2024(06)LCX0019(AAR)

TMK Traders

decided on 06/06/2024

CUSTOMS AUTHORITY FOR ADVANCE RULINGS
NEW CUSTOM HOUSE, BALLARD ESTATE, MUMBAI - 400 001
E-MAIL: cus-advrulings.mum@gov.in

The 06^th day of June, 2024
Ruling No. CAAR/Mum/ARC/89/2024
in
Application No. CAAR/CUS/APPL/4/2024 - O/o Commr-CAAR-MUMBAI

Ruling

M/s. TMK Traders (having IEC No. BCAPT4655B and hereinafter referred to as ‘the applicant’, in short) filed an application (CAAR- 1) for advance ruling before the. Customs Authority for Advance Rulings. Mumbai (CAAR in short). The said application was received in the secretariat of the CAAR, Mumbai on .26.12.2023 along with its enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’ also). The applicant is seeking advance ruling on the classification of “Oven Roasted Areca Nuts and Oven, Roasted and salted Cashew Nuts” for imports through the port of Chennai.

2. Applicant has stated as follows their statement of relevant facts having a bearing on the question(s) on which advance ruling is required with the CAAR-1 application:

2.1 The applicant is intending to import the following goods:

(a). Oven roasted areca nuts from Burma, Indonesia, Sri Lanka and Thailand…

(b). Oven roasted and salted cashew nuts from Vietnam, Thailand and Malaysia

The applicant is of the view that the subject goods are classifiable under CTH 2008 19, 20, and CTH 2008 19 10 respectively. The applicant is of the bonafide belief that the subject goods are rightly classifiable under 2008 19. Therefore, the present application is being filed to ascertain the correct classification for the roasted Areca nuts, under CTH 2008 19 20 and eligibility of the List 5 of Notification No 26/2000-Cus dated 01.03.2000 and Sl. No. 172 of Notification No. 46/2011-Cus dated 01.06.2011 for import of roasted Areca nuts. Also, to ascertain the correct classification for the roasted cashew, under CTH 2008 19 20 and eligibility of Sl. No. 172 of Notification No. 46/2011-Cus dated 01.06.2011 for import of roasted and salted cashew nuts:

3. The applicant submitted the following in the statement containing Applicant’s interpretation of law and/or facts, as the case may be, in respect of the question(s) on which advance ruling is required:

3.1 As per the applicant, the process of ‘roasting’ is neither defined in the Customs Tariff nor in the HSN Explanatory/Sections/Chapters Note. The processes carried out on the subject goods are as follow:

(1) De-husking the raw betel/areca nuts 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 nut in an oven of the seed roasting machine;

(3) Take the areca nuts out of the oven, cooling at room temperature and feeding hack 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.

3.2 As per the applicant, the roasted Areca Nuts are specifically covered and are classifiable under CTH 2008 19 20 of the Customs Tariff Act, 1975. As per the HSN Explanatory Notes to Heading 2008, Dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008. Reference is made to the case laws of L.M.L. Ltd. v. Commissioner of Customs reported in 2010 (258) E.L.T 321 (S.C), Holistic India Ltd. vs. Commissioner of Central Excise, Noida reported in 2015 (318) E.L.T 529, Collector of Central Excise, Shillong v. Wood Craft Products Ltd reported in 1995 (77) E.L,T 23 (S.C.) to submit that the HSN Explanatory Note is the safe and dependable guide in the matters of classification of items. In the case of Collector or Customs. Bombay v. Business Forms Ltd reported 2002 (142) ELT 18 (S.C.), the Hon’ble court held that Explanatory Notes to HSN need to be given due consideration for classifying goods.

3.3 As per the explanatory note to Chapter 8 fruit and nuts of this Chapter remain classified here even if put up in airtight packing (e.g., dried prunes, dried nuts in cans). In most cases, however, products put up in these packing have been prepared or preserved otherwise than as provided for in the headings of this Chapter, and are therefore excluded from chapter 8 (and will fall under Chapter 20). The applicant states that as the processes mentioned in Chapter 8 are different from the processes performed on impugned goods, they are excluded for the purpose of classification from Chapter 8 of the Customs Tariff Act, 1975. As per the HSN Explanatory Notes to Heading 2008, given below, Dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008.

3.4 As per Note 2 to Chapter 21 of the Customs Tariff Act, 1975, “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, Kama (catechu) and tobacco whether or not containing any other ingredients, such as cardamom, copra or menthol. As per the Explanatory Note, the heading covers preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water. milk, etc.), for human consumption. As per the applicant; the goods have undergone roasting, but they don’t contain lime, Katha (catechu) and tobacco. Further, roasted betel nuts can be consumed directly by merely cutting them into pieces. Therefore, the goods are equally classifiable under Chapter 21 of the Customs Tariff Act, 1975.

3.5 Chapter 8 covers fruit, nuts and peel of citrus fruit or melons (including watermelons), generally intended for human consumption (whether as presented or after processing). As per HSN explanatory notes these goods may 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 state, they may be provisionally preserved (e.g., by Sulphur dioxide gas, in brine, in Sulphur water or in other preservative solutions). The note specifies the physical status .of the goods along with corresponding processes that could he carried on those goods under this chapter. Note 3 to Chapter 8 further states that Dried fruit or dried nuts of this Chapter may be partially rehydrated, or treated for the following purposes:

(a) for additional preservation or stabilisation (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.

