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Case Law Details

Case Name : In re Radiance Enterprises (CAAR Mumbai)
Appeal Number : Ruling No. CAAR/MUM/ARC/26/2024
Date of Judgement/Order : 22/02/2024
Related Assessment Year :

In re Radiance Enterprises (CAAR Mumbai)

The Customs Authority for Advance Rulings (CAAR) in Mumbai recently delivered a significant ruling concerning Radiance Enterprises, a case that has captured the attention of importers and legal experts alike. Radiance Enterprises sought an advance ruling on the classification of provisionally preserved areca nuts imported through Chennai and Tuticorin ports, highlighting the intricate interplay between trade regulations and customs classification.

Detailed Analysis

Radiance Enterprises, identified by its IEC No. BXYPM2965E, approached CAAR with two applications aiming to clarify the customs classification of “provisionally preserved Arecanut.” This request stems from the broader context of the Customs Act, 1962, Section 28H (1), reflecting the nuanced challenges businesses face in navigating the complexities of international trade regulations.

The crux of the matter revolves around the classification under the Customs Tariff Act, 1975, specifically whether these areca nuts should fall under chapter heading 0812, which covers edible fruit and nuts provisionally preserved but not suitable for immediate consumption. The company’s detailed submission underscores the extensive preparatory processes these nuts undergo, including preservation treatments to prevent deterioration during storage and transportation, making them unsuitable for immediate consumption without further processing.

This case also delves into the interpretive layers of customs law, juxtaposing the company’s stance against the perspectives of the Tuticorin Custom House and prior rulings. Radiance Enterprises’ argument is bolstered by a certificate from the College of Food and Dairy Technology, Chennai, asserting the provisional and reversible nature of the preservation process.

Conclusion

The CAAR’s ruling in favor of Radiance Enterprises underlines a critical precedent in the classification of provisionally preserved agricultural products, offering clarity and guidance for similar cases in the future. This decision not only impacts Radiance Enterprises but also sets a benchmark for the interpretation of customs classification, reinforcing the importance of detailed procedural compliance and the nuanced understanding of trade laws. This ruling demonstrates the dynamic interaction between legal frameworks and commercial operations, highlighting the critical role of advance rulings in facilitating international trade.

FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI

RADIANCE ENTERPRISES (having IEC No. BXYPM2965E and hereinafter referred to as ‘the applicant’, in short) filed two applications (CAAR-1) for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR in short). The said applications were received in the secretariat of the CAAR, Mumbai on 07.08.2023 along with enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’ also). The applicant is seeking advance ruling on the classification of “provisionally preserved Arecanut” in both the applications for imports through the ports of Chennai and Tuticorin respectively.

2. Applicant has stated as follows in their statement of relevant facts having a bearing on the question(s) raised enclosed with the CAAR-1 applications:

That the applicant proposes to import ‘Arecanut’ from Indonesia and other South East Asian countries. Arecanut is a tropical plant found all over South-East Asia. The tree belongs to the palm tree species and is from the Arecaceae family. The fruit (nut) of this tree is popularly known as the betel nut or ‘supare’ in India. The Arecanut is an important commercial plantation crop. The fruit has a fibrous mesocarp and seeds are with a truncate base, endosperm deeply ruminates with a basalar embryo. It is also known as “betel nut” which is the kernel obtained from the fruit of arecanut palm. It is mostly used by people as masticatory and is an essential requisite during several religious, social and cultural functions in India.

After harvesting, the tender nut is dehusked and then peeled. Thereafter, these are split and subjected to heat treatment and then dried. The processes mentioned above can be mechanical or manually carried out. For preservation of these nuts and to protect them from fungi and moulds and to prevent deterioration while in storage and for safe transportation, these are subjected to preservative treatment before packing and export. The supplier of these nuts will treat them with Sorbic Acid by Spraying Process and also provide analysis certificate and inspection report with regard to the treatments carried out. Thereafter, the nuts will be imported and cleared from customs.

The preservatives can be removed before use of these nuts through simple processes. In case of preservation carried out with Sorbic Acid, the nuts can be treated with sodium bi carbonate and when washed with plain water the excess acid will get removed. In this process, by way of neutralisation and after getting dissolved in water the product will be fit for human consumption. 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. Thus, after carrying out the above processes, the nuts will become suitable for human consumption. With regard to the preservative treatment that are carried out on arecanuts, 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 arecanuts.

