Follow Us :

Case Law Details

Case Name : In re A One Traders (CAAR New Delhi)
Appeal Number : Ruling No. CAAR/Del/A One/05/2024/715
Date of Judgement/Order : 04/03/2024
Related Assessment Year :

In re A One Traders (CAAR New Delhi)

CAAR held that Roasted areca/betel nuts fall under Custom Tariff Heading 2008, specifically under Sub-heading 20081920 covering “Other roasted nuts & seeds” of the First Schedule of the Customs Tariff Act, 1975.

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

M/s A One Traders, J-1, 5-4, Dilshad Colony, Fast Delhi, Delhi having IEC No, FIR WPA1909A (‘applicant’. in slim) has filed an application (CAAR – ) for advance ruling before the Customs Authority for Advance Rulings, New Delhi (CAAR, in short). The said application was received in the Secretariat of the CAAR, New Delhi on 07.12.2023 along with its enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The applicant intends to import of “Roasted Areca Nuts (Whole) and Roasted Areca Nuts (cut)” from Myanmar, Indonesia. Sri Lanka, & Singapore into India through the port falling under the Pr. Commissioner of Customs, Nhava Sheva-1, Nhava Sheva, Tal: Urban, Dist. Raigad, Maharashtra — 400707.

2. The applicant submits that the firm M/s A One Traders, J-3, S-4. Dilshad Colony, East Delhi, Delhi is a proprietary firm registered with the respective statutory firm viz GST, Income Tax, DGFT, New Delhi etc. having exporter-importer Code BRWPA1909A and GST number (GSTIN)- 07 BRWPA1909A1Z3.

2.1. The applicant is in the process of setting up its business of Import of various types of preparations/ products of Betel nuts commonly known as “Supari” and more particularly the goods i.e. Roasted Areca Nuts (Whole) and Roasted Areal Nuts Cut” from Burma, Indonesia, Sri Lanka and Singapore.

2.2. That the applicant is approaching the Authority for seeking advance ruling qua the goods as mentioned in the above paras as applicant intends to import the same and hence would like to have a proper understanding and clarification as to whether the goods being imported shall be covered under a particular classification or the other.

2.3. That the processes carried out on the subject goods are as under: –

1) De-husking the raw betel/ areca nut and drying the same before being fed into the roasting oven;

2) Feeding the fresh areca nuts into a seed roasting oven, heating up to 100 deg. C. and roasting the fresh areca nuts in an oven of the seed roasting machine;

3) Take the areca nuts out of the oven, cooling at room temperature and feeding back into the oven, heat and roast them again, and perform this cycle until the water content of the fresh areca nuts is 10 to 15 per cent; and

4) The fresh areca nuts are repeatedly heated, roasted and cooled to ensure that the areca nuts are quickly cooled and shrunk after thermal expansion so that the roasted areca nuts have higher quality; the roasting time is around 2-3 days.

2.4. That as per their own awareness and information the applicant has got the goods as stated above are covered under CTH 2008 and more specifically under sub heading 2008 19 20 of the First Schedule of the Customs Tariff Act

CTH 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

CTH 2008 19 20 – Other Roasted Nuts and seeds.

2.5. HSN explanatory note qua Chapter 20 support of the contention of the applicant which is as under:

This Chapter includes:

(1) Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by vinegar or acetic acid.

(2) Vegetables, fruit, nuts, fruit-peel and other parts of plants preserved by sugar.

(3) Jams, fruit jellies, marmalades, fruit or nut purées, fruit or nut pastes, obtained by cooking.

4) Homogenised prepared or preserved vegetables and fruit.

(5) Fruit or vegetable juices, neither fermented nor containing added alcohol, or of an alcoholic strength by volume not exceeding 0.5 % vol.

(6) Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by other processes not provided for in Chapter 7, 8 or 11 or elsewhere in the Nomenclature. It includes, inter ilia: (I) Almonds, ground-nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives.

