TMI Blog2021 (3) TMI 1306X X X X Extracts X X X X X X X X Extracts X X X X ..... nuts have been subjected to obtain API supari, Chikni supari and unflavoured supari are 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, classifiable under Chapter 21. Flavoured supari - HELD THAT:- The judgment of the Hon ble Supreme Court of India in the case of M/s. Crane Betel Nut Powder Works 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 flavour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance Rulings Regulations, 2021, or simply affirm that the declarations made in the earlier application remain valid and unchanged at the earliest to this Authority. It was also informed that the date of receipt of such resubmitted application or affirmation, as the case may be, shall be taken as the date of receipt of their application under Regulation 8(4); and no separate payment of the prescribed fee under Regulation 6(6) of CAAR Regulations, 2021 is required to be made. 5. The applicant vide letter dated 4-2-2021 affirmed that declarations made by them in their earlier application stand valid and unchanged, and requested for early hearing on their application. 6. The comments of the concerned Principal Commissioner of Customs, JNCH dated 2-3-2020 were available in file and it has been communicated vide letter dated 4-3-2021 to remain alid and unchanged. 7. Accordingly, an opportunity of personal hearing was granted on 4-3-2021, wherein on being queried, it was submitted that the opinion of the concerned Principal Commissioner of Customs, JNCH had not been shared with the applicant. Noting that the CAAR Regulations, 2021 provide for mandatory sharing of such comment an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereafter the same are sterilized to remove bacterial count. After going through three stage cutting the betel nuts are subjected to blowing of weightless particulars by blower machine and gravity separation by automatic gravity separation machine and roasting in fire gas rotary roaster or oven to minimize moisture content for longevity of product. Then it is ready for packaging (sic). (iv) For Flavoured Supari , large impurities are removed through labours from raw semi dried betel nuts. Then small impurities are removed by de-stoner and metal detection. Thereafter, the same are garbled in automatic garblers and polishing machines. Thereafter, the same are sterilized to remove bacterial count. After going through three stages cutting the betel nuts are subjected to blowing of weightless particulars by blower machine and gravity separation by automatic gravity separation machine and roasting in fire gas rotary roaster or oven to minimise moisture content for longevity of product. Thereafter the so cut betel nuts are flavoured in automatic blending machines with flavouring compounds of different variety such as spices, menthol, copra, cardamom and/or mulethi etc. in liquid f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... green and the nut inside is so soft that it can be easily cut with an average knife. The raw fruit has to be peeled to get its kernel. In the ripe fruit, the husk become yellow or orange, as it dries and the kernel inside becomes hard to become wood-like in consistency. At this stage, areca nut can only be sliced using a special knife like cutter. The fresh fruit with husk (little less ripe) are cured in flowing water for some period. The process helps in loosening the husk, which is removed using a knife. Immediately after the kernel is taken out, it is boiled with sufficient water at high temperature for 12 hours. After boiling, it is sundried for 7-8 days to derive areca nut (supari) in marketable form. 13.2 Thereafter, various minor processes such as polishing, roasting etc. are earned out for stabilization, preservation etc. and the product so arrived at is known as Supari (areca nut) in common trade parlance which is appropriately classifiable in Chapter 8. After the entire process is over, different preparations of areca nut having different market values are prepared. 13.3 Citing reference to the Supplementary Note 2 to Chapter 21, Principal Commissioner of Customs ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the potential qualities of flavour and colour. The potential inhered in the tea leaf when the mechanical processes of withering, crushing and roasting, fermenting covering with wet sheets and roasting again were applied, at no stage did it change its essential substance. It remained tea leaf throughout. In its basic nature, it continued to be agricultural produce. (iii) Hon ble Supreme Court of India in M/s. Crane Betel Nut Powder Works v. Commissioner of Customs Central Excise - Civil Appeal 1453 of 2007 on 19 March, 2007 [2007 (210) E.L.T. 171 (S.C.)] : In our view, the Commissioner of Customs and Central Excise (Appeals) has correctly analyzed the factual as well as legal situation in arriving at the conclusion that the process of cutting betel nuts into small pieces and addition of essential/non-essential oils, menthol, sweetening agent etc. did not result in a new and distinct product having a different character and use. 13.6 Principal Commissioner of Customs has further submitted that CTH 0802 80 specifically covers seeds of areca nut (betel nut), and argued that there in terms of Rule 1 of General Rules of Interpretation, for legal purposes, the classification s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to be imported, guidance of the Harmonized Commodity Description and Coding System of the World Customs Organization, to which India is a signatory, would be useful. It is seen that with respect to Chapter 8, the HSN prescribes the following as general guidelines :- Fruit and nuts of this Chapter may be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled. The addition of small quantities of sugar does not affect the classification of fruit in this Chapter. 16. Further, on perusal of the advance rulings given by the erstwhile AAR, New Delhi, which have been referred to by the applicant, I find that cases of M/s. Excellent Betelnut Products Pvt. Ltd. and M/s. Oliya Steel Pvt. Ltd. do cover the four goods involved in the present proceedings; and in both these rulings, the erstwhile AAR has concluded that the said products merit classification under sub-heading 2106 90 30. I find that in reaching this conclusion, AAR has been of the view that on account of the positive language of the Supplementary Note 2 to Chapter 21, it is not necessary for betelnut (supari) to undergo a change of character for it to be classified under Chapter 21. I also find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of erstwhile AAR in support of the said classification, contention of the concerned Principal Commissioner of Customs, case laws relied by him to argue that the appropriate classification of the said four goods would be under Chapter 8, inasmuch as they continue to the betel nuts, even after the completion of the processes and addition of starch (and flavours), I summarize the contending positions on the question posed for advance ruling. 20. Advance ruling has been sought on classification of four different goods, each known as supari in common trade parlance, albeit with differentiator, viz. API, Chikni, unflavoured and flavoured. The basic raw material for each of the four 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of flavoured supari, the question to be answered is whether the addition of special flavouring agents would render the betel nuts into preparations of betel nuts, classifiable under Chapter 21. In this regard, the judgment of the Hon ble Supreme Court of India in the case of M/s. Crane Betel Nut Powder Works and of the CESTAT, Chennai in the case of M/s. Azam Laminators Pvt. Ltd. [2019 (367) E.L.T. A22 (Tri. - 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 not change the character of the good, meaning in the present case betel nut would continue to remain betel nut and not become preparations of betel nut. 24. In view of the aforesaid discussions, I have reached the conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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