TaxTMI 
TaxTMI 
2024 (12) TMI 1738
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....Roasted Areca Nut (Cut) from Myanmar (Burma), Indonesia, Sri Lanka, Cambodia, Thailand and Singapore etc. The applicant submitted as under: 1.1. M/s STAR ENTERPRISE, Delhi is a proprietorship firm of Mr. Anil Kumar Aggarwal. The firm is duly registered with the respective statutory authorities' viz. G.S.T. Department, Income Tax Department, D.G.F.T. Department at New Delhi. The Importer Exporter Code of the firm is AGMPA9047P and the GST number of the applicant is 07AGMPA9047P1ZT.The applicant is in the process of setting up its business of import of Roasted Areca Nut (Whole), Roasted Areca Nut (Split) and Roasted Areca Nut (Cut) from Myanmar (Burma), Indonesia, Sri Lanka, Cambodia, Thailand and Singapore etc. 1.2. 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 import the same and hence would like to have a proper understanding and clarification as to whether the goods being ported shall be covered under a particular classification or the other. The nomenclature and details of the goods being sought to be imported by the applicant are as under :- (i)....
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....hat the CTH headings describe as bellow: CTH 2008- Fruit, 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 & CTH 2008 19 20- Other Roasted Nuts and seeds. 1.5. That as per the Explanatory Notes to Chapter 8, fruits 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 will fall under Chapter 20). The processes mentioned in Chapter 8 are different from the processes 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"). 1.6. That further HSN explanatory note qua Chapter 20 explains as bellow: Chapter 20 This Chapter includes: (1) Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by vinegar or ....
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....n'ble Madras High Court after elaborately hearing all the parties dismissed the CMA's of the Customs Department, thereby upholding the aforesaid ruling of the CAAR, Mumbai. 1.10. That Ruling No. CAAR/Del/Shree Durga/26, 27 & 28/2023 dated 17.11.2023 of Hon'ble 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) & The Principal Commissioner of Customs Nagpur in Application No. 22, 23 & 24/2023-DELHI O/o Commr- CAAR-NEW DELHI, where identical goods are held classifiable under 20081920. 1.11. 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. The Commissioner of Customs II (Import), Chennai, in Application No. CAAR/ CUS/APPL/95/2023-0/0 Commr-CAAR-MUMBAI, where identical goods are held classifiable under 20081920. 1.12. 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....
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....r elsewhere in the Nomenclature. ... It includes, inter alia: i. 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. 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 BETAL 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....
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.... Chapter 8 of Customs Tariff and more particularly CTH 08029000 which is for the product namely Areca nut. m. 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 CTH 8. The said ruling has been given in the case of in Ruling dated 7.12.2022 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) n. 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. o. 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....
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....ions quoted. ii. 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. iii. Comments to points raised by the applicant vide Annexure I & Annexure II of the application are under: 2.2. The claims made by the applicant and the ruling sought is devoid of any concrete evidence and legally untenable on the following grounds: i) 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 CUS/AG/MISC/2589/2024- IMP-ASSMNT-O/o COMMR-CUS-TUTICORIN I/2457681/2024 moderate heat treatment, sulphuring. the addition of sorbic acid or potassium sorbate) b) To improve or maintain their appearance (for example, by the additi....
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....cess to which raw betel nuts have been subjected as per process flow 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 nut, which is sine qua non for a good to be classifiable under Chapter 20. v) To be classified under Chapter 20 there should be some preparation as the Chapter heading reads as "Preparations of vegetables, fruit, nuts 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 CUS/AG/MISC/2589/2024-IMP-ASSMNT-O/o COMMR-CUS-TUTICORIN I/2457681/2024 alter the character of the original good. Roasting or mere addition of certain additives for the limited purpose of enhancing preservation or appearance 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 med....
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....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 on 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. viii) 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....
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....he case of M/s Naman Agri Impex Private Ltd. "the CAA rejects applicant appeal by stating that the goods; API Supari, 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 M/s S.T. Enterprises v/s Commissioner of Customs (Chennai-vii) [2021(378) E.L.T.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 8." xi) The CESTAT judgement in case of M/s. S.T. Enterprises vs Commissioner of Customs (VII) in Customs Appeal....
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....rriving at the conclusion that the process of cutting betel nuts 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 & Anr. (supra), is erroneous". 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/....
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....sification of betel nut under chapter 20 and 21 in the interest of the local areca nut farmers and to safeguard the interest of the revenue. Records of the personal hearing in the matter: - 3. In the instant case, the personal hearing could not be conducted, 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 vides their email dated 03.12.2024 submitted rebuttal reply / additional submissions in respect of Customs port Commissionerate of Tuticorin and requested for waiver of the personal hearing in the matters and requested to take 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 the submission filed by the respondent wherein it opposed the advance ruling sought by the applicant for the goods i.e. roasted areca nut under CTH 20081920 is without any justification. ii. That the Ld. Commissioner of Customs, Tuticorin contended that th....
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....g, 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 Fruit, 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 as discussed earlier I find that the processes mentioned in chapter 8 do not cover roasting process, Therefore, The Roasted Areca Nut is totally different from Dry Areca Nut. vi. 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 Tarif....
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....eas, 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 up to 140 - 150 degrees Celsius then cooled in room temperature and the cycle is repeated until the moisture content is about to 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 Chapter 8. ix. That with respect to the another contention that the 'roasted areca nuts' needs to be 'generally put up in cans, jars or airtight containers, or in casks, barrels or similar containers', it is submitted that the term generally, has a broad connotation, as such the product need not be restricted to the aforesaid containers. Moreover, the packaging of a product, cannot decide the description of the goods, which would lead to absurdity. Further, the packaging is made to prevent the goods from deterioration and enable easy ....
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....ualify as "preparation of betel nut "or "betel nut as mentioned in CTH 08". The Court's attention was never drawn to CTH 2008.19.20 which 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. On the basis of foregoing, I am of the view that the Roasted areca/betel nuts fall under Custom Tariff Heading 2008, specifically under CTI 2008 19 20 Other roasted nuts & seeds of Chapter 20 of the First Schedule of the Customs Tariff Act, 1975. xiii. 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. xiv. 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 Ex....
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....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. xviii. 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 examined for both Headings 0802 and 2008, it is observed that roasted nuts which include roasted betel nuts find a specific description in Heading 2008. Therefore, on the application of GIR 3(b), the subject goods merits classification 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....
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....s not appear applicable in the instant case. 5.2. I note that the processes mentioned in Chapter 8 include 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 the goods, bringing about a charred physical appearance. T....
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....eatment and is different from moderate heat treatment as well as dehydration. Therefore, the impugned goods do not satisfy Note 3 to Chapter 8. 5.5. While examining the scope of CTH 2008, I find that as per HSN Explanatory Notes, heading 2008 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. 5.6. Moreover, it is, an established fact that in case of any doubt the HSN is a ....
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.... 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. (c) HSN Explanatory Notes are normally a safe guide in determining classification under CTH. Roasted areca / betel nut having been mentioned in CTH 2008 19 20 under HSN. (d) When there is a specific entry covering a product/commodity, the test of common parlance is irrelevant in determining classification. (e) There is considerable force in the submission that the classification 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....