3. Statement containing the applicant’s interpretation of law and/or facts, as the case may be, in respect of the aforesaid question(s) (i.e. applicants view point and submissions on issues on which the advance ruling is sought):

According to the applicant, these provisionally preserved Arecanuts should be classifiable under chapter heading 0812 of the Schedule to the Customs Tariff Act 1975. Chapter 8 covers edible fruit and nuts, peel of citrus fruits or melons. Chapter note (3) to chapter 8 reads as follows:

“3. 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.”

Again, Chapter note (4) reads as follows:

“4. Heading 0812 applies to fruit and nuts which have been treated solely to ensure their provisional preservation during transport or storage prior to use (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), provided they remain unsuitable for immediate consumption in that state.”

Heading 0812 covers fruits and nuts provisionally preserved but unsuitable in that state for immediate consumption. Following are the four sub-headings under the above four-digit heading.

0812 10 00 – Cherries

0812 90 – Other:

0812 90 10 — Mango slices in brine

0812 90 90 — Other

Though arecanuts are separately mentioned under 0802, as nuts provisionally preserved but unsuitable in that state for immediate consumption, the arcanuts in the present case will answer more precisely the description under heading 0812 which occurs later in the schedule and accordingly, these nuts that are provisionally preserved need to be classified under heading 0812 90 90.

4. Tuticorin Custom House which is the jurisdictional Customs Commissionerate has responded to the subject application vide letter dated 25.08.2023 wherein para 1 & 2 contains brief of the subject application, in para 3 provisions of chapter note (3) and (4) of the chapter 8 are reproduced, in para 4 applicant’s contention is referred to. Para 5 to 10 containing the comments of the Tuticorin Custom House are reproduced as under:

“5. However, it has to be noted that areca nuts whole even if partially rehydrated or treated by way of moderate heat for additional preservation or stabilization falls under CTII 08028010 and processed areca nut is classified under 08028020.

6. The above said view has been upheld by Hon’ble Supreme Court in the matter of M/s. AYUSH business overseas vs Commissioner of Customs, ACC, Chennai. In this regard NCTC Mumbai vide analytics report no.27/2022-23 has suggested arecanuts are classifiable under 080280. The relevant CTII are for arecanut whole (08028010), split (08028020), Ground (08028030) and others (08028090).

7. Thus, areca nuts of any form are classifiable under 080280. However, 0812 covers fruits or nuts provisionally preserved but unsuitable in that state for immediate consumption. Thus, in the chapter it defines the description in a specific manner rather than a general one. It is an acceptable view that the classification of a product which details the description in a specific manner would fit aptly rather than a general description which covers some more products also. Thus, areca nut is clearly classifiable under 080280.

8. Further, the importer has relied on the certificate obtained from the Professor and Head of the Department of Food Process Engineering, College of Food and Dairy Technology, Koduveli, Chennai. Also, in respect of four such earlier decisions of CAAR in respect of M/s. Gani Granites, M/s. High Tech Print Systems, M/s A K Impex and M/s Shahnaz Commodities International P ltd, appeals have been preferred against the decisions of CAAR in the context that areca nuts are classifiable under CASH 080280 only. In view of the above placed facts, in respect of “provisionally preserved areca nut” is not in accordance with law and it is required to be set aside or modify as per law.

9. Further, reliance is placed on the following Advance Rulings: CAAR Delhi vide ruling no. CAAR/Del/Vaibhav/21/2021 in the case of M/s Vaibhav Enterprises “The CAA rejects the application of M/s Vaibhav Enterprises by giving the ruling that: API Supari, Chikni Supari, Boiled Supari, Boiled and Cut supari, unflavoured supari and flavoured supari, Roasted betel nut, merit classification under chapter 8 of the first schedule to the Customs Tariff Act and more precisely, under the heading 0802.”

10. It is observed that several new applications are being submitted to circumvent the minimum import price and increasing tariff values by legalizing betel nut import through mis-declaration and mis-classification. The CAAR may not entertain such applications considering that several advance rulings have already rejected the classification of betel nut under chapter 0812, 2008 and 2106 in the interest of the local areca nut industry and to safeguard the interest of the revenue.”

