TMI Blog2023 (6) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... catechu) and tobacco. It will specifically contain menthol. Due to carrying out of such processes this product is not classifiable under Chapter 8 of the Customs Tariff Act, 1975. On the background of contending classifications, relevant chapter notes supplementary notes, C.B.I.C. Circular, explanations in the IGST Rate Notification amended from time to time, and the Section 3(7) of Customs Tariff Act, 1975 instant product - betel nut product known as supari - menthol scented and sweet - is more appropriately classifiable as a betel nut preparation under Chapter 21 i.e., CTH 2106 90 30 than in any of the headings under Chapter 8. C.B.I. C. circular legally supports this view. There cannot be a situation where same product is subjected to levy of basic customs duty under one CTH and levy of IGST under another CTH of the Customs Tariff Act, 1975. Hence, in view of Supplementary Note 2 of Chapter 21 of Schedule 1 of the Customs Tariff Act, 1975 read with Para 7 of the C.B.I. C. Circular No. 163/19/2021-GST, dated 6th October, 2021 from F. No. 190354/206/2021-TRU and the provisions of Section 3(7) of the Customs Tariff Act, 1975 the scented sweetened supari merits classificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. The applicant has submitted detailed information regarding the concerned subject goods and the procedure for manufacture of the same. The raw whole, split or ground betel nut (areca nut) provisionally preserved or not, as an agricultural product, is classifiable under CTH 0802. Arecoline is a mild parasympathomimetic stimulant alkaloid found in the areca nut, the fruit of the areca palm. It can bring a sense of enhanced alertness and energy, euphoria and relaxation. Chewing the nut stimulates the flow of saliva to aid digestion. In India there is a huge market of betel nut-based product sweet supari which is a sweet and flavoured preparation of crashed/cut betel nut with menthol, cardamon, sweetener, edible colours and usually packed in air-tight pouches. The product is sold across the retail counters and is used as a mouth freshener. Supplementary Notes, Note No. 2 of Chapter 21 of the Customs Tariff reads as under : 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificial sweetener and aromatic additives is also used as an edible preparation mouth freshener. The product intended to be imported by the applicant would be processed overseas with following processes on the green fresh Cardamom : (a) Removing of large impurities and killing bacteria by labour and machine then separating the cardamom seeds, after this process adding of aromatic spices, silver leaf, and artificial sweeteners and then packed in 50 kg to 80 kg as per requirement. (b) The product would be imported in bulk packs and would be used by Indian mouth freshener industry as an input for further processing with added flavours or packing it as it is in branded packs for wholesale and retail purposes. 3.4 The applicant is of a belief that the product flavoured and coated Illaichi : (Spice based mouth freshener - FSSAI Category 5.2.4.2) is liable to be classified under CTH 2106.90.99 in terms of Supplementary Note 5(b) to Chapter 21 which reads as : 5. Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter alia, includes : (b) preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et cutting supari; and (b) Flavoured and coated Illaichi the manufacturing process involves intricate and skilled manufacturing process on raw produce the value of the processed materials is enhanced at each and every stage. For example, the refining stage improves the quality of major inputs. The sweetening and blending stage require use of costly raw materials like fragrances and flavours which enhances the manufacturing cost. (ii) The preparation : The process before the blending mainly adds to quality and shelf life. While blending, the fragrance imparts a distinct function and nature to the finished articles which have than the major function as suppression of bad mouth odour. In this process while the lipids of fragrances retain flavour, the sweetening agents remain inert till mixed with saliva. The water in saliva after mixing with the sweetening agents releases the retained flavours in mouth which suppresses bad mouth odours. (iii) Changed nature : The preparation by use of above ingredients results in a manufacturing product which is distinct and distinguished from any of the ingredient used in the preparation. The resultant products are for end use only as mout ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommittee in GST Council, clarificatory acceptance of Central Government through its board circular and the homogenous adaptation of Customs Tariff Act for classification and interpretation makes it amply clear that the classification of any product under Customs and GST has to remain same for all purposes in both laws. This would also be required with a view that while filing a bill of entry, a product cannot be classified in two different headings for the purpose of charging basic