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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 ..... submitted as follows : For roasting of areca nuts (betel nuts), the raw Areca Nuts (Betel Nuts) are de-Hulled/de-Husked and then subjected to roasting by application of heal in oven followed by cooling at room temperature and such cycle of heating and cooling is repeated over two to three days for reducing the water content of the nuts. Roasted Areca Nuts (Betel Nuts) are correctly) classifiable under Customs Tariff Sub-heading 2008 19 20, which covers "Other Roasted Nuts and Seeds". The HSN Explanatory notes under Heading 20.08 state that this heading inter alia includes, 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. It is settled law that the Indian Customs Tariff is based on the HSN and therefore the HSN explanatory notes are relevant for interpretation of the Indian customs tariff. The said interpretation has also found favour with the Customs Advance Ruling authority in the following cases which have ruled that roasted Areca nuts (betel nuts) are correctly classifiable under CTSH 2008 1920 : * Shahnaz Commodities Internat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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 the said processes; the betel nuts retain the character of betel nut and do not qualify to be considered as "preparations of betel nut, which is sine qua non for a good to be classifiable under Chapter 20. (iv) To be classified under Chapter 20 there should be some preparation as the Chapter heading reads as "Preparations of vegetables, fruit, nuts or other parts of plants". Mere roasting of betel nut does not render the product to be distinctive as claimed by the applicant or does not alter the character of the original good. 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. Hence it remains the betel nut and rightly classifiable under Chapter 08. According to Cambridge dictionary. "Preparation is a mixture of substances, often for use as a medicine". According to Collins Dictionary "A preparation is a mixture that has been prepared for use as food, medicine, or a cosmetic". However, in the processes ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 drying without any reference to packaging and any specific manufacturing process. The importers have not submitted anything about the packaging of the goods and generally these goods are imported in bulk in jumbo bags. The goods under dispute are Areca Nuts in the same form as those classified under Chapter 08 and hence, they are dearly excluded from the scope of the Chapter Heading 2008. Hence, the purported roasted areca nuts clearly excluded from the scope of the chapter 20 and rightly classifiable under Chapter 08. (vii) As per Rule 3(a) of General Rules for the Interpretation of the Harmonized System since the product is more specifically classified under CTH 08020 classification under Chapter 2008 or 2106 is unwarranted. "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 description shall be preferred to headings providing a more general de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms 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 five goods are squarely in the nature of processes mentioned in Note 3 to Chapter 8, and have not materially changed the essential character of betel nuts, further these goods are not classifiable under sub-heading 21069030." (d) Chennai CESTAT order in M/s. S.T. Enterprises v. Commissioner of Customs, Chennai-VII, 2021 (378) E.L.T. 514 (Tri. - Chennai). "The Hon'ble Tribunal has addressed the question whether the mere boiling and drying whole betel nut it would merit classification under 21069030 and held that since the import goods are betel nuts whole, these would merit classification under Chapter 8." (x) The CESTAT judgment in case of M/s. S.T. Enterprises v. Commissioner of Customs (VII) in Customs Appeal No. 40002 & 40003 of 2021 is applicable mutatis mutandis to the present case, wherein the question decided in the said case was classification of "Boiled betel nuts". The importers submission is that the process roasting is not covered under the process mentioned under Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in the case of- (a) M/s. Samreen International Pvt. Ltd. (Ruling No. CAAR/Mum/ARC/3/2021 dated 15th or March. 2021) (2021 (378) E.L.T. 680 (A.A.R. - Cus. - Mum.). In the said order, the AAR, Mumbai held as under: "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". The AAR, Mumbai further held that "In view of the aforesaid discussions, I have reached the conclusion that all the five products placed before me for consideration, i.e., API supari, chikni supari, unflavoured supari, flavoured supari, and boiled supari merit classification under chapter 8 of the customs tariff, and more precisely, under the heading 0802, and not under sub-heading 21069030, as contended." (b) M/s. Dry Nut Enterprises (Ruling No. CAAR/Del/Dry Nut/01/2021 dated 16th March, 2021) [2022 (379) E.L.T. 139 (A.A.R. - Cus. - Del.)]