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TMI Blog2025 (2) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess, are very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes and none of these processes are mentioned in the Chapter Note 3 to Chapter 8 of the Customs Tariff Act, 1975 as well as HSN Explanatory Notes to Chapter Heading 0802. Classification as far as possible must be in conformity and in consonance with the HSN Explanatory Notes. It is trite law that whenever there is specific entry, the same would prevail over general entry. The said general principle is statutorily incorporated in General Rules of Interpretation, in particular, under Rule 3(a) of the General Rules of Interpretation. CTH 2008 19 20 is a special entry covering nuts subject to the process of roasting, when contrasted with CTH 08 02 90 which covers dried nuts. In the decision of Tribunal in respect of the case S.T. Enterprises [2021 (3) TMI 27 - CESTAT CHENNAI], 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 CTI 2008 19 20. The process that was examined by the Tribunal in the case of S.T. Enterprise was confined to boiling and drying. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods i.e. "Roasted areca nuts (betel nuts)- whole and roasted areca nuts (betel nuts)- Cut/Split" merit classification under Custom Tariff Heading 2008, specifically under CTI 2008 19 20 of Chapter 20 of the First Schedule to the Customs Tariff Act, 1975. X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that they retain the character of dried betel nut, fruit or dried nuts." (ii) The applicant's claim that raw Areca nuts after de-husking subjected to repeated roasting in oven for two to three days for reducing water content. Hence, the process mentioned by the importer appear to be only for the purpose of drying and hence, purported roasted Areca nuts are rightly classifiable under Chapter 08, specifically under CTH 080280. (iii) Roasting or mere addition of certain additives for the limited purpose of enhancing preservation or appearance or ease of consumption per se does not result in obtaining a preparation of betel nut. Therefore, the process to which raw betel nuts have been subjected as per process submitted by the applicant is squarely in the nature of processes referred to in the Chapter Note 3 to Chapter 8 and HSN Notes. Hence at the end of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preparations containing more than 20% by weight of sausage, meat, meat offal, blood, insects, fish or crustaceans, molluses or other aquatic invertebrates, or any combination thereof (Chapter 16) (d) Bakers' wares and other products of Heading 1905; or (e) Homogenized composite food preparations of heading 2104. (vi) Classification under Chapter 20 is sought to be justified on the grounds that the HSN explanatory notes to Heading 2008 provide for inclusion of areca nuts in Chapter 2008. However, the explanatory notes also clearly specify that "the products of this heading are generally put up in cans, jars or airtight containers or in casks, barrels or similar containers". This clause of the HSN explanatory notes clearly implies that the goods of this heading are preparations of fruits or nuts presented in packaged condition after manufacturing, which need to be specifically stored and preserved before consumption, for example, roasted almonds or ground nuts need separate packings as specified by the HSN explanatory notes, otherwise these products are prone to deterioration after roasting. But the processes said to be performed on the areca nuts is only for the purpose of dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the ruling that : API Supari, Chikni Supari, Boiled Supari, Boiled and Cut supari, Unflavoured supari and flavoured supari, merit classification under chapter 8 of the first schedule to the Customs Tariff Act and more precisely, under the heading 0802." (b) CAAR Delhi vide ruling no. CAAR/Del/Sarveshwari/ 11/2021 in the case of M/s. Sarveshwari Industries. "the CAA rejects applicant appeal by stating that the goods; API Supari, chikni supari, unflavoured supari, flavoured supari and boiled supari are not classifiable under sub-heading 2106 9030, since they have not attained the character of "preparations " of betel nut, which is sine qua non for a goods to he considered" (c) CAAR Delhi vide ruling no. CAAR/Del/Naman Agri/09/2021 in the case of M/s. Naman Agri Impex Private Ltd. "the CAA rejects applicant appeal by stating that the goods; API Supari, chikni supari, unfavoured supari, flavoured supari and boiled supari, merit classification under chapter 8 of the first schedule to the Customs Tariff Act, and more precisely, under the heading 0802. This is so in view of the fact that the processes to which raw green fresh betel nuts have been subjected to obtain the said f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acter for it to be classified under Chapter 21. The AAR had considered the contention of the department that the said four goods merit classification under Chapter 8, but rejected the same. However, while doing so, the erstwhile AAR did not make any comment on the implications of the Chapter Note 3 to Chapter 8 on the processes by which raw betel nuts were subjected to obtain the said four goods. Further, the Hon'ble High Court of Delhi in its order CUS AA 17/2022, dated 1-03-2023 has held that the order of CAAR in case of M/s. Excellent Betel Nut, 2023 (385) E.L.T. 711 (Del.) is erroneous. The relevant portion of the judgment is reproduced below, "The decision of the Learned AAR in Re : Excellent Betelmit Products Pvt. Ltd. (supra) to the extent that it runs contrary to the decision of the Supreme Court in Crane Betel Nut Powder Works v. Commissioner of Customs and Excise, Tirupathi (supra), is erroneous". In order to arrive at the appropriate classification of the impugned goods, all originating from common source viz. raw green fresh betel nut, a more comprehensive view needs to be taken than in the aforesaid M/s. Excellent Betel Nut case, as has been done by AAR, Mumbai i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imum Import Price as well as a tariff rate which is regularly revised by CBIC. It is pertinent to mention that the revision of tariff value is on a continuous upward trend and as on date the tariff value of the Areca nuts is USD 6259 Per Metric Ton. These applications are being submitted to circumvent the minimum import price and increasing tariff values by legalizing betel nut import through mis-declaration and mis-classification. The CAAR may not entertain such applications considering that several advance rulings have already rejected the classification of betel nut under chapters 20 and 21 in the interest of the local Areca nut farmers and to safeguard the interest of the revenue. (xiv) It is to bring to the notice of the CAAR that on testing of the imported goods declared as "Roasted Areca nuts" imported by the M/s. Universal Impex & M/s. Neena Enterprises, it is found that the goods are actually moderately heal treated areca nuts (CRCL rest reports have been enclosed) and not roasted as claimed by the importers. Hence, it is conclusively proved that all these advance ruling applications are being filed to circumvent the policy conditions applicable under 080280. 