Case Law Details
In re R. B. S. Traders (CAAR Delhi)
The applicant, a proprietary concern engaged in import activities, sought an advance ruling from the Customs Authority for Advance Rulings (CAAR), New Delhi, regarding the proposed import of roasted betel nut/areca nut. The applicant stated that the imported goods would consist of whole areca nuts subjected only to roasting or heat treatment, along with cleaning, sorting, grading, and drying where required. No additives, chemicals, flavoring agents, preservatives, lime, catechu, or sweeteners would be added during the process.
The applicant contended that roasting was undertaken solely to reduce moisture, improve shelf life, prevent fungal infestation, and facilitate safe storage and transportation. According to the applicant, the process did not amount to manufacture, did not create a commercially distinct product, and did not alter the essential character, identity, end-use, or market perception of the goods. The applicant therefore sought confirmation that roasted areca nuts remained classifiable under Heading 0802 of Chapter 8 of the Customs Tariff Act, 1975. The application also sought clarification regarding applicable customs duties, IGST, exemption notifications, valuation principles, and determination of origin.
During scrutiny of the application, CAAR observed that the issue appeared to have already been decided by the Madras High Court in the case of M/s Shahnaz Commodities International Pvt. Ltd. Consequently, a notice was issued to the applicant regarding the maintainability of the application under Section 28-I(2)(b) of the Customs Act, 1962.
In response, the applicant argued that the application was maintainable because it sought prospective clarification for future imports and did not involve any pending assessment proceedings. The applicant further submitted that the facts of the present case were distinguishable and required independent examination based on factors such as the specific manufacturing process, degree of roasting, product characteristics, commercial identity, laboratory standards, end-use patterns, trade parlance, import documentation, and technical specifications.
A personal hearing was held on 26 May 2026, during which the applicant’s authorized representative reiterated the submissions already made. No departmental representative appeared.
While examining the matter, CAAR first considered the issue of maintainability under Section 28-I(2) of the Customs Act, 1962. The Authority noted that the provision bars admission of applications where the question raised is already pending in the applicant’s case or where the same issue has already been decided by the Appellate Tribunal or any Court. CAAR emphasized that the advance ruling mechanism is intended to provide certainty and reduce litigation, and that judicial precedents are binding on subordinate authorities.
The Authority observed that the issue raised by the applicant regarding classification of roasted areca nuts had already been examined and decided by the Madras High Court in M/s Shahnaz International Pvt. Ltd. Since the question involved in the application was found to be squarely covered by that judgment, CAAR held that it could not re-adjudicate the same issue. The Authority also observed that questions concerning whether roasting amounts to manufacture or creates a commercially distinct product, as well as questions relating to applicable duties, were beyond the scope of advance rulings under the CAAR Regulations, 2021.
CAAR concluded that allowing a fresh application on an issue already decided by a higher judicial forum would be contrary to judicial discipline and the purpose of the advance ruling mechanism. The Authority further held that the statutory framework does not contemplate partial rejection of an application. Accordingly, since the classification issue was not maintainable and the application could not be partially entertained, the entire application was rejected.
The application was therefore not allowed and was disposed of accordingly.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
1. A copy of this order made under sub-section (2) of Section 28-1 of the Customs Act, 1962 is granted to the concerned free of charge.
2. Any appeal against this Advance Ruling order shall lie before the High Court of concerned jurisdiction, within 60 days from the date of the communication of such ruling or order.
3. The advance ruling pronounced by the Authority under Section 28-1 shall remain valid for five years or till there is a change in law or facts on the basis of which the advance ruling has been pronounced, whichever is earlier.
4. Where the Authority finds that the advance ruling was obtained by the applicant by fraud or misrepresentation of facts, the same shall be declared void ab initio
Facts of the Case:
M/s R. B. S. Traders, C/O-Lt. Ain Uddin Ahmed, Nakuchipathar, Barpeta, Assam – 781352, hereinafter referred to as applicant, “in short”, filed the instant application in Form CAAR-1 before the Customs Authority for Advance Rulings, New Delhi (CAAR, in short) for seeking advance ruling. The complete application was received in the Secretariat of the CAAR, New Delhi on 30.01.2026 along with their enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The IEC of the applicant is 1415000026. The applicant proposed to import roasted arecanut/betel nut and requested for advance ruling for on the following questions of law and fact:
a. Whether “roasted betel nut /areca nut” (hereinafter referred to as ‘subject product’) obtained by subjecting whole areca nuts to roasting by heat treatment without addition of any ingredients, is classifiable under Chapter 08, Heading 0802 of the Customs Tariff Act, 1975?
b. Whether the process of roasting alone amounts to manufacture or results in a new commercially distinct product, warranting classification under any other chapter such as Chapter 21?
c. What is the applicable rate of Basic Customs Duty, IGST, and other duties on the import of roasted betel nut / areca nut so classified?
d. Whether any exemption notifications issued under section 25 of the Customs Act, 1962 are applicable to the said goods?
e. What principles are to be adopted for determination of value of the imported roasted areca nut under the Customs Act, 1962?
f. What shall be the determination of origin of the goods under the applicable Rules of Origin regulations?
