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2021 (6) TMI 1147 - AAR - CustomsClassification of goods proposed to be imported - Betel Nuts such as API Supari - Chikni Supari - unflavoured Supari - flavoured Supari - Boiled Supari (all packed in consumer packing and bulk packing) - to be classified under heading 080280 of the schedule to the Customs Tariff Act, 1975 or under Chapter heading 21069030 of the Customs Tariff. HELD THAT:- The basic raw material for each of the five goods is raw betel nut, which is classifiable under Chapter 8, more specifically sub-heading 080280. It is noted that Chapter 8 covers only edible nuts; inedible nuts and fruits being excluded by virtue of Chapter Note l; 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 five 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. Alternatively, whether the processes carried out on the same for cleaning, preserving and making them more attractive to certain tastes/ preferences are too minor to fall short of rendering them as preparations of betel nuts. Further, it would be inadvisable and inappropriate to approach the issue of classification of the said five goods solely with the prism of the positive nature of Supplementary Note 2 to Chapter 21. The processes to which raw betel nuts have been subjected to obtain API supari, Chikni supari, unflavoured supari and boiled 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. 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 M/s Crane Betel Nut Powder Works [2007 (3) TMI 6 - SUPREME COURT] and of the CESTAT, Chennai in the case of M/s Azam Laminators Pvt. Ltd. [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 08029019 of Central Excise Tariff and not under 21069030 as supari for period after 07.07.20091 are relevant. Put simply, these decisions clearly imply that addition of flavouring agents do not change the character of the good, meaning in the present case betel nut would continue to remain betel nut and not become preparation of betel nut. In recent judgement of the CESTAT, Chennai, in the case of S. T. Enterprises [2021 (3) TMI 27 - CESTAT CHENNAI], the Hon'ble Tribunal has addressed the question whether by mere boiling and drying whole betel nut it would merit classification under 21069030 The Hon'ble Tribunal has held that since the import goods are betel nuts whole, these would merit classification under Chapter 8. Thus, all the five goods 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 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 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, the said five goods are not classifiable under sub-heading 21069030, as contended by the applicant. since they have not attained the character of "preparations" of betel nut, which is sine qua non for a good to be so considered.
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