Roasted betel nuts fall under Tariff heading 2008: CAAR

In re Universal Impex (CAAR Mumbai)

CAAR perused a test report issued by ABC Techno Labs India Pvt. Ltd., Chennai dated 31.3.2023 on the samples of roasted areca nut whole & split in which the test result indicates the moisture content, a test parameter, of the samples in the range of 3.34% to 3.84%. Moisture content in raw areca nut is found to be generally in the rage on 10-15%. As per applicant this test report indicates that the products were subjected to the roasting process. This aspect of product testing is a part of Customs Compliance Verification (CCV) process on importation of goods. Jurisdictional Customs Commissionerate carry out process of testing of imported goods with the help of concerned government partner agencies (GPAs) to cross-examine accuracy of declaration of goods in the import documents namely a Bill of entry and it’s supporting documents before an out of charge (00C) is granted. Hence the utility of sample test report at this stage is limited to only support applicant’s contention that the goods were subjected to the process of roasting and not merely to a moderate heat treatment.

As per General Rules of Interpretation (GIR) 3(a) of the Customs Tariff Act, 1975 when by application of GIR 2(b) or for any other reason, the goods are, prima facie, classifiable under more than one Heading, the ‘most specific description’ is preferred. When the Chapter/Section notes along with terms of 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”.

I find that in view of 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 hold 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.

On the basis of foregoing I rule that the Roasted betel nuts fall under Tariff heading 2008, specifically under Tariff entry 2008 19 20: ‘Other roasted nuts & seeds’ of chapter 20 of the first schedule of the Customs Tariff Act, 1975.

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

M/s. Universal Impex, Navi Mumbai, Thane, Maharashtra (hereinafter referred to as `the applicant’) filed three applications for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR) as per provisions of Section 28 H (2) (a) OF THE Customs Act, 1962. The said applications, along with enclosures, were received in the secretariat of CAAR, Mumbai on 31.01.2023 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 “Roasted Areca Nuts” for imports through ports of Nhava Sheva, Dist, Raigad, Maharashtra, Chennai-II Customs Commissionerate, Chennai and Krishnapatanam port, Dist. Nellore falling under Custom Commissionerate Vijaywada, Andhrp. Pradesh. The applicant intends to import “Roasted Areca Nuts” from Indonesia.

2.1 Applicant has stated as follows in their statement of relevant facts having a bearing on the question(s) raised enclosed with the CAAR-1 application:

The Areca nut is a tropical plant, belonging to the palm tree species. The kernel is obtained from the fruit of areca nut palm, known as the Areca Nut / Betel Nut or supari in India. The raw betel nut obtained is subjected to various processes to produce various products. Depending upon the specific value additions different varieties of betel nut such as API Supari, Chikni Supari, Boiled Supari, Dried Supari, Unflavoured Supari, Roasted Supari etc are obtained. The goods in the present application are “Roasted Areca Nuts and Roasted Areca Nuts Cut”.

The applicant intends to import “Roasted Areca Nuts / Betel Nuts” from Indonesia into India through the aforesaid seaports of Mumbai, Chennai and Tuticorin. Since the process of “Roasting” is not specifically defined in the Customs Tariff Act nor in the HSN explanatory notes or in its Chapter Notes, clarification is being sought from this Advance Ruling Authority.

The applicant states that the cultivation, harvesting and processing of the Roasted Areca Nut has undergone tremendous transformation, such that the involvement of labor and their dependency has reduced, by bringing about mechanization, which invariably increases the efficiency, reduces the wastage, enhances the quality and brings about uniformity in the final product. Further, the preparation time of “roasted Areca Nut” has also drastically reduced, in comparison with the manual method of preparation.

Further, applicant has submitted that the following processes are involved in the Preparation of Roasted Areca Nut:

The raw/fresh areca nut undergoes various process of preparation for roasting, which are detailed below:

Firstly, the raw areca nut is de-husked and its outer shell is removed. Thereafter, the de-husked nut is scattered to check for any visible impurities and the same is cleaned, pursuant to which the raw de-husked areca nut/betel nut is left to dry.

Secondly, the cleared and dried de-husked areca nuts are fed into the seed roasting oven/machine and heated in the temperature of above 100 Degree Celsius. The roasting is done using firewood/ palm kernel-based ovens/machines and the temperature of the flames is around 400 to 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.

Thirdly, the areca nuts are removed from the roasting oven and allowed to cool at normal room temperature, with the assistance of the cooling fans.

Fourthly, when the areca nuts have cooled and attained normal room temperature, they are again fed back into the oven at enormous heat, so as to evenly roast the areca nut.

This process is performed repeatedly, until the water content of the fresh areca nuts is reduced to 10 to 15 per cent. Thereby, the areca nut shrinks and becomes brittle. The process of repeatedly heating, roasting and cooling the areca nuts is to ensure that the areca nuts are k after thermal expansion, such that the roasted areca nuts have higher Abstract about Roasted Areca Nut submitted by the applicant is as follows:

1. The initial roasting time used to be around 7 to 8 days, but with mechanization the process of roasting and cooling is completed in about 2 to 3 days.

2. Pursuant to roasting, the areca nut undergoes a drastic 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. It has been established through research that the Tannin and Arecoline content of raw areca nut gets substantially changed by subjecting the same to roasting.

3. Various research and articles throws light on the chemical composition of various forms of areca nuts. As per the article titled “Estimation of Arecoline content of various forms of areca nut preparations by high-pressure thin-layer chromatography” substances viz. Polyphenols (flavonols, tannins) constitute a large proportion of the dry weight of the nut, their content in areca nut 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.

4. Roasting is not aimed at additional preservation or stabilization or to improve or maintain its appearance. Therefore, roasted areca nut is a distinctive product, more specifically classifiable under Chapter 20 of the Customs Tariff Act 1975 and Chapter Notes in HSN.

5. Roasted Areca Nut without the addition of any ingredients added to it is saleable in the Indian market in various forms like tukda (pieces) roasted betel nut as well as shredded roasted betel nut. These roasted betel nut products are sold in the market without any additives or without subjecting to any other preparation than the roasting process. These roasted betel nut variants are approved by government agency viz. FSSAI.

6. The “Roasted Areca Nut” is edible in its actual form and suitable for immediate consumption. It is masticatory and used for a variety of reasons such as stress reliever, mouth freshener, concentration improver and digestive following food intake.

Therefore, the process and the end product viz. “Roasted Areca Nut and Roasted Areca Nut Cut” is most suitable to be classified under Chapter 2008 19 20 of the Customs Tariff Act, 1975.

Statement containing the applicant’s interpretation of law and/or facts in respect of the issues on which the advance ruling is sought appears to be a complete reproduction of the CAAR, Mumbai’s ruling No. CAAR/Mum/ARC/44,45&46/2022 dated 07.12.2022 in the case of M/s. Shahnaz Commodities International (P) Ltd, Chennai, which applicant has thought would squarely apply to their instant case.

2.2 As per the submissions made by the applicant, Roasted areca nuts 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. They have cited case laws of 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.) to submit that the HSN Explanatory Note is the safe and dependable guide in the matters of classification of goods under the Customs Act.

Applicant further stated that as per the HSN 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). The applicant states that as the processes mentioned in Chapter 8 are different from the processes performed on impugned goods, they are excluded for the purpose of classification from Chapter 8 of the Customs Tariff Act, 1975 (hereinafter also referred as `Tariff’).

2.3 In respect of alternate CTH 2106, the applicant draws attention to Note 2 and explanatory note (A) to Chapter 21. As per 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. As per the applicant, the goods have undergone roasting, but they don’t contain lime, Katha (catechu) and tobacco. Further, roasted betel nuts can be consumed directly by merely cutting them into pieces. Therefore, the goods are equally classifiable under Chapter 21 of the Customs Tariff Act, 1975.