It is submitted for the purpose of classification of goods the Explanatory notes are guiding factors wherever any dispute arises while interpretating the classification of particulars chapters or in case of similar or competing entries and this has been held time and again in catena of judgments by the Hon’ble Courts in India

L.M.L. Ltd. Versus Commissioner of Customs Reported in 2010 (258) E.L.T 321 (S.C), Holostick India Ltd. Versus Commissioner of Central Excise, Noida Reported in 2015 (318) E.L.T 529 (S.C), Collector of Central Excise, Shillong Versus Wood Craft Products Ltd Reported in 1995 (77) E.L.T 23 (S.C.)

2.6. That in fact for similar product Hon’ble CAAR Mumbai has already issued Ruling thereby declaring the above said goods falls under CTH 20 and particularly under CTI-1 200819 20 and not under CTH 8. The said ruling has been given in the case in Ruling dated 7.12.2022 having no. CAAR/Mum/ARC/44,45 & 46/ 2022 in Application no. AAR/Cus/APPL/70,77 & 78/2022 — 0/o Commr-CAAR-Mumbai (Applicant-M/s Shahnaz Commodities International, Chennai)

2.7. Further, in fact, the customs authority challenged the said Advance Ruling before the Hon’ble High Court of Madras vide CMA No. 600, 1206 and 1750 of 2023 — The Commissioner of Customs Chennai Vs. M/s Shahnaz Commodities International P. Ltd. However, the said case were rejected by the Hon’ble High Court vide judgment dated 1.8.2023.

2.8. In view of above the applicant would like to have advance ruling on the following issue “whether the goods sought to be imported i.e. Roasted Areca Nuts (Whole) and Roasted Areca Nuts Cut” is classifiable under the CTH 2008 I 9 20 and the applicant requests the Authority for Advance Rulings that the appropriate classification of the aforesaid goods may kindly be ruled under section 28H of the Customs Act, 1962.

2.9. The applicant further submitted interpretation of law and facts in respect of the questions on which the applicant wants advance ruling, as under:

1. That the goods in question which are to be imported by the applicant is roasted betel nut and hence is rightly classifiable under CTI1 2008 and particularly 20081920.

2. That there is specific entry for the goods i.e. roasted nuts as given under

CTH 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

CTH 2008 19 20 – Other Roasted Nuts and seeds,

2.10. That so far as the goods sought to be classified i.e. roasted areca nut these goods is chewed for a variety of reasons such as stress reliever, mouth freshener, concentration improver and digestive following food intake.

2.11. The subject goods are specifically covered and are classifiable under CTH 2008 19 20 of the Customs Tariff Act, 1975. As per the HSN Explanatory Notes to Heading 2008, Dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008.

2.12. With regard to the goods in question the applicant also submitted that during the process of roasting the roasting is done using firewood/ palm kernel-based ovens and the temperature of the flames is around 600 degrees Celsius. As a result, the betel nuts would be roasted well beyond 100 degrees Celsius, usually in the range of 130-150 degrees Celsius. Roasted betel nut undergoes a change in its appearance as well as chemical characteristics on account of the roasting process. There is a visible deposition of an ash-like substance on the outer surface of the betel nut. There is a substantial change in the chemical characteristics of the betel nut product on account of the roasting process. That the tannin and arecoline content of raw betel nut/ areca nut gets substantially changed by subjecting the same to roasting and boiling. Therefore, roasted betel nut is a distinctive product of betel nut making it suitable for immediate consumption.

2.13. Roasting is not aimed at additional preservation or stabilisation or to improve or maintain their appearance.

2.14. That in this regard applicant takes support from the article titled “Estimation of arecoline content of various forms of areca nut preparations by high-pressure thin-layer chromatography” which throws light on the chemical composition of various forms of areca nuts. As per the article. Polyphenols (flavonols, tannins) constitute a large proportion of the dry weight of the nut. Its content in areca nut may vary depending on the degree of maturity and its processing method. The tannin content is highest in unripe areca nuts and decreases significantly with increasing maturity. The roasted nut possesses the highest average content of tannins, ranging from 5 to 41 % (mean, 1 .4%); the average tannin content of sun-dried nuts is 25%; and the lowest levels are seen in boiled nuts. which contain 17%. The article further states that raw areca nut contains the highest concentration of arecoline (1. 15 ± 0.008) followed by pan masala preparations (0.94 ± 0.006), least content in boiled areca nut (0.79 ± that the tannin and arecoline content of raw betel nut/ areca nut gets substantially changed by subjecting the same to roasting and boiling. Therefore, roasted betel nut is a distinctive product of betel nut making it suitable for immediate consumption.

