TaxTMI 
TaxTMI 
2024 (12) TMI 1742
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....applicant submitted as under: 1.1 That the applicant, M/s R V International, New Delhi is a proprietorship firm of Mr. Prabhjyot Singh Dang. The firm is duly registered with the respective statutory authorities viz. G.S.T. Department, Income Tax Department, DGFT Department, New Delhi etc. The Importer Exporter Code of the firm is 0513091645 and the GST number of the applicant is 07AGQPD1949R1ZN. The applicant has been regularly filing it statutory returns with the concerned departments and authorities. 1.2. That the applicant is in the process of setting up its business of trading / import of Provisionally Preserved Areca Nut (Whole) and Provisionally Preserved Areca Nut (Split)" (hereinafter referred to as the 'subject goods") to India. The appellant intends to import the said goods mainly from Myanmar, Thailand, Indonesia, Vietnam, Sri Lanka, UAE, Cambodia, Laos & Singapore into India. 1.3. That therefore the applicant is approaching this Hon'ble Authority, seeking advance ruling qua the subject goods as mentioned in the following paras of this application as the applicant intends to import the same into India and hence would like to have a proper understanding a....
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....e nut will become suitable for human consumption. With regards to the preservative treatment that are carried out on areca nuts, the Professor and Head of the Department of Food Process Engineering, College of Food and Dairy Technology, Koduveli, Chennai has issued a certificate clarifying the above. Thus it can be seen that the preservative treatment in this case is provisional and temporary and the preservatives can be removed before consumption of the areca nut. 1.8. That the abovementioned goods "Provisionally Preserved Areca Nuts" are specifically covered and are classifiable under CTH 0812 90 90 of the Customs Tariff Act, 1975. Chapter 8 covers edible fruit and nuts, peels of citrus fruits or melons. Chapter note (3) to chapter 8 reads as follow -: "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), provide....
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....moved. In the process, by way of neutralization and after getting dissolved in water the benzoic acid get removed. 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. 1.13. That in view of the above facts and legal provisions, the product "Provisionally Preserved Areca Nuts (whole) and Provisionally Preserved Areca Nut (Split)" are classifiable under Customs Tariff Heading 0812 90 90 of the First Schedule to the Customs Tariff Act, 1975". 1.14. That on the matter of interpretation of law of facts, the applicant most respectfully submits that as per their best knowledge and belief the items are classified under classification heading no. given in Custom Tariff heading 0812 9090. The said entry in Customs Tariff Act, 1975 reads as under :- Tariff Item Description of Goods Unit 0812 10 00 - Cherries Kg's (Kilograms) 0812 90 - Other 0812 90 10 --- Mango Slices in brine 0812 90 90 --- Other Chapter 8 covers edible fruit and nuts, peels o....
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....ON OF LAW AND/OR FACTS, AS THE CASE MAY BE, IN RESPECT OF THE QUESTIONS(S) ON WHICH ADVANCE RULING IS REQUIRED: - a. That the goods in question which is to be imported into India by the applicant will be Provisionally Preserved Areca Nut (Whole) and Provisionally Preserved Areca Nut (Split)" hence is rightly classifiable under Customs Tariff Heading 0812 and particularly 0812 90 90 of the First Schedule to the Customs Tariff Act, 1975" b. That the process mentioned in Annexure I, clearly shows that the product "Provisionally Preserved Areca Nuts (whole) and Provisionally Preserved Areca Nut (Split)" are classifiable under Customs Tariff Heading 0812 90 90 of the First Schedule to the Customs Tariff Act, 1975" c. That the items are classified under classification heading no. given in Custom Tariff heading 0812 9090. The said entry in Customs Tariff Act, 1975 reads as under :- Tariff Item Description of Goods Unit 0812 10 00 - Cherries Kg's (Kilograms) 0812 90 - Other 0812 90 10 - Mango Slices in brine 0812 90 90 - Other Chapter 8 covers edible fruit and nuts, peels of citrus fruits or melons. Chapter note (3....
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....dulgence of this Hon'ble authority thereby seeking the subject goods under classification CTH 0812 and more particularly under the CTH 0812 90 90. 2. As per the provisions of CAAR Regulation, 2021, the complete application of the applicant was provided to the concerned custom port, i.e. ICD, TKD (Import), New Delhi and requested to furnish the requisite comment in the instant matter. The port authority vide letter dated 16.12.2024 furnished the requisite comments in the matter, wherein the port authority has requested for not to issue the rulings for classification of the goods in question under CTH 08129090 in the instant matter. The comments of the port authority in the instant matter, are under: 2.1 The counter-reply challenging the applicant's claim that "Provisionally Preserved Areca Nuts (Whole and Split)" should be classified under CTH 0812 90 90. Based on detailed reasoning and analysis of the relevant provisions of the Customs Tariff Act, 1975, we contend that the correct classification of the product is under CTH 0802. 1. Classification Framework for Areca Nuts (Betel Nuts) The Customs Tariff Act provides clear guidelines for the classification o....