2.4 In their application, the applicant also refers to the case law of M/s. Crane Betel Nut Powder Works reported in 2007 (210) E.L.T 171 (S.C) stating that this is not applicable to their case in view of AAR ruling in case of M/s Excellent Betel Nut and a recent CAAR ruling in case of M/s Shahnaz Commodities International Pvt Ltd., Chennai. In the context of their submissions, the applicant has requested to issue ruling by holding the classification of the roasted areca nuts under CTH 2008 19 20 of the Customs Tariff Act, 1975. They have invited attention to CAAR, Mumbai’s ruling CAAR/Mum/ARC/44,45 & 46/2022 dated 7.12.2022 on identical product.

3. Comments of the jurisdictional Customs Commissionerates namely Nhava Sheva, Dist, Raigad, Maharashtra, Chennai-II Customs Commissionerate, Chennai and Krishnapatanam port, Dist. Nellore falling under Custom Commissionerate Vijaywada, Andhra Pradesh were sought in response to the applicant’s advance ruling applications. Additional Commissioner Customs (Preventive), Custom House, Krishnapatanam port, Dist. Nellore under Custom Commissionerate Vijaywada, Andhra Pradesh has responded to the application and this response is verbatim reproduced below.

3.1 ‘Areca nut’, botanically known as • Areca catechu, is a tropical plant found all over South East Asia. This tree belongs to the palm tree species and is from the Arecaceae family. The fruit (nut) of this tree is popularly known as the betel nut or supari in India. The areca nut is an important commercial plantation crop. The fruit has a fibrous mesocarp, and seeds with a truncate base, endosperm deeply ruminates with a basilar embryo. It is also known as “betel nut” which is the kernel obtained from the fruit of areca nut palm. 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).

3.2 Areca/ Betel nut is mentioned in Heading No.0802, specifically under CTH 080280.

3.3 Note 3 to Chapter 8 – 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 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. specifies certain treatments that could be carried out on the dried nuts for additional preservation or stabilization or to improve or maintain their appearance.

3.4 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.

3.5 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 by the processes specified in Chapters 7, 8 or 11 are not classifiable under Chapter 20. The processes specified in Chapters 7, 8 or 11 mainly include freezing, steaming, boiling, drying, provisionally preserving and milling.

3.6 CTH 2008 deals with 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:

3.7 CTH 2008 19 20 — Other roasted nuts and seeds. There is no specific description of Areca nut under this heading.

3.8 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.

3.9 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.

3.10 The roasting or mere addition of certain additives for the limited purpose of enhancing preservation or appearance or ease of consumption per se does not result in obtaining a preparation of betel nut. Further, every irreversible process does not result in a “preparation of the raw material”. Even after these processes the betel nuts retain the character of betel nut and do not qualify to be considered as preparation of betel nut. The goods do not change the essential character. Therefore, they do not merit a change in classification from Chapter 8 to Chapter 21.

3.11 Roasting is carried out using firewood/ palm kernel-based ovens and the temperature of the flames is around 600 degrees Celsius, due to which betel nuts are roasted well beyond 100 degrees Celsius, usually in the range of 130-150 degrees Celsius. This doesn’t necessarily indicate that the roasting brings any new item into existence or alter any new item into existence or alter the essential characteristic of areca nut. Further, excessive heat treatment or ,.._ is done only to remove the moisture and preserve the areca nut for a longer period. The above activity is squarely covered under Note 3 to Chapter 8, “preservation”.

3.12 As per General Rules of Interpretation (GIR) 3(a) of the Customs Tariff Act, 1975, when by application of GIR 2(b) or for any other reason, the goods are, prima facie, classifiable under more than one Heading, the ‘most specific description’ is preferred. When the Chapter/ Section notes along with terms of heading and explanatory notes are examined for both Headings 0802 and 2008, it is observed that areca nut / betel nuts find a specific description in Heading 0802 whereas Heading 2008 speaks only about other roasted nuts. Therefore, on the application of GIR 3(b), the subject goods merits classification under Heading 0802 and more specifically under Subheading 0802 80.

3.13 Supplementary note 2 to Chapter 21 states that in this Chapter “betel nut product known as Supari” means any preparations 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.

3.14 Betel nut product known as “Supari” is mentioned in Subheading 21069030.

3.15 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. Therefore, it appears that it is a residuary entry in respect of edible food preparations. As a result, edible preparations shall be classified under this entry 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 0802 80 of the Customs Tariff Act, 1975, they stand excluded from the scope of Chapter 21.

3.16 From the above it appears that Roasted Areca Nuts – whole as well as cut – merit classification under Heading 0802 80 of the First Schedule of the Customs Tariff Act, 1975.

3.17 Jurisdictional Customs Commissionerate of Chennai has submitted following comments in response to the application and the same are reproduced verbatim below:

1. The applicant’s claim that roasting is not defined in the Customs Tariff Act 1975 is not correct. Though roasting as a process is not defined, it will fall under the ‘moderate heat treatment’ mentioned in Chapter Note 3 of Chapter 8.

“3. Dried fruits 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 betel nut, fruit or dried nuts.”

2. The applicant’s claim that after repeated roasting for 2-3 days under 130-150 degrees Celsius in a roasting oven due to which the water content is reduced to 10-15% is a complete misrepresentation of facts. It is evident by the fact available with this office vide test reports that a raw betel nut falling under Chapter 8 has a moisture content of less than 10% and the betel nut undergoing repeated roasting and severe heat treatment has a water content 10 to 15% appears incorrect.

3. In the process flow mentioned in para 2 to make roasted betel nut, one set of process are found to be intended for cleaning, the second set for heating and roasting. These processes are clearly covered by the Chapter Note 3 to Chapter 8 (reproduced in para 8). In the instant case, betel nuts after being roasted are cooled and this fact per se would not exclude the end-products from the scope of “dried nuts”.

4. Further, it is equally obvious that roasting or mere addition of certain additives for the limited purpose of enhancing preservation or appearance or ease of consumption per se does not result in obtaining a preparation of betel nut.

5. Speaking more generally, in view of the design of the Schedule to the CTA 1975, HSN 080280 and plethora of judgements, besides common understanding and parlance, every  irreversible process does not result in obtaining a new product with a distinct classification at  the 8-digit level. Therefore, the process to which raw betel nuts have been subjected to roasted betel nut is squarely in the nature of processes referred to in the Chapter Note 3 to Chapter 8 and HSN Notes. Hence at the end of the said processes, the betel nuts retain the character of betel nut and do not qualify to be considered as “preparations” of betel nut, which is sine qua non for a good to be classifiable under Chapter 20.

6. As per the applicant, the roasted betel nuts are fit for immediate human consumption without addition of any other ingredient, as evident from the FSSAI approved products available in market. The term “roasted betel nuts”, are packed, labelled and marketed for sale as roasted betel nuts on various online portals like Amazon, India mart, Flipkart etc. the samples available in market does not bear CTH on packets, hence mere sales and packing does not tell about CTH of the item.

1. The applicant has claimed that roasting changes the colour and reduces tannin and arecoline content which is superficial as even boiling will result in similar physical and chemical changes.

2. To be classified under Chapter 20 there should be some preparation as the Chapter heading reads as “Preparations of vegetables, fruit, nuts or other parts of plants”. Mere roasting of betel nut does not render the product to be distinctive as claimed by the applicant or does not alter the character of the original good. Roasting or mere addition of certain additives for the limited purpose of enhancing preservation or appearance or ease of consumption per se does not result in obtaining a preparation of betel nut. Hence it remains as the betel nut which is rightly classifiable under Chapter 08.

3. According to Cambridge dictionary, “Preparation is a mixture of substances, often for use as a medicine”. According to Collins Dictionary “A preparation is a mixture that has been prepared for use as food, medicine, or a cosmetic.” However, in the process flow mentioned in para 2 it is evident that there is neither any mixture of products nor any change in the original good which tantamount to no preparation.

4. The article quoted is superficial as the credibility of the article could not be verified. Mere quoting of a paper or article without any credible specific details like the year of publication, name of the author, University at which it is presented, etc is an attempt to mislead the CAAR.

