In re Rose Marry International (CAAR Mumbai)
CAAR held that subject goods placed before CAAR for consideration, i.e.. 1) Processed API Betel-nut product known as Supari and 2) Processed Betel-nuts unflavoured chemically processed Supari in small cut‑pieces (not split) merit classification under chapter 8 of the Customs Tariff, and more appropriately, under the heading 0802, as under:
1) Processed API Betel-nut product known as SUPARI (Not Prepared): 0802 80 10 and
2) Processed Betel-nuts unflavoured chemically processed SUPARI in small cut pieces (Not split): 0802 80 90.
FULL TEXT OF ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI
M/s Rose Marry International (hereinafter referred to as ‘the applicant’. in short) filed an application for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR, in short). The said application dated 23.08.2022 was received in the secretariat of the CAAR, Mumbai on 08.09.2022 along with its enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The applicant is seeking advance ruling on the classification for the proposed import of 1) Processed API Betel-nut product known as Supari and 2) Processed Betel-nuts unflavoured chemically processed Supari in small cut-pieces (not split).
2. The applicant are manufacturer and merchant exporter/importer of betel nuts, having FSSAI No. 10016043001636 dated 17.10.2017 and UDYAM Registration No. UDYAM-KR03-0113863 Dt. 26.10.2021 and have never imported betel-nuts in any form. It is submitted that they intend to import 1) Processed API Betel-nut product known as Supari and 2) Processed Betel-nuts unflavoured chemically processed Supari in small cut-pieces (not split) (hereinafter referred to as the ‘subject goods’), since they are having several orders from local markets for supply of processed betel-nuts known as Supari for local consumption. They intend to import the said goods through the ICD Whitefield, Bengaluru. Accordingly, comments from the jurisdictional Principal Commissioner / Commissioner of Customs were invited.
3. The applicant has submitted that they have neither imported Areca-nuts dried in any form which is covered under CTH 0802 80 for trading into India nor they have ever imported Betel-nut product known as Supari covered under CTH 2106 90 30. However, they came to know that there is dispute of classification among these two competitive entries under the Customs Tariff heading 0802 80 and 2106 90 30 for the Areca-nuts dried and the Betel-nut products and they are unable to understand their betel-nut products which are in a processed form shall be classifiable under Chapter heading 0802 80 or 2106 90 30. For this reason and for proper classification of the goods which they are planning to import and for payment of correct amount of Customs duty on these goods, they have filed this application seeking Advance Ruling from the Advance Ruling Authority under The Customs Act,1962.
4. Further, in this respect the applicant has added that the following processes and preparations are carried out on Areca-nuts dried to arrive at the finished Processed product API Betel-nut product known as Supari under CTH 2106 9030 and another product Processed Betel-nuts Unflavoured chemically processed Supari in Small cut-pieces (not split) covered under 2106 9030 as enumerated below. Applicant proposes to import these two different products as per description given by the applicant and the text of the same is reproduced below:
4.1 Processed product API Betel-nut product known as Supari under CTH 2106 90 30
(i).The first stage process involved is the collection of Areca fruits of 6 to 7 months old immature dark green fresh nuts which are manually harvested from the palm tree.
(ii).In the second stage these freshly harvested nuts are dipped in chlorinated water to remove the adhering dirt, the fruits are then soaked in water mixed with chemicals to reduce microbial load /fungal infections.
(iii).In the third stage large impurities are removed by labour with the help of mechanical de-husking process.
(iv).In the fourth stage minor impurities are removed by de-stoner machine which is fully automatic process and then they are subjected to Garbling process for the removal of extraneous matter such as other parts of the plants, dirt and added adulterants.
(v).In the fifth stage the tender nuts are boiled in water mixed with areca nut extract in which the same water is used for boiling 2 to 3 batches of areca-nuts. The areca nut extract is used to impart red color and good glossy appearance. While boiling the tender nuts, the highly concentrated Tannin is obtained as a by-product which is separated and is used in various industrial applications.
(vi).In the sixth stage these boiled tender nuts are dried for 15 days in open space and are
dried by blowing hot air in mechanized processing with the use of heat exchangers.
(vii).In the seventh stage these dried nuts are once again subjected to removal of any metal/minor impurities by magnetic. metaldetecting machines and blowers.
(viii).In the eight stages these dried nuts are sorted out using automatic Sorting machines, thereafter they are graded using grading machines with pre-graded photo chromatic devices.
