TMI Blog2022 (2) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... UPREME COURT] 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 is also an extension of the same line of reasoning. This decision of the Hon ble Supreme Court has been subsequently followed by the Chennai Bench of the Hon ble Tribunal 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 this product classifiable under sub-heading 0802 90 19 of Central Excise Tariff which is aligned with Customs Tariff. Thus, even flavoured supari merits classification under Heading 0802 of the Customs Tariff and not under Heading 2106 as argued by the applicant. Therefore, in respect of the products API supari, chikni supari, unflavoured supari, and flavoured supari, it is held that their correct classification is Heading 0802 of the First Schedule to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separation by automatic gravity separation machine, roasting in fire gas rotary roaster, metal detection by magnetic metal detectors, and packaging. These nuts are said to be cut into 8 or 12 pieces; Flavoured supari - All the processes undertaken in case of unflavoured supari plus sterilizing to remove/kill bacteria and flavouring in automatic blenders with spices/or Mulethi and perfumes; 3. The Commissioner of Customs, Nhava Sheva-I, Jawaharlal Nehru Custom House, had filed a detailed reply to the application vide his communication dated 6-10-2020 to the Additional Commissioner of the erstwhile AAR. In the said reply, detailed processes undertaken on raw areca nuts/betel nuts have been described, reference has been made to the chapter notes/supplementary notes to the relevant chapters of the Customs Tariff, i.e. 8 and 21, and thereafter, a conclusion has been drawn that all the processes undertaken, viz., cleaning, boiling, starching, garbling etc. are covered under the Note 3 to Chapter 8, and therefore, all these products merit classification under Chapter 8. Reliance has been placed on the Hon ble Supreme Court s decision dated 11-9-1979 in the case of D.S. Bist and Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the products under consideration, the doctrine of judicial discipline requires that the said decision is followed as held by the Hon ble Supreme Court in the case of M/s. Kamlakshi Finance Corporation [1991 (55) E.L.T. 433 (S.C.)]; that, the doctrine of equity requires that they also be treated on par with the other importers who are allowed import the same goods classifying them under sub-heading 2106 90 30 on the basis of the rulings of the erstwhile AAR; that, the rulings of the erstwhile AAR are now binding precedents since no appeals have been filed against them; that, the goods proposed for import very clearly answer to the Supplementary Note 2 to Chapter 21 of the first schedule to the Customs Tariff Act, 1975, and therefore, merit classification under sub-heading 2106 90 30. The Learned Counsels sought two days time to submit additional submissions. The applicant, vide their communication dated 23-4-2021 sought time of 15 days for their additional submissions on account of the situation arising out of the COVID-19 pandemic. However, the applicant has submitted his submissions by e-mail on 27-5-2021 which are mere reiteration of facts and arguments that were attached with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he advance ruling scheme as was originally envisaged, there was no provision for appeal. As already mentioned above, the scheme of advance rulings in customs went a major overhaul in the Finance Acts of 2017 and 2018. The Section 28EA was inserted in the Act w.e.f. 28-3-2018 which provided for appointment of an officer of the rank of Principal Commissioner of Customs or Commissioner of Customs as the CAAR. Provision for appeal was inserted vide Section 28KA and Section 28F was substituted w.e.f. 31-3-2017/29-3-2018 to provide for an appellate body above the CAARs appointed under Section 28EA. To the best of my knowledge, the erstwhile AAR issued three rulings involving the commodities under consideration in the present proceedings. They were in the cases of M/s. Excellent Betelnut Products on 7-8-2015, and M/s. Oliva Steel as well as M/s. Isha Exim on 31-3-2017. As already discussed above, the provisions of law relating to advance rulings in customs underwent a major changeover w.e.f. 31-3-2017. Therefore, all the three rulings issued by the erstwhile AAR was in its capacity as an original advance rulings authority and such rulings were binding only on the applicant and the customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute. Viscount Simon quoted with approval a passage from Rowlatt, J. expressing the principle in the following words : In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used . (at p. 635) Thus, the settled position of law is that in a taxing statute there is no scope for bringing in the doctrine of equity and one only has to go by the words of the statute. The wording of the statute is laid out in Section 28J of the Act, which has already been discussed in the preceding par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this chapter, the related entry, with respect to betel nuts, is the sub-heading 2106 90 30, i.e., betel nut products known as supari. 10. In matters of classification of goods entered/intended for import/export, the Harmonized Commodity Description and Coding System of the World Customs Organization, comprising of more than 5,000 commodity groups, arranged in a legal and logical structure and supported by well-defined rules to achieve uniform classification, is used by the signatory member countries. So far as chapter 8 is concerned, apart from the relevant chapter notes already reproduced above, 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. 10.1 In this chapter, the entry 0802.80 refers to areca nuts, used chiefly as a masticatory. Thus, the explanatory notes to chapter 8 indicate that chapter 8 covers nuts intended for human consumption (whether as presented or after processing); whether they are fresh, frozen (whether or not previously co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reca/betel nuts, and even after such addition, the resultant product continue to remain classified under chapter 8. Finally, one comes to the instance of addition of spices/Mulethi/liquid perfume in the automatic mega blenders as is stated in respect of flavoured supari. Before answering that question, I feel necessary that the facts of the case of M/s. Crane Betel Nut Powder Works should be discussed. 13. M/s. Crane Betel Nut Powder Works, as per the Hon ble Supreme Court of India [2007 (210) E.L.T. 171 (S.C.)], were engaged in the business of marketing betel nuts in different sizes after processing them by adding essential/non-essential oils, menthol, sweetening agent etc., and were clearing the goods under heading 2107 of the central excise tariff and were paying duty accordingly. Subsequently, they filed a revised classification declaration under rule 173B of the Central Excise Rules, 1944, with effect from 17th July, 1997, claiming classification of its product under sub-heading 0801 00 of the tariff. It was contended that the crushing of betel nuts into smaller pieces with the help of machines and passing them through different sizes of sieves to obtain goods of different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein is quite relevant to the situation which is the subject matter of the proceedings before me. Being guided by the aforesaid principle, I paraphrase the question before me to ask whether the processes to which raw areca nut, indisputably falling under chapter 8, is subjected are significant and substantive enough to render the said five items as preparations of areca cut, to merit classification under chapter 21 or fall short. Going by the ratio of the decision laid down by the Hon ble Supreme Court which was followed by the Hon ble Tribunal, the answer to that also appears to be in the negative. 16. In order to arrive at a ruling regarding the classification of the said five items, it is incumbent on me to consider the supplementary notes to chapter 21, as also the scope of the chapter 8 and the guidelines contained in the HSN, and the ratio of the decisions already recorded above. I note that the AAR in its rulings cited by the applicant have omitted to refer to the latter. Recognizing the legal construct and specific provisions of section 28-J(1), it is obvious to me that the task before me cannot be reduced to pass the advance ruling based on the previous ruling of AAR c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onger or complicated wouldn t rob the produce of its agricultural character. The observations of the Hon ble Supreme Court in the case of M/s. Crane Betel Nut Powder Works, 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 is also an extension of the same line of reasoning. This decision of the Hon ble Supreme Court has been subsequently followed by the Chennai Bench of the Hon ble Tribunal in the case of Azam Laminators [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 this product classifiable under sub-heading 0802 90 19 of Central Excise Tariff which is aligned with Customs Tariff. Following the line of reasoning laid down by the Hon ble Supreme Court, the Hon ble High Court of Calcutta and the Hon ble CESTAT, I am of the opinion that even flavoured supari merits classification under Heading 0802 of the Customs Tariff and not u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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