5. Since the question relates to classification of goods proposed to be imported, guidance of the Harmonized Commodity Description and Coding System of the World Customs Organization, to which India is a signatory, would be useful. Even It is seen that with respect to Chapter 8, the HSN prescribes the following as general guidelines: –

Fruit and nuts of this Chapter may be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled

The addition of small quantities of sugar does not affect the classification of fruit in this Chapter

20. The applicant has claimed that dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008.

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: 20081920

— Other roasted nut and seeds

21. This is another misrepresentation of facts since Chapter 20 cannot and does not cover any nuts or fruits prepared or preserved by the processes specified under Chapter 8. Since Chapter note 3 of Chapter 8 includes roasting under ‘moderate heat treatment’ the impugned goods cannot be classified under Chapter 20

22. This chapter does not cover:

a. Vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, Chapter 8, or Chapter 11;

b. Vegetable fats and oils (chapter 15);

c. Food preparations containing more than 20% by weight of sausage, meat, meat offal, blood, insects, fish or crustaceans, molluscs or other aquatic invertebrates, or any combination thereof (chapter 16)

d. Bakers’ wares and other products of heading 1905; or

e. Homogenized composite food preparations of heading 2104.

22. Further as per Rule 3(a) of General Rules for the Interpretation of the Harmonized System since the product is more specifically classified under CTH 08020 classification under Chapter 2008 is unwarranted.

When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

a. The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods

Further as per Rule 3(a) of General Rules for the Interpretation of the Harmonized System since the product is more specifically classified under CTH 08020 classification under Chapter 2016 is unwarranted

When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

b. The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods

24. Chapter Note 1 of Chapter 20 says that this chapter does not cover: vegetables, fruit or nuts, prepared or preserved by the processes specified in chapter 7, chapter 8, or chapter 11. Chapter 20 heading reads “preparations of vegetables, fruit, nus or other parts of plants”. It is pertinent to mention that the Chapters are organised as per evolution which is evident by the fact that the edible nuts and fruits are classified under Chapter 8, preparations of vegetables, fruits, nuts or other parts of plants under Chapter 20 and miscellaneous edible preparations under Chapter 21. Hence, since the roasted betel nut which did not undergo any preparation is rightly classifiable under Chapter 8.

25. Further, reliance is placed on

a. CAAR Delhi vide ruling no. CAAR/Del/Vaibhav/21/2021 in the case of M/s Vaibhav  Enterprises

” The CAA rejects the application of M/s Vaibhav Enterprises by giving the ruling that: API Supari, Chikni Supari, Boiled Supari, Boiled and Cut supari, unflavoured supari and flavoured supari, Roasted betel nut, merit classification under chapter 8 of the first schedule to the Customs Tariff Act and more precisely, under the heading 0802.”

where the CAAR ruled that inter alia roasted betel nut merits classification under Chapter 8

b. CAAR Delhi vide ruling no. CAAR/Del/Sarveshwari/11/2021 in the case of M/s Sarveshwari industries.

“the CAA rejects applicant appeal by stating that the goods; API Supari, chikni supari, unflavoured supari, flavoured supari and boiled supari are not classifiable under sub-heading 21069030, since they have not attained the character of “preparations” of betel nut, which is sine qua non for a good to be considered”

c. CAAR Delhi vide ruling no. CAAR/Del/Naman Agri/09/2021 in the case of M/s Naman Agri Impex Private Ltd.

“the CAA rejects applicant appeal by stating that the goods; API Supari, chikni supari, unflavoured supari, flavoured supari and boiled supari, merit classification underchapter 8 of the first schedule to the Customs Tariff Act, and more precisely, under the heading 0802. This is so in view of the fact that the processes to which raw green fresh betel nuts have been subjected to obtain the said five goods are squarely in the nature of processes mentioned in Note 3 to Chapter 8, and have not materially changed the essential character of betel nuts, further these goods are not classifiable under subheading 21069030.”

d. Chennai CESTAT order in M/s S.T. Enterprises v/s Commissioner of Customs (Chennai-vii)[ 2021(378) E.L.T514(Tri. Chennai)J.

“The Hon’ble Tribunal has addressed the question whether the mere boiling and drying whole betel nut it would merit classification under 21069030 and held that since the import goods are betel nuts whole, these would merit classification under Chapter 8.”

26. On perusal of the advance rulings given by the erstwhile AAR, New Delhi, which have been referred to by the applicant, the case of M/s Excellent Betel Nut Products Pvt. Ltd. do cover the four goods, i.e., API supari, Chikni supari, Unflavored supari and Flavored supari. In both these rulings, the erstwhile AAR has concluded that the said products merit classification under sub-heading 21069030. In doing so, the erstwhile AAR has been of the view that on account of the positive language of the Supplementary Note 2 to Chapter 21, it is not necessary for betel nut (supari) to undergo a change of character for it to be classified under Chapter 21. The AAR had considered the contention of the department that the said four goods merit classification under Chapter 8, but rejected the same. However, while doing so, the erstwhile AAR did not take any comment on the implications of the Chapter Note 3 to Chapter 8 on the processes by which raw betel nuts were subjected to obtain the said four goods. Further, the erstwhile AAR was of the opinion that the decision of the Hon’ble Supreme Court in the case of M/s. Crane Betel Nut however works reported at 2007 (210) E.L.T. 171 (S.C.))

“The SC gives the decision that the Commissioner of Customs and Central Excise has correctly analyzed the factual as well as legal situation in arriving at the conclusion that the process of cutting betel nuts into small pieces and addition of essential/ non-essential oils, menthol, sweetening agent etc. did not result in a new and distinct product having a different character and use.”

and therefore has no application in the facts of the cases before them. Further, the honorable High Court of Delhi in its order CUS AA 17/2022 dated 01-03-2023 has held that the order of CAAR in case of M/s Excellent betel nut is erroneous. The relevant portion of the judgment is reproduced below,

“The decision of the learned AAR in Re: Excellent Betelnut Products Pvt. Ltd. (supra) to the extent that it runs contrary to the decision of the Supreme Court in Crane Betel Nut Powder Works v. Commissioner of Customs and Excise, Tirupathi & Anr. (supra), is erroneous”.

27. However, in order to arrive at the appropriate classification of the impugned goods, all originating from common source viz. raw green fresh betel nut, a more comprehensive view needs to be taken than in the aforesaid M/s Excellent Betel nut case, as has been done by AAR, Mumbai in the case of

a. M/s. Samreen International Pvt. Ltd. (Ruling No. CAAR/Mum/ARC/3/2021 dated 15th of March, 2021)

“I find the observations of the Hon’ble Supreme Court in the case of Crane Betel Nuts and the decision of Hon’ble Tribunal in the case of Azam Laminators to be extremely enlightening”

“ln view of the aforesaid discussions, I have reached the conclusion that all the five products placed before me for consideration,
i.e., API supari, chikni supari, unflavoured supari, flavoured supari, and boiled supari merit classification under chapter 8 of the customs tariff, and more precisely, under the heading 0802 and not under sub heading 21069030, as contended.”

b. M/s Dry Nut Enterprises (Ruling No. CAAR/Del/Dry Nut/2021 dated 16th March 2021)

“..I find that the reference by the Principal Commissioner of Customs to the Note 6 to chapter
21 of the Central Excise Tariff  Act, which was essentially intended to deem certain processes as ” manufacture” is inappropriate in the present context. This is particularly so, given the judgement of the Hon’ble Supreme Court of India in the case of M/s. Crane Betel Nut Powder Works and of the CESTAT, Chennai in the case of M/s.Azam Laminators Pvt. Ltd. Put simply, these decisions clearly imply that addition of flavouring agents do not change the character of the good, meaning in the present case betel nut would continue to remain betel nuts and not become preparations of betel nuts”

28. From the various advance rulings quoted above, it is more than evident that the applicant’s submission of Hon’ble Supreme Court’s decision in M/s. Crane Betelnut Powder works has been rendered infructuous post the amendments in 2009 is untenable and does not hold any water.

