TaxTMI 
TaxTMI 
2024 (8) TMI 1695
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...." from Myanmar, Indonesia, Sri Lanka, Bangladesh, UAE and Singapore etc. The applicant submitted as under: 1.1. That the applicant, M/s Cuthbert Passion LLP, 5th Floor, Wing-A, Statesmen House, 148 Barakhambha Road, New Delhi - 110001, is an LLP (Limited Liability Partnership) firm registered with the respective statutory authorities viz. GST Department, Income Tax Department and DGFT Department, New Delhi. The applicant has a valid Importer Exporter Code of the firm and the GST number and regularly filing its statutory returns with the concerned departments and authorities. 1.2. That the applicant is in the process of setting up its business of Import of Roasted Areca Nut (Whole), Roasted Areca Nut (Split) and Roasted Areca Nut (Cut) from Burma (Myanmar), Indonesia, Sri Lanka, Thailand, UAE, Bangladesh 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 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. 1.4....
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....ed Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008. 1.8 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. 1.9 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). 1.10 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"). 1.11 That further HSN explanatory note qua Chapter 20 explains as below: Chapter 20 This Chapter includes: ....
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....d 01.08.2023 respectively before the Hon'ble Madras High Court, wherein 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. 1.15 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. 1.16 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. 1.17 That the process of roasting thus changes the chemical and physical characteristics of the areca nut by reducing arecoline and tannin as....
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....c strength by volume not exceeding 0.5% vol. 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: 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. 1.21 That so far as the goods sought to be classified i.e. roasted 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. 1.22 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....
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....and hence these goods clearly falls under the chapter heading 21 and more particularly CTH 2106 90 30 as stated and not under Chapter 8 of Customs Tariff and more particularly CTH 08029000 which is for the product namely Areca nut. That in fact for similar product, Hon'ble CAAR Mumbai has already issued a 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 of in Ruling dated 07.12.2022 no. CAAR/Mum/ARC/44, 45 & 46/ 2022 in Application no. AAR/Cus/APPL/70,77 & 78/2022 - 0/o Commr-CAAR-Mumbai (Applicant-M/s Shahnaz Commodities International, Chennai). 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. 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....
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....this office to offer comments and report must refer to following issues: i. The applicant being eligible in terms of section 28-E (c) of the Act. ii. Applicability of proviso (1) of section 28-1 (2) of the Customs Act, 1962 regarding the question raised in the application. iii. Claim of the applicant that the nature of activity as being proposed - refer s.no. 6 of form-CAAR-1. 2.2. In this regards the comments to be forwarded for the same above are below: As per Section 28-E(c) "applicant" means any person, - [Substituted by Finance Act, 2018 (Act No. 13 of 2018), dated 29.3.2018.] (i) holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; or (ii) exporting any goods to India; or (iii) with a justifiable cause to the satisfaction of the Authority, who makes an application for advance ruling under section 28H; As per the information available on DGFT website, and the application submitted by the applicant M/s Cuthbert Passion LLP, the applicant is an IEC holder vide No. AAPFC1383, making him eligible as per 28E(c)(i) of the Act. ....
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.... Hence the goods should be classified under Chapter 08. ii. Further Notes to chapter 0802 mentions that this heading also covers areca (betel) nuts used chiefly as a masticatory, cola (kola) nuts used both as a masticatory and as a base in the manufacture of beverages, and an edible, nutlike, spiny-angled fruit of the species Trapa natans, sometimes referred to as a water chestnut. Since the goods are masticatory in nature i.e., used for or adapted to chewing, it is clear that the same are not to be ingested/ swallowed and thus cannot be classified under Chapter 20. iii. The applicant claims that raw Areca nuts after de-husking are subjected to repeated roasting to reduce water content which changes the appearance and chemical composition of the goods. However, the process as mentioned by the importer appears to be only for the purpose of drying and hence, purported roasted Areca nuts are rightly classifiable under Chapter 08, specifically under CTH 080280. iv. 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 o....
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....on or stabilization, hence the impugned goods cannot be classified under Chapter 20. The said chapter note is reproduced below: This chapter does not cover: a. Vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, Chapter 8, or Chapter 11; b. Vegetable fats and oils (chapter 15); c. Food preparations containing more than 20% by weight of sausage, meat, meat offal, blood, insects, fish or crustaceans, mollusc 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. ii) 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 08020 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: The heading which provides the most specific description shall be preferred to headings provid....
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....lassification under 21069030 and held that since the import goods are betel nuts whole, these would merit classification under Chapter 08." (Annexure-C). In all of the above three cases the applicant submitted the application to import various types of products, details and processes in making of the following goods: I. Unflavoured Supari: Following processes are conducted on raw dried betel nut: removing of large impurities by labour, removing of small impurities by de-stoner, metal deflection (removal of metal item, if any), garbling, polishing in polishing machine, 3 stage cutting, blowing of weightless particles by blower, gravity separation by automatic gravity separation machine, roasting in fire gas rotary roaster, metal detection by magnetic metal detectors and packaging. II Flavoured Supari: Following processes are conducted on raw dried betel nut. Removing of large impurities by labour, removing of small impurities by de-stoner, metal deflection (removal of metal item, if any), garbling in automatic garblers, polishing in polishing machine, sterilization to remove bacterial count, splitting (halt) and/or 3 stage cutting, blowing of weightless pa....
