Case Law Details
In re Saga International (CAAR Delhi)
M/s Saga International, a partnership firm based in Kolkata, sought an advance ruling from the Customs Authority for Advance Rulings (CAAR), New Delhi, regarding the import classification of “Roasted Areca Nuts” from several countries, including Indonesia and Myanmar. The firm aimed to clarify whether these goods fall under specific classifications in the Customs Tariff Act, 1975. The application highlighted the modernization of the roasting process, which has reduced preparation time and increased efficiency. The roasting involves several steps, including de-husking, drying, and subjecting the nuts to high temperatures to achieve the desired quality. The applicant emphasized that the roasted product, suitable for immediate consumption, undergoes significant chemical and physical changes, resulting in a distinct product not explicitly defined in the Customs Tariff. The ruling considered the definitions and processes outlined in different chapters of the Tariff, particularly Chapter 8 (Edible Fruits and Nuts) and Chapter 20 (Preparations of Vegetables and Fruits). The CAAR deliberated on the classification of roasted nuts, recognizing that roasting is a heat treatment process not explicitly included in the relevant chapters, ultimately leading to the conclusion that “Roasted Areca Nuts” should be classified under Chapter 2008 of the Customs Tariff Act.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
M/s Saga International, No. 22, Rupchand Roy Street, 2nd Floor, Burra Bazar, Kolkata, West Bengal — 700007, hereinafter referred to as the 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 above said firm is a partnership firm of Mr. Gaurav Pujara and Mr/ Rajat Raja. Importer-Exporter Code of the firm is AEXFS6376J, and the GST Number is 19AEXFS6376J1ZU. The said application was received in the Secretariat of the CAAR, New Delhi on 01.07.2024 along with their enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The applicant intends to import “Roasted Areca Nuts and Roasted Areca Nuts (Cut)” from Indonesia, Myanmar, Bangladesh, Sri Lanka, Thailand, Vietnam, Madagascar, Nepal and West Africa.
2.1. That the applicant approached this Authority for seeking advance ruling qua the goods as mentioned in the following 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. The applicant in the instant application submitted as under: –
2.2 The Areca nut, originating from the palm tree species, thrives in tropical regions. It is brained from the fruit of the Areca Nut Palm and is commonly known as the Areca Nut or Betel Nut, referred to as “supari” in India. The raw betel nut undergoes a series of processes to yield various products. Depending on specific treatments, a variety of betel nut types are produced. including Boiled Betel Nut, Dried Betel Nut, Flavored Betel Nut, Unflavored Betel Nut, Roasted Betel Nut / Areca Nut, and more. The focus of this application is on “Roasted Betel / Areca Nuts” and “Roasted Betel / Areca Nuts Cut.”
2.3. The applicant’s intention is to import “Roasted Areca Nuts” or “Betel Nuts” from countries such as Indonesia, Myanmar, Bangladesh, Sri Lanka, Thailand, Madagascar, Vietnam, Nepal and West Africa into India. These imports are planned to be imported through seaports at Chennai, Tuticorin Port, and Mundra Port. However, there is a need for clarification regarding the process of “Roasting” as it is not explicitly defined in the Customs Tariff Act or the Chapter Notes, but only in the HSN (Harmonized System of Nomenclature) explanatory notes.
2.4. The applicant emphasizes that the cultivation, harvesting, and processing of “Roasted Areca Nut” have undergone significant modernization, reducing the reliance on manual labour. Mechanization has led to increased efficiency, reduced waste, improved quality, and greater uniformity in the final product. Additionally, the preparation time for “Roasted Areca Nut” has substantially decreased when compared to the traditional manual preparation method.
2.5. The Process and Preparation of Roasted Areca Nut involves several key steps, which are outlined as follows:
2.5.1. Initially, the raw or fresh areca nut is de-husked, and its outer shell is removed. Afterward, the de-husked nuts are carefully inspected for any visible impurities and are thoroughly cleaned. Subsequently, these raw de-husked areca nuts, also known as betel nuts, are left to air dry in open yards.
