TMI Blog2021 (5) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... The processes to which raw betel nuts have been subjected to obtain API supari, Chikni supari, unflavoured supari and boiled supari are squarely 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, which is sine qua non for a good to be classifiable under Chapter 21. Flavoured supari - whether the addition of special flavouring agents would render the betel nuts into preparations of betel nuts, classifiable under Chapter 21? - HELD THAT:- The 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 preparation of betel nut. The conclusion that all the five goods placed before me for consideration, i.e., API supari, chikni supari, boiled supari, unflavoured supari, and flavoured supari, merit classification under Chapter 8 of the First Schedule to the Customs Tariff Act, and more precisely, under the heading 0802. This is so in view of the fact that the processes to which raw gre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties (betel nuts). 4. In accordance with the procedure prescribed under the CAAR Regulations, 2021, personal hearing was scheduled on 26.04.2021. However, counsel of the applicant requested for another date for hearing due to extension of lockdown in Delhi. Keeping in view the statutory provisions under section 28-I of the Customs Act, 1962 that require ruling to be pronounced within three months of fliing of the application, next date of personal hearing was fixed on 25.05.2021 in virtual mode, keeping in view the circumstances prevailing on account of COVID pandemic. Representing the applicant, Shri Somesh Arora, Advocate, attended the hearing in virtual mode on the said date. During the hearing, the learned advocate briefed about the classification question and products on which ruling has been sought. He briefly explained the processes carried out to obtain 5 different types of betel nut products as mentioned in their application for Advance Ruling. He referred to the two previous rulings of the Authority for Advance Rulings (AAR, in short) in the case of M/S Excellent Betelnut Products Pvt. Ltd. and M/S Oliya Steel Private Ltd. Learned advocate stressed upon the binding nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mphasis supplied). In the light of the above, learned counsel mentioned that it therefore, follows that some processing and even one process on the basic product if carried out moves it to the domain of (Preparation) as for as Customs Tariff is concerned; it may kindly be noted that, as was observed in both the Advance Ruling Authority's rulings cited above that the principle was laid down that process even if boiling disentitled the betel nuts to be called as eligible to fall under the description 'betel nuts fresh and dried' falling under Customs Tariff Heading 0802 of the Customs Tariff Act, 1975. Lastly, it is prayed that the considered Rulings of the Advance Ruling Authority are worthy of following and it is therefore, pleaded accordingly. 5. The applicant wishes to import various type of products, details and processes involved in making of the same are summarized as under: (i) 'API Supari': Following processes are conducted on raw green fresh betel nut: removing of large impurities by labourers, boiling in water for 6 hours, mixing food starch, drying, polishing and packaging. (ii) 'Chikni Supari': Following processes are conducted on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt stated the following questions on which ruling has been sought, Whether the goods sought to be imported is processed whole betel nut as described therein above, whether or not containing ingredients such as food starch, spices, mulethi, flavors, perfume etc., though not containing lime or katha (catechu) or tobacco and will the resultant products viz. (i) API supari (processed whole raw green fresh betel nut/boiled betel nut), (ii) Chikni supari, (iii) Unflavoured supari, (iv) Flavoured supari, (v) Boiled supari are classifiable under the Chapter/Heading 21069030? , Whether the finished products are rightly classifiable under 21069030 though the raw material used for the manufacture falls under CTH 08029000? and Whether the Notification No. 50/2017-Customs dated 30.06.2017 is applicable and if so whether the benefit of exemption listed under Sl. No. 103 of the Table under the said notification is available to the commodities (products manufactured out of betel nuts) under CTH 21069030? 6. I find that the concerned Principal/Commissioner of Customs have not provided their comments to this specific advance ruling application, even as their comments on question rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b. To improve or maintain their appearance (for example, by the addition of vegetable oil or small quantities of glucose syrup), provided that they retain the character of dried fruit or dried nuts . 10. In the Chapter 8, areca nuts, whole, split, ground, and two residuary sub-headings are accommodated under 08028010, 20, 30, 90, and 08029000, respectively. 11.1 On the other hand, Chapter 21 covers miscellaneous edible preparations. The relevant Supplementary Note 2 to the said Chapter lays down that, In this Chapter 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, menthol, 11.2 In this Chapter, the related entry, with respect to betel nuts, is the sub-heading 21069030, i.e., betel nut products known as supari. 12. 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 usefu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... z. API, Chikni, unflavoured, flavoured and Boiled. The basic raw material for each of the five goods is raw betel nut, which is classifiable under Chapter 8, more specifically sub-heading 080280. 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 five goods be considered as preparation of betel nut that would make them classifiable under Chapter 21 by virtue of Supplementary note 2 of Chapter 21. It is the contention of the applicant that due to the processes that the raw betel nuts have been subjected to, the goods have become preparations of betel nuts. Alternatively, whether the processes carried out on the same for cleaning, preserving and making them more attractive to certain tastes/ preferences are too minor to fall short of rendering them as preparations of betel nuts. Further, it would be inadvisable and inappropriate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the limited purpose of enhancing preservation or appearance or ease of consumption per se does not result in obtaining a preparation of betel nut. Speaking more generally, in view of the design of the Schedule to the CTA, HSN and plethora of judgements, besides common understanding and parlance, every irreversible process does not result in obtaining a new product with a distinct classification even at the eight or ten-digit level; and every process does not result in coming into being of a preparation of the raw material . Therefore, I conclude that the processes to which raw betel nuts have been subjected to obtain API supari, Chikni supari, unflavoured supari and boiled supari are squarely 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, which is sine qua non for a good to be classifiable under Chapter 21. In this regard, I have carefully considered the submission and ease law cited by Shri Arora (para 4.1 above refers) and find that the kernel of the said decision does not co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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