3.6 ‘The areca/betel nut is mentioned in Heading 0802, specifically under sub-heading 080280 The explanatory note to Heading 0802 state that this heading also covers areca (betel) nuts used chiefly as a masticatory. One of the ‘main use of the goods under consideration is masticatory. Therefore, the subject goods satisfy this note. However, the process of roasting is not finding mention anywhere in this Explanatory Note.

3.7 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 reported 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 physical changes in the structure and composition of the goods, bringing about a charred physical appearance. Therefore, drying is a moisture removal process involving methods such as dehydration, evaporation, etc., whereas roasting is a. severe heat treatment process.

3.8 The following CTH can be found to be specifically mentioned in the Tariff: -

CTH 2008: Fruits, 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

- Nuts, groundnuts and other seeds, whether or not mixed together:

2008 19 20 - Other roasted nuts and seeds.

While examining the scope of CTH 2008 it is found that as per HSN Explanatory Notes, heading 2008 covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof,. prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter. Specifying what is included in this heading, the explanatory note states that Almonds, ground nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted, whether or not-containing or coated with vegetable oil, salt flavours, spices or other additives. From the forgoing it can be seen that the subject goods find specific reference in the chapter 20 of the schedule I of the Customs Tariff Act, 1975 as well as corresponding HSN Explanatory Note. It is important to pay attention to the fact that in the above explanatory note a process of roasting is not specifically mentioned as a process of preservation or stabilization or a process to improve or maintain the appearance.

3.9 On various online marketplaces like https://www.amazon.in/, haps://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. v. Asstt. Collector of Customs, Bombay and Others reported in 1988 (38) ELT 568 (SC), “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, how these are dealt with by the people who deal in them, provided that there is a market for these types of goods”.

3.10 Chapter 20 covers the preparation of nuts . One of the processes for the preparation of impugned goods is specified in Heading 2008, i.e roasting .Roasting is the essential process for the preparation of impugned goods. The subject goods under consideration are not excluded by any chapter note or explanatory note from Heading 2008. Therefore, it is evident that the subject goods are classifiable under Heading 2008 based on the terms of the Heading 2008 and Notes to Chapter 20.

3.11 Roasted Areca Nuts Import from Sri Lanka is subject to nil rate of Basic Customs Duty in terms of List 5 of Notification No.26/2000-Cus dated 01.03.2000. The said notification was issued by the Ministry of Finance, Government of India in pursuant:: of the Indo-Sri Lanka Free Trade Agreement (ISFTA). Roasted Areca Nuts Import from Thailand and Indonesia is eligible to avail the benefit of SI. No. 172 of Notification No. 46/2011-Cus dated 01.06.2011. For identical products namely Roasted Areca Nuts, the Hon’ble Authority, Mumbai, vide Ruling Nos. CAAR/MUM/ARC/44, 45 & 46/2022 dated 07.12.2022 which has also been upheld by the Hon’ble High Court of Madras as reported in 2023 (386) E.L.T. 214 (Mad.), vide Ruling Nos. CAAR/Mum/ARC/39,40,41/2023 dated 12.05.2023 and vide Ruling No. CAAR/MUM/ARC/67/2022 dated 16.10.2023 had held that the product is classifiable under CTH 2008 19 20. The said ruling is applicable to the present case also, as the Roasted Areca Nuts are same to the product that was under consideration before the Hon’ble Authority in the above-mentioned Rulings.

OVEN ROASTED AND SALTED CASHEW NUTS IMPORTED FROM VIETNAM, THAILAND AND MALAYSIA

3.12 The process carried out-on the impugned goods includes the following steps: Preheat the oven to 350 degrees, line a rimmed baking sheet with parchment paper or foil for easy cleanup, add cashews in a single layer, and roast for 10-15 minutes.

3.13 As per the applicant, the applicable. subheading for roasted and salted cashew nuts will be CTH 2008 19 10, which provides for 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, nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together, other; including mixtures; Brazil huts and cashews.

3.14 For identical products namely Roasted Cashews, the Hon’ble Authority under GST, Kerala, vide Ruling -No. KER/1 12/2021 dated- 26.05.2021, vide • Ruling No. KER/I 13/2021 dated 26.05.202 1- and vide Ruling: No. KER/115/2021 dated 25.05..2021- had held that the product is classifiable under (1″l’l 1 2008 19 JO. The said ruling is applicable to the present case also, as the Roasted Cashews are same to the product that was under consideration before the Hon’ble Authority in. the above-mentioned Rulings.

3.15. For identical products namely Roasted Cashews, the United States Trade Ruling, vide Ruling No. NY g81459 dated 20.09.2000 and vide Ruling No. NY I83434 dated. 22.07.2002 had held that the product is classifiable under CTH 2008 19 10.

4. The Jurisdictional Commissionerate, Chennai II (Import), submitted comments dated 29.04.2024 on the subject application as follows:

4.1 Comments on the classification of “Oven Roasted and Salted Cashew Nuts”:

There is a specific entry in first schedule of the Customs Tariff Act under CTH 20081910 for classification of the item “Cashew Nuts, roasted, salted or roasted and salted”. ; Hence, the classification sought by the importer for “Oven Roasted & Salted Cashew Nuts” under CTH 20081910 may be considered.

4.2 Comments on Classification of “Oven Roasted Areca Nuts”:

The claims made by the applicant and the ruling sought on the classification of the Oven Roasted Areca nuts is devoid of any concrete evidence and legally untenable on the following grounds:

4.2.1 Though roasting, as a process is not defined, it will fall under the ‘moderate heat treatment’ mentioned in Chapter Note 3 of Chapter 8.

