TaxTMI 
TaxTMI 
2024 (6) TMI 1566
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....nd holder of CIN U52200UP2023PTC176263, holder of PAN ABKCS1017P and holder of IEC ABKCS1017P. The Jurisdiction of Applicant falls under the Commissioner of Customs, ICD Patparganj, Delhi. 1.1 The Areca nut is a tropical plant, belonging to the palm tree species. The kernel is obtained from the fruit of areca nut palm, known as the Areca Nut/Betel Nut or supari in India. The raw betel nut obtained is subjected to various processes to produce various products. The goods in the present application are "Roasted Areca Nuts Whole and Roasted Areca Nuts Cut". 1.2 The applicant intends to import "Roasted Areca Nuts/Betel Nuts" from Burma (Myanmar), Indonesia, Sri Lanka and Singapore. Since the process of "Roasting" is not specifically defined in the Customs Tariff Act nor in the HSN explanatory notes or in its Chapter Notes, clarification is being sought from this Advance Ruling Authority. 1.3 The applicant states that the cultivation, harvesting and processing of the Roasted Areca Nut has undergone tremendous transformation, such that the involvement of labour and their dependency has reduced, by bringing about mechanization, which invariably increases the efficiency, reduces th....
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....and Arecoline content of raw areca nuts get substantially changed by subjecting the same to roasting. c. Various research and articles throws light on the chemical composition of various forms of areca nuts. As per the article titled "Estimation of Arecoline content of various forms of areca nut preparations by high-pressure thin-layer chromatography" substances viz. Polyphenols (flavonols, tannins) constitute a large proportion of the dry weight of the nut, their content in areca nut 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. d. Roasting is not aimed at additional preservation or stabilization or to improve or maintain its appearance. Therefore, roasted areca nut is a distinctive product, more specifically classifiable under Chapter 20 of the Customs Tariff Act, 1975 and Chapter Notes in HSN. e. Roasted Areca Nut without the addition of any ingredients added to it is saleable in the Indian market in various forms like tukda (pieces) roasted betel nut as well as shredded roasted betel nut. These roasted betel nut products are s....
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....spect of tax or duties under this Act or the Customs Tariff Act, 1975 (51 of 1975) or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act;] [(e) determination of origin of the goods in terms of the rules notified under the Customs Tariff Act, 1975 (51 of 1975) and matters relating thereto.] [(f) any other matter as the Central Government may, by notification, specify.] 1.8.3 Thus, as per the said section, advance ruling may be sought by the applicant on the questions concerning classification of goods under the Customs Tariff Act, 1975. The applicant submits that the questions for determination in the instant advance ruling application concern: - Classification of goods under Customs Tariff Act, 1975; and 1.8.4 Therefore, in the instant case the applicant is eligible to file the present advance ruling before the Customs Authority for Advance Ruling, Delhi. 1. APPLICANT's INTERPRETATION IN RESPECT OF THE QUESTIONS RAISED FOR ADVANCE RULING 2.1 CLASSIFICATION OF ROASTED ARECA NUT (WHOLE) AND ROASTED ARECA NUTS CUT 2.1.1 That, pre....
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....ing added sugar or other sweetening matter or spirit, not elsewhere specified or included. CTH 2008 19 20 - Other Roasted Nuts and Seeds HSN explanatory note to Chapter 20 states that: 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 purees, fruit or nut pastes, obtained by cooking. 4. Homogenised 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. .................... 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, flavors, spice....
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....023 dated 07.12.2023. In this ruling, the Authority determined that Roasted areca/betel nuts are classified under Custom Tariff Heading 2008, specifically under sub-heading 20081920, as "Other roasted nuts & seeds" of the First Schedule of the Customs Tariff Act, 1975. 2.1.10 A similar stance was taken by the Hon'ble CAAR Mumbai in the case of Universal Impex (2023) 7 CENTAX 36 (AAR-Cus-Mum), where Roasted betel nuts were classified under CTH 2008, specifically under Sub-heading 20081920. 2.1.11 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. 3. Comments of the ICD, Patparganj Commissionerate (i) The Applicant is a valid entity bearing IEC No. ABKCS1017P as per the requirement under Section 28E(c) of the Customs Act; (ii) As far as the applicability of the Proviso (1) of the Section 28-1 (2) of Customs Act, 1962 is concerned, no such matter is pending before any officer in this office. Further, the office is not a party in any appeal on such ....