2.15. From the above detail and process mentioned above it is clear that the product clearly falls under the chapter heading 20 and more particularly CTH 200819 20 as stated and not under Chapter 8 of customs Tariff and more particularly CPI 08029000 which is for the product namely Areca nut.

2.16. That in fact for similar product wherein Hon’ble CAAR Mumbai has already issued Ruling thereby declaring the above said goods falls under CII120 and particularly under CM 200819 20 and not C111 8. The said ruling has been given in the case of in Ruling dated 7.12.2022 no. CAAR/Mum/ARC/44.45 & 46/ 2022 in Application no. AAR/Cus/APPL/70,77 & 78/2022 – 0/o Commr-CAAR-Mumbai (Applicant-M/s Shahnaz Commodities International, Chennai)

2.17. Further, in fact, the customs authority challenged the said Advance Ruling before the Hon’ble High Court of Madras vide CMA No. 600, 1206 and 1750 of 2023 – The Commissioner of Customs Chennai Vs. M/s Shahnaz Commodities International P. Ltd. However, the said case were rejected by the Hon’ble High Court vide judgment dated 1.8.2023.

2.18. The Hon’ble High Court has after considering all the other chapter including chapter 08. and chapter 21 of Customs Tariff and also considered the other rulings as submitted by the customs authority though qua other goods i.e. boiled areca nuts, API supari, tin flavoured supari etc.

2.19. the applicant further submitted that it has been observed by the Hon’ble High Court that the Rulings of the Advance Ruling Authority did not deal with roasted arecanut and thus would have no relevant to the issue on hand. Further, it has been held that Roasting is a process treated to be distinct from the process of boiling and drying, in fixing the classification in respect of betel/ areca nut under CTH; that roasted betel /areca nut having been specifically classified under CTH 2008 19 20. the attempt to classify, under CTH 08 02 80 would fall foul of the settled rule of construction that specific entry would prevail over general entry. Also it is held that HSN explanatory notes is normally a safe guide in determining classification under CTH. Roasted Areca betel nut having mentioned in CTH 2008 19 20 under HSN the impugned Ruling is in consonance with HSN classification and that when there is a specific entry covering a product/ commodity, the test of common parlance is irrelevant in determining classification.

2.20. Hence, the subject goods i.e. Roasted areca nuts are squarely covered under the classification 2008 19 20 and cannot be covered under CTH 08 which has been stand taken by the customs authority before this Hon’ble Authority as well as before the Hon’ble High Court and their said contention has been rejected.

2.21. That the applicant has made the present application in bonafide and seeks the kind indulgence of this Hon’ble authority thereby seeking the subject goods under classification CTH 20 and more particularly under CTH 2008 19 20 and requested to the authority to pronounce ruling on the classification in respect of the instant goods.

3. A personal hearing in the matter was conducted on 23.02.2024. During the personal hearing, the authorized representative / Advocate representing the applicant explained in brief the reasons for filing the application and referred to a few earlier rulings of CAAR, Mumbai on the similar question of classification for goods in question. He reiterated the submissions given in their application for advance ruling. On being asked, he replied that they intend to import the goods in question and as regards comments of the concerned Commissioner, he mentioned that they would be giving their response to the comments in one week.

4. The requisite Comments On the application tier advance rulings have been received from the concerned Commissionerate of Nhava Sheva-I, JNCH, Nhava Sheva. Tal: Urban. Dist. Raigad, Maharashtra – 400707 wherein the claim of the applicant has been opposed and submitted as under:

4.1. The applicant being eligible in terms of Section 28-E (c) of the Act. In this regard it is submitted that the importer is holding a valid Importer Exporter code (BR WPA1909A ) and subject to the satisfaction of the Authority appears eligible under the provisions of 28-E(c) of the Customs Act. 1962.

4.2. (i) Roasted Betel nut/Areca Nut(whole/Cut) are classifiable under Heading 08028010 and not under heading 20081920. The processing as mentioned by the importer – i.e. De-husking/ Removing Skin. Roasting in the oven/machine, cooling do not change the character of the Betel nuts and the Betel nut have not attained any major change. Therefore, the goods Roasted Areca Nut are classifiable under Heading 080280 and not under 20081920 as requested by the importer.

