CAAR Rejects Advance Ruling as Roasted Areca Nut Classification Was Already Decided by Madras HC

In re Think Smart Consultant Pvt Ltd (CAAR Delhi)

The Customs Authority for Advance Rulings considered five applications filed by M/s Think Smart Consultant Pvt. Ltd. seeking advance rulings on the classification of “Oven Roasted Areca Nut” proposed to be imported from ASEAN member states. The applicant sought classification under tariff item 2008 19 91 of the Customs Tariff Act, 1975 and contended that the earlier tariff entry 2008 19 20 considered by the Madras High Court in Shahnaz International Pvt. Ltd. had become redundant after restructuring of tariff headings through the Finance Act, 2025. The applicant expressed apprehension that customs field formations might treat the earlier judgment as inapplicable because of the tariff changes and requested a fresh ruling to avoid detention of goods and demurrage. The applicant also requested that, even if the application was rejected, the authority should clarify that roasted areca nuts would now fall under tariff item 2008 19 91.

The CAAR first examined the maintainability of the applications under Section 28-I(2) of the Customs Act, 1962, which bars admission of applications where the issue raised has already been decided by any Court or Tribunal. The authority observed that the issue relating to classification of roasted areca nuts had already been conclusively decided by the Madras High Court in Shahnaz International Pvt. Ltd., where the goods were classified under Heading 2008 of the Customs Tariff. The authority held that the applicant had not demonstrated any change in the nature, composition, or processing of the goods that would justify reconsideration of the classification issue. According to the CAAR, only the tariff sub-heading had been renumbered following amendments introduced by the Finance Act, 2025, while the underlying classification principle remained unchanged.

The authority referred to Section 28-I(2)(b) of the Customs Act, CBEC Instruction dated 29.11.2013, and judicial principles relating to binding precedent. It observed that clause (b) is applicant-agnostic and prevents the advance ruling authority from entertaining questions already decided by Courts or Tribunals, even when raised by different applicants. The CAAR further stated that the advance ruling mechanism is intended to reduce litigation and provide certainty in unresolved classification matters, and not to reopen issues already settled by higher judicial forums. Referring to the Supreme Court judgment in Union of India v. Kamalakshi Finance Corporation Ltd., the authority emphasized that subordinate authorities are bound to follow higher judicial precedents. The order also referred to international practices governing advance rulings, including provisions under United States customs regulations that similarly prohibit advance rulings on issues already pending or decided before appellate courts.

The CAAR held that permitting fresh applications solely because of renumbering or restructuring of tariff entries would create uncertainty and conflicting rulings contrary to the object of the advance ruling mechanism. It observed that legislative restructuring of tariff headings falls within the domain of Parliament and the Central Board of Indirect Taxes and Customs, and that mere substitution of tariff entries does not create a fresh classification dispute requiring adjudication. Concluding that the issue raised by the applicant was squarely covered by the Madras High Court judgment, the authority declined to pronounce a fresh ruling and disposed of the applications accordingly.

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

M/s Think Smart Consultant Pvt Ltd, Unit No. 12/A, 4^th floor, Sushma Infinium, Near Ambala-Delhi Highway, ZiralcPur, Punjab-140603, having IEC No. AAKCT7479B and PAN AAKCT7479B (the applicant, in short) filed five applications which are under serial No. 219/2025-26 and 01-04/2026-27 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 01.04.2026. along with their enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The applicant proposed to import of “Oven Roasted Areca Nut” and requested for rulings for classification of the goods in question under 2008 1991 of the Schedule to the Customs Tariff Act, 1975.

2. The applicant is a firm holding a valid Importer-Exporter Certificate and eligible to file the present application by virtue of Section 28E (c) (i) of the Customs Act, 1962, which states as below: Section 28E – Definitions.-

(c) ‘applicant” means any person,-

(i) holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; or

(ii) exporting any goods to India; or

(iii) with a justifiable cause to the satisfaction of the Authority, who makes an application for advance ruling under section 28H;

2.1. The Applicant intend to import of “Oven Roasted Areca Nut from ASEAN Member States. As per submission of the applicant, As per the present scheme of classification of commodities under the Customs Tariff Act, 1975, reproduced below, Fruits, Nuts and other edible parts of plants are classified under Chapter Heading 2008, while Roasted Arecanuts are specifically classified under Tariff Item 2008 19 91:

2008 — FRUIT, NUTS AND OTHER EDIBLE PARTS OF PLANTS, 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:

3. Upon a careful scrutiny of the applications, it was observed that the issue arising for consideration therein stands conclusively decided by the Hon’ble Madras High Court in the case of in case of Mis Shahnaz International Pvt. Ltd. [2023/386) E.L.T 214(Mad.)]. In view of the said binding judicial pronouncement, the present applications 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 07.04.2026 was issued to the applicant calling upon them to submit their response in the matter.