5. A personal hearing in the matter was conducted on 27.12.2023 in office of the CAAR, Mumbai. During the personal hearing the authorized representative of M/s. RADIANCE ENTERPRISES, Shri S. Murugappan, Advocate reiterated his earlier written submissions made in the applications to CAAR, Mumbai. He relied upon Ruling No. CAAR/Mum/ARC/42/2023 dated 15.05.2023 passed in the same matter in the case of M/s. Hi Tech Print Systems. He sought two-week time to submit the rebuttal to the comments dated 25.08.2023 of the Tuticorin Custom House. Nobody appeared from both the concerned Jurisdictional Customs Commissionerate i.e. Chennai and Tuticorin during the said Personal Hearing online/in person.

Further, the applicant submitted a rebuttal to the comments of Tuticorin Custom House on 28.12.2023 and the same is reproduced as under:

“Para 5- It is not the case of the applicant that these areca nuts are only partially rehydrated or treated by way of moderate heat for additional preservation or stabilization. It is the claim of the applicant that the processes referred to in chapter note (4) of Chapter 8 have been undertaken in respect of the areca nuts under reference and therefore, as per the said chapter note, they are unsuitable for immediate consumption in that state. Therefore, in this context the comments made in para 5 by the customs are not at all relevant.

Para 6- Reliance is placed by the customs in this regard in respect of Supreme Court judgment in the matter of Ayush Business Overseas Vs. Commissioner of Customs, ACC, Chennai. The Supreme Court decision referred to above dismissing the appeal filed by Ayush Business Overseas against the Tribunal judgment is a common decision given in respect of two appeals by Chennai Customs Tribunal as reported in 2021 (378) EL.T. 514 (Tri Chennai). This case deals with classification of imported betel nuts (whole) that are subjected to processes like de-husking, cleaning, boiling and drying but neither broken or crushed nor containing other ingredients such as cardamom, copra, menthol, lime, katha or tobacco, In respect of the above case, the Chennai Bench of the Tribunal has held that the product under question cannot be called as supari and therefore, classification of the same has been confirmed under heading 0802 8010. This decision of the Tribunal has no relevance whatsoever to the present case as it is not the applicant’s stand that the areca nut imported has been subjected to various processes like de-husking, boiling etc. or that ingredients such as cardamom, copra etc. have been added. The applicant’s entire claim is that these are provisionally preserved and meets the scope of chapter note (4) to Chapter 8. The issue dealt in the above Tribunal decision is totally different and hence, the reliance placed by the customs on the above decision is thoroughly misplaced. In the same para (para 6) the customs also have referred to NCTC Mumbai analytical report suggesting classification of areca nuts under heading 0802 8010 (whole), 0802 8020 (split), 0802 8030 (ground) and 0802 8090 covering other types of areca nuts other than those mentioned above. At the outset, it is submitted that the so-called NCTC Mumbai analytical report referred to in this para has not been made available to the applicants. Hence, any reliance on the analytical report cannot be sustained. Again, to reiterate, it is not the case of the applicants that the areca nut imported by them will fall under these sub-headings and the reference here is not to provisionally preserved areca nut.

Para 7- A wild statement is made that areca nuts in any form will be classified under 0802 80. In the same para it is contended that 0812 covers fruits and nuts provisionally preserved. In view of this, it is contended that when a definition with specific description is available, a general description cannot be preferred. This contention of the customs authority is completely untenable. Heading 0812 refers to any type of fruits or nuts that have been subjected to a specific process mentioned in chapter note (4). Thus, classification under heading 0812 is based on the fact that the fruit / nut imported meets the above definition. It cannot be argued naively by customs that since various types of areca nuts are covered under 0802, heading 0812 cannot be applied to areca nut provisionally preserved. The basic principle of interpretation is that no provision in the Act is to be interpreted in such a way that certain provisions are rendered redundant. What heading 0812 refers to is fruits or nuts subjected to a specific treatment. Therefore, irrespective of any specific coverage of a particular fruit / nut elsewhere in chapter 8, it is to be noted that if such a fruit/ nut is subjected to the processes outlined in chapter note (4) then its classification has necessarily to be under 0812 only. Otherwise, heading 0812 as well as chapter note (4) will become meaningless and rendered redundant. No provision can be interpreted in such a way so as to make it redundant.