(ii) Also, as per open source, roasting is defined as:- “a cooking method that uses dry heat where hot air covers the food for cooking it evenly on all sides with temperature of at least 150 degree Celsius.”

(iii) It is worth mentioning that for a nut as hard as areca nut, what importer is referring as roasting is actually mechanism to achieve drying of the nut and dried nut are correctly classifiable under chapter 08. Hence, to classify it under Chapter 20 when a specific classification of dried areca nut is present, appears to be only an effort to evade higher Customs duty.

(iv) As per Note-3 of the Chapter 08 – 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, if 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.

4.3. In this regard kind attention is invited to following Court/ tribunal case Laws:‑

I. Hon’ble CESTAT (Chennai), final order bearing nos. 40736- 40737/2021 dated 26- 02­2021, in Appeal Nos. C/40002- 40003/2021 (Appellants- M/s. ST Enterprises and M/s. Ayush Business Overseas, wherein Hon’ble CESTAT (Chennai), ordered that Betel nuts “whole” subjected to processes like de-husking, cleaning, boiling and drying, are classifiable under HSN CODE 08028010. The said order of Hon’ble CESTAT (Chennai) has been further endorsed by Hon’ble Supreme Court of India stating that they are not inclined to interfere with the Hon’ble CESTAT’s order, in Civil Appeal Nos. 850-51 of 2021-M/s. Ayush Business Overseas-vs-Commissioner of Customs (Chennai VII).

II. Hon’ble Supreme Court, in the case of M/s. Crane Betel Nut Powder Works 2007(210) ELTI7(SC), has decided the classification under heading 0802, after making the observation that: “the process of manufacture employed by the appellant company did not change the nature of the end product and betel nut remains a betel nut. The said observation of the tribunal depicts the status of the product prior to manufacture and thereafter…. The observation that manufactures implies a change, but every change is not manufacture and n every change of an article is the result of treatment, labour and manipulation is apposite to the situation at hand. The process involved in the manufacture of sweetened betel nut pieces does not result in the manufacture of a new product as the end product continues to retain its original character though in a modified form”.

III. The Advance Rulings, issued CAAR/ Del/USB in the year 2021 (For eg. Exports/ 23/2021/dated 20/12/2021, CAAR/Del/ Sarvcsjwari/ 11/2021 dated 04-06-2021). CAAR/Del/Dry Nut/01/2021 dated 16-03-2021) by the Customs Advance Ruling. Authority For Ness Delhi, ruled that (i) API Supari, (ii) Chikni Supari. (i) Unflavoured Supari, (iv) Flavoured Supari and (v) Boiled Supari, are classifiable under I leading 0802 and not under subheading 2106930, since they have not attained the character of “preparation of betel nut”. Although, the said Rulings are binding only on the concerned parties and designated Pr. Commissioner/ Commissioner of Customs and his subordinates, the aforesaid Rulings have been brought into your notice to further emphasize the change in the law/ fact.

IV. The Advance Rulings, issued in the year 2021 (i.e. CAA R/Del/Great Nuts/05/2021 dated 20.05.2021) by the Customs Authority for Advance Ruling, New Delhi. ruled that (i) API Supari, (ii) Chikni Supari, Unflavoured Supari, (iv) Flavoured Supari and (v) Boiled Supari, are classifiable under Heading 0802 and not under subheading 2106930, since they have not attained the character of “preparation of betel nut” and betel nut remains the betel nut. The said advance ruling has been endorsed by Hon’ble High Court of Delhi vide order dated 01.03.2023.

V. Hon’ble High Court of Delhi in M/s Great Nuts Impex Pvt. Ltd. Versus Commissioner of Customs Delhi & Ors Vide order dated 01.03.2023 has decided the classification of “Betel nut product known as Supari” under 0802 and has observed that it would not be apposite to classify the products in question as those covered under Chapter 21 of the Customs Tariff.

