AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 1791
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....ime, Sulphur di-oxide, Sodium Benzoate solution or Bordeaux solution would be classifiable under Tariff Item 08129090 of the Customs Tariff Act, 1975? (ii) If falling under Tariff Item 08129090 of the Customs Tariff Act, 1975, what would be the applicable Customs duty and IGST rates for imports of Areca Nuts (Whole & Half Split/Cut form) provisionally preserved with slacked lime, Sulphur di-oxide, Sodium Benzoate solution or Bordeaux solution from Indonesia? (iii) Whether the product Areca Nuts (Whole & Half Split/Cut form) provisionally preserved with slacked lime, Sulphur di-oxide, Sodium Benzoate solution or Bordeaux solution would be classifiable under Tariff Item 20081930 of the Customs Tariff Act, 1975? (iv) If falling under Tariff Item 20081930 of the Customs Tariff Act, 1975, what would be the applicable Customs duty and IGST rates for imports of Areca Nuts (Whole & Half Split/Cut form) provisionally preserved with slacked lime, Sulphur di-oxide, Sodium Benzoate solution or Bordeaux solution from Indonesia? (v) Whether the Sr. No. 172 of Notification No. 46/2011-Cus dated 01.06.2011 would be applicable to import of Areca Nuts (Whole & Hal....
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....the drying process; or (iii) Treatment with Sulphur di-oxide or Sodium Benzoate solution having antibacterial and antifungal properties. Areca Nuts preserved from fungus and bacteria by certain processes find classification in 08129090 1.4 Areca Nuts is treated/sprayed for preservation from fungus and bacteria with slacked lime, Sulphur di-oxide, Sodium Benzoate solution or Bordeaux solution, before packing and its onward export. However, on being treated/sprayed with slacked lime, Sulphur di-oxide, Sodium Benzoate solution or Bordeaux solution, it remains unsuitable for immediate consumption in that state and hence need to be processed further to remove the preservatives and to make the same suitable for human consumption. The said preservatives can be removed from such Areca Nuts before consumption, through simple processes, like washing with water, to make it suitable for human consumption. Thus, the conditions of Chapter Note (4) under Chapter 8 of the Customs Tariff are duly fulfilled. Chapter Note (4) provides as follows: "4. Heading 0812 applies to fruit and nuts which have been treated solely to ensure their provisional preservation during transport ....
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....ozen, adding sugar or other sweetening matter, and additional preservation by moderate heat treatment, Sulphuring, addition of sorbic acid or potassium sorbate. Preservation method of Areca Nuts by slacked lime or Bordeaux solution is not mentioned under Chapter 8 of the Tariff. However, use of the words 'for example' in the Chapter Note 3 (a) inside the brackets, indicate that the processes mentioned therein are merely illustrative and not exhaustive. The said Chapter Note 3(a) is reproduced below for the sake of convenience: "3. 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);" 1.11 As per Supplementary Note 1 to Chapter 21 of the Customs Tariff, 'Pan masala' means any preparation containing betel nuts and any one or more of the ingredients, namely, lime, katha (catechu) and tobacco whether or not containing any other ingredient, such as cardamom, copra or menthol. Supplementary Note 2 states that 'betel nut product known as Sup....
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....sses under Chapter 8 or Chapter 21 of the Tariff, therefore, the phrase "otherwise prepared or preserved" under Tariff Heading 2008 of the Tariff, may cover the preservation processes by treating/spraying with slacked lime or Bordeaux solution/Sulphur di-oxide/sodium Benzoate solution and specifically under Tariff Item 20081930 of the Customs Tariff Act, 1975. 1.15 In view of the foregoing submissions, it is humbly submitted that the product Areca Nuts treated/sprayed with slacked lime, Sulphur di-oxide, Sodium Benzoate solution or Bordeaux solution would be classifiable under Tariff Item 20081930 of the Customs Tariff Act, 1975. Therefore, the Applicant seeks validation to this classification from this Hon'ble Authority for Advance Ruling. 1.16 The Applicant reserves their right to add, alter or modify any of the grounds of the application at any point of time till it is finally decided. The Applicant also wishes to be heard in person before the application is finally decided. The Applicant also reserves the right to rely upon and submit copies of case laws, judgments, excerpts from the statute, clarifications issued under the stature etc. on which reliance is placed in ....
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....ices or other additives. 2.2 Several Advance ruling applications are filed for betel nut to avoid classification under chapter 08 to evade the restrictions of "Minimum Import Price" as well as "Tariff Rate" which is regularly revised by CBIC. It is pertinent to mention that the revision of Tariff value is on a continuous upward trend and as on date the tariff value of the Areca Nuts is USD 6242 per Metric Tons. The details of duty structure and DGFT import Policy for items under CTH 080280 and 20081920 are detailed below for reference: Sr. No. CTH BCD as per Tariff Effective Rate of BCD IGST Policy as on date 1 08028010 100% 100% 5% Prohibited but free if CIF value is above Rs. 351/-or above per KG Tariff Value is US $ 6242 PMT (as per Notification No.53/2024-Customs (N.T.) dt.31.07.2024 2 20081920 30% 30% 12% Free 2.3 The second query of the Applicant, i.e. "whether Sr. no. 172 of the Notification No. 46/2011- Cus dated 01.06.2011 would be applicable?". Sr. No. 172 of the Notification No. 46/2011 dated 01.06.2011 pertains to CTH "200710 to 200820". However, as the goods should be classified under 08028010, this notific....