Para 8- It is contended that appeals have been filed against the rulings given by the Customs Authority for Advance Ruling in respect of M/s. Gani Granites, M/s. High Tech Print Systems, M/s. A K Impex and M/s. Shahnaz Commodities International P Ltd. However, no copies of such appeals have been made available to the applicant, neither there is any reference to stay of the orders passed by the Authority for Advance Ruling. By making a vague reference to these cases and the submissions that appeals are filed against the decision given by the authority in these cases, the customs cannot achieve anything and consequently, the bland statement in para 8 needs to be rejected. Besides, the customs have not submitted copies of the so-called appeals and also has failed to indicate the status of such appeals. The mere statement that appeals are filed cannot take away the right of the Authority for Advance Ruling to render a decision/ ruling. The last three lines of para 8 read as follows: “In view of the above placed facts, in respect of “provisionally preserved areca nut” is not in accordance with law and it is required to be set aside or modify as per law.” Here, it is not clear what the customs are trying to state. All provisionally preserved fruits and nuts are classifiable under 0812, if they meet the specifications laid down in chapter note (4) mentioned above. Therefore, it cannot be contended that the term. “provisionally preserved areca nut” is not in accordance with law and any such contention is to be rejected.

Para 9 – In this para, customs have relied upon a decision given in the case of M/s. Vaibhav Enterprises. Once again it is submitted that, that particular case again refers to the various types of supari and that they merit classification under chapter 8 of the schedule to the Customs Tariff Act. There is no discussion or decision with regard to provisionally preserved areca nuts with reference to chapter note (4) to chapter 8 of the Customs Tariff schedule. Hence, the reliance placed on the above decision is misplaced.

Para 10 – A sweeping allegation has been made that applications are being submitted to circumvent the minimum import price. The customs authorities are required to contest the issue on merits and not make general allegations that applications are being submitted to circumvent the minimum import price. In the same para, it is again alleged that such imports are attempted by mis-declaration and mis-classification. Again, these conclusions are naive and not sustainable. Based on facts, if a product meets the stipulations made in chapter note (4) to chapter 8, it cannot be contended that there is mis-declaration on the part of the importer / applicant. Again, in the same para, it is stated that several advance rulings have already rejected the classification of betel nut under heading 0812, and that the application is to be rejected in the interest of the local areca nut industry. Here again, the customs authorities have failed to forward any copies of the decisions of the Authority for Advance Ruling made earlier. In addition, it is advised to the Authority for Advance Ruling that it need not entertain such applications in the interest of the local areca nut industry. Classification of the product has to be done in accordance with the provisions of the Tariff and therefore, here, there is no basis whatsoever to take a stand that the Authority for Advance Ruling should protect the interest of the local areca nut industry. Such a submission is completely irrelevant. It is finally submitted that as long as the areca nut imported meets the stipulations given in chapter note (4) to Chapter 8 and if tests, if any, carried out by the authorities confirm that position, then, necessarily the areca nut proposed to be imported by the applicant should fall only under 0812.”

6. Another personal hearing in the matter was conducted on 30.01.2024 in office of the CAAR, Mumbai. During the personal hearing the authorized representative of M/s. RADIANCE ENTERPRISES, Shri S. Murugappan, Advocate reiterated his earlier written submissions made in the applications to CAAR, Mumbai. He submitted that the matter is already decided in their favor in the case M/s. Hi-Tech print system by CAAR and that as per their knowledge department has not given conclusive deposition about story in the matter as claimed that appeal has been filed. He also contended that the case laws cited by the department are not applicable in their present case, as the issue at hand is different in the present application. He, however, submitted to provide some further literature within a week in further support of their contention that the provisionally preserved areca nuts merit classification under CTH 0812. Nobody appeared from both the concerned Jurisdictional Customs Commissionerate i.e. Chennai and Tuticorin during the said Personal Hearing online/in person.

7. The office of the CAAR, Mumbai forwarded the rebuttal dated 28.12.2023 received from the applicant to the Tuticorin Custom House for further comments on that, however, this office has not received any comments thereon from them till date.

Further, vide an E mail dated 15.02.2024 the learned Advocate for the applicant has submitted that Sorbic Acid in the form of sorbates is a preservative used in food preparations as well as preserving edible fruits, vegetables, etc. In this regard, the learned advocate has submitted extracts from Public Notice dated 06.03.2020 issued from File No. 1-1700/FASSAI/Imports/2017 by Food Safety and Standards Authority of India showing List of Mapped HS Codes with FSS Regulations and Food Code System as well as Extracts from Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011. In the list of Mapped HS Codes, Si. No. 870 relates to ITC HS Code 0802 8010 covering edible fruits and nuts -areca nuts — whole and Sl. No. 1021 relates to ITC HS Code 0812 9090 covering “fruits and nuts provisionally preserved, but, unsuitable in that state for immediate consumption”. Corresponding food category system mentioned against these entries are a) 4.1.2.2 and b) 4.1.2.4 & 4.1.2.8 respectively.

