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TMI Blog2021 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ve imported betel nut in the whole form and only contention is that nuts have been subjected to certain processes of manufacture and therefore would fall out of Chapter 8. Though several stages/ process are claimed to be done in the write up given by supplier, during the argument the process undertaken was mainly confined to boiling in water and drying in sun light. Even if some stage of drying or rehydrating or treatment is done for preservation / stabilization or maintaining the appearance, as long as the nuts retain the character of dried nuts, they fall under Chapter 8. The counsel for appellants had placed before us samples of dried whole betel nut (without husks) as well as sample of the imported goods. We were able to see that the imported goods are also whole but more dried. It can be seen that CTH 21069030 takes in the items betel nut product known as suprai . To be more clear what is described therein is betel nut product and not betel nut whole as seen in Chapter 8. Chapter Note 2 of Chapter 21 also speaks about betel nut product and not betel nut whole . As per Chapter Note 2 of Chapter 21 betel nut product means any preparation containing betel nut, but not containing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the appellants. Appellants had classified the goods under CTH 21069030 and submitted a write up given by their supplier / exporter, M/s.Nadaraj International Company Ltd., Yangon, Myanmar explaining various stages of process undergone by the imported goods. The goods were examined by the officers of FTZ and they were of the view that since the imported betel nut (Areca-nuts) are whole nuts and are classifiable under CTH 08028010, it is a prohibited item for import as the CIF value of the goods is lesser than ₹ 251/- per kg. 3. On reasonable doubt, samples were drawn and sent for examination to the Chemical Examiner, Customs Laboratory, Customs House, Chennai. The Chemical Examiner stated that it could not be ascertained whether the betel nuts are boiled / roasted. It was also stated that it is free of cardamom and added food starch. On the view that various processes as claimed by the appellants in their write up having not been undertaken to make the betel nut product of betel nut or preparations containing betel nut , the assessing officer held that the impugned goods do not merit classification under CTH 21069030 as claimed by appellant. The assessing authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the inner shell (endocarp) : 0801 12 10 --- Fresh kg. 70% 60% 0801 12 20 --- Dried kg. 70% 60% 0801 12 90 --- Other kg. 70% 60% 0801 19 -- Other : 0801 19 10 --- Fresh kg. 70% 60% 0801 19 20 --- Dried kg. 70% 60% 0801 19 90 --- Other - Brazil nuts : kg. 70% 60% 0801 21 00 -- In shell kg. 30% 20% 0801 22 00 -- Shelled - Cashew nuts : kg. 30% 20% 0801 31 00 -- In shell kg. 30% Free 0801 32 -- Shelled 0801 32 10 --- Cashew kernel, broken kg. 30% 20% 0801 32 20 --- Cashew kernel, whole kg. 30% 20% 0801 32 90 --- Other kg. 30% 20% 0802 OTHER NUTS, FRESH OR DRIED, WHETHER OR NOT SHELLED OR PEELED ALMONDS 0802 11 00 --In shell kg. ₹ 35 per kg. ₹ 30 per kg. kg. ₹ 100 per kg. ₹ 95 per kg. Hazelnuts or filberts (Corylus spp.): 0802 21 00 --In shell kg. 30% 20% 0802 22 00 -- Shelled kg. 30% 20% Walnuts : 0802 31 00 -- In shell kg. 30% 20% 0802 32 00 -- Shelled kg. 30% 20% - Chestnuts ( Castanea spp.) 0802 41 00 --In shell kg. 30% 20% 0802 42 00 -- Shelled kg. 30% 20% - Pistachios : 0802 51 00 -- In shell kg. 30% 20% 0802 52 00 -- Shelled kg. 30% 20% - Macademic nuts : 0802 61 00 --In shell kg. 30% 20% 0802 62 00 -- Shelled kg. 30% 20% 0802 70 00 - Kola nuts (Cola S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or menthol. 2. In this Chapter betel nut product known as Supari means any preparation containing betel nuts, but not containing any one or more of the following ingredients, namely:lime, katha (catechu) and tobacco whether or not containing any other ingredients, such as cardamom, copra or menthol. 3. For the purposes of tariff item 2106 90 11, the expression Sharbat means any non-alcoholic sweetened beverage or syrup containing not less than 10% fruit juice or flavoured with non-fruit flavours, such as rose, Khus, Kevara, but not including aerated preparations. 4. Tariff item 2106 90 50, inter alia, includes preparations for lemonades or other beverages, consisting for example, of flavoured or coloured syrup, syrup flavoured with an added concentrated extract, syrup flavoured with fruit juice and intended for use in the manufacture of aerated water, such as in automatic vending machines. 