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....olution or Bordeaux solution from Indonesia. Dehydrated Areca Nuts, before packing/storage and onward transportation, is highly prone to bacterial and fungus growth due some moisture content therein. In order to protect the Areca Nuts from fungus and bacteria, it needs to be treated with preservatives, which make the Areca Nuts unsuitable for immediate consumption in that state. 4.2 For preservation of the Areca Nuts and to protect them from fungi and moulds and to prevent degradation while in storage and for safe transportation, these are to be subjected to preservative treatment before packing and export thereof. The preservatives used on Areca Nuts are the following: (i) Treating with lime or slacked lime, which is an excellent naturally occurring anti- bacterial material. It improves the absorption of the alkaloid stimulants of the Areca Nut into the bloodstream; or (ii) Treating with 1% Bordeaux solution, which is a simple mixture of copper sulphate (1- part) + Lime (1-part) with water (100-parts) with neutral pH, and is an excellent anti- fungal and anti-bacterial solution to preserve from fungus and bacteria while in storage. It is sprayed on the Areca N....
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....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 hit or dried nuts." Chapter Note 4 to Chapter 8 of the Customs Tariff Act, 1975 is as under: "4. Heading 0812 applies to fruit and nuts which have been treated solely to ensure their provisional preservation during transport or storage prior to use (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), provided they remain unsuitable for immediate consumption in that state." The relevant portion of HSN Explanatory notes of the Chapter 8 to the Customs Tariff Act, 1975 is reproduced as under: "Fruit and nuts of this Chapter may be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled. It should be noted that homogenisation, by itself, does not qualify a product of this Chapter for classification as a preparation of Chapter 20." 4.9 Heading 0812 of the First Schedule of the Customs Tariff Act, 1975 covers fruits and nuts provisionally preserved but unsuitable in that state for immediate consumpt....
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....or between products classified under the Heading 0812 and Heading 2008 is that after provisional preservation process, the products classifiable in Heading 0812 cannot be consumed as such being unfit for human consumption and hence requiring additional processes to be carried out thereon to remove the preservatives before making the product suitable for human consumption. However, the products covered under Heading 2008 are edible and are fit for immediate human consumption as such even though subjected to preservation process. Preservation processes with slacked lime or Sulphur di-oxide or Sodium Benzoate solution or Bordeaux solution make the Areca Nut non-edible or unfit for immediate consumption in such preserved condition, and moreover these processes are not covered under Chapter 7, 8 or 11 of the Tariff. 4.14 The Note 1(a) to Chapter 20 of the Customs Tariff Act, 1975 is reproduced as under: "1.- This Chapter does not cover: (a) Vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, 8 or 11;" The relevant portion of Heading 2008 is as under: 2008 Fruit, nuts and other edible parts of plants, otherwise prepar....
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....g betel nuts and any one or more of the following ingredients, namely: lime, katha (catechu) and tobacco whether or not containing any other ingredient, such as cardamom, copra or menthol." Supplementary Note 2 of Chapter 21 of the Customs Tariff Act, 1975 is as under: "2. In this Chapter "betel nut product known as Supari" means any preparation containing betel nuts, but not containing any one or more of the following ingredients, namely: lime, katha (catechu) and tobacco whether or not containing any other ingredients, such as cardamom, copra or menthol." 4.18 It can be seen from the above that only preparations containing Betel Nuts or products of Betel Nuts are classifiable under Heading 2106. Since the Applicant intends to import provisionally preserved Areca Nuts in its original form which are to be used as starting material for manufacture of 'Pan Masala' or 'Supri' and not being preparation or product of 'Betel Nuts' would not find classification therein. The slacked lime powder or Sulphur dioxide or Sodium Benzoate solution or Bordeaux solution sprayed on the original form of Areca Nuts either in whole or split form, is only for the p....
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....c Acid or Sulphur-di-Oxide gas which are basically used for inhibiting the growth of moulds and bacteria. The preservation process is done to ensure the fruits and nuts are not spoiled during transportation. These preserved products might have higher levels of SO2 or Benzoic acid And they can be safely treated with Sodium Bi Carbonate (NaHCO3) and washed with plain water to remove the excess of Benzoic Acid, Benzoic acid gets neutralized to Sodium Benzoate in the process easily get dissolved in water and can be removed easily. Similarly, products preserved with Sulphur-di-oxide can be treated with Hydrogen peroxide by which the sulphur di oxide is oxidized to sulphate, and addition of Sodium Bi Carbonate during the process makes the process harmless, the excess peroxides formed can be removed by washing with plain water." 4.21 The Applicant also places reliance on another ruling in the matter of Radiance Enterprises - Ruling No. CAAR/Mum/ARC/26/2024 dated 22.02.2024, a copy of which is enclosed herewith as Exhibit B and Ruling No. CAAR/Del/Vaibhav/19/2024 dated 27.05.2024 in the matter of Vaibhav Enterprises, a copy of which is enclosed herewith as Exhibit C. These two decisions....
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....ds and to prevent deterioration while in storage and for safe transportation. ii. The supplier of these nuts treats them with sulphur-di-oxide gas or sodium benzoate solution and also provide analysis certificate and inspection report with regards to the treatments carried out. Thereafter, the nuts will be imported and cleared from customs. iii. The preservatives can be removed before use of these nuts through simple processes. In case of preservation carried out with sodium benzoate solution, the nuts can be treated with sodium bi-carbonate and when washed with plain water the excess benzoic acid will get removed. In the process, by way of neutralization and after getting dissolved in water the benzoic acid get removed. iv. In cases where nut is treated with sulphur-di-oxide, these can be treated with hydrogen peroxide by which the sulphur-di-oxide is oxidized to sulphate and during the process addition of sodium bi-carbonate and water will remove the excess peroxides. 6.1 Chapter 8 covers fruit, nuts and peel of citrus fruit or melons (including watermelons), generally intended for human consumption (whether as presented or after processing). As per ....