AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 1746
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....he firm M/s Betelnut Supplier LLP is duly registered with the respective statutory authorities viz. GST Department, Income Tax Department and DGFT Department, Kolkata. The Importer Exporter Code of the firm is AAUFB6072H and the GST number is 19AAUFB6072H1ZY.The applicant has been regularly filing its statutory returns with the concerned departments and authorities. The applicant is in the process of setting up its business of trading / import of Menthol Scented Supari (hereinafter referred to as the 'subject goods") in India for use in mouth freshener. The appellant intends to import the said goods mainly from Burma (Myanmar), Indonesia, Malaysia, Sri Lanka, Thailand, Cambodia, UAE and Singapore etc. in India. 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 in India and 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. The nomenclature and details of the goods being sought to be imported by the ap....
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.... Packaging in industrial packs of 5kgs to 80kgs as per requirement. (xiii) This process however, does not contain any materials like Lime, Katha (catechu) and tobacco. 1.5. That the raw material i.e. betel nut, thus undergoes a substantial change in its appearance as well as in its chemical characteristics on account of various processes mentioned herein above and thus the tannin and arecoline and other content of raw betel nut/areca nut get substantially changed and therefore, after process as mentioned herein above on the betel nut, it become a distinctive product of betel nut which is processed and prepared and thus making it suitable for immediate consumption also. 1.6. That as per the supplementary notes (2) of Chapter 21 of Customs Tariff Act, 1975, "Betel nut product known as Supari" means "any preparation containing betel nuts, but not containing any one or more of the following ingredients, namely: lime, katha and tobacco whether or not containing any other ingredients, such as cardamom, copra or menthol." From the process mentioned herein above, it is clear that the product though uses the betel nut / areca nut as main raw material however, in the proces....
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....planatory notes are guiding factors wherever any dispute arises while interpreting the classification of particulars chapters or in case of similar or competing entries and this has been held time and again in catena of judgments by the Hon'ble Courts in India in the matters of L.M.L. Ltd. Versus Commissioner of Customs Reported in 2010 (258) E.L.T 321 (S.C), Holostick India Ltd. Versus Commissioner of Central Excise, Noida Reported in 2015 (318) E.L.T 529 (S.C), Collector of Central Excise, Shillong Versus Wood Craft Products Ltd. Reported in 1995 (77) E.L.T. 23 (S.C.). 1.10. That the explanations (iii) and (iv) appended to IGST Rate Notification 01/2017- IGST (Rate) Dated 08-06-2021, the relevant text is reproduced hereunder: (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be....
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....lethi), etc. Therefore, due to carrying out of such processes, this product is not classifiable under chapter 08 of the Customs Tariff Act, 1975. On the background of contending classifications, relevant chapter notes & supplementary notes, CBIC Circular referred herein above, explanations in the IGST Rate Notification amended from time to time, and the section 3(7) of Customs Tariff Act, 1975 instant product i.e. - Betel Nut product known as supari - Menthol scented is more appropriately classifiable as a Betel Nut preparation under chapter 21 i.e., CTH 2106 9030 than in any of the headings under chapter 08 and CBIC circular legally also supports this view. There cannot be a situation where same product is subjected to levy of basic customs duty under one CTH and levy of IGST under another CTH of the Customs Tariff Act, 1975. Hence, in view of Supplementary Note 2 of chapter 21 of schedule 1 of the Customs Tariff Act, 1975 read with para 7 of the CBIC Circular No. 163/19/2021- GST dated 06.10.2021 from F. No. 190354/206/2021-TRU and the provisions of section 3(7) of the Customs Tariff Act, 1975 the scented sweetened supari merits classification under CTH 2106 90 30. Chapter 21 inc....
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....ted to Agenda of 45th Meeting of GST Council and the recommendation of the fitment committee available at https://gstcouncil.gov.in/sites/default/ flies/Agenda/ Detailed Agenda Note - 45th GSTCM Vol. 2.pdf which confirms classification of the Sweet Supari under 2106.90.30 and IGST rate as 18%. Subsequently CBIC issued Circular No. 163/19/2021 -GST dated 06 October 2021 clarifies the position of the Union Government to be in conformity of the GST Council. RELEVANCE TO CUSTOMS TARIFF: 1.16. That kind reference is invited to the explanations (iii) and (iv) appended to IGST Rate Notification 01/2017- IGST (Rate), dated 08-06-201 which read as below: "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). The rules for the interpretation of the First Schedule to the Customs Tariff, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. 1.17. That identical provisions have been incorporated....
