AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (11) TMI 1615
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....Indonesia, Myanmar, Bangladesh, Sri Lanka, Thailand and Cambodia into India. The applicant submitted as under: 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. Depending upon the specific value additions different varieties of betel nut such as API Supari, Chikni Supari, Boiled Supari, Dried Supari, Unflavoured Supari, Roasted Supari etc. are obtained. The goods in the present application are "Roasted Areca Nuts Whole", "Roasted Areca Nuts Cut" and "Roasted Arecanut Split". 1.2. The Applicant intends to import "Roasted Areca Nuts/Betel Nuts" from Indonesia, Myanmar Bangladesh, Sri Lanka, Thailand, Cambodia into India through the Seaports/ICD's at Tuticorin, Mundra and Nhava Sheva. Since the process of "Roasting" is not specifically defined in the Customs Tariff Act nor in the Chapter Notes, but only in the HSN explanatory notes, clarification is being sought from this Advance Ruling Authority. 1.3. The Applicant states that the cultivation, ....
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.... well as 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 of the betel nut product on account of the roasting process. It has been established through research that the Tannin and Arecoline content of raw areca nut gets substantially changed by subjecting the same to roasting. 1.6. 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. 1.7. 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....
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....g or boiling in water or containing added sweetening matter) or dried (including dehydrated, evaporated or freeze-dried), provided they are unsuitable for immediate consumption in that state, they may be provisionally preserved (e.g., by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions). The said note specifies the physical status of the goods along with corresponding processes that could be carried on those goods under this chapter. Note 3 to Chapter 8, states that Dried fruit or dried nuts of this Chapter may be partially rehydrated or treated for the following purposes: (a) for additional preservation or stabilisation (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 nuts. 1.11. The areca / betel nut is mentioned in Heading 0802, specifically under subheading 0802 80. The explanatory note to Heading 0802 states that this heading also covers areca (betel) nuts used chiefly as a ....
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.... parlance. On the contra, the said term "Roasted" is mentioned in the Customs Tariff Act and has been dealt in detail in the HSN Explanatory Notes. 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. Roasting is a process used for bringing into existence roasted nuts, which process is not mentioned in Chapter 8 CTH. Chapter 20 covers the preparation of nuts, one of the processes for preparing the impugned goods is specified in Chapter Heading 2008, i.e. roasting. CTH 200....
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....t in the case of M/s. United Offset Process Pvt. Ltd. Vs. Asst. Collector of Customs, Bombay and Others 1989 Supp. (1) SCC 131, wherein the court held "If there is no meaning attributed to the expressions used in the particular enacted statute then the items in the customs entries should be judged and analysed on the basis of how these expressions are used in the trade or industry or in the market or, in other words, how these are dealt with by the people who deal in them, provided that there is a market for these types of goods". The roasted betel nut is an independent product, which is sold in the market in both packed and unpacked form. Further, the packed roasted betel nuts are labelled and marketed as roasted betel nuts/ roasted supari and carry the stamp of approval by the FSSAI. Therefore, the impugned goods are known in the trade as roasted betel nuts only. Further, the Tariff heading and corresponding HSN Explanatory Note clearly explain the scope of the Chapter heading 2008. 1.16. On the other hand, 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....
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....water or milk, further the impugned goods don't contain lime, Katha (catechu) and tobacco. As such, the impugned goods cannot classify under Chapter 21 or its sub-headings. As a result, edible preparations shall be classified under this chapter, only if the same is not classifiable under any of the other specific entries for edible preparations. As the goods under consideration are already included in Heading 2008 of the Customs Tariff Act, 1975, they stand excluded from the scope of Chapter 21. Further, since the impugned goods have undergone roasting which has not been categorized or classified in Chapter 8, while on the other hand Chapter 2008 19 20 categorically specified "Roasted Areca Nuts" in its explanation to HSN notes, the "Roasted Areca Nuts and Roasted Areca Nuts Cut" appears to be classifiable under Chapter 2008 19 20 CTH. 1.19. As per the applicant, the above-mentioned 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, as mentioned supra, Dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008. The Applicant states t....
