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TMI Blog2021 (11) TMI 1194X X X X Extracts X X X X X X X X Extracts X X X X ..... . In case, it is considered that the said processes and mixing of food starch are substantive enough for the products to be considered as preparation of betel nut that would make them classifiable under Chapter 21 by virtue of Supplementary note 2 of Chapter 21. The appropriate guideline for determining the nature and impact of these processes or act of addition of food starch is found in Note 2 to Chapter 8 of the Customs Tariff Act. The said note prescribes that dried nuts of this Chapter may be partially rehydrated, or treated for the following purpose: (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. Guided by the letter and spirit of the said Chapter Note, I find that the processes and mixing of food starch that the said four supari have been subjected to fall in the category of processes carried out on the same for cleaning, preserving and making them more attractive to certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned Principal Commissioner of Customs, Nhava Sheva and Commissioner of Customs, ICD Patparganj Other ICDs, Delhi have been received vide their letter dated 08.10.21 and 15.09.21 respectively. 3. As per the application for advance ruling, the applicant wishes to import various type of products and the main raw material used in such products is raw betel nut and these products do not contain lime, katha (catechu) and tobacco. The details and processes involved in obtaining various products are summarized as under: (i) 'API Supari' : Following processes are conducted: removing of large impurities by labourers, boiling in water for 6 hours, mixing food starch, drying, polishing and packaging. (ii) 'Chikni Supari' : Following processes are conducted: removing of large impurities by labourers, slicing in small pieces, boiling in water for 6 hours, mixing food starch, drying, polishing and packaging. (iii) 'Unflavoured Supari' : Following processes are conducted: removing of large impurities by labourers, removing of small impurities by de-stoner, metal deflection (removal of metal item, if any), garbling, polishing in polishing machine, 3 stage cutting, blowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that the products though use betel nut/ areca nut as the main raw material; however, in the process various other products are mixed and it becomes a preparation; hence these goods fall under Chapter 21 and more particularly under sub-heading 21069030 and not under Chapter 8. The applicant has also referred to the Supplementary Note 2 of Chapter 21 to justify that these products are classifiable under the sub-heading 2106 90 30. As per the said Supplementary Note 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. They have also cited reference to ruling of the erstwhile Authority for Advance Rulings (AAR), New Delhi in the case of M/s Excellent Betelnut Products Pvt. Ltd, M/s Oliya Steel Private Limited, Kolkata. I will revert to these in my discussion later in the order. 5. The Principal Commissioner of Customs (NS-I), JNCH, Nhava Sheva vide his letter dated 08.10.21 has commented, inter-alia, that in a recent judgement of CESTAT, Chenn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble CESTAT, Chennai in the case of M/s S.T. Enterprises, Delhi, wherein while deciding an appeal against the order of Commissioner (Appeal), the Tribunal has held that the correct classification of boiled 'Betel Nut Whole' would be under chapter 8 and specifically under sub-heading 0802 80 10. 6. In accordance with the procedure prescribed under the CAAR Regulations, 2021, personal hearings were scheduled on 20.09.2021, 06.10.21 and 13.10.21. However, the applicant vide an e-mail dated 13.10.21 informed that they had changed their advocates from M/s Jain Globus Law firm to Advocate Shri Priyadarshi Manish, who vide his letter dated 12.10.2021 (received on 13.10.2021) requested for adjournment in the matter. The applicant was then given further opportunity for personal hearing on 22.10.21 and 26.10.21. The advocate representing the applicant sought brief deferments on both the dates. Finally, in the personal hearing held through virtual mode on 29.10.21 Ms. Anjali J. Manish, Advocate made submissions supporting their contention that the betel nut items merited classification under Chapter 21 as against the contention of the department that the six betel nut items were class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undergoing certain processes the betel nut remains the betel nut only and resultant product could not be identified as new product to be classified under chapter 21; after the said Judgement of Hon'ble