29. On perusal of of M/s. Shahnaz Commodities International advance ruling which is relied upon by the applicant, the following are observed

a. Para 2.1 of the advance ruling mentions that the process of “roasting” is neither defined in customs tariff nor in the HSN Explanatory/sections/chapters note. In the chapter note 3 of chapter 8 ‘moderate heat treatment process’ is mentioned.

“….

3. 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. It is pertinent to note that roasting is also a heat treatment. The process mentioned by the applicant is not clear and did not mention whether it is sundried before roasting. The applicant has claimed that after roasting water content comes down to 10-15 percent. However as per the test report available with this office, the moisture content is normally less than 10% (test report attached) for various consignments of raw betel nuts imported under Chapter 08. Applicant did not provide any test report even before Advance Ruling authority and there was no test in this regard before the decision is made by the authority. Hence it is clearly evident that the applicant did not provide the complete process before the CAAR and have misrepresented the facts.

c. In para 2.2 applicant states that processes mentioned in chapter 8 are different from the processes performed on impugned goods. Since the claimed process by the applicant is devoid of any test report and roasting is well inclusive in heat treatment mentioned in Chapter note 3 of Chapter 8, the applicant’s contention does not hold any water. After roasting the end product remain dried areca nut which is well defined in chapter 8 up to 6-digit level.

d. In para 2.3 of the said order, applicant’s contention is that roasted betel nuts can be consumed directly by merely cutting them into pieces. Even raw betel nut can be consumed directly by merely cutting into pieces.

e. In para 4.1 of the said order, the CAAR is of the view 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. However, CAAR did not order to test the goods and solely relied on the submissions by the applicant which is not backed by any empirical evidence. It is also noteworthy to mention that boiling will also change the chemical and physical characteristics of areca nut by reducing the arecoline and tannin content and even sun drying will also reduce the arecoline and tannin content.

f. Point 3 of para 4.2 of the said order states that roasting is not aimed at additional preservation or stabilization. In the absence of test report to ascertain such claim, the issue must be examined after due testing.

g. Point 4 of para 4.2 of the said order states about a research article to substantiate the claims of the Importer. However, there was no mention of the name of the author, university or institute where the article is published.

h. In para 5.1, M/s. Shahnaz Commodities International has stated to CAAR that the areca nuts are roasted at the temperature of 130-150 degrees Celsius and roasting changes the colour of the areca nut. For that matter, heating or boiling also change the colour of the product. Change of colour does not mean the essential characteristics of the product also changes and no test report has been provided to support their claim. The applicant has also further claimed that roasted supari variants are approved by FSSAI, a government agency. However, no FSSAI report was provided to back the claim. It is noteworthy to mention that even raw areca nut is also approved by FSSAI.

i. In para 5.2 of the said order, the CAAR states that under the present legal framework M/s. Crane’s case is futile. However, it is pertinent to mention that the M/s Crane’s case has been relied upon for plethora of advance rulings passed in the past.

j. In para 5.3 of the said order, the CAAR is of the view that none of the rulings referred by the jurisdictional Commissionerate dealt with Roasted betel nut. It is pertinent to mention that the earlier advance ruling in case of M/s Vaibhav enterprises vide Ruling no. CAAR/Del/Vaibhav/21/2021 dated 21.01.2021 have discussed about the roasted betel nut in para 3(iv) as ‘roasting in fire gas rotary roaster’ which is referred by the jurisdictional Commissionerate.

k. Para 5.4 of the said order states that GIR are provided for ease of reference only; for legal purpose classification shall be determined according to the terms and headings and any relative section or chapter notes. Chapters are organized as per the evolution of the goods and that is the reason for chapter 20 and chapter 21 discussing about preparation and they fall after chapter 8 which consists of raw/ single edible products. In Chapter 20, roasted nuts and seeds comes after the heading jams, fruit jellies. Even heading 2008 is all about ‘fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or sprit, not elsewhere specified or included”. Since the raw betel nut is already specified in chapter 08 under heading 080280, it cannot be classified under chapter 20. Roasting alone will not change the product from chapter 08 to chapter 20 to get classified with jam and marmalades.

l. In para 5.5 of the said order, CAAR states that the explanatory note to heading 0802
states that “this heading also covers areca (betel) nuts used chiefly as a masticatory”. It also states that roasted betel nut are fit for immediate human consumption without addition of any ingredients on the basis of examination of FSSAI approved samples. However, FSSAI samples are not provided to the Commissionerate and the applicant themselves has accepted in their submission that their product is also used for masticatory purposes.

m. In para 5.6 of the said order, CAAR gives reference of case of Alladi Venkateswarlu v/s Govt of Andhra Pradesh in which the Hon’ble Apex court held that “the commonly accepted sense of a term should prevail in constructing the description of an article of food”. CAAR also states that drying is moisture removal process involving methods such as dehydration, evaporation, etc. whereas roasting is a severe heat treatment process. The purpose of roasting inter alia is to reduce moisture water content and hence it is also a form of drying. Roasting supplements the preparation and by itself cannot be deemed to a preparation process.

n. Further it is observed based on test reports the moisture content even in case of Chapter 08 areca nuts is normally less than 10% but the applicant has claimed that the moisture content is 10-15% for the impugned goods which has undergone a ‘severe heat treatment process’ compared to the ‘moderate heat treatment’ mentioned in Note 3 of Chapter 8.

CTH	Heat treatment	Moisture Content
Chapter 08	Moderate heat treatment	Test report moisture content <10%
CHAPTER 20 (impugned goods in thistreatment case)	Repeated Roasting and severe heat Moisture as claimed by the applicant	content as per applicant 10-15%

o. In para 5.7 of the said order, the CAAR gives reference to explanatory notes of chapter 20 and 08 and is of the opinion that process of roasting is not covered by note 3 to chapter 8. The purpose of roasting is to reduce moisture which is well covered under note 3 of chapter 8.

p. In para 5.8 of the said order, CAAR refers that applicant submitted sample products of packaged, labeled and marketed items as roasted betel nuts. Packaged and labeled items were not submitted by the applicant. To the complete dismay not even photos of such items were submitted by the applicant. Invoices of the sample produced were not checked for the CTH and hence the process itself is incomplete. They further stated that packages will bear FS SAI stamp of approval, no information provided by the applicant on label and marketing. As per explanatory notes of chapter 20, packaging should be less than 250gm and no details has been provided as far as packaging is concerned.

q. In para 5.9 of the said order, CAAR refer chapter notes of chapter 8 and states that roasting is different from all the processes mentioned in chapter 8, which is not correct. The purpose of roasting is to reduce water content, arecolin and tannin. It does not change the end product and the end product still remains as betel nut. Drying is well defined under chapter note 3 of chapter 8, most specifically under heading 0802. In view of the above observations, this office is in the process of filing an appeal in the High Court against the order of CAAR in case of M/s. Shahnaz Commodities International.

28. Several advance ruling applications are filed for betel nut to avoid classification under Chapter 08 as there is a MIP as well as a tariff rate which is regularly revised by CBIC vide notification. It is pertinent to mention that the revision of tariff value is on a continuous upward trend (USD $4937 in Dec 2021 to USD $14026 in February 2023).

29. However, several new applications are being submitted to circumvent the minimum import price ad increasing tariff values by legalizing betel nut import through mis- declaration and mis-classification. The CAAR may not entertain such applications considering that several advance rulings have already rejected the classification of betel nut under chapter 20 and 21 in the interest of the local areca nut industry and to safeguard the interest of the revenue.

4. A personal hearing in this matter was conducted on 25.04.2023 in which advocate Shri. Satish Sundar, Shri. N. Balaji and Shri. Faizal Hanif Toply represented the applicant. Joint Commissioner Customs represented one of the jurisdictional Commissionerates. After explaining their CAAR applications during the course of personal hearing they invited attention to previous CAAR ruling in case of M/s Shahnaz Commodities International (P) Ltd., Chennai, HSN explanatory notes, rejoinder submitted in response to comments received from Additional Commissioner (Preventive) Customs, Krishnapatnam Custom House, Gopalpuram, Dist. Nellore falling under Custom Commissionerate Vijaywada, Andhra Pradesh, HSN explanatory notes to Chapter heading 2008 and also a recent judgment of the honorable High court, New Delhi in case of M/s Great Nuts Impex Pvt. Ltd. & others.