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....es are not meant for partial rehydration or treating for additional preservation or stabilization or for improving or maintaining appearance of the original product. 1.21. Alternate classification for scented supari can be found in chapter 21. Chapter 21 includes within its ambit, miscellaneous edible preparations and tariff item 2106 covers Food preparations not elsewhere specified or included. Further, the supplementary note 2 to the said chapter lay down that, in this Chapter "betel nut product known as Supari" means any preparation containing betel nuts, but not containing any one or more of the following ingredients, namely: lime, katha (catechu) and tobacco whether or not containing any other ingredients, such as cardamom, copra or menthol'. 21.06 - Food preparations not elsewhere specified or included. 2106.10 - Protein concentrates and textured protein substances 2106.90 - Other In this classification the word 'preparation' is a guiding factor. The applicant has explained the detailed process carried out on the raw product i.e., betel nut. These processes as described and carried out on the subject product are essential for the preparatio....
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....s a preparation and a distinctive product of betel nut which is processed and prepared and thus making it suitable for immediate consumption also. For the said reasons these goods must be categorized under the chapter heading 21 and more particularly CTH 2106 90 30. d. That the process mentioned in Annexure I is a food preparation therefore it cannot be treated as only betel nut which is found mentioned under CTH 08 as the same only is for the raw betel nut and not for any processed and/or prepared betel nut hence, the goods in question must fall under CTH 21 and not under CTH 08. e. That in fact for the similar product, this Hon'ble Authority has already issued Ruling thereby declaring the above said goods falls under CTH 21 and not CTH 08. The said ruling has been given in the case of M/s BAG Industries, vide (2023) 2 Centax 213 (A.A.R. - Cus. - Mum.)/2023 (384) E.L.T. 119 (A.A.R. - Cus. - Mum.) on 31-10- 2022 by CAAR, MUMBAI. f. That the applicant has made the present application bonafide and seeks the kind indulgence of this Hon'ble authority thereby seeking the subject goods under classification CTH 21 and more particularly under the CTH 2106....
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....advance ruling and the Authority is satisfied that there was sufficient cause for his non-appearance when the application was called for hearing, the Authority may, after allowing the opposite party a reasonable opportunity of being heard, make an order setting aside the ex parte order or advance ruling and restore the application for fresh hearing." 4.1 In the instant case, the personal hearing could not be taken place, as the port authority neither furnished any comments in the matter nor requested for opportunity of personal hearings, in spite of multiple reminders. The Authorized Representative (AR) of the applicant was informed the present status of their cases vide email dated 20.12.2024 and requested to intimate as to whether they want to avail opportunity of personal hearing in the matter. The AR of the applicant vides their email dated 22.12.2024 submitted additional submissions 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. 4.2 The additional submissions of the applicant are as under: - i. That it is submitted that in India....
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....: Definitions - "Tariff item," "sub-heading," "heading," and "chapter" refer to the First Schedule to the CTA. - The rules for interpreting the First Schedule, including Section and Chapter Notes and General Explanatory Notes, apply to this notification. Applicability of CBIC Circular and GST Council Recommendations - The Central Board of Indirect Taxes and Customs ("CBIC") Circular No. 163/19/2021- GST dated October 6, 2021, clarifies the classification of scented supari. - The GST Council's 45th meeting recommendations support classification under 2106.90.30 with an 18% IGST rate. viii. Classification under Customs Tariff: - Contending classifications are Chapter 8 (dried fruits/nuts) and Chapter 21 (miscellaneous edible preparations). - Chapter 8's relevant notes do not apply since the processes exceed partial rehydration or preservation. - Chapter 21's supplementary note 2 defines "betel nut product known as Supari" as preparations containing betel nuts without lime, katha, or tobacco. In view of the above it can be concluded that Menthol scented supari is appropriatel....