Supreme Court, Chapter Notes of Chapter 8 of Central Excise Tariff were amended and Note 6 was inserted in Chapter 21 so as to declare the process of adding or mixing certain ingredients to betel nut, as amounting to manufacture; thus proposed import of betel nut product known as 'Supari' to be excluded from Chapter 8 and hence cannot be classified under sub-heading 08028010; sub-heading 21069030 refers to betel nut product known as 'Supari' whereas the Chapter heading 080280 refers to Areca Nuts and 08028010 refers to '----Whole'; combined reading of rule 2 (a) and 3 (b) of the General Rules for the Interpretation of Import Tariff, justifies classification of the proposed goods under sub-heading 21069030; CBIC circular No. 163/19/2021-GST dated 06.10.2021 states that 'scented sweet supari' merit classification under sub-heading 21069030 as 'Betel Nut product known as Supari '; reliance on the judgement in the case of M/s Crane Betel Nut P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, to which India is a signatory, would be useful. It is seen that with respect to Chapter 8, the HSN prescribes the following as general guidelines: - 'Fruit and nuts of (his Chapter may be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled. The addition of small quantities of sugar does not affect the classification of fruit in this Chapter. 13. Further, on perusal of the advance rulings given by the erstwhile AAR, New Delhi, which have been referred to by the applicant, I find that case of M/s Excellent Betel nut Products Pvt. Ltd. do cover the goods, i.e. API supari, Chikni supari, boiled supari, Unflavoured supari and Flavoured supari, involved in the present proceedings; and in rulings in the application of M/S Excellent Betelnut Products Pvt. Ltd. and M/S Oliya Steel Private Limited, the erstwhile AAR has concluded that the said products merit classification under sub-heading 2106 90 30. I find that in reaching this conclusion, AAR has been of the view that on account of the positive language of the Supplementary Note 2 to Chapter 21, it is not necessary for betel nut (supari) to undergo a change of character for it to be classified under Chap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oiled supari is obtained by the simplest of the processes. Since, the process does not include cutting or slicing, it remains whole boiled supari . I note that Hon'ble CESTAT, Chennai has held this good to be classifiable under sub-heading 0802 80 10. Therefore, by virtue of proviso 1 (b) to section 28-1 (2) of the Customs Act, the matter of classification of whole boiled supari having been decided by CESTAT, Chennai, is being disallowed by this Authority. 15.2 Thereafter, I find that the processes involved in obtaining Unfavoured Supari and Cutting Supari include multi-stage cutting, but no addition or mixing of any other substance. 15.3 In the case of API supari and Chikni supari, the processes include mixing of food starch. In determining the classification of these four supari items, viz. Unfavoured Supari, Cutting Supari, API supari and Chikni supari, the basic question is whether the process of cutting or slicing, and mixing of food starch change the substantive character of the betel nuts and result in products that should appropriately be considered as preparations of betel nut and not betel nut, albeit with certain degree of processing. In case, it is considered that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etel Nut case. In the M/s Crane order, the Hon'ble Supreme Court held 30. In our view, the process of manufacture employed by the appellant-company did not change the nature of the end product, which in the words of the Tribunal, was that in the end product the 'betel nut remains a betel nut'. The said observation of the Tribunal depicts the status of the product prior to manufacture and thereafter, In those circumstances, the views expressed in the D.C.M. General Mills Ltd (supra) and the passage from the American Judgment (supra) become meaningful. The observation that manufacture implies a change, but every change of not manufacture and yet every change of an article is the result of treatment, labour and manipulation is apposite to the situation at hand. The process involved in the manufacture Of sweetened betel nut pieces does not result in the manufacture of a new product as the end product continues to retain its original character though in a modified form. (emphasis supplied) 15.5 In the case of Azam Laminators Pvt. Ltd., where scented betel nut was being manufactured by cracking of dried betel nut into small pieces, and thereafter, gently heating it with addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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