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....e not uncommon in the areca nut industry and do not render the nuts unsuitable for consumption but ensure safe storage during transit. Thus, Chapter Notes 3 and 4 do not support the applicant's argument for reclassification under CTH 0812. 2.2. Judicial Precedents Favoring Classification Under CTH 0802 The applicant cites rulings like CAAR/Mum/ARC/42/2023 and others to substantiate classification under CTH 0812. However, the facts and context of these rulings differ significantly from the present case: Instead, precedence exists for areca nuts being classified under CTH 0802, where the product retains its primary identity as areca nuts despite minor processing. Specific rulings and Explanatory Notes to the Harmonized System (HS) emphasize that products explicitly covered under a particular heading (such as 0802 for areca nuts) cannot be shifted to broader or general headings like 0812 unless substantial transformation has occurred. 2.3. Application of Rule 1 of the General Interpretative Rules (GIR) As per Rule 1 of the GIR, classification is determined by the terms of the headings and relevant Section or Chapter Notes. Heading 0802 explicitly covers are....
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.... areca nut under CTH 0802. The scientific analysis provided by these agencies will be instrumental in confirming the product's characteristics and the applicability of the relevant tariff headings, ensuring an informed and accurate classification. Prayer In view of the above submissions, it is most respectfully prayed that this Hon'ble Authority may kindly: 1. Determine the Appropriate Classification Declare the correct classification of "Provisionally Preserved Areca Nuts (Whole)" and "Provisionally Preserved Areca Nuts (Split)" under Customs Tariff Heading 0802 instead of CTH 0812 90 90, as the product's essential characteristics and preservation processes align more closely with the scope and description of CTH 0802. 2. Mandate Testing for Objective Analysis Direct that the product be tested by competent authorities such as the Central Revenue Control Laboratory (CRCL) and the Food Safety and Standards Authority of India (FSSAI) to ascertain: *The impact of the preservation process on the product's suitability for immediate consumption. * Whether the product retains its essential characteristics of ar....
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....th preservatives, which make the Areca Nuts unsuitable for immediate consumption in that state. (iv) It is submitted that 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: a. Treating with lime or slacked lime, which is an excellent naturally occurring antibacterial material. It improves the absorption of the alkaloid stimulants of the Areca Nut into the bloodstream; or b. Treating with 1% Bordeaux solution, which is a simple mixture of copper sulphate (1part) + Lime (I-part) with water (100-parts) with neutral pH, and is an excellent antifungal and anti-bacterial solution to preserve from fungus and bacteria while in storage. It is sprayed on the Areca Nut during the drying process; or c. Treatment with Sulphur di-oxide or Sodium Benzoate solution having antibacterial and antifungal properties. d. The preservatives can be removed before use of the Areca Nuts through simple processes. In case of tre....
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....servation. Hence, the instant goods are provisionally preserved and classifiable under CTH 0812 as per Customs Tariff Act, 1975. The port authority also erred in not distinguished between normal Areca Nut and Provisionally preserved Areca nut and thus erred by submitting that the Areca nuts, even after these treatments of preservation, it remains areca nuts and are specifically categorized under 0802 and even after undergoing such preservation, the provisionally preserved arena nut are still ready for masticatory use upon simple cleaning or treatment. This is not simply cleaning or treatment but is going through a chemical changing process for removing of the chemicals which were used in that preservation of the goods. The port authority erred in interpretation. (vii) It is submitted that the provisional preserved Areca Nuts should be classifiable under Chapter Heading 0812 of the First Schedule of the Customs Tariff Act, 1975 which includes Fruit and nuts provisionally preserved, but unsuitable in that state for immediate consumption, and more particularly under sub-heading 0812 9090, which would cover Areca Nuts that are provisionally preserved during transport or storag....
