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TMI Blog2024 (6) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... awn upon as authority by Commissioner of Customs to truncate the applicability of an advance ruling by a statutorily constituted authority. Strictly speaking, it was not levy of duties of customs under Customs Act, 1962 that was the subject of ruling or the demand impugned therein but of levy under section 30 of Special Economic Zones Act, 2005 for which duties of customs was merely the measure and, hence, even the Commissioner of Customs could not have been appended to the applicant let alone any other Commissioner or any other authority. This decision does not advance the proposition of jurisdictional limit set out in the impugned order before us. We may also venture to observe that customs practice does not prescribe that, in every import which has not sought jurisdiction of Authority for Advance Rulings (Central Excise, Customs and Service Tax), the classification should, necessarily, be contrary to that in the advance ruling. The essence of our observation is that the nature of ruling is such that even if discarded, and only by operation of law in chapter VB of Customs Act, 1962, another tariff line more detrimental to importer is, by default, not elevated as the appropriate c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy is thus demonstrated. That the Commissioner of Customs chose to arm the impugned proceedings with the said notes in the absence of detailed scrutiny of its applicability has only undermined the purpose of the impugned proceedings. Had the Commissioner of Customs complied with the prescription for resolution of classification disputes as set out by us supra, an informed adjudication may have followed. Now it has not. Though Learned Counsel appears to be correct about his submissions on the findings of the Tribunal in re ST Enterprises [ 2021 (3) TMI 27 - CESTAT CHENNAI] ] we do not have to rely on those for discarding it as binding precedent on classification in the light of the decision of the Hon ble High Court of Bombay in Isha Exim Versus Union of India, Commissioner of Customs (NS-I) , Mumbai, Deputy Commissioner of Customs (NS-I) Maharashtra [ 2023 (12) TMI 920 - BOMBAY HIGH COURT ] and, owing to non-adherence to the rules of engagement for revision of classification in the impugned order, there being no alternative classification to fall back on. There is no finding that the impugned goods are not API supari and, therefore, rendering the ruling inapplicable. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts for two-thirds of world production of arecanuts and counts a third of its population as consumers. It is also all about import of 15 consignments of API supari , or so said in the bills of entry filed between 25th September 2021 and 27th October 2021 at the inland container depot (ICD) in Borkhedi, that was seized under section 110 of Customs Act, 1962 by officers of Directorate of Revenue Intelligence (DRI) for being arecanuts that are not betelnut product known as Supari which, allegedly, was being claimed with intent to evade Foreign Trade Policy (FTP) restrictions and tariff value handicap that attends on tariff item 0802 8010/ 0802 8020 of First Schedule to Customs Tariff Act, 1975 proposed as substitute. And much like the world of Alice created by Carrol in Through the Looking Glass, there is not much to choose from between betel nut product known as Supari and areca nuts whole/split either in appearance or from laboratory analysis and, yet, thereby hangs a tale of several hindrances to import of the latter that, law-enforcers allege, offer motive, means and opportunity for evasion by recourse to the former which, but for their argus-eyed vigilance over the trade, would ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax policy intent favouring the import of pleasingly flavored betelnut bits in pouches over whole betelnut on which value addition by domestic industry has considerable potential; both impinge on the validity of conclusions in controversy over rate of duty for customs assessment to fasten levy on bringing into India however much protection of local farmers is protested as the persuasion. 3. Other than respective descriptions as betelnut product known as supari corresponding to tariff item 2106 9030 of First Schedule to Customs Tariff Act, 1975, replete with ambiguity, and as arecanuts corresponding to sub-heading 0802 80 of First Schedule to Customs Tariff Act, 1975, 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 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 they retain the character of dried fruit or nuts. in notes to chapter 8 of First Schedule to Customs Tariff Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort value (CIF) not less than ₹ 251 per kilogram as mark of further disfavour. The prerogative of the Central Government to erect barriers to international trade through tax policy and trade policy is, largely, beyond question but frequent encountering of consistently disadvantaged treatment of one which, taking the design of the tariff lines in its entirety and for