TaxTMI 
TaxTMI 
2024 (11) TMI 1624
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....ctive Statutory Authorities 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-....
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....r, 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). (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 proces....
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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 ....
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....ought 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 t....
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....e 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). 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 case 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 resp....
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....llate Tribunal or any court. 2.3. The activity proposed is to import Roasted Areca Nuts (Whole), Roasted Areca Nuts (Split), Roasted Areca Nut(cut) in India. The item described as "Roasted Areca nuts (whole), Roasted Areca Nuts(Split) & Roasted Areca nuts (cut)" are freely importable if the unit price of the goods is more than Rs.351/kg and classifiable under CTH 080280 2.4 Further comments on the merits of the question on which advance ruling has been sought by the applicant are as under :- Points 1-7: are a matter of fact as stated by the applicant. 2.5 Point 8-11. i) 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. 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 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), pro....
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....e 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 use as a medicine". According to Collins Dictionary "A preparation is a mixture that has been prepared for use as food, medicine, or a cosmetic". However, in the processes mentioned by the importer, it is evident that there is neither any mixture of products nor any change in the original good which tantamount to no preparation. 2.6 Point 12-15 (1) The applicant has claimed that dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008. The relevant portion of the chapter heading 2008 is reproduced below: CTH 2008 Fruits, nu....
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...., chapter 8, or chapter 11. Chapter 20 heading reads "preparations of vegetables, fruit, nuts or other parts of plants". It is pertinent to mention that the Chapters are organised as per evolution, which is evident by the fact that the edible nuts and fruits are classified under Chapter 8, preparations of vegetables, fruits, nuts or other parts of plants under Chapter 20 and miscellaneous edible preparations under Chapter 21. Hence, the roasted betel nut which did not undergo any preparation is rightly classifiable under Chapter 08. 2.7 Points 16-19. 1) Reliance is placed on the following Advance Rulings, which have ruled classification of areca nuts under CTH 0802. a. CAAR Delhi vide ruling no. CAAR/Del/Vaibhav/21/2021 in the case of M/s Vaibhav Enterprises "The CAA rejects the application of M/s Vaibhav Enterprises by giving the ruling that: API Supari Chikni Supari Boiled Supari, Boiled and Cut supari, Unflavoured supari and flavored supari merit classification under chapter 8 of the first schedule to the Customs Tariff Act and more precisely, under the heading 0802 b. CAAR Delhi vide ruling no CAAR/Dei/Sarveshwari/11/2021 in the case of M/s Sarveshwari I....
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....e Rulings quoted above have ruled classification under CTH 0802. 2.9 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 mutatis mutandis to the present case, wherein the question decided in the said case was classification of "boiled betel nuts". The importers submission is that the process roasting is not covered under the process mentioned under Chapter Note 3 of Chapter 8. It is pertinent to mention here that the process of boiling is also not mentioned in the Chapter Note 3 to Chapter 8 and the Tribunal has held that the goods under dispute "boiled areca nuts" merit classification under CTH 08028010, which was affirmed by the Hon'ble Supreme Court vide judgment dated 19.03.2021 in Civil Appeal Nos. 850- 851 of 2021. Though the process dealt with by the Hon'ble Tribunal was not exactly the same, the principle involved holds relevance. When the boiled supari can be classified under Chapter 08 on the grounds that boiling does not alter the original characteristics of the goods, the same would apply in the present case also as roasting alone would not alter the charac....
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....red supari, and boiled supari merit classification under chapter 8 of the customs tariff, and more precisely, under the heading 0802, and not under sub-heading 21069030, as contended." b. M/s Dry Nut Enterprises (Ruling No. CAAR/Del/Dry Nut/01/2021 dated 16th March, 2021) In this case, the AAR, Mumbai held as under: "I find that the reference by the Principal Commissioner of Customs to the Note 6 to chapter 21 of the Central Excise Tariff Act, which was essentially intended to deem certain processes as manufacture" is inappropriate in the present context. This is particularly so, given the judgement of the Hon'ble Supreme Court of India in the case of M/s. Crane Betel Nut Powder Works and of the CESTAT, Chennai in the case of M/s.Azam Laminators Pvt. Ltd. Put simply, these decisions clearly imply that addition of flavouring agents do not change the character of the good, meaning in the present case betel nut would continue to remain betel nuts and not become preparations of betel nuts" 2.13 From the various advance rulings quoted above, it is evident that the claim of the applicant M/s N K International renders Hon'ble Supreme Court's decision in M/....
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....works, infructuous and hence their claim for classification of Roasted Areca Nuts (Whole), Roasted Areca Nuts (Split), Roasted Areca Nuts (cut) under Chapter 20 is untenable. V. Hence, it is conclusively proved that all these advance ruling applications are being filed to circumvent the policy conditions applicable under CTH 080280 and it is requested to consider the same before issuing the advance ruling on the classification of the "Roasted Areca Nuts (Whole), Roasted Areca Nuts (Split), Roasted Areca Nuts (cut)". 2.16 Comments in respect to the points raised by the applicant vide Annexure II of the application are under: Point 1-7. i. The applicant has claimed that dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008. The relevant portion of the chapter heading 2008 is reproduced below CTH 2008 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 - Nuts, ground nuts and other seeds, whether or not mixed together. 200819 - Other, including mixtures 20081920 ....