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....te consumption in that state." Such provisionally preserved areca nuts are not classifiable under Tariff Heading 0802. The relevant portion of Heading 0802 is as under: 0802 - Other nuts, fresh or dried, whether or not shelled or peeled 080280 - Areca nuts: 08028010 --- Whole 08028020 - split 08028030 --- Ground 08028090 - Other (x) It is submitted that even though Areca Nut is separately mentioned under Heading 0802, the Areca Nuts covered under sub-heading 08028010 to 08028090 shall only include the ones which are suitable for immediate consumption, even if in whole, cut or split form. These Areca Nuts are edible in nature due to the absence of preservative agents being used thereon. Whereas, the Areca Nuts which are provisionally preserved and are unfit for immediate consumption (not readily edible), are classifiable under Heading 0812 instead of Heading 0802 of the Customs Tariff Act, 1975. Hence, it can be seen that if Areca Nuts are not provisionally preserved and hence are fit for immediate consumption, it would find classification under Heading 0802 and contrary to that if the Areca Nuts are provisional....
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....generally put up in cans, jars or airtight containers, or in casks, barrels or similar containers. Hence, it can be seen that if Areca Nuts are provisionally preserved and hence are unfit for immediate consumption, it would find classification under Heading 0812 and contrary to that if the Areca Nuts are even though subjected to preservation process, but still not rendered unfit for immediate consumption, it would find classification under Heading 2008. Further, the Areca Nuts are intended to be imported packed in bags/sacks and not in cans, jars or airtight containers, or in casks, barrels or similar containers and even for this reason, it would not find classification in Heading 2008. (xiv) It is submitted that Pan Masala and Betel Nuts/Supari with lime are ready to eat preparations covered in Chapter 21 of the Customs Tariff Act, 1975, whereas Areca Nuts treated/sprayed with slacked lime or Sulphur di-oxide or Sodium Benzoate solution or Bordeaux solution, since not suitable for immediate consumption, wherein the identity of Betel Nut (Areca Nut) is not lost or transformed to any edible preparation, is neither 'Pan Masala' nor 'betel nut product known as Sup....
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....as under: "6.4 From the submission of the applicant I find that the subject product is treated with sulphurdi-oxide gas or sodium benzoate solution before packing and export for preservation. The said preservatives can be removed before consumption through simple processes, as explained at para 2 above, to make the product suitable for human consumption. It is observed that the subject goods remain unsuitable for immediate consumption in that state and need to be processed further to remove the preservatives to make the same suitable for human consumption. Thus, I find that the conditions of chapter note (4) as mentioned above are duly fulfilled and hence the said goods come within the ambit of Customs Heading 0812. Therefore, in view of the submissions made by the applicant, relevant legal provisions and the above discussions, I have reached a conclusion in the matter in respect of the questions asked in the CAAR- 1 application." It is submitted that the fruits and Nuts in general have a shorter life span and post- harvest they are preserved using preservatives like Benzoic Acid or Sulphur-di-Oxide gas which are basically used for inhibiting the growth of moulds ....
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....ed to decide the present application regarding classification of Provisionally preserved Areca nut (whole) and Provisionally preserved 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 Provisionally preserved Areca nut (whole) and Provisionally preserved Areca nut (split) under the first schedule of the Customs Tariff Act, 1975. 5.2. 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 HSN explanatory notes, goods under Chapter 8 may be fresh (including chilled), frozen (whether or not previously cooked by steaming or boiling in water or containing added sweetening matter) or dried (including dehydrated, evaporated or freeze-dried); provided they are unsuitable for immediate consumption in that state they may be provisionally preserved (e.g., by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions). 5.3. Chapter 8 under the Customs tariff Act 1975 covers Edible fruit and nuts; peel of citrus fruit or melons and note (3) to chapt....
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....tate. Though areca nuts are separately mentioned under 0802, nuts provisionally preserved but unsuitable in that state for immediate consumption, as the areca nuts in the present case, will get covered under Heading 0812 which occurs later in the schedule and accordingly, the nuts that are provisionally preserved and not fit for immediate consumption need to be classified more specifically under the CTH 08129090. 5.6. Further, reliance has also been placed upon on the following rulings -: i. Ruling No. CAAR/Mum/ARC/42/2023 dated 15.05.2023 of Hon'ble Authority passed in the matter of M/s. Hi Tech Prints Systems, Chennai Vs. The Commissioner of Customs (Import), Tuticorin, where identical goods are held classifiable under 0812 90 90. ii. Ruling No. CAAR/Mum/ARC/26/2024 dated 22.02.2024 of Hon'ble Authority passed in the matter of M/s. Radiance Enterprises, Chennai Vs. The Commissioner of Customs II (Import), Chennai and The Commissioner of Customs, Tuticorin, where identical goods are held classifiable under 0812 90 90. 6. It is pertinent to mention that, as per Notification No. 01/2021 - Customs (N.T.) dated 04.01.2021 (As amended vide Notification N....