TaxTMI 
TaxTMI 
2024 (9) TMI 1971
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The applicant intends to import "Roasted Areca Nuts and Roasted Areca Nuts (Cut)" from Indonesia, Myanmar, Bangladesh, Sri Lanka, Thailand, Vietnam, Madagascar, Nepal and West Africa. 2.1. That the applicant approached this Authority for 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 imported shall be covered under a particular classification or the other. The applicant in the instant application submitted as under: - 2.2. The Areca nut, originating from the palm tree species, thrives in tropical regions. It is obtained from the fruit of the Areca Nut Palm and is commonly known as the Areca Nut or Betel Nut, referred to as "supari" in India. The raw betel nut undergoes a series of processes to yield various products. Depending on specific treatments, a variety of betel nut types are produced, including Boiled Betel Nut, Dried Betel Nut, Flavored Betel Nut, Unflavored Betel Nut, Roasted Betel Nut / Areca Nut, and more. The focus of this application is on "Roasted Betel / Areca Nuts" and "Roasted Betel / Areca Nut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ow 4 percent. This reduction in water content causes the areca nut to shrink and become brittle. The purpose of repeatedly roasting and cooling the nuts is to quickly cool and shrink them after thermal expansion, resulting in roasted areca nuts that are easily chewable, crunchy and of higher quality. 2.6. Overview on Roasted Areca Nut: A. Roasted Areca Nut, a traditional and widely consumed product, has undergone significant changes in its processing and characteristics. In the past, the roasting process used to take approximately 7 to 8 days, but modern mechanization has reduced this time to about 2 to 3 days, enhancing efficiency. B. The roasting of areca nuts results in a remarkable transformation in both their appearance and chemical composition. During roasting, an brownish layer forms on the outer surface of the betel nut, and there are substantial alterations in its chemical properties. Research indicates that the levels of Tannin and Arecoline, key compounds in raw areca nuts, undergo significant changes as a result of the roasting process. C. Various studies and articles shed light on the chemical composition of different forms of areca nuts. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dings, Chapter Notes, HSN Explanatory Notes and General Rules of Interpretations is being deciphered: 2.7.2. 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 the Chapter notes these goods 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). The said note specifies the physical status of the goods along with corresponding processes that could be carried on those goods under this chapter. Note 3 to Chapter 8, states that 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, the addition of sorbic acid or potassium sorbate); ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re, drying is a moisture removal process involving methods such as dehydration, evaporation, etc., whereas roasting is a severe heat treatment process. 2.7.7. Further, it cannot be stated that the term "roasted areca nut / betel nut" is not mentioned in the Customs Tariff Act and that "roasted betel nut" is a term used in common trade parlance. On the contra, the said term "Roasted" is mentioned in the Customs Tariff Act and has been dealt in detail in the HSN Explanatory Notes. Chapter 20 of the Tariff covers the Preparations of vegetables, fruit, nuts or other parts of plants. As per Chapter Note 1 (a) to Chapter 20, the Chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in Chapters 7, 8 or 11. Therefore, vegetable, fruit or nut products or preparations made other than by the processes specified in Chapters 7, 8 or 11 are classifiable in Chapter 20. The processes specified in Chapters 7, 8 or 11 mainly include freezing, steaming, boiling, 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....market as "Roasted Betel Nuts". Therefore, even if the term is not defined in the statute, the product needs to be recognized in terms of common trade parlance. It is a well-settled principle that words in a taxing statute must be construed in consonance with their commonly accepted meaning in the trade and their popular meaning as held by the Hon'ble Apex Court in the case of M/s. United Offset Process Pvt. Ltd. Vs. Asst. Collector of Customs, Bombay and Others 1989 Supp. (1) SCC 131, wherein the court held "If there is no meaning attributed to the expressions used in the particular enacted statute then the items in the customs entries should be judged and analysed on the basis of how these expressions are used in the trade or industry or in the market or, in other words, how these are dealt with by the people who deal in them, provided that there is a market