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TMI Blog2023 (8) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... tinct / different and importantly, relevant in determining whether the nuts would fall under CTH 0802 or under 2008. It may be useful to rely on the decision of the Hon ble Supreme Court in case of STERLING FOODS VERSUS STATE OF KARNATAKA AND ANOTHER [ 1986 (7) TMI 109 - SUPREME COURT ] wherein, while dealing with the question, whether prawns, shrimps and lobsters locally purchased for export after subject to the process of cutting their heads and tails, peeling, deveining, cleaning, freezing and exporting was eligible to claim the benefit as a sale in the course of export under sub section (3) to Section 5. It was found that the benefit ought to be extended as prawns / lobsters even after being subject to the above processes do not lose their identity, but commercially remain the same. Importantly, an argument was advanced on the basis of the entries in the Schedule to the Karnataka Act and the amendments made thereto particularly in relation to classification of Shrimps, Prawns and Lobsters to suggest that enumeration of Items in different entries in the Tariff Schedule is by itself indicative of the fact that they are commercially different. However, the said contention was reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevance / bearing on the issue. Reliance was sought to be placed by the learned counsel for the Revenue on the decision of the Tribunal in the case of S.T.Enterprises which on being carried in Civil Appeals, which came to be dismissed, to submit that the goods imported viz., roasted areca nut/ betel nut continues to remain betel nut and thus classifiable under CTH 08 - It is found that reliance on the above decision to determine the classification of roasted betel / areca nut under the Customs Tariff Act is wholly misplaced. Relevance of judgment in the case of C rane Betel Nut Powder Works - HELD THAT:- In Crane Betel Nut powder s case, there importantly, the question was whether the process of boiling and drying would constitute manufacture. However, in the instant case, the question is not as to whether the activity of roasting of betel nut would constitute manufacture, but whether in view of a separate entry for roasted betel nut, it is permissible to continue to classify the roasted betel nut under CTH 08 02 80 which covers fresh or dried areca nuts - it is found that when there is a specific entry for roasted nut and HSN Explanatory notes specifically include roasted betel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations in CAAR-1 on the same issue pertaining to some other jurisdictional Commissionerates of Customs. (b) The respondents stated in the applications that they intend to import "roasted areca / betel nuts (whole, split, and cut)" from Burma, Indonesia, Sri Lanka, Singapore, etc. (c) The respondents had set out the various processes, which the areca nuts are subject to before import, and the same as stated in CMA.No.600 of 2023 are extracted hereunder for ready reference: "1. De-husking the raw betel/areca nut and drying the same before being fed into the roasting oven; 2. Feeding the fresh areca nuts into a seed roasting oven, heating up to 100 degreeCelcius and roasting the fresh areca nuts in an oven of the seed roasting machine; 3. Take the areca nuts out of the oven, cooling at room temperature and feeding back into the oven, heat and roast them again, and perform this cycle until the water content of the fresh areca nut is 10 to 15 per cent; and 4. The fresh areca nuts are repeatedly heated, roasted and cooled to ensure that the areca nuts are quickly cooled and shrunk after thermal expansions so that the roasted areca nuts have higher quantity; the roasting time is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELT 514 apart from a number of Advance Rulings. iv. Roasting is not meant for preservation or stabilization or to improve or enhance/maintain the appearance of the product. (g) The Advance Rulings Authority after considering the materials placed, proceeded to rule that roasted areca / betel nuts -whole, split and cut fall under Chapter Heading 2008, specifically, under Tariff entry 2008 19 20: "other roasted nuts & seeds" of Chapter 20 of the the First schedule of CTA, on the strength of the following reasons: i. That the goods covered under the applications are roasted betel nuts. ii. That the nuts are roasted at temperatures of 130 to 150 degree Celsius. The process brings about change in physical and chemical characteristics of the betel nuts. iii. That the judgment of the Hon'ble Supreme Court in the case of Crane Betel Nut Powder and S.T.Enterprises reported in 2007 (210) E.L.T. 171 (SC), and the other Advance Rulings, were not found to have any bearing in resolving the issue on hand inasmuch the classification of "roasted areca / betel nuts" under CTH was not dealt with in any of the said judgments, orders or Rulings. iv. The Advance Rulings Authority after consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (d) That the classification of roasted nut under Chapter Heading 2008 stands covered by a series of decisions of the Apex Court and Advance Rulings. 