classification at least, is not really distinguishable from the other and, in the absence of implied policy intent or precise articulation, does nothing but entrust absolute and unfettered power in the hands of the enforcement mechanism for whom the columns to the right of the descriptions may have pre-eminence over reckoning with law. 6. It does not, therefore, surprise that, and well before quantitative restrictions were brought into play, the appellant herein, M/s Excellent Betelnut Products Pvt Ltd, preferred application under section 28H of Customs Act, 1962 before the Authority for Advance Rulings (Central Excise, Customs and Service Tax) seeking affirmation to classify several betel nut products , including API supari impugned here, against tariff item 2106 9030 of First Schedule to Customs Tariff Act, 1975 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions fastening prior onus on proper officer in resolution of classification disputes as the secondary issue. The varying of value, not arising from rule 3(4) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, is only consequential to the revision of classification and has significance only for computation of duty thereof. 8. Before we proceed to the kernel of the challenge, there are certain mega trends that this order exemplifies and which we may ignore only at the cost of imperiling rule of law. The most glaring is the conviction that silence in the law offers open ground to be crept into and occupied without giving thought either to the remit of another agency of the State or that exercise of statutory authority is confined to the express design of the statute and this is how persons turn outlaws and agencies turn rogue. We are fairly aghast at the foundation laid thus 32. .Therefore I consider it to be high time that the issue is taken up for re-look about the classification of Betelnuts described as API supari in respect of the importer M/s Excellent Betelnuts Pvt. Ltd., under Customs law . by a proper officer under section 28 of Customs Act, 1962, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unchanged. The ruling is neither about tariff lines below sub-heading 0802 80 in First Schedule to Customs Tariff Act, 1975 nor about the coverage of tariff item 2106 9030 of First Schedule to Customs Tariff Act, 1975 but that API supari , placed before Authority for Advance Rulings (Central Excise, Customs and Service Tax) as having been prepared by boiling of arecanuts and drying, was to be classified as the latter. The correctness, or otherwise, of the ruling is not for this Tribunal to adjudge and, by extension, neither for the Commissioner of Customs to adjudicate upon nor for the investigation agency to have cavil; neither subsequent rulings to the contrary in applications of other importers nor discredit by the Hon ble High Court of Delhi in Great Nuts Impex Pvt Ltd v. Commissioner of Customs, Delhi [(2023) 7 Centax 53 (Del)], such as it does, invalidates the impugned ruling for assessment of API supari imported by M/s Excellent Betelnut Products Pvt Ltd. These prefacing remarks of ours is not measure of our graciousness but acknowledgement of the statutory demarcation of authority binding all its creations within the arc of its leash even while conferring mastership within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1962, the jurisdictional path for resolution of classification disputes, the distinctiveness of taxable event in the two commodity levies authorized by the Seventh Schedule in the Constitution and the purposive emphasis to be placed on one of the statutory tools, viz. tariff, crafted thereto, the intendment of advance rulings circumscribing its decisional framework and, most crucial of all, fidelity to the ratio of orders relied upon - that pervades the findings in challenge before us. Discussion of the relevant statutory provisions thereto in detail would be more apt in a manual of assessment, adjudication and appeal under Customs Act, 1962 and Central Excise Act, 1944 which is not the intended purpose of the Tribunal; these shall, however, be referred to in navigating the contours of the impugned order. 11. In effect, the outcomes in the impugned order rests upon discard of the advance ruling issued on application of the importer herein for classification of the goods imported herein against tariff item 2106 9030 of First Schedule to Customs Tariff Act, 1975 for its inapplicability by not considering the alternative classification, as subsequent rulings did and found affirma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to resolve classification dispute in adjudicatory capacity. More so, as the impugned ruling was, in the absence of section 28KA of Customs Act, 1962 then, not even subject to appellate challenge and the Commissioner of Customs, in seeking to undo the ruling through the impugned order, has set itself up contrarily both to legislative intent of empowering advance ruling authority and to executive disinterestedness in disputing rulings then. 13. From the records, it appears to us that the adjudicating authority placed emphasis on the decision in re Great Nuts Impex Pvt