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....el) 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 processes, are very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes. It is pertinent to note 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. 1.23. In this regard the judgment of the Hon'ble Supreme Court's in the cases of M/s.Amrit Agro Industries Ltd as well as M/s Phil Corporation is the squarely applicable to the impugned good "Roasted Betel Nut", wherein, the Apex Court clarified the doubts on the issue of whether a process of roasting amounts to a preparation or not. The Court observed that HSN Explanatory Note to chapter 20, refers to "dry-roasted, oil-roasted or fat-roasted". Further, the principal processes of preparation would change the classification of nuts from Chapter 8 to Chapter 20. Further, the impugned goods are not excluded by any chapter note or explanatory note from CT Heading 2008. Therefore, the Ape....
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....i on the similar question of Classification of "Roasted Areca Nut and Roasted Areca Nut Cut" has categorically differentiated the process and preparation of "Roasted Areca Nut" from Chapters 08 and 21 of the CTH, on the basis of the above Supreme Court judgments and has opined and ruled that Chapter 20008 19 20, is the appropriate classification for "Roasted Areca Nut" by its Ruling No.CAAR/Del/Exim/30/2024 dated 05.07.2024, in the matter of M/s Exim Incorporation, Delhi, which would squarely apply to the Applicant in the instant case. 1.28. Further, even as per General Rules of Interpretation (GIR) 3(a) of the Customs Tariff Act 1975, when the goods are classifiable under more than one Heading, the 'most specific description' is preferred. When, 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". 1.29. The Applicant s....
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....hine, cooling do not change the character of the Betelnuts and the Betalnut 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. (ii) As per open source, roasting is a cooking method that uses dry heat where hot air covers the food, cooking it evenly on all sides with temperature of at least 150 degree Celsius from an open source. It is worth mentioning that for a nut as hard as arecanut, roasting is mechanism to achieve drying of the nut and dried nut are correctly classifiable under chapter 08. Hence, to classify it under Chapter 20 when a specific classification of dried arecanut is present, appears to be an effort to evade higher Customs duty. 5. In this regard kind attention is invited to following Court/ tribunal case laws: (i) Hon'ble Supreme Court's in their decision dated 11-9-1979 in the case of D.S. Bist and Ors. [1979 (9) TMI 168 - SUPREME COURT] has held that all agricultural produce undergoes some processing on or outside the farm in order to make it non- perishable, transportable, and marketable and just because processing is a bit l....
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....or 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". 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. (vi) 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 vi....
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....s 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. 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: This heading covers fruit, nuts and other e....
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....e table it appears the applicant is trying to get the goods betel nuts classified at the HS CODE 20081920 which has lower rate of duty and to avoid applicability of MIP and Tariff condition and is trying to evade the applicable customs duty. 9. Since the processes which the imported product have undergone before the import as declared by the importer in advance ruling application cannot be verified with naked eyes. Hence samples are required to be sent to CRCL, New Delhi for testing on following parameters: (i) The identity of goods with respect to genus and species and parts thereof. (ii) The nature of food product- plant/fruit whole/fruit split (if split, in how many pieces)/seed/any other. (iii) The changes made during process are temporary or permanent in nature? (iv) Which of the following process of cutting/pruning/cleaning/heat treatment or boiling conducted. (v) Chemically treated or not. If yes, chemical used. (vi) If treated with or mixing of sweeteners. (vii) If treated with or mixing of fragrance. (viii) If the goods are having fungus/bacterial growth or any other infectious growth. (ix)....
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....y commissioner of the concerned customs port has also attended the same wherein she opposed the entertaining of the application / rulings. 4. The applicant vide email dated 01.11.2024 requested for treating the rebuttal / additional submissions of the AR in respect of another application of the port of Tuticorin for the instant case i.e. for the port of NS-1 also. The additional submission in the instant matter, are as under: 1. The Applicant is a proprietary firm and had sought to import Roasted Areca Nut/Betel Nut from Indonesia. The supplier is one M/s. PT. Gajamukha, JalanSukaBumi Lama Gang III, No.999 Dusun II, Desa PujiMulya, Kecamatan Sunggal, Kubupaten Deli Serdang-20365, North Sumatra, Indonesia. The Indonesian supplier is in the business from the / Betel Nut". In such circumstances the Applicant has made the present application to ascertain whether the product sought to be imported falls under CTH 2008 1920. 2. The Applicant along with its application had placed various material in the form of the suppliers profile @ page 116, product write-up page 117-118, photographs of the processes undertaken by the supplier namely De-husking, roasting, so also th....