4.2.2 The applicant in their application has submitted that raw Areca nut after de-husking were subjected to repeated roasting oven for two to three days for the purpose of reducing water content. Hence, the process mentioned by the importer appear to be only for the purpose of drying and hence roasted Areca nuts intended to import by the importer arc rightly classifiable under Chapter 08, specifically under CTH 080280.

4.2.3. .The process to which raw betel nuts have been subjected as per process submitted by the applicant is squarely, in the nature, of processes referred to in the Chapter Note 3 to Chapter 8 & and HSN Notes. Hence at the end of the said. processes, the Betel nut 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 20. To be classified under Chapter 20 there should be some preparation as the Chapter heading reads as “Preparations of vegetables, fruit, nuts or other parts of plants”. Mere roasting of betel nut does not render the product to be distinctive as claimed by the applicant or does not alter the character of the original goods. Roasting or mere addition of certain additives for the limited purpose of enhancing preservation or appearance or ease of consumption per se does not result in obtaining a preparation of betel milt. Hence it remains the betel nut and rightly classifiable under Chapter 08. According to Cambridge dictionary, “Preparation is a mixture of substances often for use as a medicine”. According to Collins Dictionary “A preparation is a mixture that has been prepared for use as food, medicine, or a cosmetic”. However, as per the processes mentioned by the Importer, it is evident that there is neither any mixture of products nor any change in the original goods and hence areca nuts after subjected to said processes still covered under Chapter 08.

4.2.4 The importer has claimed that dry Roasted Areca (or betel) nuts are specifically covered under Chapter Heading 2008. However, the Chapter 20 does not cover any nuts or fruits prepared, preserved by the processes specified under Chapter 8 as per the Chapter Note 1 of the Chapter 20. As the processes mentioned to be performed by the importer are covered under the ‘moderate heat treatment’, hence, the impugned goods cannot be classified under Chapter 20. The said chapter note is reproduced below:

1. This chapter does not cover:

a. Vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, Chapter 8, or Chapter 11;

b. Vegetable fats and oils (chapter 15);

c. Food preparations containing more than 20% by weight of sausage, meat, meat offal, blood, insects, fish or crustaceans, molluscs or other aquatic invertebrates, or any combination thereof (chapter 16)

d. Bakers’ wares and other products of heading 1905; or

e. Homogenized composite food preparations of heading 2104.

4.2.5. Even though the Roasted Areca nuts are not specifically covered under Chapter 20, the importer has submitted that as per the HSN explanatory Notes Roasted Areca nuts covered under CTH 20081920. However, the explanatory notes also clearly specify that ‘the products of this heading are generally put up in cans, jars or airtight containers, or in casks, barrels or similar containers’. This clause of the HSN explanatory notes clearly implies that the goods of this heading are preparations of fruits or nuts presented in packaged condition after manufacturing, which need to be specifically stored and preserved before consumption or example. roasted almonds or ground nuts need separate packings as specified by the HSN explanatory notes, otherwise these products are prone to deterioration after roasting the processes said to be performed on the areca nuts is. only for the purpose of drying without any reference to packaging and any specific manufacturing process. The importers have not submitted anything about the packaging of the goods and generally these goods are imported in bulk in jumbo bags. The goods under dispute are Areca Nuts in the same form as those classified under Chapter 08 and hence, they are clearly excluded from the scope of the Chapter Heading 2008. Hence, the purported roasted areca nuts clearly excluded from the scope’ of the chapter 20 and rightly classifiable under chapter 08.

4.2.6. Further, as per Rule 3(a) of General Rules for the Interpretation of the Harmonised System since the product is more specifically classified under CTH 08020 classification under Chapter 2008 or 2106 is unwarranted.

3. When by application of Rule 2 (b) or for any other reason, goods are. prima facie. classifiable under two or More headings, classification shall be effected as follows:

a. The heading which. provides the most specific description shall he preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

4.2.7. The Chapters in the Custom Tariff are organized as per evolution, which is evident by the fact that the edible nuts and fruits are classified under Chapter 8, preparations of vegetables, fruits, nuts or other parts of plants classified Under Chapter 20 and miscellaneous edible preparations classified under Chapter 21. Hence, the roasted betel nut which did not undergo any preparation is rightly classifiable under Chapter 8.. It is can be seen from the other, sub headings of the chapter 20, all the food items covered under Chapter 20 can -be directly consumable without any further. Processes. However, the goods “Areca nuts which are heat treated for removal of water content cannot be consumed directly and it requires further manufacturing process to make it edible food preparation. it is natural that a heat treatment will change the colour of any food item. However, it does not mean that the essential characters of the item have been changed. in this case, even after such severe heat processes the end product remains areca nut with moisture content of 4-6%, like normal sun-dried areca nuts. Hence, the proposed imported item described as “Roasted Areca nuts” is rightly coveted under CTH 080280.

4.2.8. The CESTAT‘ judgement in case of M/s. ST Enterprises vs. Commissioner of Customs (VII) in customs Appeal no. 40002 and 40003 of 2021 is applicable mutatis-mutandis to the present case, wherein, the question decided in the said case was classification of boiled betel elutes The process of boiling is not mentioned in the chapter note 3 to chapter 8 and the Tribunal has held the goods under dispute ‘boiled areca nuts’ merit classification under CTH 0802 8010 which was affirmed by the Hon’ble Supreme Court vide the judgement dated 19.03.2021 in the Civil Appeal nos. 850-851 of 2021. Though, the process dealt with by the Hon’ble Tribunal was not exactly the same the principle’ involved hold’s relevance. When the boiled supari can be classified under chapter 08 on the grounds that boiling does not alter the original characteristic of the goods, the same would ‘apply in the present case also as roasting alone would not alter the character of the goods and therefore roasted areca nuts should be classified fled under chapter 08 even on this principle also.