5. Heading 2106 (except tariff items 2106 90 20 and 2106 90 30, inter alia, includes: (a) protein concentrates and textured protein substances: (b) preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates : 21069011 ---- Sharbat kg. 150% - 21069019 ---- Other kg. 150% - 21069020 --- Pan masala kg. 150% - 21069030 --- Betel nut product known as Supari kg. 150% - 21069040 --- Sugar-syrups containing added flavouring or colouring matter, not elsewhere specified or included; lactose syrup; glucose syrup and malto dextrine syrup kg. 150% - 21069050 --- Compound preparations for making non-alcoholic beverages kg. 150% - 21069060 --- Food flavouring material kg. 150% - 21069070 --- Churna for pan kg. 150% - 21069080 --- Custard powder kg. 150% - --- Other : 21069091 ---- Diabetic foods kg. 150% - 21069092 ---- Sterilized or pasteurized millstone kg. 150% - 21069099 ---- Other kg. 150% - * Amended by Notfn.No.45/18 5.3 The arguments of the appellant from the written synopsis is summarized as under: The impugned goods are food preparation of betel nut. Betel nut products known as supari are specifically mentioned in Chapter /heading 21069030 and hence betel nut products known as Supari are accordingly classifiable under Chapter / heading 21069030 of the Schedule to the Import Tariff. As per Supplementary Note 2 of Chapter 21, betel nut product known as Supari means any preparation conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ushing and processing and emerges into a new product known to the market came before the Hon ble Supreme Court in the case of M/s Crane Betel Nut Powder Works Vs CC CE Tirupathi as reported in 2007 (210) E L.T. 171 (S.C.). The Hon ble Supreme Court held that even after undergoing certain processes the betel nut remained betel nut only and resultant product could not be identified as new product to be classifiable under chapter 21. The Hon ble Supreme Court held that the end product shall remain under chapter 8 only. 5.5 In this background the parliament inserted chapter notes in the Union Budget for the year 2009-10 by an amendment whereby betel nut product known as Supari of tariff item 2106 90 30 was excluded from Chapter 8 as per Fifth Schedule of the Budget. 5.6 Therefore, in view of the above statutory position, the relevance of Hon ble Supreme Court judgment in the case of M/s Crane Betel Nut Powder Works does not have any bearing on the present day classification of betel nut known as supari in the market. The word supari only appear in chapter 21 as known to the market in India and it does not find any place in chapter 8. Therefore, boiled supari which is altogether differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.03.2017 in the case of M/s Isha Exim vs. Pr. Commissioner of Customs (Import), Chennai-II is very well applicable and binding upon the Commissioner of Customs as the ruling is applicable to Chennai Commissionerate of Customs. 5.11 Further, on the direction of the ld. Commissioner (Appeals) a reference was made to the chemical examiner again vide letter dated 21.12.2020 of the authorised officer and the chemical examiner vide reply F No. S.Misc./3/2004 LAB dated 21.12.2020 replied that: With reference to the above, it is clarified that the sample received in this laboratory is in the form of whole nuts (betel nuts) and not a preparation. Hence it does not fall under chapter heading 21069030 and not Supari . It fall under chapter 8 in respect of the Chapter 8 Notes Dried nuts of this Chapter may be rehydrated 5.12 The chemical examiner is not the proper authority to advise on the classification of the product with reference to chapter or heading. The chemical examiner only authorize to give a factual report on the analysis of the sample with reference to its physical and chemical properties and the ingredients and it is beyond hs purview to give a report on the classification of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under heading 8 ibid. 7. Ld. A.R Ms. T. Usha Devi supported the findings in the impugned order. 8. Heard both sides and perused the records carefully. 9. The issue to be decided is whether the impugned goods merit classification under CTH 21069030 or CTH 08028010. According to appellants the raw betel nut obtained from tree has been subjected to boiling and made ready for human consumption. By process of cleaning and boiling the nuts, the moisture content is reduced and are longer fresh and dry nuts so as to fall under Chapter 8. 10. Appellants have enclosed write up given by their supplier / exporter M/s.Nadaraj International Company Ltd., Yangon which reads as follows : We hereby confirm that we have rightly classified the exported goods called as betelnuts (Boiled Supari) in our country as common nomenclature to be under 21069030 as it is manufactured product and not a raw product. The process behind its manufacture is highly scientific and complex. The process starts by taking raw dried betelnuts, a substance clearly classified under 0802 chapter. Then the large and visible impurities are removed labor and the non-visible impurities are removed by the De-stoner. This is follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her words, appellants do not have a case that the