TMI Blog2022 (12) TMI 1413X X X X Extracts X X X X X X X X Extracts X X X X ..... roasting means the excess or very high heat treatment that produces fundamental chemical and physical changes in the structure and composition of the goods, bringing about a charred physical appearance. Therefore, drying is a moisture removal process involving methods such as dehydration, evaporation, etc., whereas roasting is a severe heat treatment process. The impugned goods i.e. roasted betel nuts, find specific reference in the chapter 20 of the schedule I of the Customs Tariff Act 1975 as well as corresponding HSN Explanatory Note. It is important to pay attention to the fact that in the above explanatory note a process of roasting is not specifically mentioned as a process of preservation or stabilisation or a process to improve or maintain the appearance. This corroborates the finding that the process of roasting is not covered by Note 3 to Chapter 8 and hence these products, roasted betel nuts complete as well as cut are not classifiable under chapter 8 of the Tariff. The relevance of Chapter 21 is already discussed in para 5.1. Supplementary note 2 to Chapter 21 states that in this Chapter betel nut product known as Supari means any preparation containing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting machine; 3) Take the areca nuts out of the oven, cooling at room temperature and feeding back into the oven, heat and roast them again, and perform this cycle until the water content of the fresh areca nuts is 10 to 15 per cent; and 4) The fresh areca nuts are repeatedly heated, roasted and cooled to ensure that the areca nuts are quickly cooled and shrunk after thermal expansion so that the roasted areca nuts have higher quality; the roasting time is around 2-3 days. In India, areca nut is chewed for a variety of reasons such as stress reliever, mouth freshener, concentration improver and digestive following food intake. 2.2 As per the applicant, the above-mentioned goods are specifically covered and are classifiable under CTH 2008 19 20 of the Customs Tariff Act, 1975. As per the HSN Explanatory Notes to Heading 2008, given below, Dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008. They have cited case laws of L.M.L. Ltd. Versus Commissioner of Customs Reported in 2010 (258) E.L.T 321 (S.C), Holostick India Ltd. Versus Commissioner of Central Excise, Noida Reported in 2015 (318) E.L.T 529 (S.C), Collector of Central Excise, Shi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Rulings rejected the classification of betel-nut products under the HS Code 2106 90 30 and confirmed the same under Heading 0802 by holding that the processes such as boiling, slicing, removal of impurities, metal deflection, garbling, polishing, roasting, cutting and adding flavours to the betel-nut do not alter the nature and characteristics of the product so as to take it outside the purview of the Heading 0802. However, after the subsequent amendment to the Central Excise Tariff Act, 1985 vide The Finance (No.2) Act, 2009 (Act No. 33 of 2009 dated 19th August 2009) with the insertion of Note to Chapter 21, the decision of Hon'ble SC in the above-mentioned case law was rendered infructuous. In support of the above, they have cited the ruling issued in the case of M/S Excellent Betel Nut Products by the Authority for Advance Rulings, wherein the authority took proper judicial notice and distinguished the decision in the case of Crane Betel nut powder works Vs Commissioner of Customs C. EX, Thirupathi (2007 (2 10) ELT 171 (SC)) and held the classification of processed betel nuts under the CTH 21069030. In the context of their above-mentioned submissions, the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , they do not merit a change in classification from Chapter 8 to Chapter 21. They have cited the case law of M/S. Crane Betelnut Powder Works reported in 2007 (210) E.L.T 171 (S.C) in support of the above. They have also submitted that the ratio of said judgement was applied to the CAAR New Delhi ruling no. CAAR/Del/Sarveshwari/11/2021 in the case of M/S Sarveshwari Industries. 3. Note 2 to Chapter 21 states that 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. Betel nut is one of the ingredients in the preparation. It is not clear in the submission as to what are the other ingredients in the preparation and what the process is for adding those ingredients. 4. The term roasted betel nut is not mentioned in the Customs Tariff Act, 1975. Roasted betel nut is a term of common trade parlance/ invented word. 5. In respect of Chapter 20, it is pointed out that chapter 20 does not cover vegetables, fruit or nuts, prepared or preserved by the processes specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a substantial change in the chemical characteristics of the betel nut product on account of the roasting process. It has been established through research (submitted along with additional submission) that the tannin and arecoline content of raw betel nut/ areca nut gets substantially changed by subjecting the same to roasting and boiling. Therefore, roasted betel nut is a distinctive product of betel nut making it suitable for immediate consumption. 3) Roasting is not aimed at additional preservation or stabilisation or to improve or maintain their appearance. 