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TMI Blog2024 (6) TMI 1454X X X X Extracts X X X X X X X X Extracts X X X X ..... r ICD and Mundra Port. 2. Applicant has stated as follows in their statement of relevant facts having a bearing on the question(s) raised enclosed with the CAAR-1 application: 2.1 The applicant has referred the ruling in his own matters in CAAR Ruling No. CAAR/Mum/ARC/36/2022, dated 31-10-2022 issued against Application No. CAAR/CUS/APPL/55/2022-0/0 Commr-CAAR-MUMBAI issued in matters of the applicant for the port of JNCH. 2.1.1 REASONS FOR ADDITION OF PORTS - The applicant submits that in view of their competitor's prices they are finding it extremely difficult to manage the sale prices and the high road transport costs to make supplies from JNCH to their customers in Uttar Pradesh, West Bengal, Delhi, Madhya Pradesh and Gujarat. For ease of doing business and to save on road transport costs, the applicant intends to also import such goods from ports nearer to their customers to reduce their road transport and to reduce various hurdles faced in long distance inter-State transport of the goods, as the case may be. For above reasons the applicant is filing this application with required fees and supporting documents for addition of ports in Ruling CAAR/Mum/ARC/36/2022, date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2.4.3 Other Traditional mouth fresheners not covered in 5.2.4.1 and 5.2.4.2 2.5 CLASSIFICATION: In CAAR Ruling No. CAAR/Mum/ARC/36/ 2022 dated 31/10/2023 the applicant had submitted that - (a) In terms of supplementary note 2 to Chapter 21 which read as : 2. 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 or menthol. And in terms of the description, Betel nut product known as "Supari" as appearing in heading 2106. Chapter 21 1st Schedule to Customs Tariff Act, 1975 Menthol/Scented Sweet Cutting Supari being an edible manufactured product of betel nut, is squarely covered under the tariff description in terms of GRI (1) read with GRI (2)(a) appended to Customs Tariff Act, 1975. (b) In terms of the indicated additives like sweeteners, flavours and menthol, the edible product Flavoured and Coated Illaichi is classifiable under 2106.90.99 in terms of Supplementary Note 5(b) to Chapter 21 which reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Polishing Machine, (f) Sterilization to remove bacterial count, (g) Cutting, (h) Blowing of weightless particles in blower, (i) Gravity separation by Automatic Gravity Separation Machine, (j) Roasting in Fire Gas Rotary Roaster, (k) Adding scents and flavours such as Menthol, Spices, sweetening agents etc. in desired quantities along with liquid flavors (as and if desired) and edible oil are mixed in automatic mega size blenders, (l) Packaging in industrial packs of 50kg to 80kg as per requirement, (m) This process does not contain any materials like Lime, Katha (catechu) and tobacco. 3.1.6 Also, in terms of the indicated additives like sweeteners, flavours and menthol, the product is classifiable under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 rate of 18% vide entry at S. No. 23 of Schedule III of notification No. 1/2017-Central Tax (Rate) dated 28-6-2017. 7.3 Flavoured and coated Illaichi generally consists of Cardamom Seeds, Aromatic Spices, Silver Leaf Saffron, Artificial Sweeteners. It is distinct from Illaichi or cardamom (which falls under heading 0908). It is clarified that flavoured and coated Illaichi is a value-added product and falls under sub-heading 2106. It accordingly attracts GST at the rate of 18% (S. No. 23 of schedule III of notification No. 1/2017-Central Tax (Rate) dated 28-6-2017)." 4. Out of all the four concerned Customs Commissionerates, only the Customs Commissionerate of Indore has submitted their comments on the subject application as below: 4.1 The importer, M/s. BAG Industries intends to import the Bulk Cutting Sweet Supari under CTH 2106 90 30 therein attracting Customs duty @150% (eff. rate 50% as per Notification No. 50/2017-dated 30-6-2017, as amended), + 10% SWS (Social welfare surcharge) + IGST@ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der CTH 0802 80 and NOT under CTH 21069. This fact can also be corroborated by point no. 5 of Annexure-I which clearly states that the processes which are being conducted on raw dried Betel Nut, is removing of impurities, polishing, sterilization etc. These activities are clearly covered under the supplementary note 3 of Chapter 08 of Customs Tariff Act, 1975 as well as the description given in the HSN. 4.6 Further attention is invited towards the judgment of the Hon'ble Apex Court of India in Civil Appeal No. 6659 of 2005 of M/s. Crane Betel Nut Powder Works v. Commissioner of Customs & Central Excise, Tirupathi [2007 (210) E.L.T. 171 (S.C.)], and of the CESTAT, Chennai in the case of M/s. Azam Laminators Pvt. Ltd. [2019 (367) E.L.T. A22 (Tri. - Chennai) where the scented betel nut was being manufactured by cracking of dried betel nut into small pieces, and thereafter, gently heating it with addition of vanaspati oil, sweetening and flavouring agents and packed in small pouches. The Hon'ble CESTAT held the resultant product classifiable under sub-heading 0802 and not under 2106 90. These decisions clearly imply that addition of flavouring agents do not change the basic characteri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e raw materials including the Supari which have permanently lost their character after completion of manufacturing process as a new product as preparation of CTH 2106 emerges. There is no appeal against the Original Advance Ruling which is final and binding as per the mandate of Section 28J of the Customs Act, 1962. In matters of Isha Exim Versus Union of India, Commissioner of Customs (NS- I), Mumbai, Deputy Commissioner of Customs (NS-I) Maharashtra reported 2023 (12) TMI 920 - Bombay High Court (Writ Petition No. 10512 OF 2023 Dated : - 18-12-2023) Hon'ble Bombay High Court has ruled that - "13. The Chennai Bench in the above referred decision in the case of S. T. Enterprises (supra) in paragraph 20 observed in relation to reliance on the ruling in case of M/s. Excellent Betelnut (which was cited by the assessee therein) that said ruling would apply only to the parties therein, and is not binding precedent for other cases. If it is the contention of the respondents before us that the decision of the Chennai Bench by virtue of dismissal of the appeal by the Supreme Court has become the law, then the finding of the Chennai Bench that the advance ruling in case of M/s. Exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates to Tariff Item 2106 90 30 relating to 'supari' and stating that the process of adding or mixing cardamom, copra, menthol, spices, sweetening agents or any such ingredients other than lime, katha (catechu) or tobacco to betel nut, in any form, shall not amount to "manufacture". However, we are conscious of the fact that this amendment was only under the Central Excise Tariff Act and not the Customs Tariff Act. 32. Secondly, w.e.f 1-7-2017, the GST Act was introduced and the concept of taxation itself has undergone a change from 'manufacture' to 'supply'. The Supplementary Note 2 in Chapter 21 of Cost Tariff is also verbatim the same as Supplementary Note 2 under Chapter 21 of the Customs Tariff Act, 1975. This only exemplifies the intention of the legislature to have always treated 'supari' as a special entry and not as a betel nut under the general entry of 'nuts'. 