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TMI Blog2022 (12) TMI 1413X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the Customs Tariff nor in the HSN Explanatory/Sections/Chapters Note. They have submitted the processes carried out on the imputed goods as follows: 1) De-husking the raw betel/ areca nut and drying the same before being fed into the roasting oven; 2) Feeding the fresh areca nuts into a seed roasting oven, heating up to 100 deg. C and roasting the fresh areca nuts in an oven of the seed roasting 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r crushing and adding other ingredients to betel-nut would amount to manufacture or not. Upon convincing that crushing and mixing other ingredients to the betel-nut into powder would not amount to manufacture, the Court ruled in favour of the party thus permitting them to classify the item under the CTH 0803. Based on the above, earlier rulings issued by the Customs Authority for Advance 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 Prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of consumption per se does not result in obtaining a preparation of betel nut. Further, every irreversible process does not result in a "preparation of the raw material". Even after these processes, the betel nuts retain the character of betel nut and do not qualify to be considered as "preparations" of betel nut. The goods do not change the essential character. Therefore, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ius. As a result, the betel nuts would be roasted well beyond 100 degrees Celsius, usually in the range of 130-150 degrees Celsius. 2) Roasted betel nut undergoes a change in its appearance as well as chemical characteristics on account of the roasting process. There is a visible deposition of an ash-like substance on the outer surface of the betel nut. There 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, tannin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... physical and chemical characteristics. Roasting causes the deposition of an ash-like substance on the outer surface of the betel nut. It imparts a charred appearance to the betel nut. Roasting also causes a substantial change in chemical composition, especially in respect of tannin and arecoline content. Roasted Areca Nut is used for eating (mukhwas) directly 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 releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lings referred to in the Chennai Commissionerate's reply pertains to issue of classification of the roasted supari and any reference to these rulings will not help us decide the present matter. We cannot import and apply the ratio of classification decisions in case of any other variant of supari to the roasted supari, be they may be from chapter 8 or 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 cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the roasted betel nuts - complete or cut - are fit for immediate human consumption without addition of any other ingredient as seen during the course of hearing on the basis of examination of FASSAI approved samples. 5.6 Now let me examine whether processes carried out on the subject goods are covered by the processes specified in this 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant. The applicant submitted sample products packaged, labelled and marketed as roasted betel nuts during the personal hearing. Even on various online marketplaces like https://www.amazon.in/, https://indiamart.com, https://flipkart.com etc roasted betel nuts as products are sold. This clearly indicates that the goods have both 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, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or preparations made other than by the processes specified in Chapters 7, 8 or 11 are classifiable in Chapter 20. The processes specified in Chapters 7, 8 or 11 mainly include freezing, steaming, boiling, drying, provisionally preserving and milling. Therefore, any vegetable, fruit, nut or edible parts of a plant which is prepared 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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