2025 (2) TMI 318 - AAR - Customs

Classification of import goods - Roasted Areca nuts (betel nuts)- whole and roasted Areca nuts (betel nuts)- Cut/Split - to be classified under Customs Tariff Sub-heading 2008 19 20 or under CTH 080280? - HELD 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 stales that almonds ground nuts areca for betel) nuts and other nuts dry-roasted oil-roasted or fat-roasted whether or not containing or coated with vegetable oil salt flavours spices or other additives. Dry- roasting oil-roasting fat-roasting as a process are very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes and 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. Classification as far as possible must be in conformity and in consonance with the HSN Explanatory Notes. It is trite law that whenever there is specific entry the same would prevail over general entry. The said general principle is statutorily incorporated in General Rules of Interpretation in particular under Rule 3(a) of the General Rules of Interpretation. CTH 2008 19 20 is a special entry covering nuts subject to the process of roasting when contrasted with CTH 08 02 90 which covers dried nuts. In the decision of Tribunal in respect of the case S.T. Enterprises 2021 (3) TMI 27 - CESTAT CHENNAI the question that arose for consideration was as to whether the goods involved therein viz. boiled betel nuts would merit classification under CTH 21069030 or CTH 08028010. It was not concerned with CTI 2008 19 20. The process that was examined by the Tribunal in the case of S.T. Enterprise was confined to boiling and drying. Importantly roasting was not one of the processes that was examined. The competing entries that were examined in the above case were CTH 21069030 vis-a-vis CTH 08028010 - The Court s attention was never drawn to CTI 20081920 which covers roasted nuts including areca/betel nuts inasmuch as the facts as set out by the tribunal in its order was not concerned with the process of roasting. Where a question passes sub-silentio then it may have no precedential value. It is an established fact that in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Tariff Act. The case of Commissioner of Customs Central Excise v. Phil Corporation Ltd. 2008 (2) TMI 3 - SUPREME COURT is directly relevant and applicable in the instant case of the applicant. In the judgment of the said case Hon ble Supreme Court has held a number of cases this Court has clearly enunciated that HSN is a safe guide 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 categorically state that its products are excluded from Chapter 8 as they fall in Chapter 20. In this view of the matter the classification of the products in question has to he made under Chapter 20. From the apex court s foregoing 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. Now as far as judicial discipline and law is concerned the Hon ble Supreme Court has held in the case of UOI v. Kamalakshi Finance Corporation Ltd. 1991 (9) TMI 72 - SUPREME COURT that order of higher appellate authorities should he unreservedly followed by subordinate authorities. The mere fact that the order of the appellate authority is not acceptable to the department in itself and objectionable phrase- and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed the result will only be undue harassment to assessees and chaos in administration of tax laws . Conclusion - The subject goods i.e. Roasted areca nuts (betel nuts)- whole and roasted areca nuts (betel nuts)- Cut/Split merit classification under Custom Tariff Heading 2008 specifically under CTI 2008 19 20 of Chapter 20 of the First Schedule to the Customs Tariff Act 1975.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issue considered in this judgment is the classification of "Roasted Areca nuts (betel nuts)- whole and roasted Areca nuts (betel nuts)- Cut/Split" under the Customs Tariff Act, 1975. The primary question is whether these goods should be classified under Customs Tariff Sub-heading 2008 19 20, which covers "Other Roasted Nuts and Seeds," or under Chapter 8, specifically under CTH 080280, which pertains to dried nuts.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework involves the interpretation of the Customs Tariff Act, 1975, particularly Chapter 8 and Chapter 20, and the Harmonized System of Nomenclature (HSN) Explanatory Notes. The applicant argues for classification under Chapter 20 based on the HSN Explanatory Notes, which include roasted areca nuts under this heading. The Commissioner of Customs contends that the process described by the applicant is akin to drying, which falls under Chapter 8.

Court's Interpretation and Reasoning

The Court distinguishes between the processes of drying and roasting. It notes that Chapter 8 includes processes like chilling, steaming, boiling, drying, and provisionally preserving, but not roasting. The Court emphasizes that roasting involves severe heat treatment, which is distinct from the moderate heat treatment referred to in Chapter 8.

Key Evidence and Findings

The Court relies on the HSN Explanatory Notes, which classify dry-roasted, oil-roasted, or fat-roasted nuts under Chapter 20. The Court also considers previous rulings and judgments, including the Supreme Court's emphasis on the HSN as a guide for classification.

Application of Law to Facts

The Court applies the General Rules of Interpretation, particularly Rule 3(a), which states that a specific entry should prevail over a general entry. It concludes that roasted areca nuts, being specifically mentioned under Chapter 20, should be classified under CTH 2008 19 20.

Treatment of Competing Arguments

The Court addresses the Commissioner's argument that the process described is merely drying. It rejects this by highlighting the distinct nature of roasting as a process. The Court also considers the Commissioner's reliance on previous rulings that classified similar goods under Chapter 8 but finds them inapplicable as they did not deal with roasted nuts.

Conclusions

The Court concludes that the roasted areca nuts should be classified under Chapter 20, specifically under CTI 2008 19 20, as they undergo a roasting process distinct from those processes mentioned in Chapter 8.

SIGNIFICANT HOLDINGS

The Court establishes that the classification of roasted areca nuts under Chapter 20 is consistent with the HSN Explanatory Notes and previous judicial interpretations. It emphasizes the importance of adhering to specific entries in the tariff classification when they exist.

Core Principles Established

The judgment reinforces the principle that the HSN Explanatory Notes are a reliable guide for classification under the Customs Tariff Act. It also underscores the need for judicial discipline in following higher appellate authority decisions unless stayed by a competent court.

Final Determinations on Each Issue

The Court rules that "Roasted areca nuts (betel nuts)- whole and roasted areca nuts (betel nuts)- Cut/Split" are correctly classifiable under Custom Tariff Heading 2008, specifically under CTI 2008 19 20 of Chapter 20 of the First Schedule to the Customs Tariff Act, 1975.