9911796707
TMI Blog2020 (11) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... 02. In the case at hand, the applicant s product is marketed as Nizam Pakku . The betelnut/ arecanut(broken/pulverised) is heated with Vegetable oil, menthol for the purpose of preserving and Sugar, glucose syrup, menthol and spices, viz., cardamom and cloves are added. As per the test reports furnished by the applicant, (from the excellence Laboratory dated 13.11.2019) the percentage content of betel nut is 92% the other ingredients are cardamom(0.9%),Sugar(Betel Nut)-1.9%; Vanaspati/EdibIe Oil-4.7%, which are the admissible ingredients as per Chapter Note 3 of Chapter 08 of the Customs Tariff. Also, the test report of Bureau Veritas India Pvt Ltd states that The sample is cut pieces Of dried edible Betelnut . Thus it is seen [hat the essential character of betel nut (arecanut) remains the same in the product supplied by the applicant. Therefore, following Rule 1 of General principles of Interpretation of the Tariff, the product merits classification under Chapter head 080280 and not under CTH 2106. Rate of GST - HELD THAT:- The rate of CGST is notified vide Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 as amended in respect of goods and that of SGST is notified vide Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n trading of Betel nut, under the name and style "Nizam Pakku" and the said brand name is owned and registered in favour of the Applicant. "Pakku" is a tamil word for "betel nut". The said "Nizam Pakku" is manufactured by M/s. Azam Laminators Pvt. Ltd. who sells the "Nizam Pakku" exclusively to the Applicant, which is marketed by them through Dealers and Distributors network. The manufacturing process of "Nizam Pakku" submitted by the applicant is as below: Dried betel nut is procured and broken into pieces of smaller sizes, pulverized and then gently heated with Vanaspati, so as to ensure that vanaspati is spread evenly on the surface of the betel nuts; Sugar, glucose syrup, menthol and spices, viz., cardamom and cloves are also added; the use of glucose syrup and sugar which contains moisture can form fungus and hence a meager quantity of saccharin to the extent of 1000 Parts per million is added purely for preservation purposes; the resultant product is packed in small pouches under the name and style of NIZAM PAKKU. The same is used by people for chewing either along with betel leaves or as such. The essential character of betel nut is preserved as such and the product has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame under Chapter 0802. Also, the Tamil Nadu Food Safety and Drug Administration Department has granted license to the Applicant to deal with the subject Nizam Pakku as Distributor, Wholesaler and Transporter. It may be observed from the license that the subject product, Nizam Betelnut is classified under HSN 0802 9013 (corresponding to 0802 8030 prior to the amendments with effect from 2011). 2.3. Further, the Applicant submitted that the issue of classification of the subject goods, under Kerala VAT Act has arisen and culminated in Order No.C3/7632/13/ CT Dt. 03.03.2015 passed by the Commissioner of Commercial Taxes, Kerala, where the product has been held to be falling under HSN Code 0802 9013. The applicant has stated that Central Excise Tariff is also aligned to Customs Tariff and HSN, but for certain differences. For example, in as much as the duty of excise is on "manufacture" certain processes carried out on certain goods would be declared as "manufacture" by way of Section Notes / Chapter Notes in the Central Excise Tariff. Such provisions are not relevant under Customs Tariff. As GST is also based on Customs Tariff only, such provisions relating to deemed manufacture are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as "betel nut powder known as supari" has been changed to "Betel nut product known as supari" and both these phrases have been defined in same manner, which indicates that there is no difference between these phrases. It may be observed from the definition that "betel nut product known as supari" is first of all a preparation containing betel nut, i.e. apart from betel nut, there would be further ingredients in the preparation. Further, the said preparation should not contain lime, katha and tobacco, in which case, it cannot be called as "betel nut product known as supari". But the