In re King Snacks (CAAR Mumbai)
The Customs Authority for Advance Rulings (CAAR), Mumbai, in In re King Snacks, examined the appropriate tariff classification under the Customs Tariff Act, 1975, for four products—Oven Roasted Areca Nuts, Cashew Nuts, Walnuts, and Pista Nuts. The authority analyzed the technical processes involved, the applicable tariff headings, Harmonized System of Nomenclature (HSN) explanatory notes, and judicial precedents to determine the correct classification.
Legal Framework for Classification
The authority reiterated that classification of goods under the Customs Tariff must be done in accordance with the General Rules for the Interpretation (GRI) of the Tariff, particularly Rule 1, which mandates reliance on the terms of the headings, relevant Section or Chapter Notes, and, where necessary, subsequent Rules. Since the Indian tariff is harmonized with the HSN at the six-digit level, the Explanatory Notes published by the World Customs Organization (WCO) serve as an important interpretative tool.
Citing the Supreme Court’s decisions in CC v. Wood Craft Products Ltd. (1995) 77 ELT 23 (SC) and CC v. Business Forms Ltd. (2002) 142 ELT 18 (SC), the CAAR reiterated that HSN Explanatory Notes are a reliable guide to interpret tariff headings in case of ambiguity.
Oven Roasted Areca Nuts
The applicant described a process involving de-husking, drying, and multiple roasting cycles at 100°C, reducing the moisture content of areca nuts to 10–15%. The authority noted that Chapters 7, 8, and 11 cover nuts that are frozen, steamed, boiled, or dried—but not roasted. Roasting, which causes chemical and physical transformation, falls under Chapter 20 when it results in “otherwise prepared or preserved” products.
However, CAAR referred to judicial and administrative precedents to examine the specific moisture parameters defining “roasted areca nuts.” In M/s Universal Impex (CAAR Ruling dated 12.05.2023), moisture levels below 4% were accepted as characteristic of roasted areca nuts. This finding was affirmed by the Madras High Court in M/s Universal Impex v. Commissioner of Customs, Chennai (WP Nos. 23836 & 24237 of 2024, order dated 22.11.2024). The High Court held that areca nuts with 10–15% moisture should be treated as raw, while those with less than 10% qualify as roasted.
Relying on these settled parameters, CAAR concluded that the subject product—having moisture between 10% and 15%—did not qualify as roasted areca nuts. Instead, it falls under CTH 0802, covering “Other nuts, fresh or dried, whether or not shelled or peeled,” and specifically under CTIs 08028010 (whole), 08028020 (split), or 08028030 (ground), depending on form.