customs duty and IGST. 5. I have gone through the above submissions and all the documents placed before me. Since, no comments have come from the jurisdictional authority, I proceed to deliberate upon the issue on the basis of documents and submissions placed on record. I agree with the contention of applicant in respect of Para 4.1(vi) supra. Therefore, present application of the applicant needs to be seen in the context of a legal framework governed by Customs Tariff Act, 1975, specifically Section 3(7), Chapter notes of Chapters 8, 9 and 21, section notes, supplementary notes of Chapter 8 of the Customs Tariff, C.B.I. C. Circular No. 163/19/2021-GST, dated 6th October, 2021 issued based on the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pari under this chapter is legally unsustainable. 5.2 Alternate classification for scented sweetened supari can be found in Chapter 21. Chapter 21 includes within its ambit, miscellaneous edible preparations and Tariff Heading 2106 covers food preparations not elsewhere specified or included. It is mandated that : 1. This Chapter does not cover : (a) Mixed vegetables of Heading 07.12; (b) Roasted coffee substitutes containing coffee in any proportion (Heading 09.01); (c) Flavoured tea (Heading 09.02); (d) Spices or other products of Headings 09.04 to 09.10; Further, the Supplementary Note 2 to the said chapter lay down that, 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 . 21.06 - Food preparations not elsewhere specified or included 2106.10 - Protein concentrates and textured protein substances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts of different headings are to be classified in heading 0910. The addition of other substances to the products of headings 0904 to 0910 [or to the mixtures referred to in paragraph (a) or (b) above] shall not affect their classification provided the resulting mixtures retain the essential character of the goods of those heading. Otherwise, such mixtures are not classified in this Chapter; those constituting mixed condiments or mixed seasonings are classified in heading 2103. Mixed condiments and mixed seasonings containing spices different from the spices and mixed spices of headings 9.04 to 09.10 in that they also contain one or more flavouring or seasoning substances of Chapters other than Chapter 9, in such proportions that the mixture has no longer the essential characteristics of the spice within the meaning of Chapter 9 (See the General Explanatory Note to that Chapter). Further, the relevant Supplementary Notes provide as : (2) Spice means a group of vegetable products (including seeds, etc.), rich in essential oils and aromatic principles, and which, because of their characteristic taste, are mainly used as condiments. These products may be whole or in cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on aspects of the scented sweet supari and flavoured coated illaichi. I find that both the products would be subjected to the processes before their importation and hence it is pertinent to consider the contents of the C.B.I. C. circular noted earlier in view of the provisions of the Section 3(7) of the Customs Tariff Act, 1975. The relevant para of the said circular is reproduced below : 7. Applicability of GST on scented sweet supari flavoured and coated illaichi : 7.1 Representations have been received seeking clarification regarding classification and applicable GST rates on flavoured and coated illaichi, and scented sweet supari. 7.2 Scented sweet supari falls under tariff item 2106 90 30 as Betel nut product known as Supari and attracts GST rate of 18% vide entry at S. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017. 7.3 Flavoured and coated illaichi generally consists of cardamom seeds, aromatic spices, silver leaf, saffron, artificial sweeteners. It is distinct from illaichi or cardamom (which falls under heading 0908). It is clarified that flavoured and coated illaichi is a value added product and falls under sub he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent as is leviable under Section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8) or sub-section (8A), as the case may be. Based on the contents of the C.B.I. C. Circular No. 163/19/2021-GST, dated 6th October, 2021, it is clear that the provision of Section 3(7) of the Customs Tariff Act, 1975 applies to scented supari classifiable under CTH 2106 90 30 and flavoured and coated illaichi classifiable under CTH 2106.90.99. In the instant case menthol scented sweet supari does not contain lime, katha (catechu) and tobacco. It will specifically contain menthol. Due to carrying out of such processes this product is not classifiable under Chapter 8 of the Customs Tariff Act, 1975. On the background of contending classifications, relevant chapter notes supplementary notes, C.B.I.C. Circular referred above, explanations in the IGST Rate Notification amended from time to time, and the Section 3(7) of Customs Tariff Act, 1975 instant product - betel nut p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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