4.4. Further, as per Para 8 of Annexure-1 of CAAR Application submitted by M/s. A One Traders, processing of the goods involves de-husking the raw betel nut/areca nut, roasting, cooling and again roasting. The process is performed repeatedly. It is observed that the purpose of roasting here is to remove the moisture content to 10%-15% and making it brittle. Hence as per chapter note 3 of Chapter S. which pertains to dried nuts, it retains the essential character of Arecanuts. Merely roasting and cooling doesn’t change the essential character.

4.5. Therefore, in view of above Roasted Areca Nut are classifiable under Heading 080280 and not under sub-heading 20081920. Because the processing as mentioned by the importer De-husking/ Removing Skin. Roasting in the oven/machine and cooling do not change the character of the Betel nuts and the Betelnut has e not attained the character of “Preparation of the betelnut”, Therefore, the goods Roasted Betelnut/Areca Nut are classifiable under Heading 08028010 and not under sub-heading 20081920 as requested by the importer.

4.6. A. The HS CODE heading 0802 covers the Areca nuts as detailed below:‑

0802… Other Nuts Fresh or Dried, Whether or not shelled peeled

080280-Areaca Nuts Dried..

08028010 Whole

08028020 Split

08028030 Ground

08028040 Others

As per Note-3 of the Chapter 08

Dried fruit or dried nuts of this Chapter may he partially rehydrated, or treated for the following purposes:

(a) for additional preservation or stabilisation (for example, by moderate heat treatment. sulphuring. the addition, if 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.

B. The HSN explanatory notes of heading 0802 are produced below:

This heading also covers areca (betel) nuts used chiefly as a masticatory, cola(kola) nuts used both as a masticatory and as a base in the mono facture of beverages, and an edible, nutlike, spiny-angled fruit of the species Trapanatans, sometimes referred to as a water chestnut.

The heading does not include:

(a) The edible tuber of the species Eleocharis dulcis or Eleocharis tuberosa, commonly known as the Chinese water chestnut (heading 07.14).

(b) Empty walnut or almond hulls (heading 14.04).

(c) Ground-nuts (heading 12.02). roasted ground-nuts or peanut butter (heading 20.08).

(d) Horse chestnuts (Aesculus hippocastanum) (heading 23.08).

C. The Tariff Item 20081920 as claimed by the importer is a kind of residuary heading which is produced below:

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:

2008 19 20 Other roasted nuts and seeds

D. HSN Explanatory Notes, heading 2008 is as follows:

This heading covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed. including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter.

It includes, inter alia:

(1) Almonds, ground-nuts, areca (or betel) nuts and other nuts, dry-roasted, oil- roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives.

(2) “Peanut huller”, consisting or a paste made by grinding roasted ground­nuts, whether Or not containing added salt or oil.

(3) Fruit (including fruit-peel and seeds) preserved in water. in syrup, in chemicals or in alcohol.

(4) Fruit pulp, sterilised, whether or not cooked.

E. Further, the Chapter note I (a) of chapter 20 has excluded vegetables, fruits or nuts, prepared or preserved by the process specified in Chapter 7, Chapter 8, or chapter 11. One of the processes specified in Chapter 8 is moderate Heat Treatment. The imported goods have gone through De-husking, Roasting in the oven/machine and cooling. Therefore, Roasted Areca nuts are excluded from Chapter 20 as per the chapter notes of chapter 20 and also as per explanation in the explanatory notes and so fits for classification in 0802.

As per General Rules of Interpretation 1 (GIR I): “The tales of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal Purposes, classification shall he determined according to the terms of the headings and any relative Section or Chapter Notes an provided such headings or Notes do not otherwise require…”

Since, there is a specific heading of Arecanuts in Chapter 0802 the imported goods merits classification under Chapter 080280 and not under chapter 2008 19 20.

4.7. Conclusion as per HS code and Explanatory notes:

The areca/betel nut is specifically mentioned under subheading 080280 instead of 2008 Therefore Roasted Arecanuts merits classification in CTI-1 080280.

4.8. Further, the duty structure in CTH 080280 and 20081920 is as under:

Sr. No CTH BCD as per tariff Effective rate of BCD IGST Policy as on date
1 80280 100% 100% 5% Prohibited but free if CIF Value is Rs. 351/- or above per KG
2 20081920 30% 30% 12% Free

4.9. From the above table it appears the applicant is trying to get the goods i.e. areca nuts/betel nuts classified under HS CODE 20081920 which has lower rate of duty and to avoid applicability of MIP and Tariff condition and is trying to evade the applicable customs duty.

