Unflavoured Supari Classifiable Under CTH 2106 90 30: CESTAT Chennai Upholds Importer’s Claim

By CA Sandeep Kanoi Custom Duty Judiciary November 4, 2026

Commissioner of Customs Vs Guru Krupa Traders (CESTAT Chennai)

Summary : The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, dismissed the Revenue’s appeal challenging the classification of imported “Betel Nut Product Known as Supari (Unflavoured Supari)” under Customs Tariff Heading (CTH) 2106 90 30. The dispute arose from four Bills of Entry dated 27 February 2022 filed by M/s. Guru Krupa Traders for approximately 432.08 metric tonnes of imported goods. The importer declared the consignments under Chapter 21 as unflavoured supari, whereas the Customs Department proposed reclassification under CTH 0802 80 20 as split areca nuts. The Additional Commissioner of Customs confirmed the proposed reclassification through Order-in-Original dated 24 April 2024. However, the Commissioner (Appeals), Chennai, set aside the adjudication order on 8 January 2025, leading to the present Revenue appeal.

The original adjudicating authority had imposed a redemption fine of ₹2 crore, a penalty of ₹1 crore under Section 112(a), ₹50 lakh under Section 114AA and ₹4 lakh under Section 117 of the Customs Act, 1962. The Revenue argued that physical examination and reports of the Central Revenues Control Laboratory (CRCL) established that the imported goods consisted of split pieces of betel nuts, some of which were incompletely dehusked and contained fibres. The samples did not contain lime, katha, tobacco or flavouring substances. According to the Department, the imported goods retained the essential characteristics of areca nuts and did not qualify as food preparations under Chapter 21. It further contended that classification under CTH 2106 90 30 improperly enabled the importer to claim concessional duty benefits and avoid restrictions applicable to the import of areca nuts.

The importer defended the classification by relying on reports issued by an FSSAI-authorised laboratory and the No Objection Certificate granted by the Food Safety and Standards Authority of India. The laboratory reports identified the goods as “Betel Nut Product Known as Supari (Unflavoured Supari)” and confirmed conformity with the applicable food safety standards. The importer submitted that the absence of lime, katha and tobacco did not disqualify the goods from classification as supari under Supplementary Note 2 to Chapter 21. Reliance was also placed on certificates of origin issued by Myanmar authorities describing the goods under HS Code 21069030. The importer cited judicial precedents supporting the classification of processed betel nut products under Chapter 21 and argued that the CRCL findings did not establish that the imported goods were merely raw or dried areca nuts.

The Tribunal examined the competing laboratory reports and emphasised that the burden of proving an alternative classification rested upon the Revenue. Referring to Supreme Court decisions, including Union of India v. Garware Nylons Ltd., HPL Chemicals Ltd. v. Commissioner of Customs and Gastrade International v. Commissioner of Customs, it observed that the Department must produce reliable evidence when seeking to depart from the classification declared by an importer. The Tribunal distinguished between the evidentiary purposes of CRCL reports and FSSAI reports. While CRCL recorded the physical characteristics of the samples, the FSSAI laboratory conducted examinations against prescribed food safety parameters. Neither report could independently determine tariff classification, which required consideration of the goods’ nature, composition, processing and the applicable statutory tariff provisions.

The Tribunal found that the CRCL reports did not conclusively establish that the imported goods were not supari. The reports principally described the goods as split betel nuts and recorded the absence of certain additives, without adequately examining the processes undertaken or determining whether the products constituted prepared supari. In contrast, the FSSAI examination involved detailed scientific testing, including moisture content, contaminants, pesticide residues and microbiological parameters. The FSSAI reports identified the goods as supari and were followed by the issuance of the requisite No Objection Certificate. The Tribunal observed that the Revenue had neither successfully challenged the FSSAI findings nor produced convincing scientific evidence demonstrating that those findings were incorrect. Accordingly, the physical descriptions recorded by CRCL were insufficient to disregard the conclusions of the specialised statutory authority.

The Tribunal also considered the significance of moisture content in distinguishing raw, dried and roasted areca nuts. The FSSAI reports recorded moisture content below 7%, which the Tribunal regarded as relevant evidence concerning the processing and characteristics of the imported goods. Referring to judicial decisions of the Madras, Bombay and Punjab and Haryana High Courts, the Tribunal examined the limitations of determining the nature of areca nuts solely from their physical appearance. It considered that the Revenue’s laboratory findings did not adequately address the scientific parameters necessary to establish the Department’s proposed classification. The Tribunal further examined the relevant Chapter Notes, Harmonised System of Nomenclature (HSN) Explanatory Notes, General Rules for Interpretation and the distinction between tariff entries for areca nuts and betel nut products known as supari.

The classification dispute also involved the applicability of preferential customs duty based on certificates of origin, the valuation adopted for the imported goods and the sustainability of confiscation and penalty proceedings. The importer relied upon the certificates issued by Myanmar authorities, which described the goods as betel nut products known as supari under HS Code 21069030. The Tribunal considered these documents alongside the statutory tariff provisions and the evidence concerning the nature of the goods. It also examined the judicial precedents cited by both sides, including decisions concerning the classification of betel nut preparations, the evidentiary value of laboratory reports and the Department’s burden of proof. The Tribunal assessed whether the Revenue had established sufficient grounds to disturb the findings recorded by the Commissioner (Appeals).

The Bench also considered moisture content below 7%, tariff interpretation, HSN notes, the nature of processing, common parlance, advance rulings, origin certificates, valuation and consequential proceedings. It held that an advance ruling concerning another importer was not binding under section 28J, but its reasoning could still be persuasive. Decisions cited by the Revenue required application in their factual and statutory context.

On consideration of the evidence and applicable legal principles, the Tribunal concluded that the Revenue had not satisfactorily established that the imported goods were classifiable as split areca nuts under CTH 0802 80 20 instead of unflavoured supari under CTH 2106 90 30. The CRCL reports did not provide an adequate evidentiary foundation to displace the detailed FSSAI findings, and the Department failed to discharge the burden required for reclassification. Consequently, the Tribunal dismissed the Revenue’s appeal and upheld the Order-in-Appeal dated 8 January 2025, thereby maintaining the classification accepted in favour of M/s. Guru Krupa Traders and the consequential relief granted by the Commissioner (Appeals).

Finding insufficient cogent evidence to displace the classification under CTI 2106 90 30, the Tribunal dismissed the Revenue’s appeal and upheld Order-in-Appeal No. 64/2025 dated 8 January 2025. The appellate decision setting aside the original reassessment, confiscation and penalties therefore remained undisturbed.

Cases Discussed

Union of India v. Garware Nylons Ltd. — (1996) 10 SCC 413
Dunlop India Ltd. v. Union of India — (1976) 2 SCC 241
Gastrade International v. Commissioner of Customs — (2025) 8 SCC 342
HPL Chemicals Ltd. v. CC, Chandigarh — 2006 (197) ELT 324 (SC)
CC & CE, Amritsar v. D.L. Steels — 2022 (381) ELT 289 (SC)
Crane Betel Nut Powder Works v. CCE — 2007 (210) ELT 171 (SC)
S.T. Enterprises v. CC — 2021 (378) ELT 514 (Tri.-Chennai)
Isha Exim v. Union of India — 2023 (12) TMI 920 (Bombay HC)
NBG International Private Limited v. Commissioner of Customs — 2026 (3) TMI 1212 (Bombay HC)
Commissioner of Customs v. Shahnaz Commodities International Pvt. Ltd. — (2023) 9 Centax 183 (Madras)