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.... fruits, nuts or other parts of plants under Chapter 20 and miscellaneous edible preparations under Chapter 21 Hence, the roasted betel nut which did not undergo any preparation is rightly classifiable under Chapter 08. 2.17 Points 8-12. I. 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 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" As per Note 3 Chapter 8 above it mentioned that Dried fruits or dried nuts of this Chapter may be treated for additional preservation or stabilization however the same mentions moderate heat treatment, sulphuring the addition of sorbic acid or potassium sorbate but t....
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....pearance or ease 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 use as a medicine". According to Collins Dictionary "A preparation is a mixture that has been prepared for use as food, medicine, or a cosmetic". However, in the processes mentioned by the importer, it is evident that there is neither any mixture of products nor any change in the original good which tantamount to no preparation. 2.18 Points 13-16. 1. The 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 mutatis mutandis to the present case, wherein the question decided in the said case was classification of "boiled betel nuts". The importers submission is that the process roasting is not covered under the process mentioned under Chapter Note 3 of Chapter 8. It is pertinent to mention here that the process of boiling is also not mentioned in the Chapter Note 3 to Chapter 8 and the Tribunal has held that the goods under dispute "boiled are....
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....No. CAAR/Mum/ARC/3/2021 dated 15th of March, 2021) In the said order, the AAR, Mumbai held as under. "I find the observations of the Hon'ble Supreme Court in the case of Crane Betel Nuts and the decision of Hon'ble Tribunal in the case of Azam Laminators to be extremely enlightening". The AAR, Mumbai further held that "In view of the aforesaid discussions, I have reached the conclusion that all the five products placed before me for consideration, i.e., API supari, chikni supari, unflavoured supari, flavoured supari, and boiled supari merit classification under chapter 8 of the customs tariff, and more precisely, under the heading 0802, and not under sub-heading 21069030, as contended." b. M/s Dry Nut Enterprises (Ruling No. CAAR/Del/Dry Nut/01/2021 dated 16th March, 2021) In this case, the AAR, Mumbai held as under: "I find that the reference by the Principal Commissioner of Customs to the Note 6 to chapter 21 of the Central Excise Tariff Act, which was essentially intended to deem certain processes as manufacture" is inappropriate in the present context. This is particularly so, given the judgement of the Hon'ble Supreme Court of India in th....
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....quarely in the nature of processes referred to in the Chapter Note 3 to Chapter 8 and HSN Notes. III. Further, Notes to chapter 0802 mentions that this heading also covers 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. Since the goods are masticatory in nature i.e., used for or adapted to chewing, it is clear that the same are not to be ingested/swallowed and thus cannot be classified under Chapter 20 IV. From the various advance rulings quoted above, it is evident that the claim of the applicant M/s N K International renders Hon'ble Supreme Court's decision in M/s. Crane Betelnut Powder works, infructuous and hence their claim for classification of Roasted Areca Nuts (Whole), Roasted Areca Nuts (Split), Roasted Areca Nuts (cut) under Chapter 20 is untenable. VI. Hence, it is conclusively proved that all these advance ruling applications are being filed to circumvent the policy conditions applicable under CTH 080280 and it is requested to con....
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....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 customs port Commissionerate i.e. ICD, Dadri, in their comments place reliance upon a number of rulings/orders passed by various fora in which the goods were Flavoured Supari, unflavoured supari, Chickni Supari, Boiled Supari, etc. which are other than the goods in question in the present case. Hence, the orders of the various fora on which reliance was placed by the custom port Commissionerate, not appears applicable in the present case. 5.2 Now, I proceed to decide the present application regarding classification of the goods in question, i.e. Roasted Areca nut (whole), Roasted Areca nut (cut) and Roasted Areca nut (split) on the basis of the information on record as well as the existing legal framework having bearing on the classification of the Roasted Areca nut (whole) Roasted Areca nut (cut) and Roasted Areca nut (split) under the first schedule of the Customs Tariff Act, 1975. 5.3. I note that the processes mentioned in Chapter 8 include chilling, steaming, boiling, dryin....
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....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 sorbate by the addition of vegetable oil or small quantities of glucose syrup. Roasting is different from all the processes mentioned above. Roasting, as submitted by the applicant, is carried out using roasting ovens due to which betel nuts are roasted in the range of 150 degrees Celsius then cooled in room temperature and the cycle is repeated until the moisture content is less than 6 %. This clearly indicates that the roasting is much more than mild heat treatment. Even in the generally understood meaning of the terms, it is understood that roasting involves severe heat treatment and is different from moderate heat treatment as well as dehydration. Therefore, the impugned goods do not satisfy Note 3 to Cha....
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.... 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 at through the laboratory testing and the finding that whether the nuts are being roasted or otherwise. The Port Authorities are free to seek any test report in case of any reasonable doubt regarding the authenticity of the goods declared under a particular classification head as per the import documents. 5.10 The explanatory notes nowhere explicitly provides that only in the condition that the product if packaged in a certain way can only be classified under Chapter 20. This is stretching the argument too far. The pre-conditions for packaging cannot be treated as a mandatory condition for classifying any commodity under Chapter 20. 5.11 A specific instance of misdeclaration cannot jeopardi....