2.5.2. Once the de-husked areca nuts are cleared and dried, they are introduced into a seed roasting oven or machine, where they are subjected to temperatures exceeding 100 degrees Celsius. The roasting process is accomplished using firewood or palm kernel-based ovens/machines, with flame temperatures ranging from 300 to 400 degrees Celsius. Consequently, the betel nuts are roasted well beyond 100 degrees Celsius, typically falling within the range of 100 to 120 degrees Celsius.
2.5.3. After roasting, the areca nuts are taken out of the oven and allowed to cool down to room temperature, aided by cooling fans.
2.5.4. Subsequently, once the areca nuts have cooled and reached room temperature, they are reintroduced into the oven at high heat to ensure even roasting of the nuts.
2.5.5. This roasting and cooling cycle is repeated until the moisture / water content in the processed areca nuts falls below 4 percent. This reduction in water content causes the areca nut to shrink and become brittle. The purpose of repeatedly roasting and cooling the nuts is to quickly cool and shrink them after thermal expansion, resulting in roasted areca nuts that are easily chewable, crunchy and of higher quality.
2.6. Overview on Roasted Areca Nut:
A. Roasted Areca Nut, a traditional and widely consumed product, has undergone significant changes in its processing and characteristics. In the past, the roasting process used to take approximately 7 to 8 days, but modern mechanization has reduced this time to about 2 to 3 days, enhancing efficiency.
B. The roasting of areca nuts results in a remarkable transformation in both their appearance and chemical composition. During roasting, an brownish layer forms on the outer surface of the betel nut, and there are substantial alterations in its chemical properties. Research indicates that the levels of Tannin and Arecoline, key compounds in raw areca nuts, undergo significant changes as a result of the roasting process.
C. Various studies and articles shed light on the chemical composition of different forms of areca nuts. Polyphenols, including flavanols and tannins, make up a significant portion of the nut’s dry weight. The content of these substances varies based on the maturity of the nut and the processing method, with unripe areca nuts having the highest tannin content, which decreases as they mature.
D. It’s important to note that roasting isn’t intended for preservation, stabilization, or appearance enhancement. Roasted areca nut is a distinct product, classified under Chapter 20 of the Customs Tariff Act 1975 and more specifically under Explanatory Notes to Chapter 2008 of the Harmonized System of Nomenclature (HSN).
E. Roasted Areca Nut, in its original form without any added ingredients, is available in the Indian market in various forms such as pieces and shredded varieties. These roasted betel nut products are sold without additives and are approved by government agencies like FSSAI.
F. Roasted Areca Nut is not only edible but also suitable for immediate consumption. It serves various purposes, including stress relief, mouth freshening, concentration improvement, and aiding digestion after meals.
In conclusion, the processing and final product, namely “Roasted Areca Nut” and “Roasted Areca Nut Cut,” are best classified under Chapter 2008 19 20 of the Customs Tariff Act, 1975, given their unique characteristics and applications.
2.7. 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):
2.7.1. The classification of roasted betel nuts involves examination of three different
Chapter Headings in the Customs Tariff, which are reproduced below:
Chapter 8: Edible Fruit and Nuts, Peel of Citrus Fruits or Melons.
Chapter 20: Preparations of Vegetables, Fruit, Nuts or other parts of Plants.
Chapter 21: Food Preparations not elsewhere specified or included (Miscellaneous Edible Preparations).
General Interpretation Rules (GIR) specifies the titles of sections, chapters and sub-chapters for ease of reference, classification shall be determined according to the terms of the headings and corresponding Section or Chapter Notes.
Therefore, to analyze the classification of “Roasted Areca Nut” in the instant case the Chapter Headings, Chapter Notes, HSN Explanatory Notes and General Rules of Interpretations is being deciphered:
2.7.2. 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 the Chapter notes these goods 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). The said note specifies the physical status of the goods along with corresponding processes that could be carried on those goods under this chapter.
Note 3 to Chapter 8, states that Dried fruit or dried nuts of this Chapter may be partially rehydrated or treated for the following purposes:
(a) for additional preservation or stabilization (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 areca / betel nut is mentioned in Heading 0802. specifically under subheading 0802 80. The classification covers areca nut of the following descriptions viz. whole, split, ground and others, which basically categorizes areca nut in its original / actual form. The impugned goods “roasted areca nuts” does not satisfy / fit this classification. The process of roasting is not finding mention anywhere either in the CTH Chapter notes or the Explanatory Notes to this Chapter 08.
