TMI Blog2023 (6) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... context the decision of the Hon'ble Calcutta High Court in the case of Killing Valley Tea Co. v/s Secretary to State [ 1920 (5) TMI 1 - CALCUTTA HIGH COURT] is worth mentioning, wherein it was held that a tea leaf remains the same even after being subjected to mechanical processes like withering, crushing, roasting, fermenting etc. is a definite pointer to the principle that needs to be applied for classification in such matters. he observations of the Hon'ble Supreme Court in the case of M/S. Crane Betelnut Powder Works [ 2007 (3) TMI 6 - SUPREME COURT] , that the process of cutting betel nuts into small pieces and addition of essential/non-essential oils, menthol, sweetening agent etc. did not result in a new and distinct product having a different character and use also an extension of the same line of reasoning. However, after amendment by insertion of a note in chapter 21 of Central Excise Tariff these decisions are of no relevance at present in deciding classification matters under the Customs law. The claim of applicant that these processes are very crucial for changing the essential characteristics of raw tendered betel nuts with the resultant betel nut prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pieces (Not split): 0802 80 90. - Ruling Nos. CAAR/Mum/ARC/43/2022 in Application No. CAAR/CUS/APPL/68/2022 - - - Dated:- 6-12-2022 - (Narendra V. Kulkarni) Customs Authority for Advance Rulings, Mumbai Present for the applicant : Shri Sourabh Banka (Proprietor), Shri. K.C Kala (Authorized Representative), Shri. Harshad H. Karotra (Advocate) Present for the Department : None RULING M/s Rose Marry International (hereinafter referred to as 'the applicant', in short) filed an application for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR, in short). The said application dated 23.08.2022 was received in the secretariat of the CAAR, Mumbai on 08.09.2022 along with its enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the 'Act'). The applicant is seeking advance ruling on the classification for the proposed import of 1) Processed API Betel-nut product known as Supari and 2) Processed Betel-nuts unflavoured chemically processed Supari in small cut-pieces (not split). 2. The applicant are manufacturer and merchant exporter/importer of betel nuts, having FSSAI No. 1001604300 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). ln the second stage these freshly harvested nuts are dipped in chlorinated water to remove the adhering dirt, the fruits are then soaked in water mixed with chemicals to reduce microbial load /fungal infections. (iii). ln the third stage large impurities are removed by labour with the help of mechanical de-husking process. (iv). ln the fourth stage minor impurities are removed by de-stoner machine which is fully automatic process and then they are subjected to Garbling process for the removal of extraneous matter such as other parts of the plants, dirt and added adulterants. (v). ln the fifth stage the tender nuts are boiled in water mixed with areca nut extract in which the same water is used for boiling 2 to 3 batches of areca-nuts. The areca nut extract is used to impart red colour and good glossy appearance. While boiling the tender nuts, the highly concentrated Tannin is obtained as a by-product which is separated and is used in various industrial applications. (vi). ln the sixth stage these boiled tender nuts are dried for 15 days in open space and are dried by blowing hot air in mechanized processing with the use of heat exchangers. (vii).ln the seventh sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passing through the holding baskets for 4 to 5 months. This steeping of water results in discoloration of outer husk and subsequently the foul smell as well as bacterial presence is treated by heat blanching using sodium benzoate (0.1%) and potassium Meta bisulphate (0.2%) to eliminate the foul smell and improving the quality of nuts. This process is over and above the process of Chapter Heading 0802 due to the reason that the inputs to the Areca-nuts has taken place in this process for obtaining the final Unflavoured processed Betel-nut in cut pieces, this process amounts manufacturing by adding up of chemicals to the final product and is appropriately classifiable under CTH 2106 90 30. (v). Then the tender nuts are dried in open space and this drying is being done by blowing hot air in mechanized processing using heat exchangers. (vi). The dried nuts are once again subjected to removal of any metal /minor impurities by magnetic metal detecting machines and blowers. (vii). Sterilization process is undertaken to remove the Bacterial Count. (viii). 3 Stage cutting of Betel Nuts are carried out (customized) and weightless particles are blowed by blower machine and gravity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be fresh (including chilled), frozen (whether or not previously cooked by steaming or boiling in water or containing added sweetening matter) or dried (including dehydrated, evaporated or freeze-dried); provided they are unsuitable for immediate consumption in that stale, they may be provisionally preserved (e.g., by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions). The term chilled means that the temperature of a product has been reduced, generally to around 0 C, without the product being frozen. However, some products, such as melons and certain citrus fruit, may be considered to be chilled when their temperature has been reduced to and maintained at +10 C . The expression frozen means that the product has been cooled to below the product's freezing point until it is frozen throughout. Fruit and nuts of this Chapter may be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled. It should be noted that homogenisation, by itself does not qualify a product of this Chapter for classification as a preparation Q/ Chapter 20. The addition of small quantities Q/sugar does not affect the classifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruits/nuts which is due to harvest. 5.3 Further, the applicant submitted that after the removal of impurities, the nuts are boiled in water mixed with areca nut extract. The areca nut extract is used to impart red colour and glossy appearance. While boiling the tender nuts, the highly concentrated Tannin is obtained as a by-product which is separated and is used in various industrial applications. After boiling, the areca fruits/nuts are dried for 15 days in open space and is dried by blowing hot air in mechanized processing with the use of heat exchangers. In this stage, the areca fruits/nuts are boiled in water mixed areca nut extract and are being dried. 5.4 Further, the applicant submitted that after boiling and drying of the areca fruits/nuts, they are sorted out using automatic Sorting machines and graded using grading machines with pre-graded photo chromatic devices. In this stage, the areca fruits/nuts are sorted and graded and the resultant commodity is known as Processed API Betel-nut product known as SUPARI . 