TaxTMI 
TaxTMI 
2024 (7) TMI 1816
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....ed to as the 'Act'). The applicant intends to import "Roasted Areca Nuts (Whole), Roasted Areca Nuts (Split) and Roasted Areca Nuts (Cut)" from Indonesia, Sri Lanka and Myanmar into India through the port of Custom House, New Harbour Estate, Tuticorin - Tamil Nadu. STATMENT OF FACTS AND QUESTION LAW 1.1 The Applicant intends to import the following goods and seek ruling of Hon'ble Authority in the matter of Classification of the goods under Customs Tariff Act, 1975 which in the opinion of the Applicant are classifiable under chapter heading 20081920. S. No. Name of Item Country from where to be Imported 1. Roasted Areca Nut (Whole) Roasted Areca Nut (Split) Roasted Areca Nut (Cut) Indonesia, Sri Lanka, Myanmar 1.2 The Process for involved in the manufacture of the above said goods is as under: Roasted Areca Nut (Whole), Roasted Areca Nut (Split) and Roasted Areca Nut (Cut): Following processes are conducted on raw Areca/Betel Nut: - a. De- husking the raw betel/areca nut and drying the same before being fed into the roasting oven. b. Feeding the fresh areca nuts into a seed roasting oven, heating up to....
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.... Supreme Court has decided and reiterated that the HSN Explanatory Note is the safe and dependable guide in the matters of classification of items: i. L.M.L. Ltd. Versus Commissioner of Customs Reported in 2010 (258) E.L.T 321 (S.C), ii. Holostick India Ltd. Versus Commissioner of Central Excise, Noida Reported in 2015 (318) E.L.T 529(S.C), iii. Collector of Central Excise, Shillong Versus Wood Craft Products Ltd Reported in 1995 (77) E.L.T 23 (S.C) 1.5 As per the Explanatory Note to Chapter 8 of Customs Tariff Act, 1975 deals with 'edible 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 excluding from Chapter 8 (and will fall under chapter 20). The processes mention in chapter 8 are different from the processes performed on impugned goods, they are excluded for the purpose classification from chapter 8 of the Customs Tariff Act, 1975 (hereinafter also referred as "TARIFF"). 1.6 In respect of ....
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....notice and distinguished the decision in the case of M/s Crane Betelnut Powder Works Vs Commissioner of Customs & Central Excise, Thirupathi reported in 2007 (210) E.L.T 171 (S.C) and held the classification of processed betel nuts under 21069030. 1.9 The process of roasting has not been defined in the Tariff Act. However, the process of roasting is done using firewood/palm kernel-based ovens and the temperature of the flames is around 600 degrees Celsius. as a result, the betel nuts would be roasted well beyond 100 degrees Celsius, usually in the range of 130-150 degree Celsius. Roasted betel nut undergoes a change in its appearance as well as chemical characteristic on account of the roasting process. There is a visible deposition of an ash-like substance of the outer surface of the betel nut. there is a substantial change in the chemical characteristics of the Betel nut product on account of the roasting process. that the tannin and arecoline content of raw Betel nut/areca nut gets substantially changed by subjecting the same to roasting and boiling. therefore, roasted betel nut is a distinctive product of betel nut making it suitable for immediate consumption. Roasting is no....
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....oresaid ruling of the CAAR, Mumbai. III. 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, M.P in Application No. 22, 23 & 24/2023-DELHI O/o Commr-CAAR-NEW DELHI, where identical goods are held classifiable under 2008 19 20, copy of judgment enclosed marked as Annexure-III. IV. 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 under 2008 19 20, copy of judgment enclosed marked as Annexure-III. 1.12 As per the Explanatory Note 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 therefo....
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.... The Comments of the Chennai-II (Import) Customs Commissionerate with regard to points raised in the application are furnished as under: 2.1 Comments on Para 3: 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: 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....
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....ope of "dried nuts". iv) Further, it is equally obvious that 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. Therefore, the process 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 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....
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.... cans, jars or airtight containers, or in casks, barrels or similar containers". 'This clause of the HSN explanatory notes clearly implies that the goods of this heading are preparations of fruits or nuts presented in packaged 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. ii) Further, as per Rule 3(a) of General Rules for the Interpretation of the....
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....ng 21069030, since they have not attained the character of" preparations" of betel nut, which is sine qua non for a good to be considered" c. CAAR Delhi vide ruling no. CAAR/ Del/ Naman Agri/09/2021 in the 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)] iii) 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 th....
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....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." 2.5. 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, Trupathi & Anr. (supra), is erroneous". 2.6. 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 observations o....