33. ---------- in view of our categorical finding that there being a specific entry for Supari' under Chapter 21 and it would take precedence over the general entity under Chapter 8, the question of applying the ratio laid down by the Apex Court would not even arise for the simple reason that the issue on hand i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case is only an authority for what it actually decides." 35 (c) In Rajendra Singh v. Stale of U.P., reported in [2007] 7 SCC 328, also the Apex Court approved the said position, by citing the above passage as well. Thus viewed from these angles also, the ratio laid by the Apex Court in Crane Betel Nut Powder Work's case cannot be enlarged and read into the facts of the present case, under the guise of logical reasoning." In view of submissions above and in view of department accepted Rulings, the comments received from Indore Customs are incorrect and inapplicable. Therefore, the department has accepted the ruling which is binding in terms of Section 28J of the Act. (a) There are no comments in matters of GST Circular (Detailed in Paras 6, 6.1, 6.2 and 6.3 of original Ruling) nor on the explanatory note discussed in Para 6.4 of the Original Ruling. (b) In view of submissions above the applications for addition of ports in the original ruling be kindly allowed. 6. A personal hearing in the matter was conducted on 7-5-2024 in office of the CAAR, Mumbai. During the personal hearing the authorized representatives of M/s. Bag In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recommendations of the GST Council in its 45th meeting held on 17th September, 2021 clarifying classification aspects related to the product covered in the instant application and explanations (iii) and (iv) of the IGST rate notification vide entry at S. No. 23 of Schedule III of notification No. 1/2017-Central Tax (Rate) dated 28-6-2017, amended from time to time. 7.1 Insofar as scented sweetened supari is concerned the contending classifications can be from Chapter 8 and Chapter 21 of the Customs Tariff Act, 1975. The relevant notes to chapter 8 lay down the following : - 3. Dried fruits or dried nuts of this Chapter may be partially rehydrated or treated for the following purposes : (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 accommodate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 for their claim to the classification of scented sweetened supari. However, before turning to further analysis of this classification issue let me examine me legal framework for deciding classification of flavoured and coated illaichi (Cardamom). 7.3 Insofar as flavoured and coated illaichi (Cardamom) is concerned the contending classifications can come from the chapters 9 and 21 of the Customs Tariff Act, 1975. Chapter 9 covers Coffee, tea, mate and spices and Heading 0908 covers Nutmeg, Mace and Cardamoms. The relevant extract from the Tariff headings in chapter 9 is reproduced below : - Cardamoms : 0908 31 -- Neither crushed nor ground: 0908 31 10 --- Large (amonum) 0908 3120 --- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hapter 2.1 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". Further, relevant tariff item provides as: 2106 - Food preparations not elsewhere specified or included. 2106 10 00 - Protein concentrates and textured protein substances. 2106 90 - Other : 2106 90 20 --- Pan masala 2106 90 30 --- Betel nut product known as "Supari" --- Other : 2106 90 91 ---- Diabetic foods 2106 90 99 ---- Other 8. 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 will be subjected to the processes before their importation and hence it is pertinent to consider the contents of the CBIC circular noted earlier in view of the provisions of the Section 3(7) of the Customs Tariff Act, 1975. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntegrated 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." This provision has been substituted (w.e.f. 1-7-2017 vide Notification No. 25/2017-Cus., dated 28-6-2017) by Section 4 of the Taxation Laws (Amendment) Act, 2017 (18 of 2017). 8.3 Contents 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 percent 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) for sub-section (8A), as the case may be. Based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to processes to which illaichi is subjected to in the instant case the emerging product is definitely a value-added product of illaichi and also distinctly different from illaichi or cardamom classifiable under Chapter 9 of the Customs Tariff Act, 1975. In view of the above supplementary note to Chapter 21 read with para 7 of C.B.I.C. Circular No. 163/19/2021-GST, dated 6th October, 2021, same merits to be classified under Tariff Heading 2106 and more particularly under CTI 21069099 (other). 9. I also concur with the view of the applicant that these present applications are for addition of the ports of import and that the classification of the same is already decided by this Authority in applicant's own case vide Ruling No. CAAR/Mum/ARC/36/2022, dated 31-10-2022 and that no appeal is filed against the said ruling. Further, there is nothing on the record available before me contrary to these facts nor the department came with any rebuttal on this aspect. 10. In view of the above discussions and findings, I rule that "Menthol Scented Sweet Supari" merits classification under CTI 2106 90 30 and "Flavoured and coated Illaichi" merits classification under CTI 2106 90 99 of the First S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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