4. A perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 2 to 3 days is merely moderate heating for preservation contemplated by chapter 8 of the Tariff stands considered and rejected by the advance ruling authority in the aforesaid decision which have been upheld by the Hon'ble High Court. The said rulings have also considered the lest reports relied upon by the Jurisdictional Commissionerate and arguments based on the same stand rejected. Nobody appeared from the department side for the Personal hearing either in person or through online mode. 5. I have taken into consideration all the materials placed on record in respect of the subject goods including the submissions made by the applicant during the course of personal hearing. I have gone through the response received from the Chennai Customs. I therefore proceed to decide the present applications regarding classification of "Roasted areca nuts (betel nuts)-whole and roasted Areca nuts (betel nuts)- Cut/Split" on the basis of the information on record as well as the existing legal framework having bearing on the classification of the products in question under the first schedule of the Customs Tariff Act, 1975. 5.1 It can be seen from the wording used, the processes mentioned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 I have examined the scope of Note 3 to Chapter 8 and I find that it specifies certain treatments that could be carried out on the dried nuts for additional preservation or stabilization or to improve or maintain their appearance. Further, as per the above note, the processes that could be carried out are moderate heal treatment, sulphuring, and the addition of sorbic acid or potassium sorbate by the addition of vegetable oil or small quantities of glucose syrup. Roasting is different from all the processes mentioned above. Even in the generally understood meaning of the terms, it is understood that roasting involves severe heat treatment and is different from moderate heat treatment as well as dehydration. The ratio of Hon'ble Apex Court judgment in the case of Alladi Venkateswarlu v. Government of Andhra (cited supra) regarding differentiating the process of roasting and drying is very much relevant and applicable in this case. 5.4 I have examined the scope of CTH 2008 and I find that, as per HSN Explanatory Notes, Heading 2008 covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Commissioner of Customs & Central Excise v. Phil Corporation Ltd. in Appeal (Civil) 2215 of 2002 dated 7-2-2008 [2008 (223) E.L.T. 9 (S.C.)], is directly relevant and applicable in the instant case of the applicant. In the judgment of the said case Hon'ble Supreme Court has held "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 8 as they fall in Chapter 20. In this view of the matter, the classification of the products in question has to he made under Chapter 20." While delivering Phil Corporation Judgment Hon'ble Supreme Court has clearly spelt out importance of HSN Explanatory notes in deciding the matters of classification placing reliance on the judgment of Supreme Court in the case of Collector of Central Excise, Shillong v. Wood Craft Products Ltd., (1995) 3 SCC 454. Hon'ble Supreme Court in paragraph 12 of the said judgment observed as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for deciding classification under Customs Tariff Act, 1975 and previously mentioned two Supreme Court judgments classifying roasted nuts which include almonds, betel nut and other nuts under Chapter 20 by taking recourse to HSN explanatory note to Tariff Heading 2008 ", I rule that roasted betel nuts are correctly classifiable under the Tariff Item 2008 19 20 of Chapter 20 of the first schedule of the Customs Tariff Act, 1975." 9. The Hon'ble High Court of Madras in its judgment dated 1-8-2023 in the case of M/s. Shahnaz Commodities International P. Ltd., M/s. Universal Impex and M/s. Neena Enterprises has upheld the classification of Roasted Betel Nuts under CTH 2008 19 20. The Hon'ble High Court went on to analyse the various aspects in determining classification and summed up that (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; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Writ Petition against GOI Order dated 25-8-2009. This office vide letter F. No. 198/69/2004-RA-Cx dated 22-10-2012 specifically asked department to state the present status of the said Writ Petition. The department vide letter F. No. V(PKS/357) Trb Cell-246/10/AP/M-III, dated 11-12-2012 stated the Writ Petition is at 'Pre-admission stage'. As such, the said GOI order dated 25-8-2009 is neither set aside nor stayed by the Hon'ble Bombay High Court. Under such legal scenario the principle of judicial discipline demands that the order of higher authority is to be strictly implemented by the lower Authorities. Hon'ble Supreme Court has held in the case of UOI v. Kamalakshi Finance Corporation Ltd. [1991 (55) E.L.T. 433 (S.C.)], that orders of higher appellate authorities should be unreservedly followed by subordinate authorities unless operation of same has been stayed by competent court. Hence, Government finds no infirmity in the impugned Order-in-Appeal and therefore upholds the same." The Hon'ble SC has confirmed the same view already taken in the matter of UOI v. Kamalakshi Finance Corporation Ltd. [1991 (55) E.L.T. 433 (S.C.)] and passed the judgment on 1-2-2023 in the matter ..... 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