TaxTMI 
TaxTMI 
2024 (11) TMI 1625
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....uts (Split) and Roasted Areca Nuts (Cut)" from Thailand, Myanmar, Indonesia, Sri Lanka, Bangladesh, UAE and Singapore etc. The applicant further submitted as under: M/S. LUJEE INTERNATIONAL COMPANY LIMITED, 140/7, Soi Nabg Linchi 6 Lane, 1 Babg Linchi RD, Thungmahamek, Sathan, Bangkok- 10120, Thailand is a registered company having registered office at 140/7, Soi Nabg Linchi 6 Lane, 1 Babg Linchi RD, Thungmahamek, Sathan, Bangkok- 10120, Thailand. 1.1 That the applicant is in the process of setting up its business of trading/Export of Roasted Areca Nut (Whole), Roasted Areca Nut (Split) and Roasted Areca Nut (Cut) from Thailand, Burma (Myanmar), Indonesia, Sri Lanka, Bangladesh, UAE and Singapore to India. 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 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: - (....
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.... 20081920 - OTHER ROASTED NUTS & SEEDS i. That as per the explanatory notes to Chapter 8, Fruits & nuts of this chapter remain classified here even if put in airtight packing e.g. Dried prunes, dried nuts in canes. In most cases, however, products 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). ii. 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 (hereinafter also referred as "Tariff") iii. 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 pres....
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....le Authority passed in the matter of M/s Shree Durga Traders, Kolkata Vs the Commissioner of Customs (Preventive), Kolkata, The Principal Commissioner of Customs, Chennai II (Import) and the Principal Commissioner of Customs, Nagpur in Application No 22.23, & 24/2023-DELHI O/o Comr .- CAAR- NEW DELHI, where 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 ....
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....re. ... 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, flavors, spices or other additives. f. That so far as the goods sought 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....
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....riff and more particularly CTH 08029000 which is for the product namely Areca nut. o. That in fact for similar product, Hon'ble CAAR Mumbai has already issued a Ruling thereby declaring the above said goods falls under CTH 20 and particularly under CTH 200819 20 and not under CTH 8. The said ruling has been given in the case of 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/o Commr-CAAR-Mumbai (Applicant-M/s Shahnaz Commodities International, Chennai). p. 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. 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. ....
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.... i) No comments as provisions quoted. ii) This office has filed an appeal in Hon'ble High court of Madras (Madurai Bench) vide CMA(MD) No.600 of 2003 and the same is pending for orders. iii) The item described as "Roasted Areca nuts(whole), (split) & (cut)" are freely importable if the unit price of the goods is more than Rs.351/kg and classifiable under CTH 080280. iv) Comments to points raised by the applicant vide Annexure I & Annexure II of the application are under The claims made by the applicant and the ruling sought is devoid of any concrete evidence and legally untenable on the following grounds: 2.2. The applicant's claim that roasting is not defined in the Customs Tariff Act, 1975 is not correct. Though roasting as a process is not defined, it will fall under the 'moderate heat treatment' mentioned in Chapter Note 3 of Chapter 8 reproduced below for easy reference "3. Dried fruits or dried nuts of this Chapter may be partially rehydrated, or treated for the following purposes: a) For additional preservation or stabilization (for example, by moderate heat treatment, sulphuring the addition of sorbic ....
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.... consumption per se does not result in obtaining a preparation of betel nut. Therefore, the process to which raw betel nuts have been subjected as per process submitted by the applicant is squarely in the nature of processes referred to in the Chapter Note 3 to Chapter 8 and HSN Notes. Hence at the end of the said processes, the betel nuts retain the character of betel nut and do not qualify to be considered as "preparations" of betel nuts, which is sine qua non for a good to be classifiable under Chapter 20. 2.6. To be classified under Chapter 20 there should be some preparation as the Chapter heading reads as "Preparations of vegetables, fruit, mas or other parts of plants. Mere roasting of betel nut does not render the product to be distinctive as claimed by the applicant or does not alter the character of the original good. Roasting or mere addition of certain additives for the limited purpose of enhancing preservation or appearance or case of consumption 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....
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....ed condition after manufacturing, which need to be specifically stored and preserved before consumption For example, roasted almonds or ground nuts need separate packings as specified by the HSN explanatory notes, otherwise these products are prone to deterioration after roasting. But the processes said to be performed the areca nuts is only for the purpose of drying without any reference to packaging and any specific manufacturing process. The importers have not submitted anything about the packaging of the goods and generally these goods are imported in bulk in jumbo bags. The goods under dispute are Areca Nuts in the same form as those classified under Chapter 08 and hence, they are clearly excluded from the scope of the Chapter Heading 2008. Hence, the purported roasted areca nuts clearly excluded from the scope of the chapter 20 and rightly classifiable under chapter 08 2.9. 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. 3. When by application of Rule 2 (b) or for any other reason, goods are, prima f....
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..... "the CAA rejects applicant appeal by stating that the goods, API Suparn, chikni supari, unflavoured supari, flavoured supari and boiled supari, merit classification under chapter 8 of the first schedule to the Customs Tariff Act, and more precisely, under the heading 0802. This is so in view of the fact that the processes to which raw green fresh betel nuts have been subjected to obtain the said five goods are squarely in the nature of processes mentioned in Note 3 to Chapter 8, and have not materially changed the essential character of betel nuts, further these goods are not classifiable under subheading 21069030." d. Chennai CESTAT order in Mis ST. Enterprises is Commissioner of Customs (Chennai- vill 2021(378) FLT 514(Tri Chennai) "The Hon'ble Tribunal has addressed the question whether the mere boiling and drying whole betel nut it would merit classification under 21069030 and held that since the import goods are betel nuts whole, these would merit classification under Chapter 08" 2.12. The Hon'ble CESTAT judgement in case of M/s. S.T. Enterprises vs Commissioner of Customs (VII) in Customs Appeal No.40002 & 40003 of 2021 is applicable mu....