(ix).During the above referred processes/stages the Oral Sub Mucosal Lesion(fibrosis) and Cancer-causing chemicals like Tannin and Arecoline contents are remarkably reduced, this changes the character of the original product i.e., Areca-nut. In this process it is not only change in the character of the Areca-nut but the new synthesis product will have reduced polysaccharides (Carbohydrate) contents and the resultant new / final product is hypoglycaemic, which is suitable for consumption by diabetic and elderly people. This product is a Synthesis of new Betel-nut processed product and is squarely covered under CTH 2106 90 30.
(x).In the above said preparation of Betel-nut it supersedes the process of API Supari and is altogether a different newly Synthesis product which is chemically processed hence it cannot be equated with the API supari but a product of processed Betel-nut which qualifies the characteristics of CTH 2106 90 30.
4.2 Processed Betel-nuts Untlavoured chemically processed Supari in Small cut pieces (not split) covered under 2106 90 30
The processes and Preparation of Unflavoured Supari in Small Cut Pieces which changes the characteristics of Betel-nuts are enumerated below:
(i).Areca fruits of 7 to 8-month-old immature dark green fresh nuts which are the fresh harvest taken from the Areca tree for making this class of Processed Areca Nuts.
(ii).The freshly harvested nuts are dipped in chlorinated water to remove the adhering dirt; the fruits are then soaked in water mixed with chemicals to reduce microbial load /fungal infections.
(iii).Removal of large impurities/ Extraneous material by manual labour and through mechanical de-husking machine.
(iv).The nuts are soaked in running water for 4 to 5 months for treating it under fermentation process in the curing ponds, the nuts are placed in holding baskets which are passed through continuously running water, the level of the running water is maintained at the flow rate of 36 ltrs/ minute. This is a continuous process and the same running water is passing through the holding baskets for 4 to 5 months. This steeping of water results in discoloration of outer husk and subsequently the foul smell as well as bacterial presence is treated by heat blanching using sodium benzoate (0.1%) and potassium Meta bisulphate (0.2%) to eliminate the foul smell and improving the quality of nuts. This process is over and above the process of Chapter Heading 0802 due to the reason that the inputs to the Areca-nuts has taken place in this process for obtaining the final Unflavoured processed Betel-nut in cut pieces, this process amounts manufacturing by adding up of chemicals to the final product and is appropriately classifiable under CTH 2106 90 30.
(v).Then the tender nuts are dried in open space and this drying is being done by blowing hot air in mechanized processing using heat exchangers.
(vi).The dried nuts are once again subjected to removal of any metal /minor impurities by magnetic metal detecting machines and blowers.
(vii).Sterilization process is undertaken to remove the Bacterial Count.
(viii).3 Stage cutting of Betel Nuts are carried out (customized) and weightless particles are blowed by blower machine and gravity separation through Automatic Gravity Separation Machine.
(ix).The nuts used in preparation of Unflavoured Supari are slightly more matured than those used for Kalipak / API Supari and over and above the characteristics of Chapter heading 0802.
(x).As a result of the above process the Tannin content of fresh immature nuts is considerably reduced below 17%. During the course of this processing, the Carbohydrate content are reduced remarkably and the resultant final product is hypoglycaemic which is suitable for consumption by elderly as well as diabetic people. Product obtained through the above stages of preparation are suitable and safe for human consumption and is duly covered under the characteristics of processed Unflavoured Betel-nuts cut into small pieces which are covered under the Customs Tariff Heading 2106 90 30. This is an additional process which is changing the characteristics of the raw Betelnuts into a processed Betel-nuts.
5. In this respect, the comments of the jurisdictional commissionerate were received on 11.10.2022 from office of the Commissioner of Customs, City Customs Commissionerate, Bengaluru. Their comments are as follows:
As per importer’s application, they have proposed import of: ‑
1) Processed API betel-nut product known as supari
2) Processed Betel-nuts unflavored chemically processed supari in small cut-pieces (not split)
It is noticed that importer has not imported these goods in the past in ICD, Bengaluru and advance ruling is sought to import goods mentioned above. This office has not come across any information about the applicant’s case before any officer of customs, the Appellate Tribunal or any court. The applicant has sought advance ruling as to whether the aforementioned goods will be classifiable under CTH 0802 80 or under CTH 2106 90 30.
5.1 The import tariff as mentioned in First Schedule to the Customs Tariff Act, 1975 w.r.t. sub-heading 080280 of the Customs Tariff Act, 1975 is reproduced as follows,
