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TMI Blog2021 (5) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... re concerned, there is no doubt regarding inapplicability of the said note to these products. Hon ble Calcutta High Court in the case of Killing Valley Tea Co. v. Secretary to State [ 1920 (5) TMI 1 - CALCUTTA HIGH COURT] has held that a tea leaf remains the same even after being subjected to mechanical processes like withering, crushing, roasting, fermenting, etc., is a definite pointer to the principle that need to be applied for classification in such matters. Hon ble Supreme Court s in their decision dated 11-9-1979 in the case of D.S. Bist and Ors. [ 1979 (9) TMI 168 - SUPREME COURT] has held that all agricultural produce undergoes some processing on or outside the farm in order to make it non-perishable, transportable, and marketable and just because processing is a bit longer or complicated wouldn t rob the produce of its agricultural character. The observations of the Hon ble Supreme Court in the case of M/s. Crane Betel Nut Powder Works [ 2007 (3) TMI 6 - SUPREME COURT] , that the process of cutting betel nuts into small pieces and addition of essential/non-essential oils, menthol, sweetening agent, etc., did not result in a new and distinct product having a differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned products merit classification under sub-heading 2106 90 30 of the First Schedule to the Customs Tariff Act, 1975. Both the applicants base their contention on the supplementary Note 2 to the Chapter 21 of the First Schedule to the Customs Tariff. Considering that these applications seek rulings on a common subject, they are being taken up together for a common ruling. The applicants have also referred to the decision of the erstwhile AAR in the case of M/s. Excellent Betelnut Products rendered vide ruling number AAR/Cus/08/2015 [2015 (324) E.L.T. 619 (A.A.R.)] wherein these products were held liable for classification under Heading 2106 of the Customs Tariff. 3. The comments of the Principal Commissioner of Customs, Nhava Sheva-I, dated 26-12-2020 to the application of BMG is on record. In the said communication, detailed processes undertaken on raw areca nuts/betel nuts have been described, reference has been made to the chapter notes/supple-mentary notes to the relevant chapters of the Customs Tariff, i.e., 8 and 21, and thereafter, a conclusion has been drawn that all the processes undertaken, viz., cleaning, boiling, starching, garbling, etc., are covered under the Note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t since the products intended to be imported by them are roasted and boiled for 6 to 12 hours, it would incorrect to hold them classifiable under Chapter 8 as dried nuts. He also emphasised the Supplementary Note 2 to Chapter 21 of the tariff which states that, 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 and argued that if the products intended to be imported by them are not classified under Heading 2106 the result would be that the said supplementary note would become redundant and any interpretation of law which lead to such redundancy, may not be favoured. 5. The products under consideration in the present proceedings have a common primary ingredient, namely, raw areca nut/betel nut and the processes undertaken, as stated by the applicants, are summarised as follows :- API/boiled supari - On the raw whole green nut, removal of large impurities, boiling in water for 6 hours, mixing food starch, drying, polishing, and packaging; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing purposes : (a) For additional preservation or stabilization (for example, by moderate heat treatment, sulphuring, the addition of sorbic acid or potassium sorbate); (b) To improve or maintain their appearance (for example, by the addition of vegetable oil or small quantities of glucose syrup), provided that they retain the character of dried fruit or dried nuts. In the Chapter 8, areca nuts, whole, split, ground, and two residuary sub-headings are accommodated under 0802 80 10, 20, 30, 90, and 0802 90 00, respectively. 9.1 Chapter 21 includes within its ambit, miscellaneous edible preparations. As already mentioned, the Supplementary Note 2 to the said chapter lay down that, 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, menthol. In this chapter, the related entry, with respect to betel nuts, is the sub-heading 2106 90 30, i.e., betel nut products known as supari. 10. In matters of classification of goods entered/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or slicing. The relevant portion of the HSN as reproduced above makes it clear that even after cutting/slicing, the resultant products remain classified under Chapter 8. Similarly, processes like drying, sorting, polishing, packaging etc. do not alter the nature of the product in any significant manner to necessitate a change of classification. The next group of processes, i.e., boiling or roasting in fire gas rotary roasters, when examined in the light of the relevant notes to Chapter 8, also leads to the conclusion that even after such processes, the resultant products do not go out of the purview of Chapter 8. 12. One is then confronted with the question as to whether mixing of food starch would result in a product substantially different to be characterised as a preparation? The answer to that question also appears to be clearly in the negative when the relevant chapter notes make it clear that addition of sugar/glucose syrup/vegetable oil do not significantly alter the character of the areca/betel nuts, and even after such addition, the resultant product continue to remain classified under Chapter 8. Finally, one comes to the instance of addition of spices/Mulethi/liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured by cracking of dried betel nut into small pieces, and thereafter, gently heating it with addition of vanaspati oil, sweetening and flavouring agents and marketed in small pouches as Nizam Pakku (in Tamil)/Betel Nut (in English), the Chennai Bench of the Hon ble CESTAT held the resultant product classifiable under sub-heading 0802 90 19 of Central Excise Tariff and not under 2106 90 30 as supari for period after 7-7-2009. The Hon ble CESTAT, in coming to the above decision, relied upon the decisions of the Hon ble Supreme Court decisions in the cases of M/s. Crane Betel Nut Powder Works and M/s. Satnam Overseas Ltd. [2015 (318) E.L.T. 538 (S.C.)]. 15. I find the observations of the Hon ble Supreme Court in the case of Crane Betel Nuts and the decision of Hon ble Tribunal in the case of Azam Laminators to be extremely enlightening. Even as I recognize that the above decisions were rendered in the context of manufacture in central excise, the principle laid down therein is quite relevant to the situation which is the subject matter of the proceedings before me. Being guided by the aforesaid principle, I paraphrase the question before me to ask whether the processes to whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 shouldn t be made redundant is concerned, it is very clear that so far as chikni supari and unflavoured supari are concerned, there is no doubt regarding inapplicability of the said note to these products as has been discussed in detail in my earlier ruling on this issue which has been reproduced above. The only product in respect of which the applicability of the said supplementary note can be considered is flavoured supari. The decision of the Hon ble Calcutta High Court in the case of Killing Valley Tea Co. v. Secretary to State (A.I.R. 1921, Cal.) wherein it was held that a tea leaf remains the same even after being subjected to mechanical processes like withering, crushing, roasting, fermenting, etc., is a definite pointer to the principle that need to be applied for classification in such matters. The same principle was also applied by the Hon ble Supreme Court s in their decision dated 11-9-1979 in the case of D.S. Bist and Ors. wherein it was held that all agricultural produce undergoes some processing on or outside the farm in order to make it non-perishable, transportable, and marketable and just because processing is a bit longer or complicated wouldn t rob the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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