Ltd without being privy to the circumstances in which the appeal did come up before the Hon ble High Court; we, too, are similarly incapacitated but may garner from the decision therein that the Customs Authority for Advance Ruling (CAAR) did consider a competing tariff line despite the question posed being restricted to appropriateness of tariff line proposed by the applicant and, in challenge before the Hon ble High Court, the appellant altered the complexion of the dispute by arguing the merit of the tariff line proposed by them over the assigned tariff line, and in the course of which the ruling obtained by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of itself, discard the import or even of the proposition which may yet be revived on filing bill of entry through declaration therein. Likewise, the facility of advance ruling is not without flexibility of denial on actual import upon distinguishment from the product on which the ruling had been sought. Indeed, provision also exists for pronounced rulings to be rendered void ab initio in certain circumstances and for consequential adjudicated recovery to be ordered under Customs Act, 1962. We, therefore, find that adjudication proceedings offered neither scope for discard of a ruling for lack of merit nor even scope for repudiating a ruling at the time of assessment of goods except either within the extent set out in section 28J (2) of Customs Act, 1962 or on finding that the imported goods are not covered by the ruling. It is the alternative classification adopted by the Customs Authority for Advance Rulings (CAAR) in subsequent disposals of application of other importers which, as the impugned order puts it, overruled its earlier decision a conclusion that has been contrived, once again in the impugned order, from a different construct therein - that prompted the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SAI) and Central Revenue Control Laboratory (CRCL), Vadodara despite these having been invalidated in interim order [IR/03/2022 dated 7th February 2022] of the Tribunal. Learned Authorized Representative submitted that the impugned order has given reasons for holding the advance ruling was for betelnuts of different specification. 19. We find that the appellant was before the Tribunal on two earlier occasions of which the first arose from cavil over disinclination to grant provisional release on the ground that the impugned goods were unfit for human consumption and, on plea of the appellant that laboratory reports relied on for the purpose pertained to samples drawn and tested without notice to them, specific directions were issued for re-test following which it was held by the Tribunal, on the basis of report of M/s Qualichem Laboratories, that the adjudicating authority was to dispose off the request for provisional release afresh in accordance with law and facts. That these test reports were discarded to deny provisional release and that the Tribunal was constrained to invoke its authority are on record. It is also on record that lack of uniformity in the reports by laboratorie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll on a contingency of inconsequence. We can, however, safely conclude that, at all events, the impugned ruling was certainly not invalid on date of adjudication. 21. On the issue of jurisdictional limitation on rulings of Authority for Advance Rulings (Central Excise, Customs and Service Tax) under section 28I of Customs Act, 1962, we find the proposition of the adjudicating authority to be, ex facie, specious. Chapter VB of Customs Act, 1962 does provide for contingencies in which ruling may be repudiated but this, certainly, is not one among them. More so, when classification, as a general rule, is expected to be not only consistent qua importer but also qua imported goods and, therefore, can never be qua Commissioner; it just happens that advance ruling is not intended to substitute for section 12 of Customs Act, 1962 except qua importer and, thereby, not claimable by others as consequential right but to suggest that, either the importer should have applied re each customs formation separately or have the ruling on classification restricted to the respondent-Commissionerate is a travesty that the law does not envisage, is at odds with the General Rules for Interpretation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority to be reassured of. 23. We are unable to fathom the interpretation accorded to section 28J (1) of Customs Act, 1962 by the adjudicating authority to put forth this proposition. Leaving aside the grand vision that actuated the World Customs Organization (WCO) and the World Trade Organization (WTO) to prioritize this facilitation which was eulogized upon by Learned Counsel, procedure prescribing reference to Chairman, Central Board of Excise Customs for supplying a representative-respondent in the event of lack of respondent-Commissioner in an application without any enlargement of applicability for that reason should, unfailingly, persuade that a respondent-Commissioner if named by applicant is, in reality, representative-Commissioner. That a prescribed form, with space provided for nomination of respondent-Commissioner, should determine the jurisdictional ambit of a ruling is tantamount to superimposing procedure over substantive law. It is not only the sibling enactments that too provide for advance rulings but also the law for levy of direct taxes and that situs of applicant, and occurrence of taxable event, lies in one singular jurisdiction for collection of these levie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aspect. 