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2022 (2) TMI 629 - CUSTOMS AUTHORITY FOR ADVANCE RULINGS, NEW DELHIClassification of imported goods - preparation/product of betel nut commonly known as ‘Supari’ - API supari, Chikni supari, unflavoured supari, boiled supari and cutting supari - goods does not contain lime or katha (catechu) or tobacco but may or may not contain any other ingredients such as food starch, cardamom, copra, mulethi, menthol (flavours), perfume etc. - classifiable under the CTH 2106 90 30 as food preparation or not - HELD THAT:- The basic raw material for each of the six goods is raw betel nut, which is classifiable under Chapter 8, more specifically sub-heading 0802 80. I also note that Chapter 8 covers only edible nuts; inedible nuts and fruits being excluded by virtue of Chapter Note 1; and that betel nut/supari are masticatory. However, these items have been subjected to certain processes and added with certain materials, resulting in the question being posed whether the said processes and mixing/addition of certain materials are substantive enough to lead to the said six goods be considered as “preparation of betel nut” that would make them classifiable under Chapter 21 by virtue of Supplementary Note 2 of Chapter 21. Five goods, namely API supari, Chikni supari, unflavoured supari, boiled supari and cutting supari are considered together. In these cases, one set of processes are found to be intended for cleaning; the second set for enhancing preservation; and third set for enhancing appearance or presentation, which are clearly covered by the Chapter Note 3 to Chapter 8. Addition of starch would be included under such process. It is also noted that during the personal hearing, the Learned Advocate raised the contention that with the process of boiling, betel nut loses the character of being fresh & dried nut, therefore, the item will not be covered under Chapter 8. In the instant case betel nuts have been boiled and then dried, the eventual state of betel nuts being indeed dried - the processes to which raw betel nuts have been subjected to obtain API supari, Chikni supari, unflavoured supari, boiled supari and cutting supari are squarely in the nature of processes referred to in the Chapter Note 3 to Chapter 8 and HSN Note. Therefore, 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 21. Boiled supari - HELD THAT:- In a recent judgment of the CESTAT, Chennai, in the case of S.T. Enterprises [2021 (3) TMI 27 - CESTAT CHENNAI], the Hon’ble Tribunal has concluded that whole betel nut would not merit classification under 2106 90 30 merely on the ground that they have been subjected to boiling and drying. The Hon’ble Tribunal has also observed that since the imported goods are betel nuts whole, these would merit classification under Chapter 8. In terms of terms of the provisions of the Customs Act, the decision of the Hon’ble Tribunal would apply. Flavoured supari - whether the addition of special flavouring agents would render the betel nuts into preparations of betel nuts, classifiable under Chapter 21? - HELD THAT:- The judgment of the Hon’ble Supreme Court of India in the case of CRANE BETEL NUT POWDER WORKS VERSUS COMMR. OF CUS. & C. EX., TIRUPATHI [2007 (3) TMI 6 - SUPREME COURT] and of the CESTAT, Chennai in the case of AZAM LAMINATORS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, TRICHY (VICE-VERSA) [2019 (3) TMI 782 - CESTAT CHENNAI] [where scented betel nut was being manufactured by cracking of dried betel nut into small pieces, and thereafter, gently heating it with addition of vanaspati oil, sweetening and flavouring agents and marketed in small pouches as Nizam Pakku (in Tamil)/Betel Nut (in English), the Hon’ble CESTAT held the resultant product classifiable under sub-heading 0802 90 19 of Central Excise Tariff and not under 2106 90 30 as supari for period after 7-7-2009] are relevant. Put simply, these decisions clearly imply that addition of flavouring agents do no, change the character of the goods, meaning in the present case betel nut would continue to remain betel nut and not become preparation of betel nut. Thus, the goods covered by the application are clearly not “preparations of betel nuts”, the submission of the applicant for recourse to General Rules of Interpretation in the event of two sub-headings being equally applicable is not relevant.
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