4. The applicant, vide letter dated 21.04.2026, submitted their written reply in response to the aforesaid notice. The contents of the said reply are reproduced hereunder:

4.3. It is our experience that the field formations of the Customs interpret the Hon’ble Court udgments and rulings literally. We apprehend that the changes in the Tariff, the Customs may hold that the judgement of the Hon’ble Madras High Court classifying the goods under CTH 20081920 is no longer applicable, as the CTH is redundant. In order to avoid such a situation resulting in detention of the goods and consequent demurrage, we request that fresh ruling classifying the Roasted Areca Nuts under CTH 20081991 may kindly be passed.

4.4. Assuming but not admitting that the judgement of the Hon’ble Madras High Court holds good and the application is liable to be rejected, it is requested that the Authority mention that the Roasted Areca Nuts will be classifiable under CTH 20081991 instead of 20081920 in view of the changes made in the Tariff.

5. The authorized representative of the applicant vide email dated 23,04.2026 asked not to give them personal hearing and requested to dispose Applications at the earliest based on facts and merits of the case available on record.

6. Findings, Discussion & Conclusion:

6.1. I have gone through the application of advance ruling and the reply to notice of the applicant regarding maintainability of the application. As issue of maintainability has to be decided first before proceeding to examine the matter on merit; I have decided to examine the matter of maintainability first.

6.2. Having gone through the submissions made by the applicant regarding the issue of maintainability of application, I find that the contention of the applicant is that the Hon’ble Madras High Court had classified Roasted Areca Nuts under CTH 2008 19 20 and that, pursuant to the amendments made by the Finance Act, 2025, the tariff structure under Heading 2008 has been recast and the said tariff entry has been replaced by CTH 2008 19 91. According to the applicant, since CTH 2008 19 20 has become redundant, the issue of classification of Roasted Areca Nuts requires fresh consideration and a ruling may be issued classifying the goods under CTH 2008 19 91.

6.3. Before I proceed, I 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-I (2) of the Customs Act, 1962 reads as under:

28-I. Procedure on receipt of application: (I) On receipt of an application, the Authority shall cause copy thereof to be 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, yter allow or reject the app after examining lication the application and the records called ftn; by order rovlded that the Authority shall not allow the application question raised in the application /5, where the  of customs, the Appellate Tribunal or any Court,

a. already pending In the applicant’s case before any officer

b. the same as In a matter already decided by the Appellate Tribunal or any Court.

6,4. From the above, I find that Section 28-1 (2) of the Customs Act, 1962 governs the admissibility of applications before the Custom Authority for Advance Rulings (CAAR). The first proviso to sub-section  (2) stipulates that the Authority shall not allow the application where the question raised in the application is (a) already pending in thecustoms, the Appellate Tribunal or any Court; or (b) the same as in a matter alr applicant’s case before any officer of eady decided by the Appellate Tribunal or any Court.

6.5. 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. Kamalakshi Finance Corporation Lid, 199 I (55) ELI 433 (SC), which underscores the binding nature of precedent and the obligation of lower authorities to follow higher judicial pronouncements.

6.6. I have also examined the International practice and find that this interpretation is further consistent with international practice. In the United States, Binding Administrative Rulings (CROSS Rulings) arc governed by Part 177, Chapter I of Title 19 of the Code of Federal Regulations. Section 177.7 expressly provides that no ruling letter will be issued in respect of any issue which is pending before the U.S. Court of International Trade, the Court of Appeals for the Federal Circuit, or any appellate court therefrom. This reinforces the universal principle that advance rulings cannot be issued on questions already decided by higher judicial fora.

6.7. l find that the issue has been examined by the Board also and the interpretation of clause (b) has also been expressly clarified by CBEC vide Instruction F. No. 275/83/2012-CX.SA dated 29­11-2013. It is clear from the instructions that clause (b) of the first proviso to Section 28-1 (2) is applicant-agnostic. It states that once a question has been decided by the Tribunal or a Court in the case of any party, the AAR cannot entertain the same question again, even at the instance of a different applicant. However, the Authority must ensure that the earlier judicial decision fully and squarely covers the issue raised before it. Therefore, once the issue is covered; the authority should not entertain the application.

6.8. ft 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 applications 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.

7. In view of the forgoing facts and records of the case, f am of the view that the issue raised in
the instant applications Is squarely covered by the judgement of Ifon’ble Madras I ffgh Court in the case of M/s Shahnaz International Pvt. Ltd, [2023/386) ELT 214(Mad.)]. 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.

8. The application is not allowed and disposed of accordingly,