TaxTMI 
TaxTMI 
2024 (9) TMI 1909
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....e 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, Indonesia, Sri Lanka, Thailand and Singapore. 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. 2.1 That the nomenclature and details of the goods being sought to be imported by the applicant are as under :- (i) Roasted Areca Nuts (whole); (ii) Roasted Areca Nuts (Split); (iii) Roasted Areca Nuts (cut). 2.2 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 deg....
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....gs 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 bellow: Chapter 20 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. .....
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.... 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/o Commr- CAAR-MUMBAI, where identical goods are held classifiable under 20081920. That the process of roasting thus changes the chemical and physical characteristics of the areca nut by reducing arecoline and tannin as well moisture. 2.10 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. STATEMENTS CONTAINING APPLICANT'S INTERPRETATION OF LAW AND/OR FACTS, AS THE CASE MAY BE, IN RESPECT OF THE QUESTIONS(S) ON WHICH ADVANCE RULING IS REQUIRED: - a. That the goods in question which are to be imported by the applicant is roasted betel nut and hence should rightly be cl....
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....goods is chewed for a variety of reasons such as stress reliever, mouth freshener, concentration improver and digestive following food intake. g. 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. h. 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. i. 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. 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 proce....
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....022 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) n. 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. o. 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, unflavored supari etc. p. 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/ arec....
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....question in the application is "Whether Goods being Roasted Areca Nuts (Whole), Roasted Areca Nuts (Split) & Roasted Areca Nut (Cut)" imported by the applicant from Countries- Burma (Myanmar), Indonesia, Sri Lanka and Singapore is classifiable under Chapter Sub-Heading 20081920 of the first schedule to the Customs Tariff Act, 1975; A. Roasting as a process appears to fall under moderate heat treatment & Mentioned in Chapter Note 3 of Chapter 8, which is reproduced below- 3. Dried fruits and dried nuts of this Chapter may be partially rehydrated, or treated for the following purpose: (a) for additional preservation or 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 fruit or dried nut; B. Further, applicant's claim that after repeated roasting of the areca nuts at the temperature up to 130-150 degrees Celsius in a roasting oven due to which the water content is reduced to below 6% appears t....
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.... render the product to be distinctive as claimed by the applicant or does not alter the character of the original good. Hence, it remains the areca nut and is rightly classifiable under Chapter 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, it is evident that there is neither any mixture of products nor any change in the original good which tantamount to no preparation. Hence, the impugned goods rightly classified under Chapter 080280. G. The applicant has claimed that dry Roasted Areca 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 20081....
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....e of the chapter 20 and rightly classifiable under chapter 08. 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. 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 effected 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 I. 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, fr....
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....etel nut under chapter 20 and 21 in the interest of the local areca nut farmers and to safeguard the interest of the revenue. L. 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. M. 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 in the matter was conducted on 12.09.2024. During the personal hearing, the authorized representative of the applicant reiterated the submissions already made in their application for advance ruling. The Authorized representative of the applicant submitted the rebuttal to the comments of the concerned customs port Commissionerate/additional submissions. 5 The authorised representative of the application in their rebuttal reply t....
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....ariff 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. Roasting is a process used for bringing in to existence roasted nuts and as discussed earlier I find that the processes mentioned in chapter 8 do not cover roasting process, Therefore, The Roasted Areca Nut is totally different from Dry Areca Nut. e. That the ....
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....ts 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 understood that roasting involves severe heat treatment and is different from moderate heat treatment as well as dehydration. Therefore, the impugned goods do not satisfy Note 3 to Chapter 8. h. That with respect to the another contention....
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.... Madras is of exactly the same issue that is impugned in this application and therefore is squarely applicable to this case. k. 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 contrasted with CTH 08 02 90 which covers dried nuts. Having come to the conclusion that the classification of areca nuts is made on the basis of the process which it is subject to with a distinction between dried and roasted nut being maintained CTH 2008.19.20 which covers roasted nut including areca nut is a specific entry which opposed with the entries/items covering nuts under CTH 08. l. That the Hon'ble Tribunal in respect of the 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 classif....
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.... 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. p. That references to previous CAAR rulings on which reliance placed by the Ld. Commissioner of Customs, Tuticorin port on the goods such as API Supari, Chikni supari, boiled supari and unflavoured supari is also not relevant in the present case as a product for which an application for advance ruling is filed is distinctly different from all these varieties of betel nut/supari. Hence 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....
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....iff 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. u. In view of the above, it is requested that this Hon'ble Advance Ruling Authority may take the aforesaid additional submissions along with the Advance Ruling passed by the Authority of Advance Ruling New Delhi and Mumbai, into consideration while passing orders in the interest of justice. 6. I have taken into consideration of all the materials placed on record in respect of the subject goods including the submissions made by the applicant during the course of personal hearing. I have gone through the response from the Customs Port Commissionerate of Tuticorin, Tamil Nadu. I therefore proceed to decide the present application regarding classification of Roasted Areca Nut on the basis of the information on record as well as the existing legal framework having bearing on the classification of the roasted areca nut under the first schedule of the Customs Tariff Act, 1975. 6.1. I find that the concerned port Commissionerate in their comments, placed reliance upon the Judgement / order passed by Tribunal in the ....
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....o 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. 6.4. 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 range of 15....
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.... used in the Act." 6.7 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 note to Tariff Heading 2008", I rule 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." 6.8 Also, the Honourable High Court of Madras in its recent judgement on Civil Miscellaneous Appeal (CMA) No's 600/2023, No. 1206/2023 and No. 1750/2023, dated 01.08.2023, had upheld the classification of Roasted Betel Nuts under CTH 2008 19 20. The Honourable High Court went on to analyse the various aspects ....