In the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011, there is a table, referring to the Food Category System, the description of food items, additives which can be used and also the recommended maximum level of such additives. Under the category 4.1.2.2 applicable for dried fruits sorbates with a maximum level 500 mg per Kg is mentioned as permitted additive. On the other hand, for provisionally preserved fruits and nuts under the applicable food category 4.1.2.8, the sorbate level permissible is mentioned as up to 1000 mg per Kg.

In other words, when the addition of sorbate exceeds 500 mg per Kg., then, the fruit/nut category will be under provisionally preserved dried fruits/nuts and not suitable for immediate consumption. The excess sorbate needs to be removed and the level brought within 500 mg per Kg. to make it suitable for human consumption. The consignments proposed to be imported are consisting of provisionally preserved areca nuts, where presence of sorbic acid in the form of sorbate will be more than 500 mg per Kg.

8. As per the provisions of Statute a copy of applications/submissions of the applicant were already forwarded to the concerned Jurisdictional Commissioners of Customs calling upon them to furnish the relevant records with comments, if any, in respect of said applications, however, as mentioned above the office of the CAAR, Mumbai received comments (supra) only from the Tuticorin Commissionerate and has not received any reply/records/comments from Chennai Customs till date. Nobody appeared either online or in person from any of the concerned Jurisdiction Commissionerate i.e. Chennai or from Tuticorin during the Personal Hearings held in office of the CAAR, Mumbai on 27.12.2023 and 30.01.2024.

I have taken into consideration all the materials placed on record in respect of the subject goods including the submissions made by the applicant during the course of personal hearings.

I have gone through the response received from the Tuticorin Custom House and the rebuttal to that filed by the applicant. I therefore proceed to decide the present applications regarding classification of Provisionally preserved Areca nut 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 under the first schedule of the Customs Tariff Act, 1975.

9. The applicant has squarely answered the queries raised by the Tuticorin Custom House and also submitted the certificate issued by the Professor and Head of the Department of Food Process Engineering, College of Food and Dairy Technology, Koduveli, Chennai in support of their claim. This certificate of Tamil Nadu Veterinary and Animal Sciences University, College of Food and Dairy Technology states as follows: “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 and bacteria. The preservation process is done to ensure the fruits and nuts are not spoiled during transportation. These preserved products might have higher levels of SO2 or Benzoic acid. And they can be safely treated with Sodium Bi Carbonate (NaHCO3) and washed with plain water to remove the excess of Benzoic Acid. Benzoic acid gets neutralized to Sodium Benzoate in the process easily get dissolved in water and can be removed easily. Similarly, products preserved with Sulphur-di-oxide can be treated with Hydrogen peroxide by which the sulphur di oxide is oxidized to sulphate, and addition of Sodium Bi Carbonate during the process makes the process harmless, the excess peroxides formed can be removed by washing with plain water.”

10. The applicant has described the process of provisional preservation of the subject product. According to the applicant, the subject product undergoes preservative treatment before packing and export to protect them from fungi and moulds to prevent deterioration while in storage and for safe transportation. The process of preservation is mentioned in the proforma invoice submitted by the applicant as follows “the areca nuts after harvesting are treated with Sorbic Acid by Spraying process solely for the purpose of preservation. These provisionally preserved nuts would require further processing before direct human consumption”. The preservatives can be removed before consumption through simple processes carried out by the applicant. In case of preservation carried out with Sorbic Acid, the nuts can be treated with sodium bi carbonate and when washed with plain water the excess acid will get removed. In this process, by way of neutralisation and after getting dissolved in water the product will be fit for human consumption. 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. Thus, after carrying out the above processes, the nuts will become suitable for human consumption.

11. It is seen that the 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).

Chapter 8 of the Customs Tariff Act, 1975 covers Edible fruit and nuts; peel of citrus fruit or melons and note (3) to chapter 8 provides as:

“3. 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.”

The chapter note 3 specifies the physical status of the goods along with corresponding processes that could be carried on those goods under this chapter. The areca/ betel nut is mentioned in Heading 0802 as well as 0812. The explanatory note to Heading 0802 states that this heading also covers areca (betel) nuts used chiefly as a masticatory. One of the main uses of the goods under CTH 0802 is masticatory.