4.10. From the submission made by the importer in the Advance ruling application and the applicable duty structure, MIP condition, Chapter Notes and Tariff value it appears that the applicant is trying to get the goods betel nuts/areca nuts classified under HS Code 20081920 which has lower rate of duty when the same are rightly classifiable under HS Code 080280. Therefore, CAAR is requested not to give any ruling in this matter.

5. The applicant was provided the comments received from the jurisdictional Commissionerate. The applicant vide email dated 28.02.2024 submitted their submissions on replying the comments of the concerned commissionerate, wherein the applicant placed reliance upon stone rulings pronounced earlier on the identical issues and further submitted at under: –

5.1. That it is submitted that submission filed by the Id. the Additional Commissioner wherein it opposed the advance ruling sought by the applicant for goods i.e. roasted areca nut under CTH 20081920 is without any justification.

5.2. That the contention of all the additional preservation or stabilization is not correct as roasting involves server heat treatment and is different form moderate heat treatment as well as dehydration. Further, the classification as far as possible must be in conformity and in consonance with the HSN explanatory notes and that whenever there is specific entry, the Same would prevail over general entry as per the principle incorporated under Rule 3 (A) of General Rules of interpretation.

5.3. That in fact, the Addl. Comm. in support of its contention has relied upon certain judgments however, with due respect the said judgment are in the case the challenge was between CTH 08 and CTH 21 whereas the present in case of CTH 20 and hence the said judgment are not applicable.

5.4. Further. this Hon’ble Authority has also issued an advance Ruling No. CAAR/Del/Perfect/ 01/2024 in application No. 32/2023-Delhi dated 28.11.2023 in the case of Perfect Trading Co.. wherein this Authority has allowed the advance ruling for the goods i.e. roasted area nut under CTH 20081920 only.

5.5. Also there are other Advance Rulings on the similar contention issued by the Advance Ruling Mumbai in the cases of Kataria Traders and Mis Shree Ganesh Trades vide Advance Ruling dated 16.10,2023 and 7.11.2023 respectively.

5.6. That further, it is submitted that the contention of the applicant is duly supported by the explanatory note qua chapter 20 wherein it is duly clarified that

Chapter 20

This Chapter includes:

(1) Vegetables, fruit. nuts and other edible parts of plants prepared or preserved by vinegar or acetic acid.

(2) Vegetables. fruit. nuts, fruit-peel and other parts of plants preserved by sugar. (3) Jams, fruit jellies, marmalades. fruit or nut purees. fruit or nut pastes. obtained by cooking.

4) Homogenised prepared or preserved vegetables and fruit.

(5) Fruit or vegetable juices, neither fermented nor containing added alcohol. or of an alcoholic strength by volume not exceeding 0.5 % vol.

(6) Vegetables, fruit. nuts and other edible parts of plants prepared or preserved by other processes not provided for in Chapter 7, 8 or 11 or elsewhere in the Nomenclature.

……..

It includes, inter alia:

(1) Almonds, ground-nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted. whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives.

The Explanatory notes are guiding factors wherever any arises while interpretation the classification of particulars chapters and from the above it is very much clear that the roasted arecanut are covered under CTH 20081920 and prayed that the application filed by the applicant may he allowed.

6. I have taken into consideration of all the materials placed on record in respect of the subject goods including the submissions made by the applicant during the course of personal hearing. I have gone through the response from the Customs Port Commissionerate of Nhava Sheva-f, JNCH, Nhava Sheva. Tal: Urban Dist. Raigad, Maharashtra-400707. However, as the matter and questions before the Authority being the same, I therefore proceed to decide the present application regarding classification of roasted Areca nut on the basis of Ike information on record as well as the existing legal framework having bearing on the classification of the roasted areca nut under the first schedule of the Customs Tariff Act, 1957.

