AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 1792
X X X X Extracts X X X X
X X X X Extracts X X X X
....g qua the goods as mentioned in the following paras as applicant intends to trade / export the same and hence would like to have a proper understanding and clarification as to whether the goods being exported shall be covered under a particular classification or the other. That the nomenclature and details of the goods being sought to be exported by the applicant are as under (i) Roasted Areca Nuts (whole) (ii) Roasted Areca Nuts (Split) (iii) Roasted Areca Nuts (cut) 1.2 That the processes carried out on the Roasted Areca Nut (Whole), Roasted Areca Nut (Split) and Roasted Areca Nut (Cut) are as under :- a) De-husking the raw betel/areca nut and drying the same before being fed into the roasting oven; b) 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 areca nuts is done using firewood/palm kernel-based ovens of the seed roasting machine and temperature of the flames is around 600 degrees Celsius. c) Take the areca nuts out of the oven, cooling at room temperature and feeding ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... classification from Chapter 8 of the Customs Tariff Act, 1975 (hereinafter also referred as "Tariff"). iii. That further HSN explanatory note qua Chapter 20 explains as below: 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. 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CAAR-MUMBAI, where identical goods are held classifiable under 20081920. 1.9 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. 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 classifiable under CTH 2008 and more particularly in 20081920. b. That as per the explanatory note to Chapter 8 fruit 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 therefore will fall under Chapter 20. c. That as the processes mentioned in Chapter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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. j. There is a visible deposition of an ash-like substance on the outer surface of the betel nut. k. There is a substantial change in the chemical characteristics also of the betel nut product on account of the roasting process. That the tannin and arecoline content of raw betel nut/ areca nut gets substantially changed by subjecting the same to roasting. Therefore, roasted betel nut is a distinctive product of betel nut making it suitable for immediate consumption. l. That roasting is not aimed at additional preservation or stabilization or to improve or maintain their appearance. m. That in this regard applicant takes support from the article titled "Estimation of arecoline content of v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt vide its judgment dated 01.08.2023. q. 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. r. 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 fall foul of the settled rule of construction that specific entry would prevail over general entry. Also it is held that HSN explanatory notes are normally a safe guide in determining classification under CTH. Roasted Areca / betel nut having mentioned in CTH 2008 19 20 under HSN the impugned Ruling is in consonance with HSN classificat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The roasted areca nuts are taken out of the oven and cooled at room temperature. They are then fed back into the oven and roasted again, and this cycle is repeated until the water content of the fresh areca nuts goes below 6%. d. Packaging: The roasted areca nuts are packaged in industrial packs of 50kg to 80kg as per requirement. The Importer further submitted that the roasting process changes the appearance and chemical characteristics of the areca nuts. There is a substantial change in the chemical characteristics of the betel nut product on account of the roasting process. ii. The importer has posited that, in accordance with Rule 1 of the General Rules for the Interpretation of Import Tariff, the proposed item for importation, namely "Roasted Areca Nuts," is most appropriately classifiable under HS Code 20081920. To further bolster their argument, the importer has referenced the explanatory notes, which they claim explicitly encompass the said goods under Chapter heading 2008. iii. In addition, the importer has contended that for goods to be classifiable under Chapter 08, they should only be subjected to treatments aimed at additional prese....