4.1 During the course of hearing Ms. Sowmya Nuthalapati, Joint Commissioner —Customs representing one of the jurisdictional Commissionerates stated that the roasted betel nut falls under chapter 8 only due to application of Rule 2(b) of the General Rules of Interpretations (GRI). She, reiterating what was stated in the response from the Additional Commissioner (Preventive), Krishnapatnam Custom House, Dist. Nellore falling under Custom Commissionerate Vijaywada, Andhra Pradesh, expressed a disagreement with the classification proposed by the applicant and stated that the roasted betel nut will fall under chapter 8 of the first schedule to the Customs Tariff Act, 1975 due to application of Rule 2 (b).

4.1.1 Before looking in to jurisdictional Commissionerates’ responses it is observed that in support of applicant’s claim that the imported goods will be roasted betel nuts only, applicant’s representatives produced during the course of hearing a test report issued by ABC Techno Labs India Pvt. Ltd., Chennai dated 31.3.2023 on the samples of roasted areca nut whole & split in which the test result indicates the moisture content, a test parameter, of the samples in the range of 3.34% to 3.84%. Moisture content in raw areca nut is found to be generally in the rage on 10-15%. As per applicant this test report indicates that the products were subjected to the roasting process.

4.2. I have considered all the materials placed before me in respect of the subject goods including the submissions made by the applicant during the course of personal hearing. I have perused the response from Additional Commissioner (Preventive) Customs, Krishnapatnam Custom House, Gopalpuram. I proceed to decide present applications on the basis of information available on record as well as existing legal framework having bearing on the classification of the roasted areca nut under first schedule of the Customs Tariff Act, 1975. The issue before me is to decide the classification of Roasted Areca Nuts under the said Tariff.

4.3. On perusal of submissions of the applicant I find that the applicant has described various processes involved in producing of roasted betel nuts. In short, it is stated that the raw betel nut is de-husked and then sun-dried. The dried betel nuts are then fed to roasting ovens where temperature of flames is around 400 to 600 degrees Celsius. The betel nuts are roasted at the temperature of 130-150 degrees Celsius. Subsequently, the roasted betel nuts are cooled at room temperature. This cycle of roasting and cooling is repeated a few times till the desired quality of the product is obtained. The processes mentioned above cause changes in physical
and chemical characteristics. Roasting causes the deposition of an ash-like substance on the outer surface of the betel nut. It imparts a charred appearance to the betel nut. Roasting also causes a substantial change in chemical composition, especially in respect of tannin and arecoline content.

4.4 During the course of the hearing, the samples of roasted supari were presented by the applicant and same were examined. On visual comparison of roasted supari with normal supari the colours of roasted supari and normal supari were found different. Roasted supari was dark grey in colour while normal supari was brown in colour. Roasted supari without the addition of any ingredients to it is saleable in the Indian market in various forms like tukda (pieces) roasted supari as well as shredded roasted supari. Samples of roasted betel nut- tukda (pieces) produced during the course of hearing were approved by the FSSAI, a government certifying agency on food safety.

4.5. Before proceeding further let me deliberate on the legal framework and relevance of various case laws and rulings cited by the applicant. The present application of the applicant needs to be seen in the context of a legal framework governed by the Customs Tariff Act, 1975, Chapter/ Section notes along with HSN explanatory notes and relevant judgments of the honorable Courts.

Rule 1 of the General Interpretation Rules (GIR) lays down that the titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. Based on this fundamental rule I proceed further to analyze present issue.

4.6. From the submissions of the applicant, previous CAAR rulings and honorable Supreme Court’s judgments in two different cases I find in the instant case that the classification of roasted betel nuts involves examination of three different chapters, chapter headings and tariff entries of the first schedule to the Customs Tariff Act, 1975 in which areca nut in one or the other form finds mention. Titles of these chapters 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 Miscellaneous edible preparations

4.7 Let me analyze these chapters in sequential manner for the purpose of classification of roasted betel nut. As mentioned previously, during the course of hearing, Joint Commissioner —Customs representing one of the jurisdictional Commissionerates stated that the roasted betel nut falls under chapter 8 only due to application of Rule 2(b) of the General Rules of Interpretations (GRI). On pointing out that the roasted nuts are specifically mentioned in chapter 20 read with HSN Explanatory Note to heading 2008 she expressed a disagreement and stated that the roasted betel nut will fall under chapter 8 of the first schedule to the Customs Tariff Act, 1975 due to application of Rule 2 (b).

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 HSN explanatory 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 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 further 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 stabilisation (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 080280. The explanatory note to Heading 0802 states that This heading also covers areca (betel) nuts used chiefly as a masticatory. One of the main uses of the goods under consideration is masticatory. Therefore, the impugned goods satisfy this note. However, the process of roasting is not finding mention anywhere in this Explanatory Note to Chapter heading 0802. I also find that the roasted betel nuts are fit for immediate human consumption without addition of any other ingredient.

4.8. Now let me examine whether processes carried out on the subject goods are covered by the processes specified in the chapter 8. 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.

Chapter 20 of the Tariff covers the Preparations of vegetables, fruit, nuts or other parts ofplants. 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. 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 as discussed earlier I find that the processes mentioned in chapter 8 do not cover roasting process.

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 mention above. Roasting, as submitted by the applicant, is carried out using firewood / palm kernel based ovens and the temperature of the flames is around 600 degrees Celsius, due to which betel nuts are roasted well beyond 100 degrees Celsius, usually in the
range of 130 -150 degrees Celsius. 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.

4.9 Now, let me turn to the relevant chapter heading and tariff entry in chapter 20 of the first schedule to the Customs Tariff Act, 1975. I find that the term roasted betel nut is specifically mentioned in the Customs Tariff Act’. I find following CTH specifically mentioned in the Tariff.

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

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, flavours, spices or other additives. Dry-roasting, oil-roasting & fat-roasting, as a processes, 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.

From the forgoing it is observed that the impugned goods i.e. roasted betel nuts, find specific reference in 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 explanatory note a process of roasting is not specifically mentioned as a process of preservation or stabilization or a process to improve or maintain the appearance. This corroborates 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 Hence I do not find merit in the views expressed, reproduced in para 4.1 earlier, by Joint Commissioner Customs representing one of the jurisdictional Commissionerates.

4.10. I find that in two Supreme Court judgments, both under the Central Excise law, the classification of roasted nuts was upheld by the apex court in chapter 20 of the Central Excise Tariff Act, 1985. Interestingly, in both cases it was a case of the Central Excise department that the roasted nuts fall under the chapter 20 of the Central Excise Tariff Act. Further, unlike in Crane Betel nut case judgment, there was no subsequent legislative change in the legal frame work to alter the effect of these judgments.

I find that the ratio laid down by the Supreme Court in two case laws in (1) Amrit Agro Industries Ltd. & Anr. v. Commissioner of Central Excise, Ghaziabad (2007) 201 ELT 183 (SC), and (2) 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. Honourable Supreme Court has upheld the classification of roasted nuts, which also includes roasted betel nut, under chapter 20 of the then Central Excise Tariff Act. It is pertinent to note that the heading and sub-headings under the then Central Excise Tariff Act and present Customs Tariff Act are exactly same. 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.”

In the case of Collector of Customs, Bombay Vs Business Forms Ltd, 2002-TIOL-277-SC-CUS-LB, the Hon’ ble Supreme court held that Explanatory Notes to HSN need to be given due consideration for classifying goods.