7.1 I note that the processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. It does not specifically include the process of roasting. Here, it is important to understand the difference between the processes of moderate heat treatment & dehydrating/drying referred in chapter 8 and processes of dry roasting. oil-roasting and fat-roasting referred in chapter 20. The terms dry-roasting, oil roasting and fat-roasting however are not defined in the Customs Tariff Act. 1975. Therefore, these terms have to be understood in a commonly accepted sense. The Hon’ble Apex Court in the case of Alladi Venkateswarlu vs. Government of Andhra Pradesh 1978 AIR 945 held that “the commonly accepted sense of a term should prevail in construing the description of an article of food”. In common trade parlance, “drying” is a method of food preservation by the removal of water content. On the other hand, “roasting” means the excess or very high heat treatment that produces fundamental chemical and physical changes in the structure and composition of the goods, bringing about a charred physical appearance. Therefore, drying is a moisture removal process involving methods such as dehydration, evaporation, etc., whereas roasting is a severe heat treatment process”.

7.2 I also note that Chapter 20 of the Tariff covers the preparations of vegetables, fruit, nuts or other parts of plants. As per Chapter Note I (a) to Chapter 20, the Chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in Chapters 7, 8 or 11. Therefore, vegetable, fruit or nut products or preparations made other than by the processes specified in Chapters 7, 8 or 11 are classifiable in Chapter 20. The processes specified in Chapters 7, 8 or 11 mainly include freezing, steaming, boiling, drying. provisionally preserving and milling. Therefore, any vegetable, fruit, nut or edible parts of a plant which is prepared or preserved by any other process than these are liable to be classified under Chapter 20. Heading 2008 covers 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. Roasting is a process used for bringing in to existence roasted nuts and I find that the processes mentioned in chapter 8 do not cover roasting process.

7.3 I also note submissions of the applicant that Note 3 to Chapter 8 specifies certain treatments that could be carried out on the dried nuts for additional preservation or stabilization or to improve or maintain their appearance. The applicant in their application has declared that the objectives of the roasting are not as specified in the said note. Further, as per the above note, the processes that could be carried out are moderate heat treatment, sulphuring, and the addition of sorbic acid or potassium sorbate by the addition of vegetable oil or small quantities of glucose syrup. Roasting is different from all the processes mentioned above. Roasting, as submitted by the applicant, is carried out using roasting ovens due to which betel nuts are roasted in the range of 150 degrees Celsius then

cooled in room temperature and the cycle is repeated until the moisture content is less than 6%. This clearly indicates that the roasting is much tin than mild heat treatment. Even in the generally understood meaning, of the terms, it is understood that roasting involves severe heat treatment and is different from moderate heat treatment as well as dehydration. Therefore, the impugned goods do not satisfy Note 3 to Chapter 8.

7.4 While examining the scope of CTH 2008, I find that as per HSN Explanatory Notes, heading 2008 covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof prepared or preserved otherwise than by any of the processes specified in the preceding headings in this Chapter. Specifying what is’ included in this heading, the explanatory note states that almonds ground nuts areca (or betel) nuts and other nuts dry-roasted, oil-roasting & fat-roasting, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives. Dry-roasting, oil-roasting & fat-roasting, as a process, are very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes. It is also pertinent to observe that none of these processes are mentioned in the Chapter Note 3 to Chapter 8 of the Customs Tariff Act, 1975 as well as HSN Explanatory Notes to Chapter heading 0802.

7.5 Moreover, it is established fact that in case of doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Tariff Act. The case of Commissioner of Customs & Central Excise vs Phil Corporation Ltd in Appeal (civil) 2215 of 2002 dated 07/02/2008, is directly relevant and applicable in the instant case of the applicant. In the judgement of the said case, Honourable Supreme Court has held, “a number of cases, this Court has clearly enunciated that HSN is a safe guide jar the purpose of deciding issues of classification. In the present Case, the HSN Explanatory Notes to Chapter 20 categorically state that the products in question are so included in Chapter 20. The HSN Explanatory Notes to Chapter 20 also categorically state that its products are excluded from Chapter 8 as they fall in Chapter 20. In this view of the matter, the classification of the products in question has to be made under Chapter 20.” While delivering Phil Corporation Judgment honourable Supreme Court has clearly spelt out importance of Explanatory notes in deciding the matters of classification placing reliance on the judgment of Supreme Court in the case of Collector of Central Excise, Shillong v. Wood Craft Products Ltd, (1995) 3 SCC 454. Honourable Supreme Court in paragraph 12 of the said judgment observed as under: – “Accordingly. fin- resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged basis of the structure of the Central Excise Tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act.”