2.7.3. Further, the roasted betel nuts – whole or cut — are fit for immediate human consumption without addition of any other ingredient, as is evident from the FSSAI approved product / samples available in the market.
2.7.4. There is a wide distinction between the processes of drying and roasting. The processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. It does not specifically include the process of roasting.
2.7.5. There is a 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 HSN Explanatory Notes to Chapter 2008. The terms dry-roasting, oil roasting and fat-roasting however are not defined in the Customs Tariff Act, 1975. When the terms have not been defined in the Customs Tariff Act, 1975, then in such instances these terms have to be understood in a commonly accepted parlance as held in the case of Alladi Venkateswarlu -vs- Government of Andhra Pradesh 1978 AIR 945, wherein the Apex Court held that “the commonly accepted sense of a term should prevail in construing the description of an article of food”.
2.7.6. Further, drying is a moisture removal process involving methods such as dehydration, evaporation, etc. whereas roasting is a severe heat treatment process. In common trade parlance, “Drying” is a method of food preservation by the removal of water. On the other hand, “Roasting” means use of excess or very high heat treatment that produces fundamental chemical and physical changes in the structure and composition of the goods, bringing about a slightly 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.
2.7.7. Further, it cannot be stated that the term “roasted areca nut / betel nut” is not mentioned in the Customs Tariff Act and that “roasted betel nut” is a term used in common trade parlance. On the contra, the said term “Roasted” is mentioned in the Customs Tariff Act and has been dealt in detail in the HSN Explanatory Notes.
Chapter 20 of the Tariff covers the Preparations of vegetables, fruit, nuts or other parts of plants.
As per Chapter Note 1 (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.
2.7.8. Roasting is a process used for bringing into existence roasted nuts, which process is not mentioned in Chapter 8 CTH. Chapter 20 covers the preparation of nuts, one of the processes for preparing the impugned goods is specified in Chapter Heading 2008, i.e. roasting.
CTH 2008: Fruits, 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
On perusal of CTH 2008 and the HSN Explanatory Notes under the heading 2008, it 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.
Specifically, the explanatory note states and includes:
“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, flavour, spices or other additives.”(self emphasis)
2.7.9. From the above observation it is evident that the “other nuts”, finds specific reference in the chapter 20 of the schedule I of the Customs Tariff Act 1975 and “roasted areca / betel nuts” find specific mention in Chapter 2008 HSN Explanatory Note, both read conjointly would bring the impugned goods within the parameters of Chapter 20 more specifically under 2008 19 20 under the category “Other roasted nuts”. Moreover, from the above explanatory note, it is clear that the process of roasting is not specifically mentioned as a process of preservation or stabilization or a process to improve or maintain the appearance. Therefore, the process of roasting is not covered by Note 3 to Chapter 8, as such “Roasted Betel Nuts” whole or cut pieces are not classifiable under chapter 8 of the Tariff.
2.7.10. Further, the term “Roasted Betel Nuts”, are packaged, labelled and marketed for sale as roasted betel nuts on various online portals like Amazon, India mart, Flipkart etc. This clearly indicates that the goods have both buyers and sellers and that they are known in the trade and sold in the market as “Roasted Betel Nuts”. Therefore, even if the term is not defined in the statute, the product needs to be recognized in terms of common trade parlance. It is a well-settled principle that words in a taxing statute must be construed in consonance with their commonly accepted meaning in the trade and their popular meaning as held by the Hon’ble Apex Court in the case of M/s. United Offset Process Pvt. Ltd. Vs. Asst. Collector of Customs, Bombay and Others 1989 Supp. (1) SCC 131, wherein the court held “If there is no meaning attributed to the expressions used in the particular enacted statute then the items in the customs entries should be judged and analysed on the basis of how these expressions are used in the trade or industry or in the market or, in other words, how these are dealt with by the people who deal in them, provided that there is a market for these types of goods”. The roasted betel nut is an independent product, which is sold in the market in both packed and unpacked form. Further, the packed roasted betel nuts are labelled and marketed as roasted betel nuts/ roasted supari and carry the stamp of approval by the FSSAI. Therefore, the impugned goods are known in the trade as roasted betel nuts only. preservation or stabilization or to improve or maintain their appearance. As per the said 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, which would classify the goods therein under Chapter 8.