5. Heard both sides. Perused the material on record. 6. The common question that arises for consideration in all these appeals is whether the ruling of the Customs Authority for Advance Rulings that "roasted betel nut - whole, split and cut", merit classification under heading 2008 and more specifically under sub heading 2008 19 20 of the First Schedule to the CTA, warrants interference. 7. Before proceeding further, it may be necessary to refer to the General Rules for Interpretation, relevant Tariff Entries along with Chapter Notes and HSN Notes, and its relevance for determining the classification, which are as under: i) General Rules for the Interpretation of Import Tariff: "Classification of goods in this Schedule shall be governed by the following principles: 1….. 3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: a. The heading which provides the most specific descriptions shall be prefer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Split kg. 100% 90% 0802 80 30 --- Ground kg. 100% 90% 0802 80 90 --- Other kg. 100% 90% 0802 90 00 - Other kg. 100% Chapter 20 Preparations of vegetables, fruit, nuts or other parts of plants Notes 1. This Chapter does not cover: (a) vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, 8 or 11; (b) food preparations containing more than 20 by weight of sausage, meat, meat offal, blood, fish or crustaceans, molluscs or other aquatic invertebrates, or any combination thereof (Chapter 16); Tariff Item Description of goods Unit Rate of duty Standard Preferential Areas …. 2008 -- ………. Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included ….. - Nuts, ground-nuts and other seeds, whether or not mixed together: 2008 11 00 -- Ground-nuts Kg. 30% - 2008 19 -- Other, including mixtures: 2008 19 10 --- Cashew nut, roasted, salted or roasted and salted Kg. 241[45%] - 2008 19 20 --- Other roasted nuts and seeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut pastes, obtained by cooking, 4) Homogenised prepared or preserved vegetables and fruit. (5) Fruit or vegetable juices, neither fermented nor containing added alcohol, or of an alcoholic strength by volume not exceeding 0.5 % vol. (6) Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by other processes not provided for in Chapter 7, 8 or 11 or elsewhere in the Nomenclature. ….. It includes, inter alia: (1) Almonds, ground-nuts, areca (or 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 Chapter 21 Miscellaneous edible preparations Notes. 1. This Chapter does not cover: (a) Mixed vegetables of heading 07.12; (b) Roasted coffee substitutes containing coffee in any proportion (heading 09.01); (c) Flavoured tea (heading 09.02); (d) Spices or other products of headings 09.04 to 09.10; (e) Food preparations, other than the products described in heading 21.03 or 21.04, containing more than 20% by weight of sausage, meat, meat offel, blood, fish or crustaceans, molluscs or other aquatic invertebrates, or any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnataka, reported in (1986) 3 SCC 469 wherein, while dealing with the question, whether prawns, shrimps and lobsters locally purchased for export after subject to the process of cutting their heads and tails, peeling, deveining, cleaning, freezing and exporting was eligible to claim the benefit as a sale in the course of export under sub section (3) to Section 5. It was found that the benefit ought to be extended as prawns / lobsters even after being subject to the above processes do not lose their identity, but commercially remain the same. Importantly, an argument was advanced on the basis of the entries in the Schedule to the Karnataka Act and the amendments made thereto particularly in relation to classification of Shrimps, Prawns and Lobsters to suggest that enumeration of Items in different entries in the Tariff Schedule is by itself indicative of the fact that they are commercially different. However, the said contention was rejected by the Hon'ble Supreme Court in the following decisions, the relevant portion of which are extracted below: Sterling Foods v. State of Karnataka, (1986) 3 SCC 469: "8. This conclusion on principle was not disputed by the High Court in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether processed or frozen shrimps, prawns and lobsters are commercially the same commodity as raw shrimps, prawns and lobsters or are a different commodity and merely because the State legislature made a distinction between the two