From the Apex Court’s foregoing judgments, it is observed that the roasted nuts find specific mention in the then Chapter 20 of’ the then Central Excise Tariff Act and the Chapter 20 of the Schedule I of the Customs Tariff Act, 1975 as well as corresponding HSN Explanatory Note. It is important to pay attention to the fact that, in the above referred HSN Explanatory Note, a process of roasting is riot specifically mentioned as a process of preservation or stabilization or a process to improve or maintain the appearance. Specific attention is invited to the paras 10 & 11 of the SC judgment (M/s Phil Corporation) in which paras 6 & 7 of Supreme Court judgment in case of M/s Amrit Agro are relied upon. Para 6 inter alia reads as follows: “roasted peanuts are covered by Chapter 20. Even according to the Explanatory notes of HSN under Heading 20.08 ground- nuts, almonds., peanuts etc. which are dry- roasted, fat-roasted whether or not containing vegetable oil are the items which all would stand covered by the said Heading 70.08.” Honourable Apex Court’s conclusions corroborate the finding that the process of roasting is not covered by Note 3 to Chapter 8 and hence these products, roasted betel nuts are not classifiable under Chapter 8 of the Tariff.

8.1 further, in the CAAR, Mum bai Ruling No. CA AR/Mumbai/A RC/39,40,41/2023 in the case or M/s. Universal Impex, the Authority has slated his findings and has ruled accordingly-“in view of the specific CTH 2008 19 20: Other roasted nuts & seeds in chapter 20 of the first schedule to the Customs rare; USN Explanatory note to CTH 2008, various Supreme Court rulings upholding guiding value of the HSN Explanatory notes for deciding classification under Customs Tariff Act. 1975 and previously mentioned Iwo Supreme Court Judgments classifying roasted nuts which include almonds, betel inn and Ow nuts under chapter 20 by taking recourse to HSN explanatory note to Tariff Heading 2008″, I rule that roasted betel nuts are correctly classifiable under the tariff item 2008 19 20 of chapter 20 of the first schedule of the Customs Tare Act, 1975.”

8.2 Also, the Honourable High Court of Madras in its recent judgement on 01.08.2023. has upheld the classification of Roasted Betel Nuts under CTH 2008 19 20. The Honourable High Court went on to analyse the various aspects in determining classification and summed up that:

(a) Roasting is a process treated to be distinct from the process of boiling and drying, in fixing the classification in respect of betel/areca nut under CTH.

(b) Roasted betel/areca nut having been specifically classified under CTH 2008 19 20, the attempt to classify under CTH 08 02 80 would fall foul of the settled rule of construction that specific entry would prevail over general entry.

(c) HSN explanatory notes is normally a safe guide in determining classification under CTH. Roasted areca / betel nut having been mentioned in CTH 2008 19 20 under HSN.

(d) When there is a specific entry covering a product/commodity, the test of common parlance is irrelevant in determining classification.

(e) There is considerable force in the submission that the classification as far as possible must be in conformity and in consonance with the HSN Explanatory Notes.

9. I find that the issue dealt with i.e. Classification of “Roasted betel nuts” in the judgment of the Honourable High Court of Madras is similar in nature to that of the impugned issue in this application and therefore is squarely applicable to this case. Further, reliance is also placed on ruling of Advance Ruling Authority Mumbai in Ruling No. CAAR/CUS/APPL/95/2023 dated 16.10.2023 in the case of M/s. Shree Ganesh Traders, Chennai, on the classification of “Roasted Areca Nut” that has been classified under CTH 20081920.

10. On the basis of aforesaid orders of Hon’ble Courts and also earlier CAAR Rulings in the matter, I am of the view that the Roasted areca/betel nuts fall under Custom Tariff Heading 2008, specifically under Sub-heading 20081920 covering “Other roasted nuts & seeds” of the First Schedule of the Customs Tariff Act, 1975.

11. I rule accordingly.

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Post by Date
April 2024
M T W T F S S
1234567
891011121314
15161718192021
22232425262728
2930