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....g betel nuta into small pieces and addition of essential/non-essential oils, menthol, sweetening agent etc. did not result in a new and distinct product having a different character and use." And therefore, has no application in the facts of the cases before them. Further, the Honourable High Court of Delhi in its order CUS AA 17/2022 dated 01-03-2023 has held that the order of CAAR in case of M/s Excellent betel nut is erroneous. The relevant portion of the judgment is reproduced below, "The decision of the learned AAR in Re: Excellent Betelnut Products Pvt. Ltd. (supra) to the extent that it runs contrary to the decision of the Supreme Court in Crane Betel Nut Powder Works v. Commissioner of Customs and Excise, Tirupathi & Arr. (supra), is erroneous". 2.14. In order to arrive at the appropriate classification of the impugned goods, all originating from common source viz. raw green fresh betel nut, a more comprehensive view needs to be taken than in the aforesaid M/s Excellent Betel nut case, as has been done by AAR, Mumbai in the case of a. M/s. Samreen International Pvt. Ltd. (Ruling No. CAAR/Mum/ARC/3/2021 dated 15th of March, 2021) "I find the ....
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....nt case, the personal hearing could not be taken place, as neither the port authority requested for opportunity of personal hearings in the instant matter nor the applicant requested for the same. The AR of the applicant videos their email dated 17.11.2024 submitted additional submissions in the instant matter in respect of Customs port Commissionerate of Tuticorin and informed that the applicant does not want any further opportunity of personal hearing in above said instant matters and requested for taken the additional submissions, on record. Additional Submissions by the applicant 4. Further, the authorized representative of the applicant, has submitted additional submission and rebuttal to the comments of the customs port authority, which are as under: i. That it is submitted that the advance ruling is sought by the applicant for the goods i.e. roasted areca nut under CTH 20081920. ii. That the roasting is falls under the process of Moderate Heat Treatment which mentioned under Chapter Note 3 of Chapter 8 which examined as under and found that the term "Moderate heat Treatment" moisture content in 'Raw areca nut' is anywhere between 10% to 15%. ....
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....ot cover roasting process, therefore, the Roasted Areca Nut is totally different from Dry Areca Nut. vii. That the processes as mentioned in Chapter 8 includes 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 th....
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.... x. That the vital question as to whether roasted nuts would fall under Chapter 0802 or Chapter 2008 was affirmatively 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. xi. That with regards to the testing of the imported goods imported by M/s. Universal Impex & M/s. Neena Enterprises draw attention of the authority to the Lab Report No.173/MCH/10.08.2023 dated 24.08.2023 issued by CRCL Chennai in respect of import of Roasted betel nut by M/s Universal Impex (IEC No. 0313014159) based on the CAAR ruling No. CAAR/Mumbai/ARC/39,40,41/2023 dated 12.05.2023. To a specific test memo by the Customs department to ascertain whether the item under import was "roasted betel nut" or otherwise, the Customs lab after testing the item reported as follows: - "The item is in the form of grey brown whole nuts having cracks on the upper surface. It answers tests for arec....
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....h covers roasted nuts including areca/betel nuts, inasmuch as the facts as set out by the tribunal in its order was not concerned with the process of roasting. Thus the Roasted areca/betel nuts should fall under Custom Tariff Heading 2008, specifically under СТІ 2008 19 20 Other roasted nuts & seeds of Chapter 20 of the First Schedule of the Customs Tariff Act, 1975. xiv. That more importantly the effect of the Supreme Court judgement in the case of M/s Crane recourse to any CAAR rulings which were primarily based on the Hon'ble Supreme Court judgement in M/s Crane betel nut case is futile under the present legal framework especially provisions of section 3(7) of the Customs Tariff Act, 1975 read with perfectly aligned chapter note under chapter 20 of both the Customs Tariff Act, 1975 and GST Tariff Act, 2017. xv. That it is submitted that the betel nut in its various forms finds classification in chapters 8, 20 and 21 of the schedule - I of the Customs Tariff Act, 1975 read with HSN Explanatory notes to the relevant headings under these chapters. General Rules of Interpretation (GRI), specifically rule 1 and rule 3(a), to the Customs Tariff ....
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....ion under Heading 2008 and more specifically under Subheading 2008 19 20 as "Other roasted nuts and seeds", xix. That it is submitted that in view of 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. In view of the above, it is submitted 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. xx. That on the basis of foregoing it is submitted that the Roasted betel nuts fall under Tariff 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. In view of the above, it is requested that this the applicant do not want any further pers....
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.... 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 dehydration, evaporation, etc., whereas roasting is a severe heat treatment process". 5.3. I also note that Chapter 20 of the Tariff covers the Preparations of vegetables, fruits, 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....
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.... 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 Act. While delivering Phil Corporation Judgment Honourable Supreme Court has clearly spelt out importance of HSN Explanatory notes in deciding the matters of classification placing reliance on the judgment of Supreme Court in the case of Collector of Central 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....
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....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 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) enc....