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TMI Blog2023 (6) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that they propose to import (1) Menthol Scented Sweet Supari; and (2) Flavoured and coated Illaichi (hereinafter referred to as the 'subject goods'). There is huge demand and business potential in import of betel nut product - bulk cutting sweet supari for use of the manufacturers of branded sweet supari as well as menthol flavoured Illaichi as used in spice-based mouth freshener. They intend to import the said goods through the seaport at Nhava-Sheva, Mumbai. Accordingly, comments from the jurisdictional Principal Commissioner/Commissioner of Customs were invited. However, no comments were received from the jurisdictional authority. 3. The applicant has submitted detailed information regarding the concerned subject goods and the procedure for manufacture of the same. The raw whole, split or ground betel nut (areca nut) provisionally preserved or not, as an agricultural product, is classifiable under CTH 0802. Arecoline is a mild parasympathomimetic stimulant alkaloid found in the areca nut, the fruit of the areca palm. It can bring a sense of enhanced alertness and energy, euphoria and relaxation. Chewing the nut stimulates the flow of saliva to aid digestion. In India t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sifiable under Item 2106.90.30 in terms of Supplementary Note 5(b) to Chapter 21 which reads as : 5. Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter alia, includes : (b) preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption; Indian buyers of the applicant as industrial manufacturers of branded sweet supari may or may not further improve the products with other additives like scents and saffron before packing it in small packages for wholesale and retail, with their brand. 3.3 Flavoured and coated Illaichi : (Spice based mouth freshener - FSSAI Category 5.2.4.2) : The applicant submitted that the raw Cardamom as a mild spice has been used as a mouth freshener since ages. Preparation of Cardamom seeds coated with edible colours, silver, menthol and artificial sweetener and aromatic additives is also used as an edible preparation mouth freshener. The product intended to be imported by the applicant would be processed overseas with following processes on the green fresh Cardamom : (a) Removing of large impurities and kil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Authority may kindly issue the advance ruling on classification of (1) menthol/scented sweet cutting supari flavoured under CTH 2106.90.30; and (2) coated illaichi under CTH 2106.90.99 at an early date. 4. Personal hearing in the matter was held on 22-9-2022 wherein Shri. Anil Kumar Mishra, Advocate represented the applicant. However, no one was present for the department/jurisdictional Commissionerates. Shri Mishra re-iterated the submission made at the time of filing of CAAR-I and invited attention to the GST Council's decision as well as C.B.I. & C. Circular based on GST Council's decision issued in October, 2021. He requested to grant 15 days' time to file additional reply in support of applicant's claim to classification. 4.1 According, the applicant has filed additional submission on 3-10-2022 bringing forth the following points. (i) Value addition : The applicants submit that for both the products e.g., (a) Menthol/Scented Sweet cutting supari; and (b) Flavoured and coated Illaichi the manufacturing process involves intricate and skilled manufacturing process on raw produce the value of the processed materials is enhanced at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18%. Subsequently C.B.I. & C. issued Circular No. 163/19/2021-GST, dated 6th October, 2021 clarifies the position of the Union Government to be in conformity of the GST Council. (vi) Relevance to Customs Tariff : Kind reference is invited to the explanations (iii) and (iv) appended to IGST Rate Notification 1/2017-IGST (Rate), dated 28-6-2017 which read as below : (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. (vii) Identical provisions have been incorporated in CGST Rate Notification No. 1/2017-CGST (Rate), dated 28-6-2017. (viii) It appears that in view of the acceptance of the fitment committee in GST Council, clarificatory acceptance of Central Government through its board circular and the homogenous adaptatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes : (a) For additional preservation or stabilization (for example, by moderate heat treatment, sulphuring the addition of sorbic acid or potassium sorbate : (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." In the Chapter 8, areca nuts, whole, split, ground, and two residuary sub-headings are accommodated under CTHs 0802 80 10, 20, 30, 90, and 0802 90 00, respectively. In short, nuts including betel nut, are either partially rehydrated or treated for additional preservation or stabilization or for improving or maintaining appearance of the original product. In view of processes to which the applicant's imported supari will be subjected prior to importation it is clear that these processes are not meant for partial rehydration or treating for additional preservation or stabilization or for improving or maintaining appearance of the original product. Hence the classification of the scented sweetened supari under this chapter is legally unsustainable. 5.2 Alternate classificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract from the Tariff headings in Chapter 9 is reproduced below : - Cardamoms : 0908 31 -- Neither crushed nor ground : 0908 31 10 --- Large (amonum) 0908 31 20 --- Small (ellettaria), alleppey green 0908 31 30 --- Small, coorge green 0908 31 40 --- Small, bleached, half bleached or bleachable 0908 31 50 --- Small, mixed 0908 31 90 --- Other The Notes to the chapter provide as follows : 1. Mixtures of the products of headings 0904 to 0910 are to be classified as follows : (a) mixtures of two or more of the products of the same heading are to be classified in that heading; (b) mixtures of two or more of the products of different headings are to be classified in heading 0910. The addition of other substances to the products of headings 0904 to 0910 [or to the mixtures referred to in paragraph (a) or (b) above] shall not affect their classification provided the resulting mixtures retain the essential character of the goods of those heading. Otherwise, such mixtures are not classified in this Chapter; those constituting mixed condiments or mixed seasonings are classified in heading 2103. Mix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product known as "Supari" --- Other : 2106 90 91 --- Diabetic foods 2106 90 99 --- Other 6. Now let me turn to the other legal grounds put forth by the applicant. Applicant has referred to the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 issued based on the recommendations of the GST Council in its 45th meeting held on 17th September, 2021 for clarifying classification aspects of the scented sweet supari and flavoured coated illaichi. I find that both the products would be subjected to the processes before their importation and hence it is pertinent to consider the contents of the C.B.I. & C. circular noted earlier in view of the provisions of the Section 3(7) of the Customs Tariff Act, 1975. The relevant para of the said circular is reproduced below : 7. Applicability of GST on scented sweet supari & flavoured and coated illaichi : 7.1 Representations have been received seeking clarification regarding classification and applicable GST rates on flavoured and coated illaichi, and scented sweet supari. 7.2 Scented sweet supari falls under tariff item 2106 90 30 as "Betel nut product" known as "Supari" and attracts GST ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontents of the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 are applicable to the present case by virtue of legal framework discussed supra. Classification and applicable rate of duty under GST are clarified in the paras reproduced from the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 from F. No. 190354/206/2021-TRU. By virtue of application of Section 3(7) of the Customs Tariff Act, 1975 "any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent as is leviable under Section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8) or sub-section (8A), as the case may be. Based on the contents of the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021, it is clear that the provision of Section 3(7) of the Customs Tariff Act, 1975 applies to scented supari classifiable under CTH 2106 90 30 and flavoured and coated illaichi classifiable under CTH 2106.90.99. In the instant case menthol scented sweet supari does not contain lime, katha (catechu) a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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