2.7.12. Whereas, roasting is different from all the processes mentioned above. Roasting, as mentioned supra is carried out using firewood/ palm kernel-based ovens and the temperature of the flames is around 300-400 degrees Celsius, due to which betel nuts are roasted well beyond 100 degrees Celsius, usually in the range of 100-120 degrees Celsius. This clearly indicates that the roasting is much more than mere 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. Therefore, the impugned goods do not satisfy Note 3 to Chapter 8, as such the process of roasting cannot be covered under Chapter 8 of CTH.
Roasting is the essential process for the preparation of impugned goods. HSN Explanatory Note to chapter 20 a reference to “dry-roasted, oil-roasted or fat-roasted” indicates the principal processes of preparation that would change the classification of nuts from Chapter 8 to Chapter 20.
CTH 2106: Heading 2106 covers food preparations not elsewhere specified or included. Those food preparations not specified or included elsewhere in the tariff being preparations for human consumption are to be classified under this heading. In this chapter it is observed that it includes within its ambit, miscellaneous edible preparations.
2.7.13 As per Explanatory Note 2 to Chapter 21, “Betel Nut product known as Supari” means any preparation containing betel nuts, but not containing any one or more of the following ingredients, namely: lime, Katha (catechu) and tobacco whether or not containing any other ingredients, such as cardamom, copra or menthol.
As per the Explanatory Note, the heading covers preparations for use. either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption. Therefore, it appears that it is a residuary entry in respect of edible food preparations.
In the instant case the process of preparation does not involve cooking, dissolving, boiling in water or milk, further the impugned goods don’t contain lime, Katha (catechu) and tobacco. As such, the impugned goods cannot classify under Chapter 21 or its sub-headings.
As a result, edible preparations shall be classified under this chapter, only if the same is not classifiable under any of the other specific entries for edible preparations. As the goods under consideration are already included in Heading 2008 of the Customs Tariff Act, 1975, they stand excluded from the scope of Chapter 8 and Chapter 21.
2.7.14. Further, since the impugned goods have undergone roasting which has not
been categorized or classified in Chapter 8, while on the other hand Chapter 2008 19 20 categorically specified “Roasted Areca Nuts” in its explanation to HSN notes, the “Roasted Areca Nuts and Roasted Areca Nuts Cut” appears to be classifiable under Chapter 2008 19 20 CTH.
2.7.15. As per the applicant, the above-mentioned 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, as mentioned supra, Dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008. The Applicant states that the HSN Explanatory Note is the safe and dependable guide in the matters of classification of items and relies upon the following case laws viz.
(i) Holostick India Ltd. Versus Commissioner of Central Excise, Noida. reported in 2015 (318) E.L.T 529 (S.C),
(ii) M/s. L.M.L. Ltd. Versus Commissioner of Customs, reported in 2010 (258) E.L.T 321 (S.C),
(iii) Collector of Central Excise, Shillong Versus Wood Craft Products Ltd, reported in 1995 (77) E.L.T 23 (S.C.).
As per the explanatory note to Chapter 8, fruit and nuts of this Chapter remain classified here even if put up in airtight packing (e.g., dried prunes, dried nuts in cans). In most cases, however, products put up in these packing have been prepared or preserved otherwise than as provided for in the headings of this Chapter, and are therefore excluded from chapter 8 (and will fall under Chapter 20). It is further submitted that the processes mentioned in Chapter 8 is different from the processes performed on impugned goods, as such they are excluded for the purpose of classification from Chapter 8 of the Customs Tariff Act, 1975.
The Applicant states that the process of roasting changes the chemical and physical characteristics of areca nut reducing arecoline and tannin content as well as colour and moisture. As such, the impugned product “Roasted Areca / Betel Nut” does not fall under Chapter 8 of the Tariff.
The Applicant states that roasting is much more than mild/moderate heating treatment. Even in the general 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. Further, from the relevant chapter heading and tariff entry in chapter 20 of the first schedule to the Customs Tariff Act, 1975, it can be seen that the term roasted betel nut is specifically mentioned in the Customs Tariff Act CTH 2008: Fruits, 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
As per CTH 2008, HSN Explanatory Notes, states that 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. Dry-roasting, oil-roasting & fat-roasting, as a process, is very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes. It is pertinent to note 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.