24. Learned Authorized Representative has placed before us the decision [order dated 7th September 2021 in writ petition no. 4156 of 2024] in writ proceedings by the Hon ble High Court of Madras, in GE India Industrial Pvt Ltd v. Union of India and others, which was all about the validity of circular no. 44/2013 dated 30th December 2013 of Central Board of Excise Customs (CBEC), clarifying that levy of special additional duty (SAD) chargeable under section 3 of Customs Tariff Act, 1975 on all imports into India did not exclude supply from special economic zones (SEZ) to domestic tariff area (DTA) except where the state government concerned had exempted the levy, and the direction of Specified Officer of JMFTWZ for recovery on clearances in Tamil Nadu was challenged for overlooking a ruling [AAR/Cus/01/2013 dated 27th May 2013] of Authority for Advance Ruling under section 28J of Customs Act, 1962 that excluded such tax from being levied. While Learned Authorized Representative was content to cite certain portions therein, the crux of the issue in the context of the dispute was framed thus 21. Therefore, the Advance Ruling and its applicability is restricted on The P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y; the provisions of section 28J (1) of Customs Act, 1962 bind the trinity of applicant, ruling and customs administration of India, with the customs formations as surrogates according to location of import, till the span of life of the ruling unless distinguished in accordance with section 28J (2) of Customs Act, 1962 or the rescinding of the ruling by operation of section 28K of Customs Act, 1962. With all impediments to application of the impugned ruling thus erased, the classification, and consequences thereof, in the impugned ruling applies to the impugned goods. 26. Learned Authorized Representative did canvass his brief further by placing reliance on the rulings of Customs Authority for Advance Rulings (CAAR) in re Zaveri Enterprises [CAAR/Mumbai/ARC/12/2021 dated 1st June 2021] to also press the limited jurisdictional remit of advance rulings. We find that the said decision was only called upon, during the course of proceedings, on precedent of erstwhile, but similarly placed, authority binding in another application by another applicant for ruling on classification of goods made subsequently and, ironically while rejecting such proposition, relied on another finding render ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The rationale for the placement of such onus was necessitated by the framework of the law, as enacted in Customs Tariff Act, 1975, that permitted discard of claimed classification by recourse to comparison only under rule 3 of the said interpretative rules implying lack of incorrectness in declaration of importer as well as conformity of the counter-proposition with rule 1 of the said interpretative rules simultaneously and, therefore, warranting tie breaker for zeroing in on the more apt description. Conversely, disabusing of the tariff line proposed in the show cause notice for not being in conformity with rule 1, to start with, validates the declared classification without having to subject it to the same test of the interpretative rules as the consequence of failure thereof is search for another which, in adjudicatory exercise, would then traverse beyond the confines of the show cause notice. 28. Learned Authorized Representative canvassed the legality of the revision in classification of the product to sub-heading 0802 80 of First Schedule to Customs Tariff Act, 1975 on the ground that law had changed as provided for in section 28J (2) of Customs Act, 1962 for which he cited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariff Act, 1975. Furthermore, its binding effect being limited to the applicant deprives it of consideration in judicial determination. Thus, any suggestion of error in the findings of the impugned ruling is not of consequence as to merit approval of alternative classification. In Isha Exim v. Union of India and others [2023 (12) TMI 920 BOMBAY HIGH COURT], it was contended on behalf of respondents that rulings of advance authority is limited to the parties to the dispute. There is no determination of law, let alone change in law, that permits recourse to section 28J (2) of Customs Act, 1962 as far as the rulings cited by Learned Authorized Representative is concerned. 