for these types of goods". The roasted betel nut is an independent product, which is sold in the market in both packed and unpacked form. Further, the packed roasted betel nuts are labelled and marketed as roasted betel nuts/ roasted supari and carry the stamp of approval by the FSSAI. Therefore, the impugned goods are kn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tory Note, the heading covers preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption. Therefore, it appears that it is a residuary entry in respect of edible food preparations. In the instant case the process of preparation does not involve cooking, dissolving, boiling in water or milk, further the impugned goods don't contain lime, Katha (catechu) and tobacco. As such, the impugned goods cannot classify under Chapter 21 or its sub-headings. As a result, edible preparations shall be classified under this chapter, only if the same is not classifiable under any of the other specific entries for edible preparations. As the goods under consideration are already included in Heading 2008 of the Customs Tariff Act, 1975, they stand excluded from the scope of Chapter 8 and Chapter 21. 2.7.14. Further, since the impugned goods have undergone roasting which has not been categorized or classified in Chapter 8, while on the other hand Chapter 2008 19 20 categorically specified "Roasted Areca Nuts" in its explanation to HSN notes, the "Roasted Areca Nuts and Roasted Areca Nuts Cut" appears to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts, 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. 2008 19 20 --- Other roasted nuts and seeds As per CTH 2008, HSN Explanatory Notes, 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, is very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes. It is pertinent to note 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. 2.7.16. In this regard the judgment of the Hon'ble Supreme Court in the case of M/s. Amrit Agro Industries Ltd as well as M/s Phil Corporation is squarely applicable to the impugned good "Roasted Betel Nut", wherein, the Apex Court clarified the doubts on the issue of whether a process of roasting amounts to a preparation or not. The Cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o. CAAR/Mum/ARD/44,45&46/2022 dated 07.12.2022, in the matter of M/s. Shahnaz Commodities International (P) Ltd, Chennai, and Ruling No. CAAR/ MUM/ ARC/ 39,40,41/2023 Dated 12-05-2023, in the case of M/s. Universal Impex, Mumbai, which would squarely apply to the Applicant in the instant case. 2.7.20. The Applicant further states that the Customs Department had challenged the aforesaid Advance Rulings of the CAAR, Mumbai of M/s. M/s. Shahnaz Commodities International (P) Ltd, Chennai, M/s. Neena Enterprises, Telangana and M/s. Universal Impex, Mumbai, by way of a Civil Miscellaneous Appeal in CMA No's. 600/2023, No.1206/2023 and No.1750/2023, respectively before the Hon'ble Madras High Court. Wherein the Division Bench of the Hon'ble Madras High Court after elaborately hearing all the parties dismissed the CMA's of the Customs Department, thereby upholding the aforesaid Rulings of the CAAR, Mumbai. As such the findings of the Advance Ruling Authority on "Roasted Betel Nut" has been sustained. 2.7.21. Further, even as per General Rules of Interpretation (GIR) 3(a) of the Customs Tariff Act 1975, when the goods are classifiable under more than one Heading, the &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on the classification of the Roasted Areca nut (whole), Roasted Areca nut (split) and Roasted Areca nut (cut), under the first schedule of the Customs Tariff Act, 1975. 4.2 "As per the sub-rule 19 of the CAAR Regulation 2021 as provided under 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, Hearing of application ex parte. - Where on the day fixed for hearing or any other day to which the case is 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ied or included. Roasting is a process used for bringing in to existence roasted nuts and I find that the processes mentioned in chapter 8 do not cover roasting process. 4.5 I also note on the submissions of the 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 understo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 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." 4.9 Also, the Hon'ble High Court of Madras in its recent judgement on Civil Miscellaneous Appeal (CMA) No's 600/2023, No. 1206/2023 and No. 1750/2023, dated 01.08.2023, had upheld the classification of Roasted Betel Nuts under CTH 2008 19 20. The Honourable High Court went on to analyse the various aspects in determining classification and summed up that: (a) Roasting is a process treated to be distinct from the process of boiling and drying, in fixing the classification in respect of betel/areca nut under CTH. (b) Roasted bet....