2.7.16. In this regard the judgment of the Hon’ble Supreme Court in the case of M/s. Amrit Agro Industries Ltd as well as M/s Phil Corporation is squarely applicable to the impugned good “Roasted Betel Nut”, wherein, the Apex Court clarified the doubts on the issue of whether a process of roasting amounts to a preparation or not. The Court observed that HSN Explanatory Note to chapter 20, refers to “dry-roasted, oil-roasted or fat-roasted”. Further, the principal processes of preparation would change the classification of nuts from Chapter 8 to Chapter 20. Further, the impugned goods are not excluded by any chapter note or explanatory note from CT Heading 2008. Therefore, the Apex Court held that the roasted betel nuts are classifiable under Heading 2008 based on the terms of the Heading 2008 and HSN Explanatory Notes to Chapter 20. Further, since the impugned goods are already included in Heading 2008 of the Customs Tariff Act, 1975, they stand excluded from the scope of Chapter 21.
2.7.17. The Applicant further states that in order to confirm the classification of the impugned good viz. Betel Nut, they had requested for the sample of the goods from the Indonesian Supplier and sent it for testing with M/s. Mitra S.K. Private Limited (Testing & Inspection Lab). Kolkata. The said Accredited Laboratory, by its Test Report dated 29.05.2024 had opined and certified that the sample of goods are indeed “Roasted Whole Betel Nut” and “Split Roasted Areca Nut”, having a Moisture content of 3.64% and 3.44% respectively. This report fortifies the contention that the goods sought to be imported is “Roasted Areca Nut” which would appropriately be classifiable under CTH 2008 19020.
2.7.18. Further, the judgments passed in the case of M/s. Crane Betelnut Powder Works —Vs- Commissioner of Customs & C. EX, Thirupathi reported in 2007 (210) E.L.T 171 (S.C) and the Advance Ruling passed in the matter of M/s. Excellent Betel Nut Products in pursuance of amendment to the Central Excise Tariff Act, 1985 vide The Finance (No.2) Act, 2009 (Act No. 33 of 2009 dated 19th August 2009), will have no barring in the instant case, since the classification of “Roasted Betel Nut” was not at all the subject matter of these decisions and the same stands distinguished.
2.7.19. Further, the Customs Advance Ruling Authority, Mumbai on the similar question of Classification of “Roasted Areca Nut and Roasted Areca Nut Cut” has categorically differentiated the process and preparation of “Roasted Areca Nut” from Chapters 08 and 21 of the CTH, on the basis of the above Supreme Court judgments and has opined and ruled that Chapter 2008 19 20. is the appropriate classification for “Roasted Areca Nut” by its Ruling No. CAAR/Mum/ARD/44,45&46/2022 dated 07.12.2022, in the matter of M/s. Shahnaz Commodities International (P) Ltd, Chennai, and Ruling No. CAAR/ MUM/ ARC/ 39,40,41/2023 Dated 12-05-2023, in the case of M/s. Universal Impex, Mumbai, which would squarely apply to the Applicant in the instant case.
2.7.20. The Applicant further states that the Customs Department had challenged the aforesaid Advance Rulings of the CAAR, Mumbai of M/s. M/s. Shahnaz Commodities International (P) Ltd. Chennai, M/s. Neena Enterprises. Telangana and M/s. Universal Impex Mumbai, by way of a Civil Miscellaneous Appeal in CMA No’s. 600/2023, No.1206/2023 and No.1750/2023, respectively before the Hon’ble Madras High Court. Wherein the Division Bench of the Hon’ble Madras High Court after elaborately hearing all the parties dismissed the CMA’s of the Customs Department, thereby upholding the aforesaid Rulings of the CAAR, Mumbai. As such the findings of the Advance Ruling Authority on “Roasted Betel Nut” has been sustained.
2.7.21. Further, even as per General Rules of Interpretation (GIR) 3(a) of the Customs Tariff Act 1975, when the goods are classifiable under more than one Heading, the ‘most specific description’ is preferred. When, Section notes of the Chapter Heading and explanatory notes are examined for both Headings 0802 and 2008, it is observed that roasted nuts which include roasted betel nuts find a specific description in Heading 2008. Therefore, on the application of GIR 3(b), the subject goods merits classification under Heading 2008 and more specifically under Subheading 2008 19 20 as “Other roasted nuts and seeds”.