. In this case, the AAR, Mumbai held as under: "I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 personal hearing in the matter was conducted on 16-5-2024 wherein Sh. J.C Patel, Advocate, Shri Yogesh Shah, (Proprietor) appeared from the applicant side and reiterated their contention filed with the application. They submitted that the subject goods merit classification under CTI 2008 1920. In the support of their contention, they further submitted a compilation of index-covering various case laws. HSN explanatory notes, patented process of roasting of Areca nut. The Learned Advocates submitted that the applicant's claim for classification of roasted areca nuts (betel nuts) under CTSH 2008 1920 is duly supported by the HSN Explanatory notes under Heading 20.08 which states that this heading inter alia includes, 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. The claim of the jurisdictional Commissionerate that they had sent a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. It does not specifically include the process of roasting. Here it is important to understand the difference between the processes of moderate heat treatment & dehydrating/drying referred in Chapter 8 and processes of dry roasting, oil-roasting and fat-roasting referred in Chapter 20. The terms dry-roasting, oil roasting and fat-roasting however are not defined in the Customs Tariff Act, 1975. Therefore, these terms have to be understood in a commonly accepted sense. The Hon'ble Apex Court in the case of Alladi Venkateswarlu v. Government of Andhra Pradesh, AIR 1978 SC 945 held that "the commonly accepted sense of a term should prevail in construing the description of an article of food". In common trade parlance, "drying" is a method of food preservation by the removal of water content. On the other hand, "roasting" means the excess or very high heat treatment that produces fundamental chemic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 than by any of the processes specified in other Chapters or in the preceding headings of this Chapter. Specifying what is included in this heading, the explanatory note stales that almonds, ground nuts, areca for 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. Dry- roasting, oil-roasting & fat-roasting, as a process, 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. 5.5 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 part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce 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 under : - "Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged basis of the structure of the Central Excise Tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe, guide for ascertaining the true meaning of any expression used in the Act." From the apex court's foregoing judgments, it is observed that the roasted nuts find specific mention in the then chapter 20 of the then Central Excise Tariff Act and the chapter 20 of the schedule I of the Customs Tariff Act, 1975, as well as corresponding HSN Explanatory Note. It is important to pay attention to the fact that, in the above referred HSN explanatory note, a process of roasting is not specifically mentioned as a process of preservation or stabilization or a process to improve or maintain the appearance. Specific attention is invited to the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /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; (d) When there is a specific entry covering a product/commodity, the test of common parlance is irrelevant in determining classification; (e) There is considerable force in the submission that the classification as far as possible must be in conformity and in consonance with the HSN Explanatory Notes." In this judgment the Hon'ble High Court has slated about the relevance of CAAR Rulings relied on by the Jurisdictional Commissionerate. Relevant para of the said judgment is reproduced as follows :- "on perusal of the Rulings relied upon by the appellant, we find that the same did not deal with roasted areca/betel nuts, but boiled/dried nuts and in some cases, the question was whether the commodity in issue was a preparation of betel nut. However, the cases did not deal with roasted betel/areca nut nor was CTH 20 considered. Thus, the above Rulings may ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -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 of M/s. Godrej Sara lee Ltd. v. Excise and Taxation Officer-cum-Assessing Authority, 2023 (384) E.L.T. 8 (S.C.). Para 34 of said judgment dated 1-2-2023 is reproduced as under"- "In our view, the revisional authority might have been justified in exercising suo motu power to revise the order of the Assessing Authority had the decision of the Tribunal been set aside or its operation stayed by competent court. So long it is not disputed that the Tribunal's decision, having regard to the framework of classification of products/tax liability then existing, continues to remain operative and such framework too continues to remain operative when the impugned revisional orders were made, the Revisional authority was left with no other choice but to follow the decision of the Tribunal without any reservation. Unless the discipline of adhering to decisions made by the higher authorities is maintained, there would be utter chaos in administration of tax law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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