4.2.9. Several advance ruling applications are filed seeking classification of the roasted/betel nut to avoid ‘classification under Chapter 08 as there is a Minimum Import Price as well as a tariff rate applicable which is regularly revised by CBIC. The current Tariff value of the Areca nuts is USD 6033 Per Metric Ton. These applications are being submitted to Circumvent the minimum import price and increasing tariff values by legalizing betel nut import through mis-declaration and misclassification. The CAAR may not entertain such applications considering that several-advance rulings have already rejected the. classification of betel nut under chapter 21 in the interest of the local areca nut farmers and to safeguard the interest of the revenue..

4.2.10.- On testing of the imported goods ‘declared as “Roasted Areca nuts” imported by the M/s. Universal Impex & M/s. Neena Enterprises on the strength of the Advance Rulings, it is found that the goods are actually moderately heat-treated areca nuts and not roasted as claimed by the importers. Hence, it is conclusively proved-that all these advance ruling applications are being filed to circumvent the policy conditions applicable under CTH 080280 and the jurisdictional Commissionerate requested to consider the same before issuing the advance ruling on the classification of the “Roasted Areca nuts”, as it requires huge infrastructure to carry out the processes mentioned in their applications.

4.2.11. The Chennai Commissionerate has preferred appeals with stay application in the Hon’ble High Court of Madras against CAAR Advance Rulings passed in similar applications seeking classification of the “Roasted Areca nuts” under CTH 20081920 in respect of the importers M/s. Shree Durga Traders. M/s. Shree Ganesh Traders and M/s. INS Consultancy vide CMA Nos. 280/2024, 238/2024 & 390/2024 respectively. As on date the Hon’ble High Court has not granted stay in these appeals.

5. A personal hearing in the matter was conducted on 10.04.2024 in the office of CAAR, Mumbai. During the personal hearing the authorised representatives of M/s. TMK Traders, Shri Gokul Raj, Advocate reiterated the contention of the applicant filed with the application and further submitted that the oven roasted areca nuts merit classification under CTI 2008 19 20 and oven roasted and salted cashew nuts merit classification under CTI 2008 19 10. He also described the process of roasting and relied upon the judgement dated 01.08.2023 of Hon’ble High Court, Chennai, the case law of M/s. Alladi Venkateswarlu vs. Govt. of AP 1978 AIR 945 and rulings of CAAR, Delhi and Mumbai in the cases of M/s. Shahnaz Commodity, Universal, Sh. Ganesh Trading, Perfect Trading. He argued that the same sort, of logic is applicable to roasted cashew nut. He also relied upon US ruling CNY 183434 dated 20.07.2002. Shri. Jayant Mishra, AO, Gr. I, Chennai Import represented the department. He submitted to provide comments on the subject application within a week, thereafter, this office received comments from the Chennai Customs on 29.04.2024 which is reproduced hereinabove in para 4 and this office also forwarded the said comments to the applicant on 02.05.2024 for their rebuttal. The department has not made further reply.

6. I have taken into consideration all the materials placed on record in respect of the subject goods including the submissions made by the applicant during the course of personal hearing. I have gone through the response. received from the Chennai Customs. I therefore proceed to .decide the present applications regarding classification of “Oven Roasted Areca Nuts and Oven Roasted and salted Cashew Nuts” on the. basis of the information on record as well as. the existing legal framework ,having bearing on the classification. of the products in question under the first schedule of the Customs Tariff Act, 1975.

6:1. It can be Seen from the wording used, 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 moderate heat treatment & dehydrating/drying referred in chapter 8 and processes of dry roasting, oil-roasting and fat-roasting referred in chapter 20. The terms dry-roasting, oil roasting and fat-roasting 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 ease 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 content. On the other hand, “roasting” means the excess or very high heat treatment that produces fundamental chemical and physical changes in the structure and composition of Inc goods, bringing’ about a charred physical appearance. There/ore, drying is a moisture removal process involving methods such. as dehydration, evaporation, etc., whereas roasting is a severe heat treatment process”.

6.2. Chapter 20 of the Tariff covers the Preparations of vegetables, fruit, .nuts or other. parts of plants. As per Chapter Note 1 (a) to Chapter 20, the Chapters does not cover vegetable, fruits or nuts prepared or preserved by the processes specified in. Chapters 7, 8 or 11. Therefore, vegetable, fruit or nut products 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 above I find that the processes mentioned in chapter 8 do not cover roasting process.,

6.3. I have examined the scope of Note 3 to Chapter 8 and I find that it specifies certain treatments that could be carried out on the dried nuts for additional preservation or stabilization or to. improve or maintain their appearance. Further, as per the above. note, the processes that could be carried; out are moderate heat treatment, sulphuring, and the addition of sorbic acid or potassium sorbate by the addition of vegetable oil or small quantities glucose syrup. Roasting is different from all the processes mentioned above. Even in the generally understood meaning of the terms, it is understood that roasting involves severe heat treatment and is different from moderate heat treatment as well as dehydration. The ratio of Hon’ble Apex Court judgement in the case of Alladi Nenkateswarlu v. Government of Andhra (cited supra) regarding differentiating. the process of roasting and drying is very much relevant and applicable in this case. .

