TaxTMI 
TaxTMI 
2024 (7) TMI 1764
X X X X Extracts X X X X
X X X X Extracts X X X X
....mport "Roasted Areca Nuts (Whole), Roasted Areca Nuts (Split) and Roasted Areca Nuts (Cut)" from Myanmar, Indonesia, Sri Lanka, Thailand, UAE and Singapore etc. 1.1 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 import the same and hence would like to have a proper understanding and clarification as to whether the goods being ported shall be covered under a particular classification or the other. 1.2. That the nomenclature and details of the goods being sought to be imported by the applicant are as under: - * Roasted Areca Nuts (whole)/ Roasted Areca Nuts (Split)/ Roasted Areca Nuts (cut) * That the processes carried out on the Roasted Areca Nut (Whole), Roasted Areca Nut (Split) and Roasted Areca Nut (Cut) are as under: - ○ De-husking the raw betel/ areca nut and drying the same before being fed into the roasting oven; ○ Feeding the fresh areca nuts into a seed roasting oven, heating up the betel nuts would be roasted well beyond 100 degree Celsius, usually in the range of 130-150 degree Celsius and roasting the fresh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed for in the headings of this Chapter, and are therefore excluded from chapter 8 (and will fall under Chapter 20). 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"). That further HSN explanatory note qua Chapter 20 explains as below: This Chapter includes: (1) Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by vinegar or acetic acid. (2) Vegetables, fruit, nuts, fruit-peel and other parts of plants preserved by sugar. (3) Jams, fruit jellies, marmalades, fruit or nut purées, fruit or nut pastes, obtained by cooking, (4) Homogenized prepared or preserved vegetables and fruit. (5) Fruit or vegetable juices, neither fermented nor containing added alcohol, or of an alcoholic strength by volume not exceeding 0.5 % vol. (6) Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by other processes not provided for in Chapter 7, 8 or 11 or elsewhere in the Nomenclature.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1.9 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/95/2023-0/0 Commr-CAAR-MUMBAI, where identical goods are held classifiable under 20081920. 1.10 That the process of roasting thus changes the chemical and physical characteristics of the areca nut by reducing arecoline and tannin as well moisture. In view of above the applicant would like to have advance ruling on the following issue: "Whether the goods sought to be imported i.e. Roasted Areca Nuts (Whole) and Roasted Areca Nuts Cut" is classifiable under the CTH 200 19 20. That the applicant requests the Hon'ble Authority for Advance Rulings that the appropriate classification of the aforesaid goods may kindly be ruled under section 28H of the Customs Act, 1962. 1.11 In the statement containing applicant's interpretation of law and / or facts, as the case may be, in respect of question (s)on which Advance Rulings is required, as under: 1.11.1 That the goods in question which are to be imported by the applicant is Roasted B....
X X X X Extracts X X X X
X X X X Extracts X X X X
....asted areca nut these goods is chewed for a variety 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. 1.12 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. The roasted betel nut undergoes a change in its appearance as well as in respect of its chemical characteristics on account of the roasting process. After the processing, there is a visible deposition of an ash-like substance on the outer surface of the betel nut. The tannin and arecoline content of raw betel nut/ areca nut gets substantially changed by subjecting the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....odities International, Chennai). 1.16 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 cases were rejected by the Hon'ble High Court vide its judgment dated 01.08.2023. 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. 1.17 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 classified under CTH 2008 19 20, the attempt to classify under CTH 08 02 80 would f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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 degrees Celsius in a roasting oven, the moisture content of the fresh areca nuts reduced to 10-15%. The reduced moisture content of 4% upon repeated roasting at high temperatures, as claimed by the applicant does not hold much water as the maximum moisture of the dried areca nuts should be 7% as per standards set by the FSSAI Regulations, 2011 and the dried areca nuts with more than 7% are unfit for human consumption as per FSSAI regulations. It implies that the moisture content in sun dried fresh areca nuts imported under CTH 0802 is also 7% or less. Hence, claim that moisture content is reduced to 10- 15% after repeated roasting at higher than 150-degree Celsius temperature appears illogical and misrepresentation of facts. Logically....