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....s contention does not hold any water. After roasting, the end product remains dried areca nut, which is well defined in Chapter 8 up to 6-digit level i.e.080280. c. Further, under Chapter 8 of Customs Tariff, areca nuts, whole, split, ground and one residuary sub heading are accommodated under 08028010, 20, 30 and 90 respectively. d. In the process flow to make roasted areca nut, one set of process are found to be intended for cleaning, the second set for heating and roasting. These processes appear to be covered by the Chapter Note 3 to Chapter 8 (supra). In the instant case, areca nuts after being roasted are cooled and this fact per se would not exclude the end-products from the scope of "dried nut". Further, it is equally obvious that 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 areca nut. Therefore, the process to which raw areca nuts have been subjected as per process flow submitted by the applicant is squarely in the nature of processes referred to in the Chapter Note 3 to Chapter 8 and HSN Notes. Hence at the end of ....
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....blood, insects, fish or crustaceans, molluscs or other aquatic invertebrates, or any combination thereof (Chapter 16) d. Bakers' wares and other products of heading 1905; or e. Homogenized composite food preparations of heading 2104. Further, heading 2008 covers fruits, 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. As the Areca nut already defined under Chapter 08 (including roasted/heated/raw, in any form), hence, the subject goods rightly are classifiable under CTH 080280. f. Further, as per Rule 3 (a) of the General Rules for the Interpretation of the Harmonized System since the product is more specifically classified under CTH 080280, and classification under Chapter 2008 and Chapter 2106 is unwarranted. When by application of Rule2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: The heading which provides the most specific description shall b....
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....n of betel nut under chapter 21 in the interest of the local areca nut farmers and to safeguard the interest of revenue. j. In this regard, it is submitted that as per Chapter Note 3 of Chapter 8 as long as the goods retain the character of dried nut, they remained classified under CTH 080280. Since the Areca nut which has undergone the processes wherein it does not lose its original character i.e. in raw form, the item areca nut shall be covered under CTH 080280. 3.1 In view of above, in the instant case, it appears that the instant application does not fall under the purview of the sub-section (2) of section 28H of the Customs Act, 1962. Therefore, the instant application does not appear to be maintainable. 4. A Personal Hearing was conducted on 24.06.2024, whereby the authorized person of the applicant including the representative of the applicant participated in the hearing and reiterated the position taken in the original application. Further, they also produced a para-wise rebuttal of the comments of the Port Commissionerate in the form of a written submission. 5. WRITTEN SUBMISSIONS AT THE TIME OF PERSONAL HEARING ON 24-06-2024 In the matter of Shree Ana....
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....s our products are Roasted Areca (Betel) Nut, the goods merit classification under heading 2008.19 as per the HSN. We also submit that as per rule 3(a) of the Rules of Interpretation, the specific heading shall prevail over any general heading. As there is specific entry as 20081920 in the CTA 1975, the goods " Roasted Areca( Betel) Nut " deserve classification herein. 5.6 We also wish to draw attention of learned CAAR to the case laws cited by us along with our application. Learned CAAR, Mumbai [(2023) 4 Centax 231 (A.A.R .- Cus-Mum) had given a Ruling in favour of Roasted Areca Nuts. The Commissioner of Customs, Chennai Il preferred an appeal before High Court of Judicature at Madras against the Ruling. The matter was examined in depth by the High court. The High Court dismissed the appeal of the Commissioner vide order dated 01.08.2023 [2023(386) E.L.T. 214(Mad)] in the matter of Commissioner of Customs, Chennai II Vs. Shahnaz Commodities International Pvt. Ltd and affirmed the Ruling of the AAR. The para 16 of the judgment giving observation of the High Court is very relevant, which has categorically ruled that Roasted Areca/ Betel Nut would merit classification under CTH 20....
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.... under CTA 1975. So, it clear that Roasting as such is not defined. Thus we have to go by common understanding and parlance. Further it is again stated by the Commissioner in respect of impugned goods "that it appears to fall under moderate heat treatment". While they (Commissioner)themselves have doubt in this matter, it may be stated that heating in roasting oven up to temperature of 130- 150 degree Celsius cannot be treated to be moderate heat treatment as temperature going up to 130-150 degree Celsius is not moderate. (b) All averments made in this para are denied. In this para, it has been stated without any basis that on Roasting the water content does not come down to 10-15 percent. It has again been stated that Roasting is covered under moderate heat treatment. This is denied as also stated in the preceding para also. Roasted Areca Nuts are other that raw areca nut and for the same reason a new chapter/tariff heading has been created in HSN/ CTA 1975, which should be appreciated and accepted as such. (c), (d), (e)- All averments made in these paras are denied. It is denied that Roasted Areca Nuts will fall under any heading of Chapter 8 to CTA 1975. Modera....