The applicant in their application submitted as under:
2.1 M/s R.B.S. Traders, a proprietary concern holding an Importer Exporter Code No. 1415000026, proposes to import roasted betel nut/areca nut into India and has sought an advance ruling regarding its correct customs classification, applicable duties, valuation principles, exemption notifications, and determination of origin.
2.2 The applicant submits that the imported goods consist of whole areca nuts which have been subjected to roasting by heat treatment only. The processing undertaken includes drying (if required), roasting/heating, cleaning and removal of impurities, and sorting/grading. The applicant stated that no lime, catechu, sweeteners, flavouring agents, preservatives, chemicals, or any other additives are added before, during, or after roasting.
2.3 According to the applicant, roasting process is carried out solely for reduction of moisture content, enhancement of shelf life, prevention of fungal infestation, during safe storage and transportation. It is contended that the roasting process does not amount,to manufacture, does not create a new commercially distinct commodity, and does not alter the end-use, essential character, market identity, or consumer perception of the product. Even after roasting, the product continues to be commercially known, bought, sold, and consumed as betel nut/areca nut in common trade parlance.
2.4 The applicant relies upon the provisions of the Customs Act, 1962, the Customs Tariff Act, 1975, and the General Rules for Interpretation (GRI) of the Customs Tariff. It is argued that classification is to be determined in accordance with Rule 1 of the GRI, based on. the terms of the headings and relevant Section and Chapter Notes. The applicant submits that Chapter 8 of the Customs Tariff specifically covers edible fruits and nuts and that areca nut/betel nut is classifiable under Heading 0802. It is further argued that Chapter Notes permit minimal processes such as drying, heating, or similar treatment so long as the goods retain their original character
2.5 The applicant therefore contends that roasted areca nuts continue to merit classification under Chapter Heading 0802, as the goods neither lose their original identity nor become a new product after roasting. The applicant also submits that the applicable customs duty and IGST should be determined accordingly under the said heading.
2.6 Further, the applicant seeks certainty regarding:
i. Correct classification of the imported roasted areca nuts under the Customs Tariff Act, 1975;
ii. Applicable rate of customs duty and IGST;
iii. Applicability of exemption notifications, if any;
iv. Principles for valuation under the Customs Act, 1962; and
v. Determination of origin under the applicable Rules of Origin regulations.
2.7 The applicant states that the proposed imports will be undertaken only after obtaining certainty through the advance ruling mechanism in order to avoid ambiguity, disputes, misclassification, and future litigation. It is also affirmed that no proceedings on the same issue are pending before any Customs Authority, Appellate Authority, Tribunal, or Court of Law.
2.8 In conclusion, the applicant prays for an advance ruling confirming that roasted betel nut/areca nut, subjected merely to minimal roasting or heat treatment without addition of any ingredients or change in essential character, remains classifiable as areca nut/betel nut under Heading 0802 of Chapter 8 of the Customs Tariff Act, 1975.
3. Additional submission by the applicant
3.1 Upon a careful scrutiny of the application, it was observed that the issue arising for consideration therein stands conclusively decided by the Hon’ble Madras High Court in case of M/s Shahnaz Commodities International Pvt. Ltd. [2023 (386) E.L.T 214(Mad.)]. In view of the said binding judicial pronouncement, the present application appeared, prima facie, to be hit by the bar under Section 28-I (2)(b) of the Customs Act, 1962 and are, therefore, liable for rejection. Consequently, a notice dated 18.02.2026 was issued to the applicant calling upon them to submit their response in the matter.
3.2 The additional submission of the applicant was received in this office via email dated 18.05.2026. A brief of the submission is reproduced hereunder:
“The Applicant respectfully submits that the present proceedings deserve consideration on merits for the following reasons:
A. APPLICATION IS MAINTAINABLE
The application filed by the Applicant is maintainable under Section 28-H of the Customs Act, 1962. The issue raised by the Applicant pertains to proper interpretation of tariff classification and legal treatment of processed roasted areca nut. The Applicant has sought prospective clarification for lawful future imports. The Applicant has not sought adjudication of any pending assessment proceeding, Therefore, rejection Under Section 28-1(2) Is not justified.
B. FACTS OF PRESENT CASE ARE DISTINGUISHABLE
The reliance placed upon the judgment in M/s Shahina Commodities International Pvt. Ltd, is misplaced and distinguishable on facts.
In the said matter, the issue before the Hon’ble Court pertained to a separate factual matrix and interpretation based upon materials placed in that specific proceeding.