X X X X Extracts X X X X
X X X X Extracts X X X X
....apter 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 applicant has claimed that dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008. The relevant portion of the chapter heading 2008 is reproduced below: CTH 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 - Nuts, ground nuts and other seeds, whether or not mixed together 200819 -- Other, including mixtures 20081920 --- Other roasted nut and seeds 2.3. This is another misrepresentation of facts since the Chapter 20 cannot and does not cover any nuts or fruits prepared or preserved by the processes specified under Chapter 8 as pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion under Chapter 2008 or 2106 is unwarranted. 2.4. 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 mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. ix) The Chapter Note 1 of Chapter 20 says that this chapter does not cover: vegetables, fruit or nuts, prepared or preserved by the processes specified in chapter 7, chapter 8, or chapter 11. Chapter 20 heading reads "preparations of vegetables, fruit, nus or other parts of plants". It is pertinent to mention that the Chapters are organised as per evolution, which is evident by the fact that the edible nuts and fruits are classified under Chapter 8, preparations of vegetables, fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 process of boiling is also not mentioned in the Chapter Note 3 to Chapter 8 and the Tribunal has held that the goods under dispute "boiled areca nuts" merit classification under CTH 08028010, which was affirmed by the Hon'ble Supreme Court vide judgment dated 19.03.2021 in Civil Appeal Nos. 850-851 of 2021. Though the process dealt with by the Hon'ble Tribunal was not exactly the same, the principle involved holds relevance. When the boiled supari can be classified under Chapter 08 on the grounds that boiling does not alter the original characteristics of the goods, the same would apply in the present case also as roasting alone would not alter the character of the goods and therefore, roasted areca nut should be classified und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....done by AAR, Mumbai in the case of a. M/s. Samreen International Pvt 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 consideration, i.e., API supari, chikni supari, unflavoured supari, flavoured supari, and boiled supari merit classification under chapter 8 of the customs tariff, and more precisely, under the heading 0802, and not under sub-heading 21069030, as contended." b. M/s Dry Nut Enterprises (Ruling No CAAR/ Del/Dry Nut/ 01/2021 dated 16th March, 2021) "I find that the reference by the Principal Commissioner of Customs to the Note 6 to chapter 21 of the Central Excise Tariff Act, which was essentially intended to deem certain processes as "manufacture" is inappropriate in the present context. This is particularly so, given the judgement of the Hon'ble Supreme Court of India in the case. of M/s. Cr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s Tariff Act, 1975, is not correct but roasting is falls under the process of Moderate Heat Treatment which mentioned under Chapter Note 3 of Chapter 8 which examined as under and found that the term "Moderate heat Treatment" moisture content in 'Raw areca nut' is anywhere between 10% to 15%. After, the process of drying the moisture content is reduced to a maximum of 6% to 7%. Further any amount of drying or moderate heat treatment cannot remove the moisture content below the said level of 6%. Further, only by the process of roasting, by use of roasting ovens / furnace, the moisture content in "Roasted Areca Nut" is brought below 4% by process of competing of multiple cycle of heating and cooling of the nuts at room temperature. The roasting of the nuts also made it crispy by changing its internal structure as well as chemical changing of the ingredients of the nuts by reducing of arcoline by homarcoline. 4.3 That the process is not uncontrolled repeat roasting. The process is controlled to the extent of converting "Raw Areca Nut" to "Roasted Areca Nut" of given standard. The process is controlled as to not resulting in overcooking which would spoil the product. All imp....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 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 completed in multiple cycles of process of heating and cooling. 4.6 That on examining the scope of CTH 2008 it is found 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Once, the product/goods are unaffected by outside parameters of nature, the packaging need not be in airtight containers. Further, packaging is a means of convenience, and no other significance can be attached to it. 4.9 That the vital question as to whether roasted nuts would fall under Chapter 0802 or Chapter 008 was affirmatively answered in favour of Chapter 2008 by the decision of Hon'ble Supreme Court in the case of Commissioner of Customs & Central Excise, Goa vs Phil Corporation Ltd. reported in 2008 (223) EL. T9/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. 4.10 That with regards to the testing of the imported goods imported by M/s. Universal Impex & M/s. Neena Enterprises 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/39,40,41/2023 dated 12.05.2023. To a specific test memo by the Customs department to ascertain whether the item under import was "ro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eing 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, I am of the view that the Roasted areca/betel nuts fall under Custom Tariff Heading 2008, specifically under CTI 2008 19 20 Other roasted nuts & seeds of Chapter 20 of the First Schedule of the Customs Tariff Act, 1975. 4.14 That more importantly the effect of the Supreme Court judgement in the case of M/s Crane recourse to any CAAR rulings which were primarily based on the Hon'ble Supreme Court judgement in M/s Crane betel nut case is futile under the present legal framework especially provisions of section 3(7) of the Customs Tariff Act, 1975 read with perfectly aligned chapter note under chapter 20 of both the Customs Tariff Act, 1975 and GST Tariff Act, 2017. 4.15 That it is submitted that the betel nut in its various forms finds classification in chapters 8, 20 and 21 of the schedule I of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... have held no doubt that the roasting of nuts is a preparation. In paras 10 and 11 of Supreme Court judgment in case of Commissioner of Customs & Central Excise vs Phil Corporation Ltd para 6 and 7 of Supreme Court judgment in Amrit Agro Industries Ltd. & Anr. vs Commissioner of Central Excise, Ghaziabad have been relied upon. 4.19 That as per General Rules of Interpretation (GIR) 3(a) of the Customs Tariff Act 1975, when by application of GIR 2(b) or for any other reason, the goods are prime facie, classifiable under more than one Heading, the 'most specific description' is Section notes along with terms of heading and explanatory notes are examined for both Headings 0802 and 2008, it is observed that roasted nuts which include roasted betel nuts find a specific description in Heading 2008. Therefore, on the application of GIR 3(b), the subject goods merits classification under Heading 2008 and more specifically under Subheading 2008 19 20 as "Other roasted nuts and seeds", 4.20 That it is submitted that in view of 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 S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cable in the instant case. 5.2. I note that 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 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 i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rent from moderate heat treatment as well as dehydration. Therefore, the impugned goods do not satisfy Note 3 to Chapter 8. 5.5. 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. 5.6 Moreover, it is, an established fact that in case of any doubt the HSN is a safe guide for ascerta....