TMI Blog2023 (2) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... gislative intention of the Parliament. In the instant case, the intention of the Parliament is obvious when they inserted Supplementary Note 2 in the Customs Tariff in the year 2008. The Authority has to ascertain whether the product intended to be imported is covered by the said Supplementary Note of Chapter 21. The basic raw material for Scented Flavoured and/or Sweetened Betel Nut is raw betel nut, which is classifiable under Chapter 8, more specifically sub-heading 0802 80. 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, this item has 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 goods being considered as preparation of betel nut , that would make them classifiable under Chapter 21 by virtue of Supplementary Note 2 of Chapter 21. At this juncture, it is important to mention that the goods covered by the present application are prima facie Scented Flavoured and/or Sweetened Betel Nut and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application is limited to the classification of goods described by the applicant as preparation of Scented Flavoured and/or Sweetened Betel Nut . 3. The applicant in his application, has discussed the process of preparation and value addition of areca nut to obtain the goods proposed to be imported as under :- 3.1 There are many varieties of scented suparis. Dried areca nuts are broken into bits, blended with flavour mixture and packed. The favouring of supari varies with region and is a closely guarded secret. In South India, scented supari is made from kalipak like batlu. Spices and synthetic favours are added, instead of raw spices. Now-a-days, rose essence as well as menthol is used for easy blending. These are usually packed in butter paper. Scented supari popular in north and central India is of two types: the one made from chali and the other from kalipak. Saccharin is used for sweetening the suparis. Additives such as colour and flavour are added to improve the taste and appearance. Plastic strips are used for convenient packing of scented suparis. Tin and aluminium pouches are used for bulk packing of scented supari. 3.2 The applicant is planning to import a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mushrooms and truffles, 20.04 20.05 covers other vegetables and Heading 20.06 covers vegetables, fruits, nuts, fruit peels and other parts of plants preserved by sugar. Heading 20.07 covers products like jam/jelly/marmalade etc. and 20.08 covers inter alia nuts which are otherwise prepared or preserved. 4.4 However, Chapter 21 covers miscellaneous edible preparations. Supplementary Notes in this Chapter are in addition to what the HSN has. As these supplementary notes are specific to the Customs Tariff of India, those have to be preferred even in comparison with the HSN. 4.5 Supplementary Note 2 refers specifically to betel nut product known as supari and the Heading 2106 90 30 specifically covers this item. It is an admitted fact that the goods to be imported is a betel nut product. The manufacturing process will show that the basic raw material for making the preparation is Betel Nut. Thereafter, sugar and other condiments such as fragrances are added to make it acceptable to the users as an edible substance. Had it contained any one of the ingredients given Supplementary Note 1, such as lime, katha and/or tobacco, the same could have been classified under Heading 2106 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s flavoring material like spices or mulethi would alone be appropriately classified under CTH 2106. 5.3 The GST Council in its 45th meeting held on 17-9-2021 at Lucknow made some clarifications regarding GST rates and classification of goods. Based on the recommendations of the GST Council and the said meeting it was held that scented sweet supari falls under Tariff Item 2106 90 30 as Betel nut product known as supari and attracts GST rates of 18% vide entry at Sr. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017. 6. Following the due procedure, a personal hearing in this matter was fixed on 11-5-2022. The authorized representative for the applicant, Shri B.K. Singh, attended the personal hearing on the said date and submitted that the applicant is considering import of Scented Flavoured and Sweetened Supari , to be sold under B2B and B2C mode in India. He re-iterated the earlier submissions of the applicant, including the process of manufacturing of the above item, the earlier rulings of the erstwhile authority and the GST Council s clarification regarding GST rates classification in its 45th meeting. 