30. The applicability of the decision in re Great Nuts Impex Pvt Ltd has already been dwelt upon supra. The Tribunal, in re ST Enterprises, had before it a determination by lower authorities that impugned goods did not fall within the ambit of tariff item 2106 9030 of First Schedule to Customs Tariff Act, 1975 and considering 12 It is not the case of the appellant that the betelnuts are whole . In other words, appellants do not have a case that the imported goods are broken or crushed betel nut. They have imported be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t possible to ascertain whether the nuts are boiled .From the appearance of the betel nuts whole (imported) placed before us we are not able to conclude whether these nuts are boiled and then dried or only dried. .we do not find any evidence to support the various processes as stated in the write up of the supplier has been undertaken on the nut it would appear that, notwithstanding its appearance, processing, if established would have sufficed to hold otherwise which the impugned order has conveniently ignored. 31. The decision in re ST Enterprises does not enable us to be privy to the legal submissions including arguments on discharge of onus in the manner set out in the decisions of the Hon ble Supreme Court in re Hindustan Ferodo Ltd and in re HPL Chemicals Ltd; furthermore, as clearances appeared to have been made from a Free Trade Warehousing Zone (FTWZ) that is outside the customs territory of India, it is probable that duty liability was discharged under section 30 of Special Economic Zone Act, 2005, and not following assessment under section 17 of Customs Act, 1962 which, having placed onus on proper officer to seek further details for the purpose that, on not being respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gregation of processed dried fruit or dried nut between that chapter and chapter 20 in view of note 1 in the latter, should be applied only to such headings which distinguish between fresh and dried and amenable to classification in the latter which arecanuts are not implying that no inference can be drawn from the said chapter note in the manner in which the Tribunal has done so. Furthermore, he contented that liberal use of manufacture , which is unknown to the customs statute, to decide between two headings renders it devoid of value as binding precedent. 33. We find ourselves unable to affirm the proposition of Learned Authorized Representative, by drawing upon the authority of the decision in re ST Enterprises, on whole being the essential character of arecanut and, thereby, after preparation by boiling and drying , continuing to be arecanut as proposed in the show cause notice, as boiling and drying of the goods impugned in that dispute was not established to the satisfaction of the Tribunal while that is not in dispute here. Moreover, in that proposition inheres the inference that customs officials are, by the First Schedule to Customs Tariff Act, 1975, required to ascertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption; suggests that excepting of the tariff items excludes coverage of retail goods from the description which negates the proposition of respondent herein and by that exclusion thereto, intended inclusion for all other forms of betel nut that have undergone one or other process. That the description corresponding to subheading 0802 80 of First Schedule to Customs Tariff Act, 1975 is arecanuts with its further disaggregation into three according to its form whole, broken and powdered should have informed the Commissioner of Customs that, in venturing to hold that the impugned goods being whole precluded conformity with supari , the impugned finding is not tenable for, indeed, if supari not be whole , then broken arecanuts would be supari and a contradiction in the tariff. Furthermore, note 3 to chapter 8 of First Schedule to Customs Tariff Act, 1975 has been misconstrued. The intent of the tariff is classification that is consistent across time and space; it is not a tool for fastening imports to the higher rate of the moment. The notes are not only for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and dried a proposition that is designed to saddle betelnut products of one tariff line with all the available barriers, viz., higher tax rate, tariff value and minimum import price, intended for arecanuts of another unrelated sub-heading. Doubtlessly, by inserting the tariff line below sub-heading 2106 90, legislative wisdom drew into First Schedule to Customs Tariff Act, 1975, along with some others in this as well as other chapters, two uniquely Indian nomenclature for a product known internationally but, in deploying tax and trade policy only to one of them thereupon, a gap has emerged which its field formations, without acquainting themselves with the legislative intent and without the benefit of a policy assertion - either through statement of intent for such differential treatment or acknowledgement of legislative sanction even, to be enforced - have indiscriminately inserted themselves as the last word in the barriers. Revenue had no case to start with considering the immutable finality of advance ruling and Revenue have no case to end with in the light of our findings on their proposition. 36. We have adverted to all the findings in the impugned order and all the submiss ..... 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