6.4. I have examined the scope of CTH 2008 and I find that, as per HSN Explanatory Notes, heading 2008 covers. fruit, nuts and other edible. parts of plants, Whether whole, in pieces roil crushed, including mixtures thereof, prepared or preserved otherwise than. by any of the processes specified in other Chapters or in the preceding headings of this Chapter. Specified what is included in this heading, the explanatory note states that almonds, ground nuts. areca (or betel) nuts and other nuts, dry-roasted oil-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavors, spices or other additives. Dry.-roasting, oil-roasting & fat-roasting. as .a process. are .very much a part of chapter heading 2008 .by virtue of HSN Explanatory Notes and none of these processes are mentioned in the. chapter note 3 to Chapter 8.of the Customs Tariff Act, 1975 as well as HSN Explanatory Notes to Chapter heading 0802.

6.5 Classification as far as possible must be in conformity and in consonance with the HSN Explanatory Notes. it is trite law that whenever there is specific entry, the same would prevail over general entry. The said general principle is statutorily incorporated in General Rules of Interpretation, in particular, under Rule 3(a) of the General Rules of Interpretation. CTH 2008 19 20 is a special entry covering nuts subject to the process of roasting, when contrasted with CTH 08 02 90 which covers dried nuts.

6.6 In the decision of Tribunal in respect of the case ST Enterprises, the question that arose for consideration was as to whether the goods involved therein viz., boiled betel nuts would merit classification under CTH 21069030 or CTH 08028010. It was not concerned with CTI 2008 19 20 which covers “roasted nuts” and CTI 2008 1910 which specifically covers Cashew nut, roasted, salted or roasted and salted’. The process that was examined by the Tribunal in the case of S.T. Enterprise was confined to boiling and drying. Importantly, roasting was not one of the processes that was examined. the competing entries that were examined in the above case were CTH 21069030 vis-a-vis CTH 08028010. In other words, the question that was being examined was, whether the goods in question would qualify as “preparation of betel nut” or “betel nut as mentioned in Chapter 8”. The Court’s attention was never drawn to CTI 20081920 which covers roasted nuts including areca/ betel nuts and CTI 2008 1910 which specifically covers ‘Cashew nut, roasted, salted or roasted and salted’ inasmuch as the facts as set out by the Tribunal in its order was not concerned with the process of roasting. Where a question passes sub-silentio, then, it may have no precedential value.

7. It is an established fact that in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Tariff Act. The case of Commissioner of Customs & Central Excise vs Phil Corporation Ltd in Appeal (civil) 2215 of 2002 dated 07/02/2008, is directly relevant and applicable in the instant case of the applicant. In the judgement of the said case Honourable Supreme Court has held “a number of cases, this Court has clearly enunciated that HSN is a safe guide fir the purpose of deciding issues of classification. In the present case, the USN Explanatory Notes to Chapter 20 categorically state that the products in question are so included in Chapter 20. The HSN Explanatory Notes to Chapter 20 also categorically state that its products are excluded from Chapter 8 as they fall in Chapter 20. In this view of the matter, the classification of the products in question has to be made under Chapter 20.” While delivering Phil Corporation Judgment honourable Supreme Court has clearly spelt out importance of FISN Explanatory notes in deciding the matters of classification placing reliance on the judgment of Supreme Court in the case of Collector of Central Excise, Shillong v. Wood Craft Products Ltd. (1995) 3 SCC 454. Honourable Supreme Court in paragraph 12 of the said. judgment observed as under: -“_Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged basis of the structure of the Central Excise Tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in ‘the Act.”

From the apex court’s foregoing judgments, it is observed that the roasted nuts. find specific mention in the then chapter 20 of the then Central Excise Tariff Act and the chapter 20 of the schedule lathe Customs Tariff Act 1975 as well as corresponding HSN Explanatory Note. It is important to pay attention to the fact that, in the above referred .HSN explanatory note, a process of roasting is not specifically mentioned as a process of preservation or stabilization or a process to improve or maintain the appearance. Specific attention is invited to the paras 10 &II of the SC judgment (M/s Phil Corporation) in which paras 6 & 7 of SC judgment in case of M/s Amrit Agro. are relied upon. Para 6 inter alia reads as follows: “roasted peanuts are covered by Chapter 20. Even according to the Explanatory notes of HSN under Heading 20.08 ground- nuts, almonds, peanuts etc. which are dry- roasted, fat-roasted whether or not containing vegetable oil are the items which all would stand covered by the said Heading 20.08.”

8. The Customs Tariff is aligned, up to the 6-digit level, with the Harmonized System of Nomenclature (`HSN’) issued by the World Customs Organization (` WCO’). The HSN Explanatory Notes released by the WCO aid in the interpretation of the Headings of the Tariff and may be used as a safe guide for the same. It has been held so by the Supreme Court in the case of Collector of Customs, Bombay v. Business Forms Ltd. Thr. O.L., 2002 (142) E.L.T. 18 (S.C.).

9. In the CAAR, Mumbai Ruling No. CAAR/Mumbai/ARC/39,40,41/2023 in the case of M/s. Universal Impex, the Authority has stated his findings and has ruled accordingly-“in view of the specific CTH 2008 19 20: Other roasted nuts & seeds in chapter 20 of the first schedule to the Customs Tariff HSN Explanatory note to CITH 2008, various Supreme Court rulings upholding guiding value of the HSN Explanatory notes for deciding classification under Customs Tariff Act, 1975 and previously mentioned two Supreme Court judgments classifying roasted nuts which include almonds, betel nut and other nuts under chapter 20 by taking recourse to HSN explanatory note to Tariff Heading 2008″, I rule that roasted betel nuts are correctly classifiable under the tariff item 2008 19 20 of chapter 20 of the first schedule of the Customs Tariff Act, 1975.”