However, I find that the provisionally preserved betel nuts are not fit for immediate human consumption and they are more specifically covered under Chapter heading 0812 due to following chapter note. Chapter note (4) provides as follows:

“4. Heading 0812 applies to fruit and nuts which have been treated solely to ensure their provisional preservation during transport or storage prior to use (for example, by Sulphur dioxide gas, in brine, in Sulphur water or in other preservative solutions), provided they remain unsuitable for immediate consumption in that state.”

Following are the four sub-headings under the CTH 0812:

0812 10 00 – Cherries

0812 90 – Other:

0812 90 10 — Mango slices in brine

0812 90 90 — Other

In view of the process carried out by the applicant reproduced in para 10 supra, 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.

This heading 0812 applies to fruit and nuts (whether or not blanched or scalded) which have been treated solely to ensure their provisional preservation during transport or storage prior to use (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), provided they remain unsuitable for immediate consumption in that state. 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 heading 0812 90 90.

I also find that the case laws referred by the department is not squarely applicable in this case.

12. The concerned Jurisdiction Commissionerate of Tuticorin in their written submission dated 25.08.2023 submitted that appeals have been filed against the rulings given by the Customs Authority for Advance Ruling in respect of M/s. Gani Granites, M/s. High Tech Print Systems, M/s. A K Impex and M/s. Shahnaz Commodities International P Ltd.

Now as far as judicial discipline and law is concerned the Hon’ble Supreme Court has held in the case of UOI vs Kamalakshi Finance Corporation Ltd. 1991 (55) ELT 433 (SC), that “order of higher appellate authorities should be unreservedly followed by subordinate authorities. The mere fact that the order of the appellate authority is not “acceptable” to the department — in itself and objectionable phrase- and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws”.

Further, the Joint Secretary (Revision Authority) to Government of India in its Order No. 288/13-CX dated 25.03.2013 in the matter of The Commissioner of Central Excise, Thane-II Vs. M/s. P.D. Impex, Mumbai relied on the same. Para 9 of the said order is reproduced as under:-

“Government observes that the department in this second round of revisionary proceedings is mainly contesting that they are filing Writ Petition against GOI Order dated 25.08.2009. This office vide letter F. No. 198/69/2004-RA-Cx dated 22.10.2012 specifically asked department to state the present status of the said Writ Petition. The department vide letter F No. V(PKS/357) Trb Cell-246/10/AP/M-III dated 11.12.2012 stated the Writ Petition is at ‘Pre-admission stage’. As such, the said GOI order dated 25.08.2009 is neither set aside nor stayed by the Hon’ble Bombay High Court. Under such legal scenario the principle of judicial discipline demands that the order of higher authority is to be strictly implemented by the lower Authorities. Hon’ble Supreme Court has held in the case of UOI Vs. Kamalakshi Finance Corporation Ltd. 1991 (55) ELT 433 (SC), that orders of higher appellate authorities should be unreservedly followed by subordinate authorities unless operation of same has been stayed by competent court. Hence, Government finds no infirmity in the impugned Order-in-Appeal and therefore upholds the same.”

The Hon’ble SC has confirmed the same view already taken in the matter of UOI Vs. Kamalakshi Finance Corporation Ltd. 1991 (55) ELT 433 (SC) and passed the judgement on 01.02.2023 in the matter of M/s Godrej Sara lee Ltd. Vs. Excise and taxation officer-cum-assessing Authority, 2023 (384) E.L.T. 8 (S.C.). Para 34 of said judgement dated 01.02.2023 is reproduced as under”-

“In our view, the revisional authority might have been justified in exercising suo moto power to revise the order of the Assessing Authority had the decision of the Tribunal been set aside or its operation stayed by competent court. So long it is not disputed that the Tribunal’s decision, having regard to the framework of classification of products/tax liability then existing, continues to remain operative and such framework too continues to remain operative when the impugned revisional orders were made, the Revisional authority was left with no other choice but to follow the decision of the Tribunal without any reservation. Unless the discipline of adhering to decisions made by the higher authorities is maintained, there would be utter chaos in administration of tax laws apart from undue harassment to assesses. We share the view expressed in Kamlakshi Finance Corporation Ltd. (supra).”

13. On the basis of foregoing discussions and findings, I have come to the conclusion that “provisionally preserved areca nuts” merit classification under Custom Tariff Heading 0812, specifically under CTI 0812 9090 of the First. Schedule of the Customs Tariff Act, 1975, and I rule accordingly.

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