HSN Explanatory notes specifically mentions that the dry-roasted, fat roasted and oil roasted are a (betel) nut are included under CTH 2008 of the Customs Tariff. In this context it is pertinent to note that the Supreme Court of India in case of Commissioner of Customs & Central Excise vs Phil Corporation Ltd in Appeal (civil) 2215 of 2002 dated 07/02/2008 has decided the classification of roasted nuts under Central Excise Tariff. Relevant extracts of the judgment are reproduced below:

“Chapter 20: Preparations of Vegetables, Fruit, Nuts or Other Parts of Plants Chapter Notes:

1. This Chapter does not cover:

(a)Vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, 8 or 11;

(b) Food preparations containing more than 20% by weight of sausage, meat, meat offal, blood, fish or crustaceans, molluscs or other aquatic invertebrates, or any combination thereof (Chapter 16); or

(c) Homogenised composite food preparations of heading 21.04. 2. Headings 20.07 and 20.08 do not apply to fruit jellies, fruit pastes, sugar-coated almonds or the like in the form of sugar confectionary (heading 17.04) or chocolate confectionery (heading 18.06). 3. Headings 20.01, 20.04 and 20.05 cover, as the case may be, only those products of Chapter 7 or of heading 11.05 or 11.06 (other than flour, meal and powder of the products of Chapter 8) which have been prepared or preserved by processes other than those referred to in Note 1 (a). Tomato juice the dry weight content of which is 7% or more is to be classified in heading 20.02. 5. For the purpose of heading 20.07, the expression “obtained by cooking” means obtained by heat treatment at atmospheric pressure or under reduced pressure to increase the viscosity of a product through reduction of water content or other means. 6. For the purpose of heading 20.09, the expression “juices, unfermented and not containing added spirit” means juices of an alcoholic strength by volume (see Note 2 to Chapter 22) not exceeding 0.5% vol. 20.08 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: 2008.11 — Ground-nuts 2008.19 — Other, including mixtures 2008.20 — Pineapples 2008.30 — Citrus _fruit 2008.40 — Pears 2008.50 — Apricots 2008.60 — Cherries 2008.70 — Peaches, including nectarines 2008.80 — Strawberries — Other, including mixtures other than those of subheading 2008.19: 2008.91 — Palm hearts 2008.92 — Mixtures 2008.99 — Other 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 Chapter 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 fatroasted, whether or not containing or coated with vegetable oil,  salt, flavours, spices or other additives.

2.xxx”

9. The learned Additional Solicitor General submitted that in the HSN Notes to Chapter 8, roasted groundnuts have been specifically excluded whereas in Note 1 of Chapter 20 of the Central Excise Tariff Act, all products where preservative solution is applied or dried, dehydrated or evaporated, have been included. Note 1 of Chapter 20 states as under: – “This chapter covers only products which are prepared or preserved by processes other than merely chilled or frozen, or put in provisional preservative solution or dried dehydrated or evaporated.”

10. The learned Additional Solicitor General further submitted that the controversy involved in this case is no longer res integra. He placed reliance on the recent judgment of this court in Amrit Agro Industries Ltd & Anr. v. Commissioner of Central Excise, Ghaziabad (2007) 201 ELT 183 (SC), according to which roasted peanuts would fall under Chapter 20.

Para 6 of the judgment reads as under: – “Having gone through the records and having examined the process undertaken by the assessee, we are in agreement with the view expressed by the Tribunal (“CEGAT”) regarding classification of roasted peanuts under Heading 20.01. The Tribunal had adopted a correct test when it says that the essential structure of the peanut is not changed by the process of roasting. The assessee merely applies salt to roasted peanuts which does not obliterate the essential character.  Moreover, roasting is a process. That process has not been excluded in Note 1 to Chapter 20. Therefore, 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 20.08.”

11. The learned Additional Solicitor General has also drawn our attention to paragraph 7 of the said judgment which reads as under: – “As stated above, roasted peanut is also a preparation, however, it is a preparation of nuts like almonds, peanuts, groundnuts etc. They are products which are prepared or preserved by processes like roasting. As stated above, roasting is not chilling, it is not freezing. As stated above, roasting is not one of the enumerated processes in Chapter Note No. 1 to Chapter 20. Heading 20.01 specifically refers to preparations of vegetables fruit, nuts or plants. Sub-heading 2001.90 refers to the word ‘Other’. In the circumstances, we are in agreement with the view expressed by the Tribunal that roasted peanut falls under Chapter 20 and not under Chapter 21.”

12. He contended that HSN is quite relevant for 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 clearly indicate that its products are excluded from Chapter 8 as they fall in Chapter 20. In these circumstances, it has been submitted that the classification of the products in question have to be made under Chapter 20.

13. The learned Additional Solicitor General also placed reliance on the judgment of this court in Collector of Central Excise, Shillong v. Wood Craft Products Ltd. (1995) 3 SCC 454. This 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.”

According to the department’s submission, in view of the HSN notes and the judgment of this court in Amrit Agro Industries (supra), the classification of the products in question ought to be made only under Chapter 20.

28. We have heard the learned counsel for the parties at length and carefully analysed the judgments cited at the Bar. The Central Excise Tariff Act is broadly based on the system of classification from the International Convention called the Brussels’ Convention on the Harmonised Commodity Description and Coding System (Harmonised System of Nomenclature) with necessary modifications. HSN contains a list of all the possible goods that are traded (including animals, human hair etc.) and as such the mention of an item has got nothing to do whether it is manufactured and taxable or not.

From the forgoing apex court 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 not 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 SC judgment in case of M/s Amrit Agro are relied upon. Honorable 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.

4.11 It was perceived that the process of mere roasting of betel nut does not render a new product or does not alter the character of the original good, but remains the betel nut which is already classified under Chapter 8. As a result, it is also perceived that as the betel nut is already mentioned in Chapter 8, it can’t be classified in Chapter 20. Betel nut in various forms is mentioned in chapter 8, in chapter 20 as well as in chapter 21. Para 6 of the judgment of honourable Supreme Court in Amrit Agro Industries Ltd. & Anr. v. Commissioner of Central Excise, Ghaziabad (2007) 201 ELT 183 (SC), according to which roasted peanuts would fall under Chapter 20, reads as follows;

“Having gone through the records and having examined the process undertaken by the assessee, we are in agreement with the view expressed by the Tribunal (“CEGAT”) regarding classification of roasted peanuts under Heading 20.01. The Tribunal had adopted a correct test when it says that the essential structure of the peanut is not changed by the process of roasting. The assessee merely applies salt to roasted peanuts which does not obliterate the  essential character. Moreover, roasting is a process. That process has not been excluded in  Note 1 to Chapter 20. Therefore, 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 20.08.”

Para 7 of the same judgment reads as under: –

As state above, roasted  peanut is also a preparation, however, it is a preparation of nuts like ,almonds, peanuts, ground-nuts etc. They are products which are prepared or preserved by processes like roasting.

Hence I observe that the process of roasting of the (betel) nut constitutes a ‘preparation’. This aspect was discussed at length in the Hon’ble Supreme Court’s judgements in cases of Amrit Agro Industries Ltd as well as M/s Phil Corporation. Therefore, a perception that a mere roasting doesn’t amount to preparation is not a legally sustainable ground for rejecting the classification of roasted nuts under Chapter 20 of the Customs Tariff Act, 1975. Observations reproduced above from the judgments of the apex court clarify doubts on the issue of whether a process of mere roasting amounts to a preparation or not.

I observe that in the previously referred 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. Further, the goods under consideration are not excluded by any chapter note or explanatory note from CT Heading 2008. Therefore, it is evident 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.

4.12 In regards to remaining competing classification under Chapter 21, it is observed that it includes within its ambit, miscellaneous edible preparations. Supplementary note 2 to Chapter 21 states that in this Chapter “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. Betel nut product known as “Supari”.

Heading 2106 covers food preparations not elsewhere specified or included. Betel nut product known as supari is mentioned in Subheading 2106 90 30. Those food preparations not specified or included elsewhere in the tariff being preparations for human consumption are to be classified under this heading. Therefore, it appears that it is a residuary entry in respect of edible food preparations. As a result, edible preparations shall be classified under this entry 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 21.