10. The Hon’ble High Court of Madras in its judgement dated 01.08.2023 in the case of M/s. Shahnaz Commodities International P. Ltd., M/s. Universal Impex and M/s. Neena Enterprises has upheld the classification of Roasted Betel Nuts under CTH 2008 19 20. The Honourable High Court went on to analyse the various aspects in determining classification and summed up that

(a) “Roasting is a process treated to be distinct from the process of boiling and drying, in fixing the classification in respect of betel/areca nut under CTH;

(b) Roasted betel/areca nut having been specifically classified under CTH 2008 19 20,. the attempt to classify under CTH 08 02 80 would fall foul of the settled rule of construction that specific entry would prevail over general entry;

(c) HSN explanatory notes is normally a safe guide in determining classification under CTH;

(d) When there is a specific entry covering a product/commodity, the test of common parlance is irrelevant in determining classification;

(e) There is considerable force in the submission that the classification as far as possible must he in conformity and in consonance with the HSN Explanatory Notes.”

In this judgement the Hon’ble High Court has stated about the relevance of CAAR Rulings relied on by the Jurisdictional Commissionerate. Relevant para of the said judgement is reproduced as follows:- “on perusal ()fay Rulings relied upon by the appellant, we find that the same did not deal with roasted area betel nuts, but boiled/ dried nuts and in some cases, the question was whether the commodity in issue was a preparation of betel nut. However, the cases did not deal with roasted betel/ areca nut nor was CTH 20 considered. Thus, the above Rulings may have no relevance.” The issue dealt with i.e. Classification of “Roasted betel nuts” in the judgement of the Honourable High Court of Madras is of exactly the same issue that is impugned in this application and therefore is squarely applicable to this case. Further, the operation of the same has not been stayed by the Competent Court.

11. Now as far as judicial discipline and law is concerned the Hon’ble Supreme Court has held in the case of UOI vs Kamalakshi Finance Corporation Ltd. 1991 (55) ELT 433 (SC), that “order of higher appellate authorities should be unreservedly followed by subordinate authorities. The mere fact that the order of the appellate authority is not “acceptable” to the department in itself and objectionable phrase- and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws”.

Further, the Joint Secretary (Revision Authority) to Government of India in its Order No. 288/13-CX dated 25.03.2013 in the matter of The Commissioner of Central Excise, Thane-II Vs. M/s. P.D. Impex, Mumbai relied on the same. Para 9 of the said order is reproduced as under:-

“Government observes that the department in this second round of revisionary proceedings is mainly .contesting that they are filing Writ Petition against GOI Order dated 25.08.2009. This office vide letter F. No. 198/69/2004-RA-Cx dated 22.10.2012 specifically asked department to state the present status of the said Writ Petition. The department vide letter F. No. V(PKS/357) Trb Cell-246/10/AP/,M-III dated 11.12.2012 stated the Writ Petition is at ‘Pre-admission stage’. As such, the said GOI order dated 25.08.2009 is neither set aside nor stayed by the Hon’ble Bombay High Court. Under such legal scenario the principle of judicial discipline demands that the order of higher authority is to be Strictly implemented by the lower Authorities. Hon’ble Supreme Court has held in the case of U01 Vs. Kamalakshi Finance Corporation Ltd. 1991 (55) ELT 433 (SC), that orders of higher appellate authorities should be unreservedly followed by subordinate authorities unless operation of same has been stayed by competent court. Hence, Government finds no infirmity in the impugned Order-in-Appeal and therefore uphold’ the same.”

The Hon’ble SC has confirmed the same view already taken in the matter of UOI Vs. Kamalakshi Finance Corporation Ltd. 1991 (55) ELT 433 (SC) and passed the judgement on 01.02.2023 in the matter of M/s Godrej Sara lee Ltd. Vs. Excise and taxation officer-cum-assessing Authority, 2023 (384) E.L.T. 8 (S.C.). Para 34 of said judgement dated 01.02.202.3 is reproduced as under”-

“In our view, the revisional authority might have been justified in exercising silo mitt power to revise the order of the Assessing Authority had the decision of the Tribunal been set aside or its operation stayed by competent court. So long it is not disputed that the Tribunal’s decision, having regard to the framework of classification of products/tax liability then existing, continues to remain operative and such, framework too continues to remain operative when the impugned revisional orders were made, the Revisional authority was Leif with no other choice but to follow the decision of the Tribunal without any reservation. Unless the discipline of adhering to decisions made by the higher authorities is maintained, there would be utter chaos in administration of tax laws apart from undue harassment to assesses. We share the view expressed in Kamlakshi Finance Corporation Ltd. (supra).”

12. As far as the classification sought for roasted cashew nut is concerned, it is observed from the open-sources information that there are certain processes which are undertaken to get the roasted cashew nuts from the raw ones and that there arc considerable differences between the Roasted Cashew Nuts and the Raw Cashew Nuts. Roasting and drying arc not one and same processes and there is a sharp change in the moisture level, colour and appearance when the process of roasting is undertaken. ‘Needless to say that in the market arid trade also, roasted cashew nut is a well-known product and in common parlance it is called/selled/purchased and understood as roasted cashew nuts itself. The Customs Tariff Act, nowhere defines the process of roasting, however, CTI 2008 1910 specifically covers roasted cashew nuts. The Jurisdictional Commissionerate has also concurred the view of the applicant that the roasted cashew nuts are specifically classifiable under -CTI 2008 1910.

