter of M/s. Shree Durga Traders, Kolkata Vs the Commissioner of Customs (Preventive) Kolkata, The Principal Commissioner of Customs, Chennai II (Import) & The Principal Commissioner of Customs Nagpur in Application No. 22, 23 & 24/2023-DELHI O/o Commr-CAAR- NEW DELHI, where identical goods are held classifiable under 20081920.That Ruling No. CAAR/Mum/ARC/67/2023 dated 16.10.2023 of Hon'ble Authority passed in the matter of M/s. Shree Ganesh Traders, Chennai Vs. The Commissioner of Customs II (Import), Chennai, in Application No. CAAR/ CUS/APPL/95/2023-O/0 Commr-CAAR-MUMBAI, where identical goods are held classifiable under 20081920. 1.4.10 As per the interpretation of law, the applicant submits as under: That the goods in question which are to be exported by the applicant is Roasted Betel Nut and hence should rightly be classifiable under CTH 2008....
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.... of reasons such as stress reliever, mouth freshener, concentration improver and digestive following food intake. The subject goods are specifically covered and are classifiable under CTH 2008 19 20 of the Customs Tariff Act, 1975. As per the HSN Explanatory Notes to Heading 2008, Dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008. 1.4.14 CHANGE IN THE BETEL NUT BY THE PROCESS OF ROASTING: With regard to the goods in question it is submitted that during the process of roasting, the roasting is done using firewood / palm kernel-based ovens and the temperature of the flames is around 600 degrees Celsius and as a result, the betel nuts would be roasted well beyond 100 degrees Celsius, usually in the range of 130- 150 degrees Celsius. That roasted betel nut undergoes a change in its appearance as well as in respect of its chemical characteristics on account of the roasting process. 1.4.15 There is a visible deposition of an ash-like substance on the outer surface of the betel nut. There is a substantial change in the chemical characteristics also of the betel nut product on account of the roasting process. That the tannin and arecoline content o....
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....s/APPL/70,77 & 78/2022 - 0/o Commr- CAAR-Mumbai (Applicant-M/s Shahnaz Commodities International, Chennai) 1.4.19 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 of Customs Chennai Vs. M/s Shahnaz Commodities International P. Ltd. However, the said case were rejected by the Hon'ble High Court vide its judgment dated 01.08.2023. 1.4.20 The Hon'ble High Court has after considering all the other chapter including chapter 08, and chapter 21 of Customs Tariff and also considered the other rulings as submitted by the customs authority though qua other goods i.e. boiled areca nuts, API supari, unflavoured supari etc. It has been observed by the Hon'ble High Court that the Rulings of the Advance Ruling Authority did not deal with Roasted Areca Nut and thus would have no relevant to the issue on hand. Further, it has been held that 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; that roasted betel /areca nut having been specifically classi....
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.... rulings and requested for not to give any rulings in this matter, on the following grounds: ii. Point No. 1-4: No comments to offer. iii. Point 5 i) The applicant being eligible in terms of Section 28-E of the Act. In this regard, it is submitted that the importer is not holding a valid Importer Exporter Code and so doesn't appear eligible under provisions of 28-E (c) of the Customs Act, 1962 subject to the satisfaction of the competent authority. iv. Point No. 6 & 7: Claim of the applicant that nature of the activity as being proposed: No comments. v. Point No. 8: Comments in respect of points to be determined: - (a) Roasted Betelnut/Areca Nut(whole/Cut) are classifiable under Heading 080280 and not under heading 20081920. The processing as mentioned by the importer - i.e. Dehusking/ Removing Skin, roasting in the oven/machine, cooling does not change the character of the Betelnuts and the Betelnut have not attained any major change. Therefore, the goods Roasted Areca Nut are classifiable under Heading 080280 and not under 20081920 as requested by the importer. (b) As per open source, roasting is a cooking method that uses....