4.13.1 Now, let me analyze the relevance of M/s. Crane Betelnut Powder Works reported in 2007 (210) E.L.T 171 (S.C) and referred by the applicant in their application, which formed the basis for various CAAR rulings in the past. The aforementioned decision was in relation to the Central Excise Act, 1944 and the question was as to whether certain changes brought in the betel nut amount to manufacture under definition in section 2(f) of the Central Excise Act, 1944 or not. Further, most importantly, this judgment pertains to dispute whether the betel nut product under question falls under Chapter 8 or Chapter 21 of the Central Excise Tariff Act. This ratio cannot be imported for the classification dispute between chapter 8 and chapter 20.

4.13.2 More importantly the effect of the Supreme Court judgement in the case of M/s Crane Beetelnut stands nullified due to subsequent amendment in Chapter 21 of the Central Excise Tariff Act, 1985 by way of insertion of a chapter note in chapter 21 in the year 2009. Hence recourse to any CAAR rulings which were primarily based on the honorable Supreme Court judgement in M/s Crane’s case is futile under the present legal framework especially provisions of section 3(7) of the Customs Tariff Act, 1975 read with perfectly aligned chapter note under chapter 20 of both the Customs Tariff Act, 1975 and GST Tariff Act, 2017.

4.13.3 Further, I find that the betel nut in its various forms finds classification in chapters 8, 20 and 21 of the schedule I of the Customs Tariff Act, 1975 read with HSN Explanatory notes to the relevant headings under these chapters. General Rules of Interpretation (GRI), specifically rule 1 and rule 3(a), to the Customs Tariff Act, 1975 provide further context for understanding of various tariff entries in the Tariff. The legal framework mentioned above has to be factored in while deciding classification of betel-nut proposed to be imported by the applicant

4.13.4 I observe that the ratio of M/s Crane Betel nut judgment of the apex court cannot be followed in case of present application

(1) due to legislative change in the Central Excise Tariff subsequent to M/s Crane Betelnut Powder Work’s judgment,

(2) for deciding the classification under chapter 20 as the legal dispute in that case involved a classification of variants of betel nut between chapters 8 and 21,

(3) due to availability of commodity specific SC judgments (1) Amrit Agro Industries Ltd. & Anr. v. Commissioner of Central Excise, Ghaziabad (2007) 201 ELT 183 (SC), and (2) Commissioner of Customs & Central Excise vs Phil Corporation Ltd in Appeal (civil) 2215 of 2002 dated 07/02/2008 on the classification of roasted nuts under chapter 20 of Central Excise Tariff Act.

4.14 I observe that none of the past CAAR rulings — including all those referred by the Chennai Customs Commissionerate, prior to M/s Shehnaz Commodities International Pvt Ltd.’s ruling, dealt with the issue of classification of roasted betel nuts. These include CAAR ruling in case of M/s Vaibhav Enterprises also. When specific Supreme Court judgments on the issue of classifying roasted nuts — which include roasted betel/areca nuts also – under chapter 20 are available and are in force then there is no need to refer to CAAR rulings as well as Court judgments in classification disputes between chapters 8 and chapter 21. We cannot import and apply the ratio of classification decisions in case of any other variant of supari from chapter 8 or chapter 21 to the roasted supari falling under chapter 20. Any reference to previous CAAR rulings related to API Supari, Chikni supari, boiled supari and unflavoured supari is not relevant in the present case as a product for which an application for advance ruling is filed is distinctly different from all these varieties of betel nut/supari. Hence I hold that the Chennai Customs Commissionerate’s statements based on past CAAR rulings as well as M/s Crane Betel Nut judgment as legally unsustainable and not applicable in deciding roasted areca/betel nuts’ classification. Doing so will be against the provisions of relevant Customs heading under chapter 20 of the Customs Tariff Act, 1975 and the General Rules of Interpretations (GRI) of Customs Tariff Act, 1975.

Jurisdiction Customs Commissionerate, Chennai while relying on the CAAR ruling in M/s Vaibhav Enterprises’ case (CAAR Delhi ruling no. CAAR/Det/Vaibhav/21/2021) has stated as follows:

” The CAA rejects the application of M/s Vaibhav Enterprises by giving the ruling that: API Supari, Chikni Supari, Boiled Supari, Boiled and Cut supari, unflavoured supari and flavoured supari, Roasted betel nut, merit classification under chapter 8 of the first schedule to the Customs TariffAct and more precisely, under the heading 0801″

where the CAAR ruled that inter alia roasted betel nut merits classification under Chapter 8.

In order to examine this response of the jurisdictional Customs Commissionerate relevant text of ruling of the CAAR Delhi is reproduced verbatim below:

16. In view of the aforesaid discussions, I have reached the conclusion that all the six goods placed before me for consideration, i.e., API supari, Chikni supari, boiled supari, boiled & cut supari, unflavored supari, and flavored supari, merit classification under Chapter 8 of  the First Schedule to the Customs Tariff Act, and more precisely, under the heading 0802. This is so in view of the fact that the processes to which raw green fresh betel nuts have been subjected to obtain the said six goods are squarely in the nature of processes mentioned in Note 3 to Chapter 8, and have not materially changed the essential character of betel nuts, as held by the Hon ‘ble Supreme Court in the M/s Crane Betel Nuts case. Further, the said six goods are not classifiable under sub-heading 2106 9030, as contended by the applicant, since they have not attained the character of “preparations” of betel nut, which is sine qua non for a good to be so considered.

In so far as argument whether goods resulting from a roasting process have attained the character of ‘preparation’ or not is concerned I find that two different Supreme Court judgments namely (1) Amrit Agro Industries Ltd. & Anr. v. Commissioner of Central Excise, Ghaziabad (2007) 201 ELT 183 (SC), and (2) Commissioner of Customs & Central Excise vs Phil Corporation Ltd in Appeal (civil) 2215 of 2002 dated 07/02/2008 have held unequivocally that the roasting of nuts is a preparation. In paras 10 and 11 of Supreme Court judgment in case of Commissioner of Customs & Central Excise vs Phil Corporation Ltd para 6 and 7 of Supreme Court judgment in Amrit Agro Industries Ltd. & Anr. v. Commissioner of Central Excise, Ghaziabad have been relied upon and these paras are reproduced below.

10. The learned Additional Solicitor General further submitted that the controversy involved in this case is no longer res integra. He placed reliance on the recent judgment of this court in Amrit Agro Industries Ltd & Anr. v. Commissioner of Central Excise, Ghaziabad (2007) 201 ELT 183 (SC),according to which roasted peanuts would fall under Chapter 20.

Para 6 of the judgment reads as under: – “Having gone through the records and having examined the process undertaken by the assessee, we are in agreement with the view expressed by the Tribunal (“CEGAT”) regarding classification of roasted peanuts under Heading 20.01. The Tribunal had adopted a correct test when it says that the essential structure of the peanut is not changed by the process of roasting. The assessee merely applies salt to roasted peanuts which does not obliterate the essential character. Moreover, roasting is a process. That process has not been excluded in Note 1 to Chapter 20. Therefore, 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 20.08.”

11. The learned Additional Solicitor General has also drawn our attention to paragraph 7 of the said judgment which reads as under: –

“As stated above, roasted peanut is also a preparation, however, it is a preparation of nuts like almonds, peanuts, ground-nuts etc. They are products which are prepared or preserved by processes like roasting.  As stated above, roasting is not chilling, it is not freezing. As stated above, roasting is not one of the enumerated processes in Chapter Note No. 1 to Chapter 20. Heading 20.01 specifically refers to preparations of vegetables fruit, nuts or plants. Sub-heading 2001.90 refers to the word ‘Other’. In the circumstances, we are in agreement with the view expressed by the Tribunal that roasted peanut falls under Chapter 20 and not under Chapter 21.”