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....change of character for it to be classified under Chapter 21. The AAR had considered the contention of the department that the said four goods merit classification under Chapter 8 but rejected the same. However, while doing so, the erstwhile AAR did not make any comment on the implications of the Chapter Note 3 to Chapter 8 on the processes by which raw betel nuts were subjected to obtain the said goods. Further, the Hon'ble High Court of Delhi in its order CUS AA 17/2022 dated 01-03-2023 (Annexure-D) 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, ....
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....claration and mis- classification. The CAAR may not entertain such applications considering that several advance rulings have already rejected the classification of betel nut under chapter 20 and 21 in the interest of the local areca nut farmers and to safeguard the interest of the revenue. 2.7. Points 21-23. Summarizing points above: I. Since Chapter 2008 covers 20081920 or 20081930 covers Other roasted nut and seeds and Chapter 0802 provides specific description of the goods, it shall be preferred to headings providing a more general description as per Rule 3(a) of General Rules for the Interpretation of the Harmonized System. II. 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 betel nut. Therefore, the process to which raw betel nuts have been subjected as per process submitted by the applicant is squarely in the nature of processes referred to in the Chapter Note 3 to Chapter 8 and HSN Notes. III. Further, Notes to chapter 0802 mentions that this heading also covers areca (betel) nuts used chie....
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....ate 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. c. 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. It is submitted that the product under consideration is prepared with processes other than those Chapter Note 3 and is thus excluded from chapter 8 in terms of HSN General Exclusion Note 3 to Chapter 8. ....
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....f 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. f. That on examining the scope of CTH 2008 it is clear 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, is very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes. It is also pertinent to mention here that none of these processes are mentioned in the chapter note 3 of Chapter 8 of the Customs Tariff A....
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....ted as follows: - "The item is in the form of grey, brown whole nuts having cracks on the upper surface. It answers tests for areca nuts active ingredients, arecoline and Homarecoline. Moisture content-3 92% Carbohydrate content 1.2% In view of reference available and as the moisture content and carbohydrate content of the sample under reference is less than the raw areca nut, it may be considered as dry roasted areca nuts. It is submitted that the issue dealt with i.e. Classification of "Roasted betel nuts" in the judgement of the Honourable High Court of Madras is of exactly the same issue that is impugned in this application and therefore is squarely applicable to this case. j. That the classification as far as possible must be in conformity and in consonance with the HSN explanatory Notes. The law says that whenever there is specific entry, the same would prevail over general entry; the said general principal is statutorily incorporated in General Rules of Interpretation, in particular, under Rule 3(a) of the General Rules of Interpretation. CTH 2008 1920 is a special entry covering nuts subject to the process of roasting when contra....
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.... to the relevant headings under these chapters. General Rules of Interpretation (GRI), specifically rule 1 and rule 3(a), to the Customs Tariff Act, 1975 provide further context for understanding of various tariff entries in the Tariff. The legal framework mentioned above has to be factored in while deciding classification of roasted arena nut which is proposed to be imported by the applicant. n. That the judgement of M/s Crane Betel nut judgment of the apex court cannot be applicable in case of present application due to legislative change in the Central Excise Tariff subsequent to M/s Crane Betel nut Powder Work's judgment, and for deciding the classification under chapter 20 as the legal dispute in that case involved a classification of variants of betel nut between chapters 8 and 21, and also due to availability of commodity specific SC judgments (1) Amrit Agro Industries Ltd. & Anr. v. Commissioner of Central Excise, Ghaziabad (2007) 201 ELT 183 (SC), and Commissioner of Customs & Central Excise vs Phil Corporation Ltd in Appeal (civil) 2215 of 2002 dated 07/02/2008 on the classification of roasted nuts under chapter 20 of Central Excise Tariff Act. o. Th....
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.... 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 note to Tariff Heading 2008. In view of the above, it is submitted that roasted betel nuts are correctly classifiable under the tariff item 2008 19 20 of chapter 20 of the first schedule of the Customs Tariff Act, 1975. s. The 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 further requested to take the above said additional submissions on record. Findings, Discussion and Conclusion 5. I have taken into consideration of all the materials placed on record in respect of the goods in question including the rebuttal reply / submissions made by the applicant in response to the comments received from the concerned Customs Port Commissionerate. 5.1. Now, I proceed to decide the present application regarding....
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....re liable to be classified under Chapter 20. Heading 2008 covers 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. 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. 5.4. I also note on the submissions of the applicant that the 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 ....
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....xpression used in the Act." 5.7. I also find that the customs port Commissionerate of ICD, Dadri, Noida Customs, Gautam Budha Nagar, U.P. placed reliance upon a number of judgements / orders / rulings passed by various Courts, Tribunals, and Customs authority for Advance Rulings which all pertains to various kinds of Supari (Areca Nut) i.e. Flavoured Supari, Unflavoured Supari, API Supari, Chickni Supari, Boiled Supari, etc. The goods in question in the instant matter is Roasted Areca Nut (Supari) which is totally different from the goods i.e. various kinds of Supari, mentioned above. Since, the judgements / orders / rulings on which reliance was placed by the Customs port Commissionerate not covered squarely the instant matter, so the said judgements / orders / rulings passed are not appears applicable in the instant matter. 5.8. 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 Co....