X X X X Extracts X X X X
X X X X Extracts X X X X
....exceed 7%. Furthermore, these regulations explicitly state that dried areca nuts with a moisture content surpassing 7% are deemed unfit for human consumption. This regulatory standard implies that the moisture content in sun-dried fresh areca nuts, which are typically imported under CTH 0802, is already at or below the 7% threshold. Consequently, the importer's claim of achieving a moisture content reduction to less than 6% through repeated high temperature roasting appears to be both illogical and potentially misrepresentative of the actual facts. iv. From a logical standpoint, if sun-dried areca nuts are not expected to contain more than 7% moisture, then subjecting these nuts to repeated roasting at severely high temperatures should result in moisture levels significantly lower than the claimed 6%. The importers have provided mere statements without producing any tangible evidence to substantiate their claims regarding the purported process. In the absence of such hard evidence, it appears more plausible that the proposed areca nuts are subjected only to moderate heat treatment, a process that is very much within the scope of CTH 0802. v. Furthermore, the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ods are imported in bulk quantities in jumbo bags. This method of importation is inconsistent with the packaging requirements implied by Chapter Heading 2008. The goods under dispute are, in essence, Areca Nuts in the same form as those classified under Chapter 08, and hence, they are clearly excluded from the scope of Chapter Heading 2008. x. A holistic interpretation of the explanatory notes would suggest that Areca Nuts could be included in Chapter 20 only if they are presented in the packaged condition specified therein, i.e., in cans, jars, or airtight containers, after undergoing necessary processing and preparations. In the present case, the proposed import is in bulk form, which precludes it from being covered within the ambit of Chapter 20. xi. Therefore, by applying the Specific vs General Entry Rule 3(a) of General Interpretation Rules, which states, "The heading which provides the most specific description shall be preferred to headings providing a more general description," it can be concluded that the impugned goods, i.e., roasted areca nuts, are more appropriately classifiable under Chapter 08. This is because Chapter Heading 080280 specifically cov....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... xvii. During the course of the examination, it was discovered that the goods were not roasted at the high temperature as claimed by the importers in their Advance Ruling applications. This discrepancy is of paramount importance as it strikes at the very core of the classification issue. The bags that were opened for examination appeared to contain a mixed variety of areca nuts, with some visually appearing to be normal sun-dried areca nuts. This observation suggests a lack of uniformity in the processing of the nuts, which is inconsistent with the claimed high temperature roasting process. xviii. Furthermore, to ascertain the true nature of the goods, samples were drawn from the aforementioned consignments and subjected to rigorous testing by the Central Revenue Control Laboratory (CRCL), Chennai, and CRCL, New Delhi. The results of these tests are particularly illuminating. It was found that the goods were only moderately heat treated and not roasted as claimed by the importer. This scientific evidence directly contradicts the importers' assertions and provides strong support for the classification of these goods under Chapter 08. xix. The implications o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....screpancy in packaging methods is not merely a trivial detail but a significant indicator of the true nature of the imported goods. The use of gunny bags strongly suggests that the nuts have not undergone the claimed high-temperature roasting process, as such treatment would necessitate more protective packaging to maintain product integrity. To further illustrate this point, the following evidence is reproduced below: Examination Images xxv. The evidence presented above unequivocally demonstrates that genuine "Roasted Areca Nuts" are consistently packaged in airtight packs or containers to maintain their quality and prevent moisture contamination. This packaging practice is not merely a matter of preference but a necessary consequence of the roasting process, which alters the nuts' susceptibility to environmental factors. xxvi. In this context, it is crucial to revisit the explanatory notes for heading 2008, which explicitly state: "The products of this heading are generally put up in cans, jars or airtight containers, or in casks, barrels or similar containers." The term "generally" in this context should be interpreted as "considering the whole of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... -Whole Oriented Units (EOUs) and units in the SEZ subject to the condition that no DTA sale is allowed. 08028020 -Areca Nuts --- Split Prohibited a) However, import is free if CIF value is Rs. 351/- or above per Kilogram. b) MIP conditions, however, will not be applicable for imports by 100% Export Oriented Units (EOUs) and units in the SEZ subject to the condition that no DTA sale is allowed. 08028030 -Areca Nuts ---Ground Prohibited a) However, import is free if CIF value is Rs. 351/- or above per Kilogram. b) MIP conditions, however, will not be applicable for imports by 100% Export Oriented Units (EOUs) and units in the SEZ subject to the condition that no DTA sale is allowed. 08028090 -Areca Nuts --- Other Prohibited a) However, import is free if CIF value is Rs. 351/- or above per Kilogram. b) MIP conditions, however, will not be applicable for imports by 100% Export Oriented Units (EOUs) and units in the SEZ subject to the condition that no DTA sale is allowed. 21069030 --- Betel nut product known as "Supari" Prohibited a) However, import is free if CIF value is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ttempting to Import the Moderately Heat Treated Areca Nuts under the guise of Roasted Areca Nuts (CTI 2008 1920) by circumventing the MIP as goods viz., Raw/Sun Dried/Moderately heated Areca Nuts (CTSH 0802 80) and Supari (prepared Areca Nuts of CTI 2106 1930) were subject to MIP. xxxiii. In light of the comprehensive analysis presented above, and in strict adherence to Rule 1 of the General Rules for the Interpretation of the Harmonized System, which unequivocally states that "classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes," it can be determined that the appropriate classification for the subject goods is under CTSH 0802 80 and specifically under CTI 0802 8010 when imported as Whole Nuts, under CTI 0802 8020 when imported as Split Nuts and under CTI 0802 8090 if imported under any other form. 2.3 Furthermore, this office has issued SCN to two Importers viz., M/s. Universal Impex and M/s. Neena Enterprises for mis-declaration of Moderately Heat Treated Areca Nuts as "Roasted Areca Nuts" and for violation of MIP prescribed by DGFT Notification No. 57/2015-2020 dated 14.02.2023. As the impugned import go....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ii. The Ld. Commissioner contended that sun dried fresh Areca Nut contained moisture at 7% or below and importer's claim of achieving moisture content reduction to less than 6% through repeated high temperature roasting appears to be both illogical and potentially misrepresentative of the actual facts. The importer has provided mere statements without producing any tangible evidence to substantiate the claim. The comments of the Ld. Commissioner, is totally, baseless and misrepresentation of the fact of roasting. In this regard it is important to mention that a copy of article of Department of Oral and 42-48 Maxillofacial Pathology, Dr. Syamala Reddy Dental College Hospital and Research Centre, Bengaluru, Karnataka, India which is a study on roasted areca nut is annexed with the application which clearly shows that roasting of Areca Nuts changes an absolute in its physically and chemically. iv. That 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. Ther....