13. It is evident from the processes specified in Chapters 7, 8 or 11 which mainly include freezing, steaming, boiling, drying, provisionally preserving. and milling, thus, 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 else Where 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.

14. Further, relevant portion of the Heading 2008 is reproduced as under for ready reference:

 

It can be seen from the above Tariff arrangments that the goods i.e. cashew nuts, roasted, salted or roasted and salted has specific entry in the Customs Tariff as CTI 2008 1910. The case laws relied upon by the applicant regarding classification of roasted cashew nuts is also relevant to arrive at the correct classification of the same.

15. In the case of Commissioner of Central Excise Versus Wockhardt Life Sciences Ltd. (2012 (277) E.L.T. 299 (S.C.)), it was held that “Classification of goods- Determination of- it cannot be tinder residuary entry in presence of Specific entry, even if it requries product to be understood in technical sense-Residuary entry can he taken refuge of only in absence of specific entry”.

In the case of Western India Plywoods Ltd. Versus Collector of Customs, Cochin (2005 (188) E.LT. 365 (S.C.)) it was held that “Classification of goods-application of residuary entry to be made with extreme caution, being attracted only when no other provision expressly or by necessary implication applies to goods in question”.

16. The classification of the goods under the Customs Tariff is governed by the principles as enumerated in the General Rules of Interpretation (`GRI’) set out in the First Schedule to the Customs Tariff Act, 1975 (`Tariff’). As per Rule 1 of the GRI, classification of the imported products shall be determined according to the terms of the headings and any relative Section or Chapter Notes and., provided such headings or Notes do not otherwise require, according to the remaining Rules of the GRL GRI I stipulates that the goods under consideration should be classified in accordance with the terms of the Headings and any relevant Section or Chapter Notes. These Section or Chapter Notes and Sub-Notes give detailed explanation as to the scope and ambit of the respective Sections and Chapters. These Notes have been given statutory backing and have been incorporated at the top of each Section / Chapter.

17. Heading 2008 covers `FRUIT, NUYS AND OTHER EDIBLE PARTS OP PLANTS, OTHERWISE PREPARED OR PRESERVED, WHETHER OR NOT CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER OR SPIRIT, NOT ELSEWHERE SPECIFIED OR INCLUDED’. It is quite obvious that the product is question i.e. ‘Oven Roasted and salted Cashew Nuts’ is an edible part of cashew plant.

Explanatory notes to heading explain that this heading covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processed specified in other Chapters or in the preceding headings of this Chapter.

The explanatory notes further explain that this heading inter-alia included: Almonds, ground-nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted whether or not containing .or coated with vegetable oil, salt, flavors; spices or other additives. It is amply clear-that the subject products are not almonds or ground-nuts, rather they are ‘Oven Roasted Areca Nuts’ and ‘Oven Roasted and salted Cashew Nuts’. I am of the considered view that ‘Oven Roasted and salted Cashew Nuts’ falls under the category of other nuts’ to get itself covered into the inclusions as enumerated in the said explanatory note. Further, the subject product is a resultant of the roasting process as elaborated by the applecart in the application. `Oven Roasted and salted Cashew Nuts’ are specifically covered under CI 12008 1910 and the department has also concurred with this view; therefore, `Oven Roasted’ and salted Cashew Nuts’ merits classification under CT1 2008 1910.

18. Notification No. 26/2000-CUS. dated 01.03.2000 exempts goods of the description as specified in column (3) of the Table thereto annexed and falling under the Chapter, Heading No. or Sub-heading No. of the First Schedule to the Customs Tariff Act, .1975 (51 of 1975), specified in the corresponding entry in column (2) of the said Table, from so much of that portion of the applied • rate of duty of customs as is specified in the corresponding entry in column (4) of the said Table, subject to the following conditions, namely:-

(1) the importer proves to the satisfaction of the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may he, in accordance with the Customs Tariff (Determination of Origin under the Free Trade Agreement between the Democratic Socialist Republic of Sri Lanka and the Republic of India) Rules, 2000 published with the notification of the Government. of India. in. the Ministry, of Finance (Department of Revenue) No. 19/2000-Customs (V. 7), dated the 1st March 2000 that the goods in respect of which the benefit of this .exemption is claimed are of the origin of Sri-Lanka;

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(4) the importer follows the procedure as may be specified by .the .Government of India from lime to time.

In the instant application, the applicant has submitted that they are intending to import `Oven Roasted Areca Nuts’ .from Burma, Indonesia, Sri Lanka and Thailand. I find that exemption under the said notification is available only to the good–s of Sri. Lanka origin and not Burma, Indonesia and Thailand. It is quite obvious from the List 5 of the said notification that exemption is extended to all goods other than: (a) goods mentioned in List 2 and 3 and in Notification No. 60/2000-Customs, dated the 12th May, 2000 and 2/2007-Customs dated 5th January, 2007; (b) goods listed in the Annexure appended to this notification. Goods of subheading 2008 19 are not mentioned in List 2 and 3. in Notification No. 60/2000-Customs, dated the 12th May, 2000 and 2/2007-Customs dated 5th January, 2007 also, there is no mention of goods of. subheading 2008 19. Further, in the annexure appended to the subject notification also, there is no any mention of subheading 2008 19.