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.... altering the tannin and arecoline content so as to make it masticatory and suitable for immediate consumption. 7. In comparison to Chapter 8, Chapter 20 of the CTH specifies "Preparations of Vegetables, Fruit, Nuts or other parts of the Plants": Chapter notes states: (i) This chapter does not cover (a) Vegetables, Fruit or Nuts, prepared or preserved by the process specified in Chapter 7, 8 or 11. (ii) It is pertinent to state that the process of roasted Betel Nut does not fall under any of the above chapter 7, 8 or 11. * Therefore CTH 2008 specifies "Fruit, Nuts and other edible parts of the 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 ... other, including mixtures: 2008 20 ... other roasted Nuts and Seeds. 8. In this regard explanatory notes to Harmonized Commodity Description and Coding System (HSN) is very important, which would answer the query raised by the respondent Commissionerate. The process / preparation of "Roasting" ....
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....reted under the Central Excise Act. The proposition concerning the process and preparation of "Roasting" is discussed therein, which holds that the process of "Roasting" is different and deserves classification under chapter 20. * Further, the said judgment holds that "the HSN is a safe guide for the purpose of deciding issues of classification". In such a perspective 'Roasted Nut' will only fall under the classification CTH 2008. 11. It is further submitted that the aforesaid advance rulings passed by the CAAR, Mumbai in the case of M/s. Shahnaz Commodities International Pvt Ltd, Chennai and M/s. Universal Impex, Mumbai, has been upheld by the Hon'ble High Court, Madras in CMA No.600, 1206, 1750 of 2023 dated 01.08.2023. The division bench of the Hon'ble Madras High Court has dealt in detail about the classification of "Roasted Areca Nut" and held as under: (@ page 146) "16. To sum up: (a) 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. (b) Roasted betel/areca nut having been specifically classified under CTH 2008 19....
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....cation and tests at every level. As such, the general tendency attributable to smuggling cannot be a yardstick to restrict imports of genuine commodities/goods. 16. Further, the contention of the respondent Commissionerate that Minimum Import Price (MIP) has been fixed for import of raw arecanut falling under chapter 08, thereby paving way for mis-declaration and classification under other headings of Chapter 20 and 21, is biased and farfetched. Chapter 20 and 21 are distinct tariff headings in its own perspective. The legislature in its wisdom has thought it fit to describe the goods/commodities falling under each of the chapter to appropriate duty and other levies. If the legislature did not find it necessary to invoke/impose MIP for goods falling under these chapters then the respondent Commissionerate cannot circumvent to impose the same. If a benefit accrues to the goods falling under Chapter 20, the same is applicable and eligible for such imports, the respondent Commissionerate cannot cry over it and deny the legitimate benefit applicable to it. 17. Further, the contention that the "Roasted Arecanut" is packed in bags whereas " the product of this heading a....
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....n 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 is a moisture removal process involving methods such as dehydrat....
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....efore, 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 ascertaining the true meaning of any expression used in the Tariff ....
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....ation and summed up that: (a) 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. (b) Roasted betel/areca nut having been specifically classified under CTH 2008 19 20, the attempt to classify under CTH 08 02 80 would fall foul of the settled rule of construction that specific entry would prevail over general entry. (c) HSN Explanatory Notes are normally a safe guide in determining classification under CTH. Roasted areca / betel nut having been mentioned in CTH 2008 19 20 under HSN. (d) When there is a specific entry covering a product/commodity, the test of common parlance is irrelevant in determining classification. (e) There is considerable force in the submission that the classification as far as possible must be in conformity and in consonance with the HSN Explanatory Notes. 6. It is pertinent to mention that, as per Notification No. 01/2021 - Customs (N.T.) dated 04.01.2021 (As amended vide Notification No. 63/2022-Customs (N.T.) dated 20.07.2022)1 Subs. by reg. 12, ibid., for "under this rule" (w.e.f. 25.07.2022): "26.....