Further in para 3 (iv) of this ruling in M/s Vaibhav Enterprises’ case a reference related to ‘flavored supari’ is not a reference to ‘roasted betel nut’. Process of roasting in fire gas rotary roaster is mentioned as one of the processes in preparation of flavoured supari. In this ruling the said six goods are API supari, Chikni supari, boiled supari, boiled & cut supari, unflavored supari, and flavored supari. Hence, I find that classification of roasted betel nuts was not at all a subject matter of these decisions. Further, in this ruling the reliance is placed on judgement of the honorable Supreme Court of India in the case of M/s Crane Betel Nut Powder Works. This ruling has not taken into consideration legislative amendment in Central Excise Tariff Act, 1985 by insertion of clause 113 read with Schedule V of the Finance Act (No.2) of 2009 dated 19th August 2009, amending the Chapter Note of Chapter 21 by including Note 6 in the chapter. I have already stated that the ratio of M/s Crane Betel nut judgment of the apex court cannot be followed in case of present application as discussed in paras 4.13.1 to 4.13.4 above.

In CAAR, Delhi’s ruling in M/s Vaibhav Enterprises’ case honourable CESTAT, Chennai’s decision in the case of M/S Azam Laminators Pvt. Ltd is relied upon. This decision relates to the product scented betel nut, and not to roasted betel nut. I find that in view of specific CTH 2008 19 20 “Other roasted nuts” in chapter 20 of the first schedule to the Customs Tariff, HSN Explanatory note to CTH 2008 and previously mentioned two Supreme Court judgments the ratio of the CAAR ruling in M/s Vaibhav Enterprises’ case is not applicable to the classification of roasted Areca/betel nut and hold that roasted betel nut is correctly classifiable under the tariff item 2008 19 20 of chapter 20 of the first schedule of the Customs Tariff Act, 1975.

4.15.1 Another online hearing was conducted on 2.5.2023 with a representative of

Chennai Customs Commissionerate, Shri. Prabhakaran, Deputy Commissioner, who could not attend the hearing on 25.04.2023 due to technical glitches during virtual hearing. He reiterated the contents of their submissions and requested a time period up to 9.5.2023 to submit their additional reply. During the course of hearing he explained as to why Supreme Court judgments in cases of M/s Phil Corporation and M/s Amrit Agro Ltd. are not applicable for deciding the classification of roasted nuts by stating that the nuts involved in those disputes fall under chapter 12 of the first schedule to the Customs Tariff Act, 1975. Comments of the Chennai Customs Commissionerate dated 9.5.2023 on this aspect are re-produced below.

“In personal hearing the learned CAAR, Mumbai have taken reference of two Hon ‘ble Apex Court cases viz.,

(1) Amrit Agro industries ltd &Anr v/s Commissioner of Central Excise Ghaziabad (2007) 201 ELT 183(SC) and

(2) Commissioner of Customs & Central Excise v/s Phil Corporation ltd in Appeal (civil) 2215 of 2002 dated 07.02.2008.

In both the cases the Hon ‘ble Supreme court upheld the classification of roasted nuts under chapter 20. It pertinent to note here that the impugned goods in both the judgment are peanuts (ground nut). Peanuts and arecanuts both are squarely different commodities. Peanuts are botanically considered a legume and technically peanuts are vegetables. As mentioned above, the heading 20.01 is for “preparation of vegetable, fruits, nuts or plants” and CTH 2008 specifically mentions the word “Ground nut”. In view of the above, the judgement in case of ground nut (peanut) cannot be applicable for the classification of roasted betel nut/arecanut. Further Ground nut is classifiable under Chapter 12 which contains “Oil seeds and oleaginous fruits: miscellaneous grain seeds and fruit; Industrial or Medicinal plants; Straw and fodder” and more specifically chapter heading 1202 contains” Ground-nuts not roasted or otherwise cooked, whether or not shelled or broken”. From the above chapter heading it is quite clear that only raw peanuts are classifiable under chapter 12 and Chapter heading of 1202 specifically mentions that roasted peanuts are not classifiable under heading 1202. Hence due to this reason, the Hon ‘ble Supreme Court has ruled in favour of roasted peanuts to be classifiable under heading 2008 “Other Roasted Nuts. Where as in the case in hand Chapter Note 3 of Chapter 08 provides a way to classify roasted are canuts under Chapter 8 by providing a word ‘moderate heat treatment’ and if an item can be classified under Chapter 08, then there is a no question of classifying the same item under Chapter 20 since Chapter 2008 contains only the items not elsewhere specified or included. (Chapter 28 — 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)”.

4.15.2 I have perused this stand taken by the Chennai Customs Commissionerate. However, on careful reading of these two apex court judgments it is clearly observed that the dispute related to classification of roasted nuts was between chapter 8 and chapter 20 (M/s Phil Corporation case) and chapter 20 and 21 (M/s Amrit Agro case) and nowhere in the judgements there is any discussion on chapter 12. From the standpoint of structure of HSN on which the first schedule to the Customs Tariff Act is based it is observed that if a ‘moderate heat treatment’ covers under its scope a ‘process of roasting’ then there was no need to mention processes of ‘dry roasting, oil roasting and fat roasting’ separately under a Customs heading 2008 under chapter 20 of the first schedule to the Customs Tariff Act, 1975. Having covered processes of dry roasting, oil roasting and fat roasting under a heading CTH 2008 with a specific mention of betel nut/areca nut along with almond and other nuts in the HSN Explanatory Notes to CTH 2008 the argument that the moderate heat treatment on areca/betel nut referred in chapter 8 covers roasting process as well is legally unsustainable. Hence I find that the argument put forth by Chennai Customs Commissionerate is not legally tenable. I hold that the ratio of above mentioned two apex court judgments squarely applicable to the classification issue of roasted betel nuts in the present CAAR application.

4.16 In their comments Chennai Customs Commissionerate has further stated that several advance ruling applications are filed for betel nut to avoid classification under Chapter 08 as there is a MIP as well as a tariff rate which is regularly revised by CBIC vide notification. It is pertinent to mention that the revision of tariff value is on a continuous upward trend (USD $4937 in Dec 2021 to USD $9093 in January 2023). However, several new applications are being submitted to circumvent the minimum import price and increasing tariff values by legalizing betel nut import through mis-declaration and mis-classification. It is further suggested by the jurisdictional Chennai Customs Commissionerate that the CAAR may not entertain such applications considering that several advance rulings have already rejected the classification of betel nut under chapter 20 and 21 in the interest of the local areca nut industry and to safeguard the interest of the revenue. It is important to note that the CAAR ruling is based on the extant legal framework which is assumed to have factored in considerations like protection of local trade and industry as well as revenue interest. No additional bias can be brought in by the CAAR in the prevailing legal framework.

4.17 I have perused a test report issued by ABC Techno Labs India Pvt. Ltd., Chennai dated 31.3.2023 on the samples of roasted areca nut whole & split in which the test result indicates the moisture content, a test parameter, of the samples in the range of 3.34% to 3.84%. Moisture content in raw areca nut is found to be generally in the rage on 10-15%. As per applicant this test report indicates that the products were subjected to the roasting process. This aspect of product testing is a part of Customs Compliance Verification (CCV) process on importation of goods. Jurisdictional Customs Commissionerate carry out process of testing of imported goods with the help of concerned government partner agencies (GPAs) to cross-examine accuracy of declaration of goods in the import documents namely a Bill of entry and it’s supporting documents before an out of charge (00C) is granted. Hence the utility of sample test report at this stage is limited to only support applicant’s contention that the goods were subjected to the process of roasting and not merely to a moderate heat treatment.

4.18 As per General Rules of Interpretation (GIR) 3(a) of the Customs Tariff Act, 1975 when by application of GIR 2(b) or for any other reason, the goods are, prima facie, classifiable under more than one Heading, the ‘most specific description’ is preferred. When the Chapter/Section notes along with terms of 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”.

4.19 I find that in view of 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 hold 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.

5. On the basis of foregoing I rule that the Roasted betel nuts fall under Tariff heading 2008, specifically under Tariff entry 2008 19 20: ‘Other roasted nuts & seeds’ of chapter 20 of the first schedule of the Customs Tariff Act, 1975.