presence or absence of other ingredients such as cardamom, copra and menthol are not at all relevant to call a product as "betel nut product known as supari". The applicant argued that the product in question contained only betel nut, which is dried, broken into small pieces and pulverized and small quantity of Vanaspati is added to spread the same on the pieces and small quantities of sugar, glucose syrup, menthol and spices, viz., cardamom and cloves are also added; the use of glucose syrup and sugar which contains moisture can form fungus and hence a meager quantity of saccharin to the extent of 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not a preparation containing betel but, but betel nut itself, which has been subjected only to processes envisaged in Note 3 (b) of Chapter 8 and retained its character as betel nut. The only ingredient present in the product was betel nut and addition of Vanaspati, glucose syrup, menthol, spices and saccharin were only for purposes of preservation, sweetening and perfumery. It was not a preparation containing betel nut and other products. In view of the foregoing, it was argued that the subject product was classifiable only under Chapter 0802 9013 and not under 2106 9030, in as much as, * The subject product retained its essential character as betel nut, * Dried betel nut was subjected only to moderate heat treatment, application of Vanaspati, addition of small quantities of sugar, glucose, spices and saccharin. * It was not a preparation containing betel nut, but betel nut, treated for preservation only. * The same was known as betel nut in the market and not as 'supari'. * Note 6 of chapter 21 was not at all relevant in this case, as the product was not classifiable under Chapter 2106 9030 at the first place. * The changes made in the tariff with effect from 07.07. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion of all ingredients used to manufacture, latest test report, difference between "Supari" and their product within 3 weeks. 3.2 As undertook in the Personal hearing the applicant filed the following on 21.11.2019. i. Detailed manufacturing process followed in Areca/betel nuts by 'Nizam Pakku' - The ripened areca/ betel nuts are harvested and cut into two equal halves and boiled in the water and then sun dried for many days to make them edible by farmers/ sellers. The sun-dried areca/ betel nuts are bought by them and cut into small pieces. The cut small pieces of Areca/ betel nuts are mildly heated with vegetable oil and vanaspati and after the heat is reduced, it is coated with cardamom/ menthol/ saccharin/ glucose and perfume to preserve the Areca/ betel nuts from forming fungus and for appearance and then packed into small pouches. ii. Comparison of Nizam Betel Nut and Supari Products Sl.No. Nizam Betel Nut Betel Nut Product known as supari 1. The dried edible Areca/ Betel Nut is the only raw material used Many raw materials are used such as, aniseed, dry date, betel leave, coconut powder, bold sugar balls and other similar items are used together with areca nut. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer and the comments of the state jurisdictional officer on the issue raised by the applicant in the Advance ruling Application is given below: * The applicant is engaged in making scented betel nut. Dried betel nut is procured and broken into pieces, pulverized and heated with vanaspathi, added with sugar, glucose syrup, menthol and spices like cardamom and cloves and then packed in small pouches as per market requirement. * The scented betel nut under the erstwhile TNVAT act 2006 was taxable at 5% vide serial No. 6 of Part B of I schedule to the TNVAT Act 2006. * Under the present Goods and services Tax Act 2017, areca nuts are classified under two categories vide Sl. No. 49 under the head Exempted goods and vide Sl. No. 28 under the head of Goods taxable at 5%. Both of these categories are allotted with the HSN Code No. of 0802 only. * In order to confirm the correct classification as to whether the commodity in question viz., Nizam betel nut is falling under which category, the only way as prescribed in Serial(iii) and (iv) at the bottom of the rate of tax schedules under the GST Act, is as under: (iii) "Tariff item:, "Sub-heading" and "Chapter" shall mean respectivel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Vs. CCE - reported in 6 VST 532 (S.C.) = 2007 (3) TMI 6 - SUPREME COURT that the end product would fall under 0801. * In the dealer's own case also the same product "Nizam Pakku" manufactured by them, in their earlier name of A.R.S Company Ltd., and also by Azam Laminators (p) Ltd., on appeal, the Hon'ble Supreme Court has confirmed the relevant HSN as 0802 vide its order in Civil Appeal No. 4915/2006 dated 8-9-2015 = 2015 (10) TMI 354 - SC ORDER in respect of Azam Laminators (P) Ltd., relying upon the earlier judgment of Supreme Court in the case of Crane Betel Nut Powder Works-2007 (210) ELT 171(SC)/(2007) 6 VST 532 (S.C.) = 2007 (3) TMI 6 - SUPREME COURT * In the instant case the applicant has done only the process mentioned in Note 3 Of Chapter 8 of Customs Tariff Act and hence the product remains as betel nut only and identified by public as betel nut only. 5.2 The Central Tax Authorities were addressed to inform whether any proceedings are pending in respect of the applicant. The information was required under Section 98(1) of the Act. The Authorities vide their letter dated 04.08.2020, stating the facts involved, has opined that the a product of the applicant, is righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. Thus for the purposes of classification under GST, the First Schedule to Customs Tariff Act is only applicable. From the submissions, it is seen that the competing headings for the product under consideration are CTH 0802 and CTH 2106. 7.4 The relevant Customs Tariff item and the related Chapter/ Section notes along with the Explanatory Notes of HSN are examined as under: Notes to Chapter 8: NOTES : 1. This Chapter does not cover inedible nuts or fruits. 2. Chilled fruits and nuts are to be classified in the same headings as the corresponding fresh fruits and nuts. 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 moder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product is marketed as 'Nizam Pakku'. The betelnut/ arecanut(broken/pulverised) is heated with Vegetable oil, menthol for the purpose of preserving and Sugar, glucose syrup, menthol and spices, viz., cardamom and cloves are added. As per the test reports furnished by the applicant, (from the excellence Laboratory dated 13.11.2019) the percentage content of betel nut is 92% & the other ingredients are cardamom(0.9%),Sugar(Betel Nut)-1.9%; Vanaspati/EdibIe Oil-4.7%, which are the admissible ingredients as per Chapter Note 3 of Chapter 08 of the Customs Tariff. Also, the test report of 'Bureau Veritas India Pvt Ltd' states that The sample is cut pieces Of dried edible Betelnut'. Thus it is seen [hat the essential character of betel nut (arecanut) remains the same in the product supplied by the applicant. Therefore, following Rule 1 of General principles of Interpretation of the Tariff, the product merits classification under Chapter head 080280 and not under CTH 2106. 7.6 The applicant has claimed that the product falls under Chapter heading 0802 8030 of the Customs Tariff. For arriving at the 8 digit level classification, the following facts are considered. It is seen that the class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining to Chapter Head 0802 are available at Sl.No 28, 29 of Schedule I- 2.5% of the Notifications, and Sl.no.15 of Schedule 11-6% of the Notifications. The relevant entries are as follows: Schedule I-2.5% Sl.No. Chapter / Heading /Sub-heading/ Tariff Item Description of Goods 28. 0802 Dried areca nuts, whether or not shelled or peeled 29 0802 Dried chestnuts (singhada), whether or not shelled or peeled Schedule II-6% Sl.No. Chapter/ Heading /Sub-heading /Tariff item Description of Goods 15 0802 Other nuts, dried, whether or not shelled or peeled, such as Almonds, Hazelnuts or filberts (Coryius spp.), walnuts, Chestnuts (Castanea spp.), Pistachios, Macadamia nuts, Kola nuts (Cola spp.) [other than dried areca nuts] From the above, it can be seen that while Dried areca nuts, whether or not shelled or peeled are subjected to GST @5% [CGST-2.5% & SGST-2.5%1 as per Sl.No. 28 of Schedule I; those products classified under 0802 other than dried areca nuts are subjected to GST @ & SGST-6%] as per Sl.No. 15 of Schedule II. 8.2 As per the Notification No. 01/2017-C.T. (Rate), the rates are notified on the recommendation of Council. It is seen that the rate leviable on va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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