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.... (ii) Chikni Supari, (iii) Unflavoured Supari, (iv) Flavoured Supari and (v) Boiled Supari, are classifiable under Heading 0802 and not under sub-heading 2106930, since they have not attained the character of "preparation of betel nut", Although, the said Rulings are binding only on the concerned parties and designated Pr. Commissioner/ Commissioner of Customs and his subordinates, the aforesaid Rulings have been brought into your notice to further emphasize the change in the law/fact. 4. The Advance Rulings, issued in the year 20221 (i.e. CAAR/Del/Great Nuts/05/2021 dated 20.05.2021) by the Customs Authority for Advance Ruling, New Delhi, ruled that (i) API Supari, (ii) Chikni Supari, (iii) Unflavoured Supari, (iv) Flavoured Supari and (v) Boiled Supari, are classifiable under Heading 0802 and not under sub- heading 2106930, since they have not attained the character of "preparation of betel nut" and betel nut remains the betel nut. The said advance ruling has been endorsed by Hon'ble High Court Delhi vide order dated 01.03.2023. 5. Hon'ble High Court Delhi in M/s Great Nuts Impex Pvt. Ltd. Versus Comm....
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....utlike, spiny-angled fruit of the species Trapa natans, sometimes referred to as a water chestnut. The heading does not include: - (a) The edible tuber of the species Eleocharis dulcis or Eleocharis tuberosa, commonly known as the Chinese water chestnut (heading 07.14). (b) Empty walnut or almond hulls (heading 14.04). (c) Ground-nuts (heading 12.02), roasted ground-nuts or peanut butter (heading 20.08). (d) Horse chestnuts (Aesculus hippocastanum) (heading 23.08). C. The Tariff Item 20081920 as claimed by the importer is a kind of residuary heading which is produced below: 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: 2008 19 20 - Other roasted nuts and seeds. D. HSN Explanatory Notes, heading 2008 is as follows: 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-roaste....
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....duty structure, MIP condition, Chapter Notes and Tariff value it appears the applicant is trying to get the goods betel nuts classified at the HS Code 20081920 which has lower rate of duty when the same are rightly classifiable under HS Code 080280, as the importer has sought the classification at the lower rate of duty i.e. 20081920. Therefore, CAAR is requested not to give any ruling in this matter. Records of the personal hearing in the matter: - 3. In the instant case, the personal hearing was taken place on 31.07.2024 wherein Mr. Harish Kohli, Advocate and A.R. attended the same. The A.R. presented the business activity of the applicant, in brief, and submitted already mentioned in the application for advance rulings. Further, he submitted rebuttal reply to the comments of the concerned customs Commissionerate and additional submissions in the matter and requested for taken up the additional submissions on record. 4. The additional submissions of the RA of the applicant, is under: i. That the comments received from the Hon'ble Nhava Sheva Commissionerate that the applicant is not holding a valid Importer Exporter Code. In this regard, it is submitted that....
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....pter 8. It is contended that the process of roasting cannot be equated with the term drying as this would render the heading description "Roasted Nuts" of 2008.19.20 of schedule I to Indian customs Tariff Act 1985, as otiose. iv. That Chapter 20 of the Tariff covers the Preparations of vegetables, fruit, nuts or other parts of plants. As per Chapter Note 1 (a) to Chapter 20, the Chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in Chapters 7, 8 or 11. Therefore, vegetable, fruit or nut products or preparations made other than by the processes specified in Chapters 7, 8 or 11 are classifiable in Chapter 20. The processes specified in Chapters 7, 8 or 11 mainly include freezing, steaming, boiling, drying, provisionally preserving and milling. Therefore, any vegetable, fruit, nut or edible parts of a plant which is prepared or preserved by any other process than these are liable to be classified under Chapter 20. 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 or spirit, not elsewhere specified or included. Roasti....
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....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. vii. That Chapter 8 specifically 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 whereas, 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 up to 140 - 150 degrees Celsius then cooled in room temperature and the cycle is repeated until the moisture content is about to 6%. This clearly indicates that the roasting is much more than mild heat treatment. Even in the generally understood meaning of the terms, it is ....