5.5 The process is same for second commodity viz., 'Processed Betel-nuts unflavoured chemically processed SUPARI in small cut pieces (Not split) but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Shri. Harshad H. Karotra, Advocate represented the applicant and submitted additional submissions including a research paper authored by Shri. B.R. Gurumurthy (Dec. 2017). They explained the first product of proposed imports covered in CAAR-1 application stating the process carried out on betel nut take it out of the scope of Chapter 8 of the Customs Tariff Act. However, for the Second product they requested additional time up to 18.11.2022 to submit additional write-ups. However, no one was present for the jurisdictional commissionerate. 7. The applicant submitted their additional write-up with regard to their second product of the proposed import on 18.11.2022. They submitted a review article, Chemical Composition, Pharmacological and Toxicological Effects of Betel Nut . This article was published in Hindawi, Evidence-based Complementary and Alternative Medicine Vol 2021, (Article ID 180808, 7 pages). In the said article it has been analysed by the researcher that the Betel Nut is the dried seed of the fruit from the Areca Palm tree, which is cultivated particularly in South and South-East Asian countries. In addition, they also submitted the second original research a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey are chemical solutions ethanol, acetone, water as solvent, methanol, Na2S03, NaOH. The same is discussed in the table 1 of the said article with the name of solution, condition of extraction and references. Based on these submissions it is submitted that the second product has undergone the chemical processes of extraction of tannin and arecoline with the resultant product of processed betel nut unflavoured chemically processed supari in small cut pieces (not split) with reduced amount of toxic substances of tannin and arecoline with the resultant effect of making it less harmful for human consumption. These processes are very crucial for changing the essential characteristics of raw tendered betel nuts with the resultant betel nut product which is chemically processed and is most appropriately classifiable under CTH 2106 90 30. These processes are out of the scope of Chapter 8 of the Customs Tariff Act, 1975 and the processes are duly covered under CTH 2106 90 30. 8 I have gone through the above submissions and all the documents placed before me. I have also gone through the comments from the jurisdictional commissionerate and have taken on record the rejoinder and additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are either partially rehydrated or treated for additional preservation or stabilization or for improving or maintaining appearance of the original product. So far as chapter 8 is concerned, apart from the relevant chapter notes already reproduced above, the HSN Explanatory Note, rightly relied upon by the jurisdictional Customs Commissionerate while submitting their response, 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.' In this chapter, the entry 0802.80 refers to areca nuts, used chiefly as a masticatory. Thus the Explanatory Notes to Chapter-I indicate that chapter I covers nuts intended for human consumption (whether as presented or after processing); whether they are fresh, frozen (whether or not previously cooked by steaming or boiling in water) or dried (including dehydrated, evaporated or freeze-dried) and whether the nuts could also be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled. The processes to which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant for classification of the subject products at present. Also, in the case of M/S Crane Betel Nut Powder Works Vs CC CE Tirupathi as reported in 2007 (210) E.L.T. 171 (S.C.), the Hon'ble Supreme Court held that even after undergoing certain processes the betel nut remained betel nut only and resultant product could not be identified as new product to be classifiable under chapter 21. The Hon'ble Supreme Court held that the end product shall remain under chapter 8 only. Further, in the case of M/s S.T Enterprises Vs Commissioner of Customs (Chennai V Ill) 2021 (378) E.L.T. 514 (Tri. - CHENNAI) it was observed that 'the question is whether by mere boiling and drying whole betel nut it would merit classification under 21069030 so as to surpass the prohibition of import?' and remarked that Moreover, it can be seen that the impugned products in the case of Crane Betel Nut Powder Works (supra) have undergone much more elaborate processes like cutting into different sizes; adding essential non-essential oils, menthol, sweetening agents etc. Even when the physical appearance undergoes' a change, Apex Court held that the processes undertaken do not amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a nut and other plants as well as the extraction methods of tannin and alkaloids through the processes of maceration, microwave, ultrasounds, enzyme, decoction, irradiated radiation and gamma methods is discussed. The para 4 of the said chapter as published in the aforesaid article deals with the various processes of extraction method of tannins and alkaloids (arecoline). Under sub para 4.1 of the said chapter the solvents used for these extraction processes have been described as chemical solutions ethanol, acetone, water as solvent, methanol, Na2SO3, NaOH. It is claimed that any of these processes may be used for extraction of the aforesaid two substances from areca nuts depending upon the type of solvent used, extraction material used and the extraction conditions. 8.5 I find that the above research papers are on the subject of extraction of Tannin from areca nuts, and the studies have been carried out under a controlled environment apparently aimed to find the best procedure of extraction in producing good quality tannins in an effective way to increase extract yield with a fairly small operational risk. Further, nowhere it has been categorically brought out that the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sification shall be effected as per Rule 3(a) of the GRI, whereby the most specific heading shall be preferred over headings providing a more general description for classification of the goods. To summarize the forgoing analysis, even at the cost of repetition, I find that, in order to arrive at a ruling regarding the classification of the subject goods, it is incumbent on me to consider the notes to chapter 8 as also the scope of supplementary notes to the chapter 21 and the guidelines contained in the HSN Explanatory Notes and the ratio as well as relevance, if any, of the decisions already referred during forgoing discussion. HSN Explanatory Note under heading General to chapter 8 provides that fruit and nuts of this Chapter may be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled. Further, it is also provided that the addition of small quantities of sugar does not affect the classification of fruit in this Chapter.' Thus, the HSN explanatory notes to Section I indicate that chapter 8 covers nuts intended for human consumption (whether as presented or after processing); whether they are fresh, frozen (whether or not previously cooked by ste ..... X X X X Extracts X X X X X X X X Extracts X X X X
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