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.... areca nut farmers and to safeguard the interest of the revenue. 3. A personal hearing in the matter was conducted on 03.07.2024. During the personal hearing, the authorized representative of the applicant reiterated the submissions already made in their application for advance ruling. He further stated that in their submissions, they have relied upon a few Advance Rulings, issued on classification of identical goods, in the recent past. 4. Submission of reply to the comments of the port Commissionerate / additional submissions in the matter. The applicant had submitted that they wished to state that they had participated in the Personal Hearing granted by this Authority on 03.07.2024 and had put forth our submissions on behalf of the Applicant M/s. EXIM INCORPORATION, DELHI, further they had also placed a brief note of submissions touching upon the vital aspects concerning the ruling sought, with the relevant page No. in the Application Typeset filed by us. Further, On the basis of comments received vide email dated 01.07.2024 from the officer of the respondent Jurisdictional Commissionerate, Tuticorin, Tamil Nadu had primarily raised following aspects as objections with ....
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....s, 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. 4) 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....
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....eatment. 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. 7) With respect to 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 access to marketability. Whereas neither aspects have any bearing on 'roasted areca nuts' as roasting minimizes the moisture to the maximum level, thereby preventing insect infestation, damage and deterioration. Once, the product/goods is unaffected by outside parameters and vagaries of nature, the packaging need not be in airtight containers. Further, packaging is a means of conveni....
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....enever there is specific entry, the same would prevail over general entry. the said general principal is statutorily incorporated in General Rules of Interpretation, in particular, under Rule 3(a) of the General Rules of Interpretation. CTH 2008 19.20 is a special entry covering nuts subject to the process of roasting when contrasted with CTH 08 02 90 which covers dried nuts. Having come to the conclusion that the classification of areca nuts is made on the basis of the process which it is subject to with a distinction between dried and roasted nut being maintained CTH 2008.19.20 which covers roasted nut including areca nut is a specific entry when contrasted with the entries/items covering nuts under CTH 08. 11) In the decision of Tribunal in respect of the case M/s. ST Enterprises, the question that arose for consideration was as to the goods involved therein viz .., boiled betel nuts would merit classification under CTH 21069030 or CTH 08028010. It was not concerned with CTH 2008 19 20 which covers "roasted nuts". While in the present case, the issue is with reference to classification of "roasted areca nuts". The process that was examined by the Tribunal in the case of....
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....h formed the basis for various CAAR rulings in the past. The aforementioned decision was in relation to the Central Excise Act, 1944 and the question was as to whether certain changes brought in the betel nut amount to manufacture under definition. in section 2(f) of the Central Excise. Act, 1944 or not. Further, most importantly, this judgment pertains to dispute whether the betel nut product under question, falls under Chapter 8 or Chapter 21 of the Central Excise Tariff Act. This ratio cannot be imported for the classification dispute between chapter 8 and chapter 20. 14) 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's 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. 15) Further, I find 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 re....
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....statements based on past CAAR rulings as well as M/s Crane Betel Nut judgment as legally unsustainable and not applicable in deciding roasted areca/betel nuts' classification. Doing so will be against the provisions of relevant Customs heading under chapter 20 of the Customs Tariff Act, 1975 and the General Rules of Interpretations (GRI) of Customs Tariff Act, 1975. Jurisdiction Customs Commissionerate, Chennai while relying on the CAAR ruling in M/s Vaibhav Enterprises' case (CAAR Delhi ruling no. CAAR/Det/Vaibhav/21/2021) has stated as follows: "The CAA rejects the application of M/s Vaibhav Enterprises by giving the ruling that: API Supari, Chikit Supari, Boiled Supari, Boiled and Cut supari, unflavoured supari and flavoured supari, Roasted betel nit, merit classification under chapter 8 of the first schedule to the Customs Tariff Act and more precisely, under the heading 0801" where the CAAR, ruled that inter alia roasted betel nut merits classification under Chapter 8. In order to examine this response of the jurisdictional Customs Commissionerate relevant text of ruling of the CAAR Delhi is reproduced verbatim below: 18) In....
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....g 20.01. The Tribunal had adopted a correct test when it says that the essential structure of the peanut is not changed by the process of roasting. The assessee merely applies salt to roasted peanuts which does not obliterate the essential character. Moreover, roasting is a process. That process has not been excluded in Note 1 to Chapter 20. Therefore, roasted peanuts are covered by Chapter 20. Even according to the Explanatory notes of HSN under Heading 20.08 ground-nuts, almonds, peanuts etc, which are dry- roasted, fat-roasted whether or not containing vegetable oil are the items which all would stand covered by the said Heading 20.08. 20) The learned Additional Solicitor General has also drawn our attention to paragraph 7 of the said judgment which reads as under: - "As stated above, roasted peanut is also a preparation, however, it is a preparation of nuts like almonds, peanuts, ground-nuts etc. They are products which are prepared or preserved by processes like roasting. As stated above, roasting is not chilling, it is not freezing. As stated above, roasting is not one of the enumerated processes in Chapter Note No. 1 to Chapter 20. Heading 20.01 sp....
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.... 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", 22) I find 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 I hold 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. 23) On the basis of foregoing I have a view that the Roasted betel nut....
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....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. Therefore, drying is a moisture removal process involving methods such as dehydration, evaporation, etc., whereas roasting is a severe heat treatment proces....
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....ing 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 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....