The present Applicant seeks independent determination based on:
-
- Specific manufacturing process;
- Degree of roasting;
- Change in product characteristics;
- Commercial identity;
- Laboratory standards;
- End-use pattern;
- Trade parlance test;
- Import documentation and technical specifications.
Therefore, the present matter requires independent examination.”
4. Personal hearing:
Personal hearing in the said application was held on date 26.05.2026, wherein authorized representative, Mr. Pankaj Roy attended the same virtually and reiterated the facts which were already submitted in the application. No one appeared for the department.
5. Discussion and Findings:
5.1. I have gone through the application of advance ruling, additional submission of the applicant and relevant provisions in this regard. As issue of maintainability has to be decided first before proceeding to examine the matter on merit; I decide to examine the matter of maintainability first.
5.2. Before I proceed, 1 would like to refer to Section 28-1 (2) of the Customs Act, 1962, which governs the admissibility of applications before the Custom Authority for Advance Rulings (CAAR). The relevant portions of the provisions of Section 28-1 (2) of the Customs Act, 1962 reads as under:
28-1. Procedure on receipt of application: (1) On receipt of an application, the Authority shall cause copy thereof to he forwarded to the [Principal Commissioner of Customs or Commissioner of Customs) and, if necessary, call upon him to furnish the relevant records:
Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the Principal Commissioner of. Customs or Commissioner of Customs)
(2) The Authority may, after examining the application and the records called for, by order, either allow or reject the application
Provided that the Authority shall not allow the application question raised in the application is, where the
(a) already pending in the applicant’s case before any officer of customs, the Appellate Tribunal or any Court,
(b) the same as in a matter already decided by the Appellate Tribunal or any Court.
5.3. From the above, I find that Section 28-I (2) of the Customs Act, 1962 governs the admissibility of applications before the Custom Authority for Advance Rulings (CAAR). The first proviso to subsection (2) stipulates that the Authority shall not allow the application where the question raised in the application is (a) already pending in the applicant’s case before any officer of customs, the Appellate Tribunal or any Court; or (b) the same as in a matter already decided by the Appellate Tribunal or any Court.
5.4. Further, I understand that the entire mechanism of advance rulings is a trade facilitation measure introduced with the aim of reducing litigation and providing certainty to assessees, consistent with Article 3 of the WTO Trade Facilitation Agreement. The WTO framework itself recognizes two distinct situations where advance rulings may be declined: (a) when the issue is pending in the applicant’s own case, and (b) when the issue has already been decided by an appellate tribunal or court. The first is applicant-specific, whereas the second is applicant-agnostic. This distinction is necessary because advance rulings are implemented by Departmental officers who are duty bound to apply the law as settled in their jurisdiction. In India, this position is fortified by the ruling of the Hon’ble Supreme Court in Union of India v. Kanzlakshi Finance Corporation Ltd, 1991 (55) ELT 433 (SC), which underscores the binding nature of precedent and the obligation of lower authorities to follow higher judicial pronouncements.
5.5. It is a settled principle of law that rulings of the Tribunal and Courts are binding on subordinate authorities. The CAAR, being a statutory authority under the Customs Act, is equally bound by such precedents. To allow fresh application on questions already adjudicated by higher judicial fora would risk the creation of conflicting rulings and introduce uncertainty, an outcome contrary to the very object of the advance ruling mechanism. Clause (b) therefore operates as a statutory reinforcement of judicial discipline, making it explicit that once a question has been conclusively determined by the Tribunal or Courts, the Authority cannot re-adjudicate the same issue at the behest of another party.
5.6. In the instant case, I observed that the question raised in the present application is squarely covered by the judgment of the Hon’ble Madras High Court in the case of M/s Shahnaz International Pvt. Ltd. [2023 (386) E.L.T. 214 (Mad.)], wherein the issue relating to the classification of Roasted Areca Nuts has already been examined and decided.
5.7. Further, I observe that the questions raised in the application regarding whether the process of roasting alone amounts to manufacture or results in a new commercially distinct product and the question regarding applicable duties are out of purview from the scope of Customs Authority of Advance Ruling as per CAAR Regulations, 2021.
6. In view of the forgoing facts and records of the case, I am of the view that the issue raised in the instant applications is squarely covered by the judgement of Hon’ble Madras High Court in the case of M/s Shahnaz International Pvt. Ltd. [2023(386) E.L.T 214(Mad.)]. In terms of Section 28 I (2)(a) of the Customs Act, 1962 and in adherence to the principles of judicial discipline and binding precedent, I deem it appropriate to refrain from pronouncing any ruling on the question raised in the instant application regarding classification of the subject goods. Further, I find that the statutory scheme governing advance rulings does not envisage or permit partial rejection of an application, therefore. the instant application is liable to be, and is accordingly, rejected in toto.
7. The application is not allowed and disposed of accordingly.
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