TaxTMI 
TaxTMI 
2024 (12) TMI 1730
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....rities viz GST Department, Income Tax Department, DFGT Department etc. and the importer exporter code of the firm is AHDPC3242L & GST NO is 07AHDPC3242L2ZK and UDYAM REGISTRASTION CERITIFCATE NO is UDYAM-DL-01-0009846. 1.2 That the applicant is in the process of setting up its business of import of Roasted Areca Nuts (Whole), Roasted Areca Nuts (Split) & Roasted Areca Nuts (Cut) from Burma, Indonesia, Sri Landa, Thailand & Singapore. That the applicant is approaching this Hon' Ble Authority seeking Advance Rulings qua the goods as mentioned in the following paras. As the applicant intends to import the same & hence would like to have a proper understanding and clarification as to whether the goods being imported shall be covered under a particular classification or the other. That the nomenclature & the 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) 1.3 That the processes carried out on the roasted Areca Nuts (Whole), Roasted Areca Nuts (Split) & Roasted Areca Nut (cut) are as under: (a) De-husking the raw betel....
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....put in these packing have been prepared or preserved otherwise than as provided for in the heading of this chapter, and are therefore excluded from chapter 8 (and will fall under Chater 20). (b) The processes mentioned in chapter 8 are different from the Chapter 20 performed on impugned goods, they are excluded for the purpose of classification from chapter 8 of the Customs Tariff Act, 1975 (c) That further HSN explanatory note qua Chapter 20 explains as follows: 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 purees, fruit or nut pastes, obtained by cooking (4) Homogenized prepared or preserved vegetables and fruit; (5) Fruits 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 prov....
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....identical goods are held classifiable under 20081920. 1.8 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. Commissioner of Customs II (Import), Chennai in Application No. CAAR/CUS/APPL/95/2023-O/o Comr .- 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 buts by reducing arecoline and tannin as well moisture. In view of the 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), Roasted Areca Nuts (Split) & Roasted Areca Nuts (Cut) is classifiable under the CTH 20081920.' 1.10 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. Statement containing applicant's interpretation of law and facts, as under: a. That the goods in question which are to be imported by the applicant is Roasted Betel Nut and hence....
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....ht 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. 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 ....
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....f in Ruling dated 07.12.2022 no. CAAR/Mum/ARC/44, 45 & 46/ 2022 in Application no. AAR/Cus/APPL/70,77 & 78/2022 - 0/0 Commr-CAAR-Mumbai (Applicant-M/s Shahnaz Commodities International, Chennai). m. 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 cases 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 by the customs authority though qua other goods i.e. boiled areca nuts, API supari, unflavoured supari etc. n. 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 respec....
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....ate 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 betel nut, fruit or dried nuts." 2.2 That If the above processes are compared with the processes through which the product said to have undergone, there is hardly any additional process involved other than the processes mentioned in Chapter Note 3 of Chapter 8. To elaborate, the process mentioned by the applicant is only de-husking from raw betel nut and the next process, which is claimed to be roasting as per the applicant's understanding, is nothing but subjecting to heat treatment at 130-150 degree Celsius and the same is covered under the chapter note 3 of the chapter 8. The next process is cooling which is a normal process covered under Chapter 8 for the dried nuts, which the applicant also does not dispute and the next process said to have been undertaken is again roasting which is nothing but heating as claimed by the applicant is again covered under the aforesaid chapter note. 2.3 Further, the appli....
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....riginal goods. Roasting per se does not result in obtaining a preparation of betel nut. Hence, it remains the betel nut and rightly classifiable under Chapter 08. According to Cambridge dictionary, "Preparation is a mixture of substances, often for use as medicine". According to Colins Dictionary" A preparation is a mixture that has been prepared for use as food, medicine, or a cosmetic". 2.6. Further, Chapter 20 which deals with the preparation of vegetables, fruits, nuts or other parts of the plants generally refer through the different chapter HSN that the preparation or preservation is done through vinegar, acetic acid, sugar, sorbitol, other processes etc. and the General Notes 6 of the Chapter 20 as mentioned in the HSN explanatory notes, plays a crucial role here which states that the chapter 20 includes those 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. As the process of heating is mentioned in the Chapter 8 and the roasting is nothing but drying the gods using heat as detailed supra. Having a combined reading provides the clear ....
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.... (chapter 15); c. Food preparations containing more than 20% by weight of sausage, meat, meat offal, blood, insects, fish or crustaceans, molluscs 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 2.8. Classification under chapter 20 is sought to be justified on the grounds that the HSN explanatory notes to heading 2008 provide for inclusion of areca nuts in chapter 2008. However, the HSN Explanatory Notes to heading 2008, inter- alia, specify that the products of this heading are generally put up in cans, jars or airtight containers, or in casks, barrels or similar containers". This clause of the HSN explanatory notes clearly implies that the goods of this heading are preparations of fruits or nuts presented in packaged condition after manufacturing, which need to be specifically stored and preserved before consumption. For example, roasted almonds or ground nuts need separate packing as specified by the HSN explanatory notes, otherwise these products are prone to deterioration after roasting. But the processes s....
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.... 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 Ton. The details of duty structure and DGFT Import Policy for items under CTH 080280 and 20081920 are detailed below for ready reference: S. No. CTH BCD as per tariff Effective rate of BCD IGST DGFT Import Policy as on date 1 80280 100% 100% 5% Prohibited but free if CIF value is Rs. 351/- or CIP is 351Tariff value is US $6242 PMT (as per Notification No. 53/2024- Customs (N.T.) dt. 31.07.2024) 2 20081920 30% 30% 12% Free 2.11 From the above table it appears the applicant is trying to get the goods betel nuts classified at the CTH 2008 which has lower rate of duty and no restriction of MIP and Tariff condition and is trying to evade the applicable customs duty. 2.12 In view of all the above, this office is of the view that the Advance ruling application filed by M/s. NK International appears to be an attempt to circumvent the Minimum Import Price, notified Tariff value and higher Basic Customs duty by mis-classifying the Betelnuts/Areca nuts under CTH 2008 wh....
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....thod of drying and type of food 4.4 -Roasting is a thermal process that uses intense heat to modify the texture, colour, and moister content of food/substances. Roasting can improve the nutritional value, digestibility and palatability of the food produce or a substance, apart from extending the shelf life of food. So, it may please be appreciated that the drying and roasting are different processes with different tools, stages and for different purposes and utility. 4.5 Further, the contention of Mundra Customs that the roasted supari is covered under the chapter note 3 of chapter 8 is misleading because the subject chapter note covers 'Dried Fruit or dried nut' only whereas the product under question is Roasted Nuts which finds specific mention in Chapter 20 only. He further, requested to take the above submissions on record for kind consideration. Findings, Discussion and Conclusion 5. I have taken into consideration of all the materials placed on record in respect of the subject goods, comments of the customs Port Commissionerate and additional submissions made by the representative of the applicant. 5.1. I find that the concerned custom....
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.... 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 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....
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.... Excise, Shillong v. Wood Craft Products Ltd. (1995) 3 SCC 454. Honourable Supreme Court in paragraph 12 of the said judgment observed as under: "Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature 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 ta....
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.... 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. 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 ....