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2021 (3) TMI 1237 - AAR - CustomsClassification of goods - API supari - chikni supari - unflavoured supari - and flavoured supari - classifiable under chapter 8(08029000) of the customs tariff or are more appropriately classifiable under chapter 21, and more specifically under sub-heading 2106 90 30? - applicability of N/N. 50/2017-Cus., dated 30.06.2017 - HELD THAT - Recognizing the legal construct and specific provisions of section 28-J(1), it is obvious to me that the task cannot be reduced to pass the advance ruling based on the previous ruling of AAR cited by the applicant. 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 2106 90 30, as contended - the benefit of the exemption contained at Sr. No. 103 of the Notification No. 50/2017-Cus., dated 30.06.2017 would not be available to the products, namely, API supari, chikni supari, unflavoured supari, flavoured supari, and boiled supari.
Issues Involved:
1. Classification of API supari, chikni supari, unflavoured supari, flavoured supari, and boiled supari. 2. Applicability of Notification No. 50/2017-Cus., dated 30.06.2017. Detailed Analysis: Classification of Products: M/s. Samreen International Pvt. Ltd. sought advance rulings on the classification of API supari, chikni supari, unflavoured supari, flavoured supari, and boiled supari under the Customs Act, 1962. The applicant contended that these products should be classified under Chapter 21, specifically sub-heading 2106 90 30, rather than Chapter 8 (08029000) of the customs tariff. The applicant's processes for each product were detailed: - API supari: Boiling raw whole green nuts, mixing food starch, drying, polishing, and packaging. - Chikni supari: Similar to API supari but includes slicing into small pieces. - Unflavoured supari: Involves multiple stages of cleaning, cutting, roasting, and packaging. - Flavoured supari: Similar to unflavoured supari with additional sterilizing and flavouring. - Boiled supari: Boiling, husk removal, drying, sterilizing, sorting, polishing, and packaging. Comments from Authorities: The Commissioner of Customs, Vijayawada, and Principal Commissioner, Nhava Sheva-I, opined that areca nuts, whether boiled or dried, should be classified under Chapter 8. They argued that the term 'supari' refers to both the primary agricultural product and its preparations, but pure betelnut or supari that has not undergone significant changes should remain under Chapter 8. They referenced previous rulings and the Supreme Court decision in M/s. Crane Betelnut Powder. Applicant's Argument: The applicant relied on previous rulings by the erstwhile AAR, New Delhi, in the cases of M/s. Excellent Betelnut Products and M/s. Oliya Steel, which classified similar products under sub-heading 2106 90 30. They argued that the processes their products undergo do not necessitate a change in classification from Chapter 21 to Chapter 8. Examination of Processes: The processes for the products were examined to determine if they result in preparations containing betel nut or if the products retain the original character of raw areca nuts. It was concluded that processes like cleaning, slicing, drying, sorting, polishing, boiling, and roasting do not significantly alter the nature of the product to necessitate a change in classification from Chapter 8. Legal Precedents: The ruling referenced the Supreme Court decision in M/s. Crane Betelnut Powder Works, which held that the process of manufacturing sweetened betel nut pieces did not change the nature of the end product, which remained betel nut. Similarly, the CESTAT decision in the case of Azam Laminators Pvt. Ltd. classified scented betel nut under Chapter 8, not Chapter 21. Conclusion: Based on the examination of the processes and relevant legal precedents, it was concluded that: - API supari, chikni supari, unflavoured supari, flavoured supari, and boiled supari merit classification under Chapter 8 of the customs tariff, specifically under heading 0802. - The benefit of the exemption under Sr. No. 103 of Notification No. 50/2017-Cus., dated 30.06.2017, would not be available to these products. This comprehensive analysis ensures that the classification remains consistent with the character of the products and aligns with established legal principles.
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