for the purpose of determining exigibility to State sales tax, it cannot be said that in commercial parlance or according to popular sense, processed or frozen shrimps, prawns and lobsters are recognised as different commodity distinct from raw shrimps, prawns and lobsters. The question whether raw shrimps, prawns and lobsters after suffering processing retain their original character or identity or become a new commodity has to be determined not on the basis of a distinction made by the State legislature for the purpose of exigibility to State sales tax because even where the commodity is the same in the eyes of the persons dealing in it the State legislature may make a classification for determining liability to sales tax. This question, for the purpose of the Central Sales Tax Act, has to be determined on the basis of what is commonly known or recognised in commercial parlance. If in commercial parlance and according to what is understood in the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents that the classification as far as possible must be in conformity and in consonance with the HSN Explanatory Notes. Perusal of HSN Explanatory Notes would leave no room for doubt that "roasted areca nut" has been treated as falling under Chapter 20. The relevant portion of HSN Explanatory notes is extracted hereunder for better appreciation: It includes, inter alia: (1) Almonds, ground-nuts, areca (or betel) nuts and other nuts, dryroasted, oil-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives 10.1. To appreciate the relevance of HSN Notes in determining classification, it may be relevant to refer to the following judgments of the Hon'ble Supreme Court: (i)CCE & Customs v. Phil Corpn. Ltd., (2008) 17 SCC 569: " 3 0. I n 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Now, applying the above test to the competing entries viz., CTH 080280 and CTH 2008 1920, we find that while CTH 080280 covers areca nuts which are "fresh or dried whether or not shelled or pealed", chapter 2008 19 20 covers "other roasted nuts and seeds" which include roasted areca nuts. Importantly, Note 3 to Chapter 8 provides that dried nuts covered under the said Chapter are those which are partially rehydrated or treated for additional preservation or stabilization by moderate heat treatment, sulphuring, addition of sorbic acid or potassium sorbate. Note 1 (a) to Chapter 20 expressly excludes nuts prepared or preserved by the "processes specified in Chapters 7, 8 or 11", while classifying roasted nuts and seeds. It is thus evident that roasting and drying are treated to be distinct for the purposes of classification under the Customs Tariff Heading. Any construction to the contrary would result in rendering Note 1 (a) to Chapter 20 which excludes the process specified in Chapter 8 of CTA, redundant. While fresh or dried areca nuts are covered by 080280, roasted areca nuts are covered under 2008 19 20. Roasting is a process which has been treated to be distinct from drying a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been affirmed and put into effect on many occasions…. Corpus Juris Secundum, 82 C.J.S. Statutes 482 states: when construing a general and aspecific statute pertaining to the same topic, it is necessary to consider the statutes as consistent with one another and such statutes therefore should be harmonised, if possible, with the objective of giving effect to a consistent legislative policy. On the other hand, where a general statute and a specific statute relating to the same subject-matter cannot be reconciled, the special or specific statute ordinarily will control. The provision more specifically directed to the matter at issue prevails as an exception to or qualification of the provision which is more general in nature, provided that the specific or special statute clearly includes the matter in controversy (Edmond v. United States [137 L Ed 2d 917] , Warden v. Marrero [41 LEd 2d 383] )." 11.5. In this context, it may also be useful to refer to the following judgments, wherein the above maxim/ principle has been applied by the Courts in India while dealing with fiscal statutes: (i) CCE v. Shree BaidyanathAyurved Bhavan Ltd., (2009) 12 SCC 419: "56. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reca nut under the Customs Tariff Act is wholly misplaced for the following reasons: (a) In the above decision, 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 CTH 2008 19 20 which covers "roasted nuts". The following extract of the order of the Tribunal, wherein the issue framed would make this clear: "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." (emphasis supplied) (b) While in the present case, the issue is with reference to classification of "roasted areca nuts". 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 relevant portion would make this clear : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and packing. …….. 