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....ant to reliance on the decision of this Court in The Commissioner of Customs v. M/s. Shahnaz Commodities International P: Ltd. and 2 others, rendered in CMA Nos. 600, 1206 and 1750 of 2023 = 2023 (386) E.L.T. 214 (Mad.) = (2023) 9 Centax 183 (Mad.), where a Division Bench of Madras High Court, in and by a Common Judgment dated 1-8-2023, held that when there is a specific clause under Chapter 20, the classification cannot be made under Chapter 8. xvi. That for the correct classification of 'Menthol Scented Supari', we may refer to some of the relevant statutory provisions and supplementary notes. Chapter 08 (02) deal with 'other nuts, fresh or dried, whether or not shelled or peeled. Chapter Note 3 to Chapter 8 reads thus: "3. Dried fruit 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, or 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), p....
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.... xviii. That as it is contented by the Ld Commissioner (Respondent) that the betel nut being merely cut into smaller pieces and it is sweetened, it remains a betel nut only and would therefore squarely come under the purview of Chapter 8 and that Chapter 21 is only residuary in character and when Chapter 8 applies to the product in question, the Advance Ruling Authority cannot fall back on Chapter 21 and classify the product under Chapter 21. In this regard it is submitted that Supplementary Note 2 specifically deals with 'Supari' and states that it is any preparation containing betel nuts, but not containing lime, katha (catechu) and tobacco, whether or not containing cardamom, copra or menthol. Therefore Supplementary Note 2 placed under Chapter 21 would certainly cover the product in question, viz., 'Menthol Scented Supari'. Respondent is nowhere saying that the product in question contains lime, katha (catechu) or tobacco. Only if any of these 3 ingredients are used, then the betel nut product known as 'Supari' would fall outside the purview of Chapter 21. xix. Thus, reading Chapter 21 as a whole, harmoniously with Supplementary Note 2, it is ....
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....Interpretation for Import Tariff, there being a specific entry for the product in question, viz. "Menthol Scented Supari" under Chapter 21, applying the rules of interpretation, the classification of the said product has to be only under Chapter 21 and not Chapter 8. xxv. In the case before the Hon'ble Supreme Court in Crane Betel Nut Powder Work's case, the issue was relating to whether crushing of betel nut and adding ingredients to it would involve any 'manufacture' or not and in that context it was held that the process of boiling, slicing etc. and adding flavours to the betel nut would not result in altering the nature and characteristics of the product and therefore the classification would have to be made under Chapter 8. It is submitted that post this judgment, two important subsequent factors have intervened. Firstly, vide Finance (No.2) Act, 2009 dated 19th August, 2009, there has been an insertion of Note 6 in Chapter 21, which specifically relates to Tariff Item 2106 90 30 relating to 'supari' and stating that the process of adding or mixing cardamom, copra, menthol, spices, sweetening agents or any such ingredients other than lime, kath....
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....mported in whatever form is the basis for levy of Customs Tariff. Thus, the judgment of the Hon'ble Supreme Court in Crane Betel Nut Powder Work's case cannot be said to be a bar U/s. 28(i) of the Customs Act. xxviii. It is pertinent to note that by inserting a specific tariff entry for 'Supari' under Chapter 21, the question of classifying it under Chapter 8 does not even arise, especially when this was neither the issue before the Apex Court nor the basis on which the decision was rendered. It is also trite law that a decision is only an authority for what is decided and it cannot be extended to something which has not been decided by applying the process of a logical deduction. In P.Rajendran v. The Assistant Director, in Crl.O.P. No. 19880 of 2022 dated 14- 9-2022, the Division Bench of Madras High Court, in fact, one of us being a part of the Bench (Justice. RMT.TEEKAA RAMAN) held that "a case is only an authority for what it decides". As observed by Lord Halsbury in Quinn v. Leathem, reported in 1901 AC 495, quoted hereunder for easy reference: " ... that every judgment must be read as applicable to the particular facts proved or assumed to b....