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....nut (whole) and Areca nut (cut) on the basis of the information on record as well as the existing legal framework under the first schedule of the Customs Tariff Act, 1975. 6.2 The brief grounds of the applicant are as follows: 6.2.1 The goods in the present application are "Roasted Areca Nuts (Whole) and Roasted Areca Nuts (Cut)". The applicant intends to import "Roasted Areca Nuts/Betel Nuts" from Burma (Myanmar), Indonesia, Sri Lanka and Singapore. Since the process of "Roasting" is not specifically defined in the Customs Tariff Act nor in the HSN explanatory notes or in its Chapter Notes, clarification is being sought from this Advance Ruling Authority. 6.2.2 Further, the preparation time of "Roasted Areca Nut" has also drastically reduced, in comparison with the manual method of preparation. a. Firstly, the raw areca nut is de-husked and its outer shell is removed. Thereafter, the de-husked nut is scattered to check for any visible impurities and the same is cleaned, pursuant to which the raw de-husked areca nut/betel nut is left to dry. b. Secondly, the cleared and dried de-husked areca nuts are fed into the seed roasting oven/machine and heated in t....
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....o any other preparation than the roasting process. These roasted betel nut variants are approved by the Government agency viz. FSSAI. 6.2.4 Therefore, the process and the end product viz "Roasted Areca Nut Whole and Roasted Areca Nut Cut" is most suitable to be classified under Chapter 2008 19 20 of the CTH 1975. In the light of above the question on which advance ruling has been sought is, "Whether goods sought to be imported, qualify to be classifiable under chapter/heading 2008 19 20 as Roasted Nuts?" 6.3 The Applicant has asserted that, according to their records, the goods described above fall within the purview of CTH 2008, specifically categorized under subheading 2008 19 20 of the First Schedule of the Customs Tariff Act. For reference entry is reproduced as under: 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. CTH 2008 19 20 - Other Roasted Nuts and Seeds HSN explanatory note to Chapter 20 states that: This chapter includes: 1. Vegetables, fruit, nuts and other edible p....
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....20081920, as "Other roasted nuts & seeds" of the First Schedule of the Customs Tariff Act, 1975. 6.3.4 A similar stance was taken by the CAAR Mumbai in the case of Universal Impex (2023) 7 CENTAX 36 (AAR-Cus-Mum), where roasted betel nuts were classified under CTH 2008, specifically under Sub-heading 20081920. 6.4 The Comments of the ICD, Patparganj Commissionerate is summarized below: (i) The Applicant is a valid entity bearing IEC No. ABKCS1017P as per the requirement under Section 28E(c) of the Customs Act; (ii) As far as the applicability of the Proviso (1) of the Section 28-1 (2) of Customs Act, 1962 is concerned, no such matter is pending before any officer in this office. Further, the office is not a party in any appeal on such matter pending before any Appellate Tribunal or Court; (iii) The nature of activity cannot be verified due non provision of any details of the proposed activity. (iv) The comments on the merits of the question in the application are: a. The applicant's claim that roasting is not defined in the Customs Tariff Act, 1975 does not appear to be correct. Though roasting as a process is not defined, it a....
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....hapter 21. Hence, since the roasted areca nut which did not undergo any preparation is rightly classifiable under Chapter 080280. g. The CESTAT judgment in case of M/s. S.T. Enterprises and M/s. Ayush Business Overseas vs Commissioner of Customs (VII) in Customs Appeal No. 40002 and 40003 of 2021 respectively, is applicable mutatis mutandis to the present case, wherein the question decided in the said case was classification of "boiled betel nuts" under CTH 08028010, which was affirmed by 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. h. In this regard, it is submitted that as per Chapter Note 3 of Chapter 8 as long as the goods retain the character of dried nut, they remained classified under CTH 080280. Since the Areca nut which has undergone the processes wherein it does not lose its original . character i.e. in raw form, the item areca nut shall be covered under CTH 080280. In view of above, in the instant case, it appears that the instant application does not fall under the purview of the....
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.... of M/s S.T. Enterprises and Ayush Business Overseas Vs. Commissioner of Customs has any applicability in as much as the judgment covered boiled betel nuts, which hardly go for any change vis -a-vis raw betel nut. 6.6 The applicant has answered all the queries raised by the Jurisdictional Commissionerate during the Personal Hearing. The queries raised regarding the method of packing of the goods in question and the moisture content have been logically answered by the applicant in its rebuttal submitted in this office. I concur with the arguments submitted by applicant in its rebuttal. 6.6.1 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. The case of Commissioner of Customs & Central Excise vs Phil Corporation Ltd in Appeal (civil) 2215 of 2002 dated 07/02/2008, is directly relevant and applicable in the instant case of the applicant. 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 o....