2.7.22. The Applicant states that from all perspective namely taking recourse to HSN explanatory note to Tariff Heading 2008, High Court & Supreme Court judgments on the issue, GIR 3(b) application, interpretation of the Customs Advance Ruling Authority on the similar issue, it can be asserted that roasted betel nuts are correctly classifiable under the Customs Tariff Heading item 2008 19 20 of chapter 20 of the first schedule of the Customs Tariff Act, 1975.
Further, the Applicant requests the Authority not to publish the order to “Protect Commercially Confidential Information” in lieu of Regulation 27 of the Customs Authority for Advance Ruling Regulations 2021, brought into effect by Notification No.63/2022-Cus (N.T), dated 20.07.2022.
3. Records of the personal hearing in the matter: – In the instant case, the personal hearing could not be taken place, as the port authority neither furnished any comments in the matter nor requested for opportunity of personal hearings, in spite of multiple reminders.
Findings, Discussion and Conclusion
4.1 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 and additional submissions for another application of the applicant on the same goods filed for the Custom Port Commissionerates of Chennai-II & Tuticorin. I have also taken consideration of comments of Customs Port Commissionerates of Chennai-II & Tuticorin, in respect of applications filed by the instant applicant on the same good. As no comments have been received from the Customs Port Commissionerate of Mundra Customs, I proceed to decide the present application regarding classification of Roasted Areca nut (whole), Roasted Areca nut (cut) and Roasted Areca nut (split) on the basis of the information on record as well as the existing legal framework having bearing on the classification of the Roasted Areca nut (whole), Roasted Areca nut (split) and Roasted Areca nut (cut), under the first schedule of the Customs Tariff Act, 1975.
4.2 “As per the sub-rule 19 of the CAAR Regulation 2021 as provided under Notification No.01/2021-Customs (N.T.) dated 04.01.2021 as amended vide Notification No.63/2022-Customs (N. T.) dated 20.07.2022, Hearing of application ex parte. —
Where on the day fixed for hearing or any other day to which the case is adjourned, the applicant or the Principal Commissioner or Commissioner does not appear in person or through an authorised representative when the application is called for hearing, the Authority may dispose of the application ex parte on merit:
Provided that where an application has been disposed of 11–under this regulation and the applicant or the Principal Commissioner or Commissioner, as the case may be, applies within seven days of receipt of a copy of the order or advance ruling and the Authority is satisfied that there was sufficient cause for his non-appearance when the application was called for hearing, the Authority may, after allowing the opposite party a reasonable opportunity of being heard, make an order setting aside the ex parte order or advance ruling and restore the application for fresh hearing.”
4.3 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 v. 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”.
4.4 I also note that Chapter 20 of the Tariff covers the Preparations of vegetables, fruits, nuts or other parts of plants. As per Chapter Note 1 (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. referee, 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 fruits. 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.
4.5 I also note on the submissions of the applicant that the 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 more 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.
4.6 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 other Chapters or in the preceding headings of 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-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavour, 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.
4.7 Moreover, it is, an established fact that in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Tariff Act. While delivering Phil Corporation Judgment Honourable Supreme Court has clearly spelt out importance of HSN 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, for 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.”
4.8 Further, in the CAAR, Mumbai Ruling No. CAAR/Mumbai/ARC/39,40,41/2023 in the case of M/s. Universal Impex, the Authority has stated 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 Tariff HSN 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 two Supreme Court judgments classifying roasted nuts which include almonds, betel nut and other 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 Tariff Act, 1975.”
4.9 Also, the Hon’ble High Court of Madras in its recent judgement on Civil Miscellaneous Appeal (CMA) No’s 600/2023, No. 1206/2023 and No. 1750/2023, dated 01.08.2023, had 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 are 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.
4.10 I find that the issue dealt with i.e. Classification of “Roasted betel nuts” in the judgement 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. 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 Nuts (Whole), Roasted Areca Nuts (Split) and Roasted Areca Nuts (Cut)” 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.
5. I rule, accordingly.
(SAMAR ANDA)
Customs Authority for Advance Rulings New Delhi