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 23 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 Chapter 21 the position is changed, we do not think so. Even after such amendment, the position of law settled by the Hon'ble Apex Court in the case of M/s. Crane Betel Nut Powder Works (supra) would still be applicable. The amendment relied upon by the appellants only clarified what 'supari' would be and as such would not be of much help in deciding the classification of impugned goods. Moreover, it can be seen that the impugned products in the case of Crane Betel Nut Powder Works (supra) have undergone much more elaborate processes like cutting i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority. Accordingly, we do not propose to uphold the decision of the High Court because, it seems to us that it is wrong in principle and cannot be justified by the terms of the relevant provisions. A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute. So far as the order shows, no argument was addressed to the court on the question whether or not any direction could properly be made compelling the Municipal Corporation to construct a stall at the pitching site of a pavement squatter. Professor P.J. Fitzgerald, editor of the Salmond on Jurisprudence, 12th Edn. explains the concept of sub silentio at p. 153 in these words: A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, said Lord Morris in Herrington v. British Railways Board [(1972) 2 WLR 537 : 1972 AC 877 (HL) [Sub nom British Railways Board v. Herrington, (1972) 1 All ER 749 (HL)]] . Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases . " (emphasis supplied) (b) State of Orissa v. Mohd. Illiyas, (2006) 1 SCC 275: "12. ......According to the well-settled theory of precedents, every decision contains three basic postulates : (i) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct, or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above. A decision is an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically flows from the various observations made in the judgment......." (emphasis supplied) (c) Bhavnagar University v. Palitana Sugar Mill (P) Ltd., (2003) 2 SCC 111: " 59. A decision, as is well known, is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulings may have no relevance. The following Table would make the above position clear: S.No Case Issue Held 1 Aswath Manoharan KER/120/2021 Kerala Authority for Advance Ruling in GST Preparation of banana "chips" fall under which category? Any other process like freezing, steaming, boiling, drying, provisionally preserving and milling will fall under HSN 2008 2. M/s. Isha Exim Mumbai AAR/44/Cus/02/2017 Advance Ruling Authority, New Delhi Goods namely "unflavoured supari, flavoured suprai etc.," being processed like semi-dried, boiling, slicing in horizontal will classify under 21 06 90 30 Betelnut is boiled for 6 hours will change character therefore it is ruled to classify under HSN 2106 90 30 3 In RE: Exor Overseas 2022 (379) E.L.T. 508 Advance Ruling Authority, New Delhi Process of boiling must be considered as "preparation" and covered under HSN 2106 90 30. Process of boiling drying betel nut will fall under HSN 0803, as there is no change in character. 4 In RE: Dry Nut Enterprises 2022 (379) E.L.T. 139 Process of enhancing preservation and enhancing appearance or presentation will change character of API supari, Chikni supari and liable to be classified u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akin to moderate heat treatment. Therefore, I conclude that the processes to which raw betel nuts have been subjected to obtain API supari, Chikni supari and unflavoured supari are in the nature of processes referred to in the Chapter Note 3 to Chapter 8 and HSN Note. 15.1. The above Table would show that the Rulings of the Advance Rulings Authority did not deal with roasted arecanut and thus, would have no relevance to the issue on hand. 16. To sum up: (a) Roasting is a process treated to be distinct from the process of boiling and drying, in fixing the classification in respect of betel/areca nut under CTH. (b) Roasted betel/areca nut having been specifically classified under CTH 2008 19 20, the attempt to classify under CTH 08 02 80 would fall foul of the settled rule of construction that specific entry would prevail over general entry. (c) HSN explanatory notes is normally a safe guide in determining classification under CTH. Roasted areca / betel nut having been mentioned in CTH 2008 19 20 under HSN, the impugned Ruling is in consonance with HSN classification. (d) When there is a specific entry covering a product/commodity, the test of common parlance is irrelevant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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