19. Notification No. 46/2011-CUS. dated 01.06.2011 exempts goods of the description as specified in column (3) of the Table appended thereto and falling under the Chapter, Heading, Sub-heading or tariff item of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as specified in the corresponding entry in column (2) of the said Table, from so much of the duty of customs leviable thereon as is in excess of the amount calculated at the rate specified in,-

column (4) of the said Table, when imported into the Republic of India from a country listed in APPENDIX-I;

column (5) of the said Table, when imported into the Republic of India from a country listed in APPENDIX-II :

Provided that the importer proves to the satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, that the goods in respect of which the benefit of this exemption is claimed are of the origin of the countries as mentioned in [Appendix I or Appendix II, as the case may be], in accordance with provisions of the Customs Tariff [Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of the Association of Southeast Asian Nations (ASEAN) and the Republic of India] Rules, 2009, published in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 189/2009-Customs (N.T), dated the 31st December, 2009.

In the instant application, the applicant has submitted that they are intending to import `Oven Roasted Areca Nuts’ from Burma, Indonesia, Sri Lanka and Thailand and ‘Oven Roasted and salted Cashew Nuts’ from Vietnam, Thailand and Malaysia. I find that names of these countries except the name of Sri Lanka are mentioned in the Appendix-I of the said notification. However, the name of I3urma is mentioned as Myanmar. Further, it is quite obvious from the said notification that at Sr. No. 172 exemption is extended to all goods classified under sub-headings from 2007 10 to 2008 20 and from the above discussions and findings, it is now settled that ‘Oven Roasted Areca Nuts’ and ‘Oven Roasted and salted Cashew Nuts’ merit classification under sub-heading 2008 19.

20. On the basis of foregoing discussions and findings, I conclude that the subject goods i.e. “Oven Roasted Areca Nuts” and “Oven Roasted and salted Cashew Nuts” merit classification under Custom Tariff Heading 2008, specifically under CTI 2008 19 20 and CTI 2008 19 10 respectively of Chapter 20 of the First Schedule to the Customs Tariff Act, 1975.

20.1 Further, subject to the compliance with the conditions/instructions/provisions (as amended) provided in the Notification No. 46/2011-CUS. dated 01.06.2011, the Governments of Member States of Association of Southeast Asian Nations (ASEAN) and the Republic of India, Rules, 2009, published in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 189/2009-Customs (NT), dated 31′ December 2009, Section 281)A of Customs Act, 1962, Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 issued vide Notification No. 81/2020- Customs (N.T.) dated 21st August, 2020 and any other conditions insofar as they relate to eligibility to avail the benefits of Preferential Trade Agreements, the Applicant would be eligible to claim benefits of exemptions under Sr. No. 172 of the Notification No. 46/2011-CUS. dated 01.06.2011, if goods in question i.e. “Oven Roasted Areca Nuts” and “Oven Roasted and salted Cashew Nuts” are imported and declared by applicant of/from Myanmar, Vietnam, Thailand, Malaysia and Indonesia origin.

20.2 Similarly, subject to the compliance with the conditions/instructions/provisions (as amended) provided in the Notification No. 26/2000-CUS. dated 01.03.2000, Customs Tariff (Determination of Origin under the Free Trade Agreement between the Democratic Socialist Republic of Sri Lanka and the Republic of India) Rules, 2000 published with the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 19/2000-Customs (N.T), dated the 1st March, 2000, Section 28DA of Customs Act, 1962, Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 issued vide Notification No. 81/2020- Customs (N.T.) dated 21st August, 2020 and any other conditions insofar as they relate to eligibility to avail the benefits of Free Trade Agreements, the Applicant would be eligible to claim benefits of exemptions under List 5 of the Notification No. 26/2000-CUS. dated 01.03.2000, if goods in question i.e. “Oven Roasted Areca Nuts” are imported and declared by applicant of/from Sri Lanka origin.

21. I rule accordingly.

(Prabhat K. Rameshwaram)
Customs Authority for Advance Rulings,
Mumbai.

F.No. CAAR/CUS/APPL/4/2024-O/o Commr-CAAR-Mumbai

This copy is certified to be a true copy of the ruling and is sent to:-

1. M/s TMK Traders No. 65 W-29, Rangar Office Road, Kambam, Theni, Tamil Nadu-625 516

2. The Commissioner of Customs (Imports), Chennai-II, Commissionerate Costum House, No.60, Rajaji Salai, Chennai-600 001.

3.The Customs Authority for Advance Rulings, 5th Floor, NDMC Building, Yashwant Place, Satya Marg, Chanakyapuri, New Delhi-110021.
E-mail: cus-advrulings.del@gov.in

4. The Principal Chief Commissioner of Customs, Mumbai Customs Zone-I, Ballard Estate, Mumbai-40001.
Email: ccu-cusmum1@nic.in

5. The Commissioner (Legal), CBIC Offices, Legal/CX, 8A, Cell, 5th floor, Hudco Vishala Building, C-Wing, Bhikaji Cama Place, R.K Puram, New Delhi - 110066.
Email: anishgupta.irs@gov.in,  commr.legal-cbec@nic.in

6. The Member (Customs), Central Boards of Indirect taxes & Customs, North Block, New Delhi-110001.
Email: mem.cus-cbec@nic.in

7. The Webmaster, Central Boards of Indirect Taxes & Customs
Email: webmaster.cbec@icegate.gov.in

8. Guard  file.

(V M Sobhan Sindhu)
Asst. Commissioner of Custom & Secretary
Customs Authority for Advance Rulings,
Mumbai