4) The article titled Estimation of arecoline content of various forms of areca nut preparations by high-pressure thin-layer chromatography throws light on the chemical composition of various forms of areca nuts. As per the article, Polyphenols (flavonols, tannins) constitute a large proportion of the dry weight of the nut. Its content in areca nut may vary depending on the degree of maturity and its processing method. The tannin content is highest in unripe areca nuts and decreases significantly with increasing maturity. The roasted nut possesses the highest average content of tannins, ranging from 5 to 41% (mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as with paan (betel leaf). During the course of the hearing, the samples of roasted supari were presented by the applicant and same were examined. On visual comparison the colours of roasted supari and normal supari were found different. Roasted supari was dark grey in colour while normal supari was brown in colour. Roasted supari without the addition of any ingredients to it is saleable in the Indian market in various forms like tukda (pieces) roasted supari as well as shredded roasted supari. It was observed that these roasted supari products are sold in the market without any additives or without subjecting to any other preparation than the roasting process. These roasted supari variants are approved by FASSI, a government agency. 5.2 Before deciding on the issue, let me deliberate on the legal framework and relevance of various case laws and rulings cited by both the applicant and jurisdictional commissionerate. The present application of the applicant needs to be seen in the context of a legal framework governed by the Customs Tariff Act, 1975, Chapter/ Section notes along with HSN explanatory notes. Now, let me discuss the relevance of M/S. Crane Betelnut Powder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r chapter 21. Doing so will be against the provisions of the General Rules of Interpretations (GRI) of Customs Tariff Act, 1975. Therefore, in the absence of relevant legal case laws for impugned goods while deciding the present application, the section note, chapter note and HSN explanatory note form the foremost basis for the classification of goods. In the case of Collector of Customs, Bombay Vs Business Forms Ltd, 2002-TIOL-277-SC-CUS-LB, the Hon'ble court held that Explanatory Notes to HSN need to be given due consideration for classifying goods. Similarly, in various other case laws specified in para 2.1, it was held that HSN Explanatory Note is the safe and dependable guide in the matters of classification of items. 5.4 From the submissions of the applicant and the comments from the jurisdictional commissionerate, the classification of roasted betel nuts involves examination of three different chapter entries in the Tariff reproduced below: Chapter 8 Edible fruit and nuts; peel of citrus fruits or melons Chapter 20 Preparations of vegetables, fruit, nuts or other parts of plants Chapter 21 Miscellaneous edible preparations Rule 1 of the General Interpret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is chapter. The processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. It does not specifically include the process of roasting. Here it is important to understand the difference between the processes of drying and roasting. The terms, however, are not defined in the Customs Tariff Act, 1975. Therefore, these terms have to be understood in a commonly accepted sense. The Hon'ble Apex Court in the case of Alladi Venkateswarlu v. Government of Andhra Pradesh 1978 AIR 945 held that the commonly accepted sense of a term should prevail in construing the description of an article of food . In common trade parlance, drying is a method of food preservation by the removal of water. On the other hand, roasting means the excess or very high heat treatment that produces fundamental chemical and physical changes in the structure and composition of the goods, bringing about a charred physical appearance. Therefore, drying is a moisture removal process involving methods such as dehydration, evaporation, etc., whereas roasting is a severe heat treatment process. 5.7 The jurisdictional Commissonerate in their comments stated that the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyers and sellers and that they are known in the trade and sold in the market as roasted betel nuts. Therefore, assuming without admitting, even if the term is not defined in the statute, the product has to be understood and recognised in terms of common trade parlance. It is a well-settled principle that words in a taxing statute must be construed in consonance with their commonly accepted meaning in the trade and their popular meaning. Hon'ble Apex Court in the matter of M/S. United Offset Process Pvt. Ltd. Vs. Asst. Collector of Customs, Bombay and Others [1989 Supp. (1) SCC 13 1], If there is no meaning attributed to the expressions used in the particular enacted statute then the items in the customs entries should be judged and analysed on the basis of how these expressions are used in the trade or industry or in the market or, in other words, how these are dealt with by the people who deal in them, provided that there is a market for these types of goods . The roasted betel nut is an independent product, which is sold in the market in both packed and unpacked form. The applicant submitted samples of both during the personal hearing. The packed roasted betel nuts are lab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epared or preserved by any other process than these are liable to be classified under Chapter 20. Heading 2008 covers Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included. Roasting is a process used for bringing in to existence roasted nuts and as discussed earlier I find that the processes mentioned in chapter 8 do not cover roasting process. 6.2 The jurisdictional Commissionerate in their comments submitted that mere roasting of the betel nut does not constitute preparation. Here, I observe that Chapter 20 covers the preparation of nuts. One of the processes for preparing the impugned goods is specified in Heading 2008, i.e. roasting. Roasting is the essential process for the preparation of impugned goods. I observe that in the previously referred HSN Explanatory Note to chapter 20 a reference to dry-roasted, oil-roasted or fat-roasted indicates the principal processes of preparation that would change the classification of nuts from Chapter 8 to Chapter 20. Further, the goods under consideration are not excluded by any chapter note or expl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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