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....s adjourned, the applicant or the Principal Commissioner or Commissioner does not appear in person or through an authorised representative when the application is called for hearing, the Authority may dispose of the application ex parte on merit: Provided that where an application has been disposed of 1[under this regulation]and the applicant or the Principal Commissioner or Commissioner, as the case may be, applies within seven days of receipt of a copy of the order or advance ruling and the Authority is satisfied that there was sufficient cause for his non-appearance when the application was called for hearing, the Authority may, after allowing the opposite party a reasonable opportunity of being heard, make an order setting aside the ex parte order or advance ruling and restore the application for fresh hearing." 5.2 The applicant has sought the classification of the "Menthol Scented Supari" under Chapter 21 on the following, among other grounds: i. The raw betelnut/ areca nut is classifiable under the HS code 0802 80. ii. Edible preparation of betel nut, i.e., betelnut product known as 'supari' is classifiable under the HS code 2106 9030. ....
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.... heat treatment, sulphuring, the addition of sorbic acid or potassium sorbet etc., or iii imparted treatments like addition of vegetable oil or glucose syrup etc. to improve or maintain their appearance. They remain classified under Chapter 8 only. Thus, any treatment which is either one of the processes mentioned in the said Chapter note to Chapter 8 or, is akin to such processes, will not take the classification of Betel Nut out of the purview of Chapter 8. It is also worthwhile to mention that the processes mentioned in Chapter notes 3(a) and 3(b), as reproduced in para above, are not exhaustive but only illustrative as the expression used in the bracket is "for example". Hence, all such processes, as are done for preservation or stabilization of Betel Nut or for maintaining or improving their appearance, will be covered under the ambit of Chapter Note 3 of Chapter 8 and, hence the betel nut, having undergone such processes, will continue to be covered under Chapter 8. 5.7 From the processes detailed in para 5.1 above, to obtain menthol scented supari, betel nut is dried, de-stoned (removal of metal item), garbled, polished, sterilized for cleaning and to remove b....
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....s. 8 CAAR/Del/Star Spices/03/2021 M/s. Star Spices 9 CAAR/Del/UBS Exports/23/2021 M/s.UBS Exports International Pvt Ltd, 10 CAAR/Del/Vaibhav/21/2021 M/s. Vaibhav Enterprises 11 CAAR/Mum/ARC/3/2021 M/s Samreen International Pvt Ltd. 12 CAAR/Mum/ARC/5&6/2021 M/s SRG Enterprises & M/s SYM Company 13 CAAR/Mum/ARC/9 & 10/2021 M/s BMG Corporation, M/s Bhagwan Corporation. 14 CAAR/Mum/ARC/12/2021 M/s Zaveri Enterprises 15 CAAR/Del/Morchhadi Traders/ 07/ 2021 M/s Morchhadi Traders 16 CAAR/Del/Naman Agri/09/2021 M/s Naman Agri Impex Pvt Ltd 17 CAAR/Del/The Nut/10/2021 M/s The Nut Company 18 CAAR/Del/Tirupati/12/2021 M/s Shri Tirupati Balaji Overseas 19 CAAR/Del/Shreedhra/07/2022 M/s Shreedhra Agro LLP 5.11 Also, Hon'ble Delhi High Court's vide its order dated 01.03.2023 in case of M/s Great Nuts Impex Pvt. Ltd & M/s The Nut Co Vs Commissioner of Customs Delhi & Ors. (CUSAA17/2022 & CUSAA18/2022 respectively) is noteworthy to mention. The Hon'ble High Court upheld the view taken by CAAR (Customs Authority for Advance Rulings) in case of M/s Great Nuts Impex Pvt Ltd & M/s....
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....ardamom, copra or menthol." iii. May contain any other ingredients. such as cardamom, copra or menthol Further, as per Note 3 of Chapter 8, the ambit of the classification under Chapter 8 is defined as follows: "Dried fruit or dried nuts of this Chapter may be partially rehydrated, or treated for the following purposes: a. For additional preservation or stabilisation (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 fruit or dried nuts." Whereas, the processes listed out by the Importer for arriving at the impugned goods are squarely covered under the scope of Dried Nuts as defined under Chapter 8, except for adding of Menthol to the goods. Further, the addition of the Menthol does not alter the character of the goods viz., dried Areca/ Betel Nut. 5.13 As far as the General Rules for the Interpretation (GRI) is concerned, the classification process is guided by six GRIs of the Harmonized System of Nomenclatur....