6.1 Mr. Singh supported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 of the said order of the Hon ble Supreme Court is reproduced below 30. In our view, the process of manufacture employed by the appellant-company did not change the nature of the end product, which in the words of the Tribunal, was that in the end product the betel nut remains a betel nut . The said observation of the Tribunal depicts the status of the product prior to manufacture and thereafter. In those circumstances, the views expressed in the D.C.M. General Mills Ltd. (supra) and the passage from the American Judgment (supra) become meaningful. The observation that manufacture implies a change, but every change of not manufacture and yet every change of an article is the result of treatment, labour and manipulation is apposite to the situation at hand. The process involved in the manufacture of sweetened betel nut pieces does not result in the manufacture of a new product as the end product continues to retain its original character though in a modified form. Crane Betel Nut Powder Works v. Commr. of Cus. C. Ex., Tirupathi reported in 2007 (210) E.L.T. 171 (S.C.). 7.1 To overcome this situation and to tax such products of betel nut under Heading 2106 of the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirement is that the imported product should be known as Supari in the Indian market. This was made clear by the Authority for Advance Ruling in the case of Excellent Betel Nut and subsequent rulings in Oliya Steel and Isha Exim. The second requirement is that it should be a preparation of betel nut. What would be called a preparation is also mentioned in the Supplementary Note 2 of Chapter 21. The Note explains that the preparation may or may not include certain condiments, such as cardamom, copra or menthol. 7.7 The applicant in this case has explained in great detail as to what will be added to the betel nut after cutting it into smaller pieces. Such processes are part of preparation, as has been explained by the Hon ble Supreme Court in the case of Commissioner v. Phil Corporation (Supra). Mere roasting was considered as preparation. In the instant case, the betel nut has to go through various processes as mentioned in our application including addition of flavor, menthol and/or sweetener. 7.8 To cap it all, recently the Ministry of Finance vide Circular No. 163/19/2021-GST, dated 6th October, 2021 has clarified, that (in Item No. 7 at internal Page 4 of the Circular) sce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, with respect to betel nuts, is the sub-heading 2106 90 30, i.e., betel nut products known as supari. 9. Further, since the question relates to classification of goods proposed 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. 10. On perusal of the advance rulings given by the erstwhile AAR, New Delhi, which have been referred to by the applicant, I find that case of M/s. Excellent Betelnut Products Pvt. Ltd. [2015 (324) E.L.T. 619 (A.A.R.)] do cover the said goods, i.e., preparation of Scented Flavoured and/or Sweetened Betel Nut , involved in the present proceedings; and in this ruling, the erstwhile AAR has concluded that the said product merits classification under sub-heading 2106 90 30. I find that in reaching this conclusion, AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarification pursuant to 45th meeting of the GST Council held on 17-9-2021, wherein it was held that Scented Sweet Supari would fall under GST Tariff Item 2106 90 30. The concerned Principal Commissioner of Customs has specifically opined that since, the betel nut which has undergone the processes where it does not lose its original character of supari, it does not amount to manufacture or a new product and there is no process of adding or mixing cardamom, copra, menthol, spices, sweetening agents or any such ingredients other than lime, katha (catechu) or tobacco to betel nut, in any form, hence the items API Supari, Chikni Suparai and Unflavoured Supari shall be covered under CTH 0802. However, holding that further classification of betel nut under CTH 2106 or CTH 0802, depends upon the nature and further processing of the betel nut, the Principal Commissioner of Customs has cited the decision of the GST Council that Scented Sweet supari would fall under Tariff Item 2106 90 30. 13. In view of the above, the basic question before me is to consider my previous rulings, as also the rulings of CAAR, Mumbai, in so far as they relate to the goods described as preparation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [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 goods, meaning in the present case betel nut would continue to remain betel nut and not become preparation of betel nut. 16. I have carefully perused the decision of the GST Council regarding classification of scented sweet supari holding the same classifiable under Tariff Item 2106 90 30. However, the said decision does not detail the reasons for arriving at the same, leaving me handicapped in either distinguishing the same under GST law with classification under the Customs Tariff Act, or consider it adequate and substantive enough to change my previous rulings. Noting ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
