2021 (7) TMI 1334 - AAR - Customs

Classification of imported goods - preparation/product of Betel nut (Areca Nut) commonly known as Supari (Boiled Supari) - the goods as described which does not contain lime or katha (catechu) or tobacco but may not contain any other ingredients, such as food starch, cardamom, copra, mulethi, menthol (flavours), perfumes etc. - to be classified under CTH 2106 90 30 as food preparation or not - HELD THAT - The basic raw material for Boiled Supari is raw betel nut, which is classifiable under Chapter 8, more specifically sub-heading 0802 80. I also note that Chapter 8 covers only edible nuts; inedible nuts and fruits being excluded by virtue of Chapter Note 1; and that betel nut/supari are masticatory. However, Boiled Supari have been subjected to certain processes resulting in the question being posed whether the said processes are substantive enough to consider Boiled Supari as preparation of betel nut that would make them classifiable under Chapter 21 by virtue of Supplementary Note 2 of Chapter 21. Alternatively, whether the processes carried out on the same for cleaning, preserving and boiling are too minor to fall short of rendering them as preparations of betel nuts. Further, it would be inadvisable and inappropriate to approach the issue of classification of the said goods solely with the prism of the positive nature of Supplementary Note 2 to Chapter 21, as it seems to have been done in the order of the erstwhile AAR. The processes involved in making Boiled Supari are clearly covered by the Chapter Note 3 to Chapter 8. It is also found that in the instant case, betel nuts after being boiled are dried; and this fact per se would not exclude the end-products from the scope of dried nuts . Therefore, it is concluded that the processes to which raw betel nuts have been subjected to obtain Boiled Supari is squarely in the nature of processes referred to in the Chapter Note 3 to Chapter 8 and HSN Note. Therefore, 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 goods to be classifiable under Chapter 21. It is thus concluded that during the personal hearing, upon being explained the scope of the aforesaid two competing headings, the applicant accepted that given the processes involved in obtaining Boiled Supari, the same is more appropriately classifiable under sub-heading 0802 80 10. Boiled (whole) Supari is not classifiable under sub-heading 2106 90 30 as food preparation; instead it is more appropriately classifiable under sub-heading 0802 80 10.

Summary

Issues: Classification of imported goods - Boiled Supari under Customs Tariff Act

Analysis:

1. Application for Advance Ruling: M/s. Exor Overseas filed an application seeking an advance ruling under Section 28H of the Customs Act, 1962 before the Customs Authority for Advance Rulings, New Delhi (CAAR).

2. Goods Description and Processes: The applicant intended to import Boiled Supari, a preparation of Betel Nuts, and outlined the processes involved, including labor-intensive steps like boiling, husk removal, and drying.

3. Question for Advance Ruling: The applicant sought clarification on the classification of Boiled Supari under CTH 2106 90 30 as a food preparation, emphasizing the absence of certain ingredients like lime, katha, or tobacco.

4. Customs Commissioner's Comments: The Principal Commissioner of Customs (Import) opined that Boiled Supari retains its original character as a dried nut and should be classified under CTH 0802, not Chapter 21.

5. Personal Hearing and Applicant's Argument: The applicant's representatives appeared for a personal hearing and argued that Boiled Supari should be classified under Chapter 21 based on Supplementary Note 2, contrary to the Commissioner's stance.

6. Legal Provisions and Precedents: The applicant cited amendments in the Central Excise Tariff Act and referenced previous rulings to support the classification of Boiled Supari under CTH 2106 90 30.

7. Competing Tariff Entries: The ruling highlighted the competing tariff entries for Boiled Supari under CTH 2106 90 30 and CTH 0802 80 90, necessitating a thorough examination of relevant provisions.

8. Interpretation of Chapters 8 and 21: The judgment delved into the provisions of Chapter 8 covering dried fruits and nuts and Chapter 21 encompassing edible preparations, emphasizing the specific definitions and guidelines.

9. Guidance from World Customs Organization: The ruling considered the guidelines from the Harmonized Commodity Description and Coding System to provide additional insights into the classification of fruit and nuts.

10. Summary of Contending Positions: The ruling summarized the arguments regarding the classification of Boiled Supari, considering the processes involved and the interpretations of relevant legal provisions and precedents.

11. Conclusion and Ruling: After a detailed analysis, the ruling concluded that Boiled Supari should be classified under sub-heading 0802 80 10 instead of 2106 90 30 as a food preparation, aligning with the applicant's acknowledgment during the personal hearing.

In essence, the judgment meticulously examined the classification issue of Boiled Supari under the Customs Tariff Act, considering legal provisions, precedents, and arguments from both the applicant and the Customs Commissioner to arrive at a definitive ruling.