imported goods are broken or crushed betel nut. They have imported betel nut in the whole form and only contention is that nuts have been subjected to certain processes of manufacture and therefore would fall out of Chapter 8. Though several stages/ process are claimed to be done in the write up given by supplier, during the argument the process undertaken was mainly confined to boiling in water and drying in sun light. It is argued that such processing of boiling is a stage of preparation in making betel nut product . That therefore the goods would merit classification under CTH 21069030. Even if we assume that the impugned goods have undergone the stage of boiling or have been boiled in water and dried, we have to say that it does not take away the essential character of the betel nut being whole . 13. In this regard, Chapter Note 3 to Chapter 8 reads as under : Dried fruit or dried nuts of this Chapter may be partially rehydrated or treated for the following the purposes :- a) For additional preservation or stablisiation (for example, by moderated heat treatment, sulphuring, the addition of sorbic acid or potassium sorbate). b) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g excise duty. Later, they revised classification to be under Chapter 8 taking the view that crushing betel nuts and adding the above ingredients did not amount to manufacture . The Hon ble Apex Court reversed the Tribunal decision to hold that the said process would not amount to manufacture . The process involving manufacture does not always result in the creation of a new product and the classification was held to be under Chapter 8. 17. The said decision was followed by the Hon ble Supreme Court in the case of A.R.S Co. Vs CCE Trichy - 2015 (324) ELT 30 (SC). The very same view has been followed in Satnam Overeseas Ltd. Vs Commissioner - 2015 (318) ELT 538 ELT (SC) and in Servo-Med Industries Pvt.Ltd. - 2015 (319) ELT 578 (SC). 18. The Ld. Counsel for appellants in para-8 of the synopsis has referred to the decision of the Hon ble Supreme Court. It is submitted by him that after the said judgment in M/s.Crane Betel Nut Powder Works (supra) an amendment was introduced in Chapter 21 whereby Supplementary Chapter Note 2 to Chapter 21 was introduced. Further, that product known as supari is excluded from Chapter 8. It is argued by him that in view of the above change in Chapter Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Heading 08029000 of the Schedule to Customs Tariff Act, 1975. The process of preparation of the items proposed to be imported is given in detail and includes boiled supari which is nothing but raw supari subject to boiling for 4 hours, removing the husk, boiling again for 2 hours, drying by hot air, sterilizing, sorting, polishing and packing. Further, in the said case though the department placed reliance on the decision of the Supreme Court in M/s.Crane Betel Nut Powder Works (supra), the Advance Ruling Authority held that after amendment by adding Chapter Note to Chapter 21 the decision of Hon ble Supreme Court would not apply and that the goods are classifiable under Chapter 21. The discussions made by the Advance Ruling Authority is as under : 10. It is noticed that in an identical case of M/s.Excellent Betel Nut Products Pvt. Ltd., Nagpur referred to above, this Authority inter-alia observed that the contention of Revenue that in order to fit in chapter 21, supra, which is also known as betel nut should undergo a different character change, meaning it should not remain suprai is incorrect due to the positive language of Supplementary Note No.2 which does not require any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arate commodity having its own character, use and name, whether be it be the result of one process or several processes in manufacture take place and liability to duty is attracted . In the present case, the impugned goods / betel nut whole cannot be said to be a new commodity having its own character use and name in the market. The betel nut imported appears to be only more dried nuts than the ordinary dry betel nut fallen from trees after removing the husk. For these reasons, we cannot agree with the contention of the appellants that imported goods are product of betel nut /suprari . 21. In the case of A.R.S Company Vs CCE Trichy the Chennai Bench of the Tribunal vide Final Order No.41961/2017 dated 29.08.2017 in Appeal No.E/492/2009 followed the judgment of the Hon ble Supreme Court in their own case reported in 2015 (324) ELT 30 (SC). The Tribunal held that process of crushing betel nuts and sweetening the same with essential oils does not amount to manufacture. We do not find any reason to deviate from the view taken by the Chennai Bench in following the decision of Hon ble Apex Court. Though appellants herein contend that after the amendment by adding of Chapter Note 2 to Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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