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....case of M/s. S.T. Enterprises, the question that arose for consideration was as to the goods involved therein viz. boiled betel nuts would merit classification under CTH 21069030 or CTH 08028010. It was not concerned with CTH 2008 19 20 which covers "roasted nuts". While in the present case, the issue is with reference to classification of "roasted areca nuts". The process that was examined by the Tribunal in the case of S.T, Enterprises was confined to boiling and drying. Importantly, roasting was not one of the processes that was examined. The competing entries that were examined in the above case were CTH 21069030 vis-a-vis CTH 08028010. In other words, the question that was being examined was, whether the goods in question would qualify as "preparation of betel nut "or "betel nut as mentioned in CTH 08". The Court's attention was never drawn to CTH 2008.19.20 which covers roasted nuts including areca/betel nuts, inasmuch as the facts as set out by the tribunal in its order was not concerned with the process of roasting. On the basis of foregoing, the applicant is of the view that the Roasted areca/betel nuts fall under Custom Tariff Heading 2008, specifically under CTI 2008....
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....M/s Crane Betel Nut judgment as legally unsustainable and not applicable in deciding roasted areca/betel nuts' classification. Doing so will be against the provisions of relevant Customs heading under chapter 20 of the Customs Tariff Act, 1975 and the General Rules of Interpretations (GRI) of Customs Tariff Act, 1975. xvi. That the Ld. Commissioner of Customs, Nhava Sheva Customs port, NS-1, Maharashtra placed reliance on an Order 01.03.2023 of Hon'ble Delhi High Court in the matter of M/s Great Nuts Impex Pvt. Ltd. vs Commissioner of Customs, Delhi & ors. for the classification of Betel Nut under 0802 but in the present case, the goods in question against the Advance Rulings is sought for, is Roasted Areca Nut which is distinctly different from Betel Nut. The above said order of Hon'ble High Court also does not cover the present case on the goods in question. Hence, the above said order is also not applicable for the instant case. xvii. That in so far as argument whether goods resulting from a roasting process have attained the character of 'preparation' or not is concerned, it is submitted that two different Supreme Court judgments namely Amr....
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.... goods must be done as per the General Rules of Interpretation, Chapter Notes of Custom Tariff Act, 1975 and not on the personal assumption. In the present case, the applicant sought the ruling for classification of Roasted Areca Nut, the goods in question, under 20081920, based upon the GRI and Chapter Notes of Custom Tariff Act, 1975. xxi. That on the basis of foregoing it is submitted that the Roasted betel nuts fall under Tariff heading 2008, specifically under Tariff entry 2008 1920: "Other roasted nuts & seeds of chapter 20 of the first schedule of the Customs Tariff Act, 1975 and requested for taken the addition submission on record. Findings, Discussion and Conclusion 5. I have taken into consideration of all the materials placed on record in respect of the subject goods, comments of the customs port Commissionerate and additional submissions made by the representative of the applicant. 5.1. I find that in the comments of the customs port authority NS-1, at point No. 3 that the importer is not holding a valid Importer-Exporter code and so, it doesn't appear eligible under the Provisions of 28E(c) of the Customs Act, 1962. In this regard, I gone through....
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....ng, 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". 5.4. I also note that Chapter 20 of the Tariff covers the Preparations of vegetables, fruits, nuts or other parts of plants. As per Chapter Note 1 (a) to Chapter 20, the Chapter does not cover vegetables, fruits or nuts prepared or p....
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....han 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. 5.7. 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 the Tariff Act. While delivering Phil Corporation Judgment Honourable Supreme Court has clearly spelt out importance of HSN Explanatory notes in deciding the matters of classification placing reliance on the judgment of Supreme Court in the case of Collector of Central Excise, Shillong v. Wood Craft Products Ltd. (1995) 3 SC....