X X X X Extracts X X X X
X X X X Extracts X X X X
....8 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. vii. That Chapter 8 specifically certain treatments that could be carried out on the dried nuts for additional preservation or stabilization or to improve or maintain their appearance. The objectives of the roasting are not as specified in the said note. Further, as per the above note, the processes that could be carr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Price (MIP) requirement; b. The established Tariff Rate of valuation and c. The higher duty applicable under CTSH 0802 80. It is further noted that it was also commented that "rather, it seems that the Advance Ruling was obtained with the sole purpose of importing sun-dried or moderately heat-treated Areca Nuts under the guise of 'Roasted Areca Nuts' and this misclassification would allow importers to avoid paying the higher duty rate applicable under CTSH 080280, thereby circumventing established trade regulations and potentially causing significant revenue loss to the exchequer and the port authority has given examples of imports made by M/s Neena Enterprises and M/s Universal Impex in their supportive comments against which show cause notice were issued and Hon'ble High Court of Madras has disposed of writ applications of the importer without extending any benefit in favour of importers. In this regard, it is submitted that these are specific cases wherein imported goods may be found to be mis-declared and on the basis of such incidences, it could not make impediment from pronouncing of rulings / orders to the authority. However, the customs ports are free t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... tenable and on that ground opposing of the advance rulings is totally illogical and improper until and unless, the goods is examined / test results differs from the declared quality of goods. xi. That the vital question as to whether roasted nuts would fall under Chapter 0802 or Chapter 2008, would affirmatively be 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. xii. 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 c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ication of roasted arena nut which is proposed to be exported by the applicant. xvi. That in so far as argument whether goods resulting from a roasting process have attained the character of 'preparation' or not is concerned, it is submitted that two different Supreme Court judgments namely 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 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. xvii. 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 exa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....this regard, attention is drawn to the Provisions 28 E (c) provides the definition of applicant for CAAR application, as under: Applicant means, any person, - (i) holding a valid Importer-Exporter Code Number granted under section 7 of the Foreign Trade Policy (Development and Regulation Act, 1992 (22 of 1962); 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 28 H. Since, the applicant, in the instant case, is an exporter of goods to India, the applicant appears eligible to be an applicant for seeking advance rulings under the Provisions of 28E(c)(ii) of the Customs Act, 1962. Further, as per requirement of the provision, the person authorized to sign on behalf of the entity must be duly approved by the Board of Directors, which has been complied with. Also, the authorized person has been recommended in person by the Board of Directors of the entity including the authorized signatory. It may also be noted that as the original document of recommendation by the Board is in Thai language, the authorized translated version is also....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cesses 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 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. 5.5. 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 sor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ature emerging from the HSN. This being the expressly acknowledged basis of the structure of the Central Excise Tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act." 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 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." 5.9 The exact moisture content could only be achieved ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reg. 12, ibid., for "under this rule" (w.e.f. 25.07.2022): "26. Declaration of advance ruling to be void in certain circumstances. - (1) Where it is brought to the notice of the Authority on a representation made by the Principal Commissioner or Commissioner concerned or otherwise that an advance ruling pronounced by it has been obtained by the applicant by fraud or misrepresentation of facts, the matter shall be examined by the Authority and any such representation shall be supported by an affidavit duly attested and accompanied with attested copies of documents relied upon. (2) If the Authority after examining the representation is prima facie of the view that the advance ruling appears to have been obtained by the applicant by fraud or misrepresentation of facts, the applicant shall be given a notice to explain as to why the ruling should not be declared void ab initio under sub-section (1) of section 28K. (3) The notice referred to in sub-regulation (2) to the applicant shall be in writing - (a) informing him of the grounds on which it is proposed to declare the advance ruling as void ab initio; (b) enclosing copies of the ....