2024(05)LCX0266(AAR)

Vaibhav Enterprises

decided on 27-05-2024

CUSTOMS AUTHORITY FOR ADVANCE RULINGS
O/o THE CHIEF COMMISSIONER OF CUSTOMS
NEW CUSTOM HOUSE, NEAR IGI AIRPORT, NEW DELHI-110037

[Email:cus-advrulings.del@gov.in]

Present

Samar Nanda (Customs Authority for Advance Rulings, New Delhi)

F. No. VIII/CAAR/Delhi/ Vaibhav Ent./17/2024

The day of 27^th May, 2024

Ruling No. CAAR/Del/Vaibhav/19/2024/892/27/05/2024

In application No. 12/2024 dated 18.03.2024.

Ruling

M/s Vaibhav Enterprises. WZ-32A. Shop No. I. Asalat Pur. .lank Puri. Delhi 110058 having IEC No. 0515063908 (’applicant*, in short) has filed an application (CAAR-1) dated 18.03.2024 for advance ruling before the Customs Authority for Advance Rulings, New Delhi (CAAR. in short) vide letter dated. The said application was received in the Secretarial of the CAAR. New Delhi on / 18.03.2024 along with its enclosures in terms of Section 2811 (I) of the Customs Act. 1962 (hereinafter referred to as the 'Act'). The applicant intends to import of "Provisionally Preserved Areca Nut (Whole) and Provisionally Preserved Areca Nut (Split)" from Myanmar. 'Thailand. Indonesia. Vietnam. Sri Lanka. Cambodia, Laos & Singapore into India through the port falling under the Commissioner of Customs, ICD, Patparganj, New Delhi.

2.1. The applicant submits that the firm M/s Vaibhav Enterprises. WZ-32A. Shop No. I. Asalat Pur. Jank Puri. Delhi 110058 having IEC No. 0515063908 currently engaged in the local trading of pan shop related spices & betel nuts items. The Applicant intends to import the following goods and seeks ruling of Hon'ble Authority in the matter of classification of the goods which in the opinion of the Applicant are classifiable under chapter heading 0812 90 90:

2.2. Areca Nut is a tropical plant found all over South-East Asia. The tree belongs to the palm tree species and is from the Arecaceae family. The fruit (nut) of this tree is popularly known as betel nut or “supari” in India. The Areca nut is an important commercial plantation crop. The fruit has a fibrous mesocarp and seeds are with a truncate base, endosperm deeply ruminates with a basalar embryo. It is also known as "betel nut" which is the kernel obtained from the fruit of arcca nut palm. It is mostly used by people as masticatory and is an essential requisite during several religious, social and cultural functions in India.

2.3. After harvesting, the tender nut is de-husked and then peeled. Thereafter, these are split and subjected to heat treatment and then dried. The process mentioned above can be mechanical or manually carried out. For preservation of these nuts and to protect them from fungi and moulds and to prevent deterioration while in storage and for safe transportation, these are subjected to preservative treatment before packing and export. The supplier of these nuts will treat them with sulphur-di-oxide gas or sodium benzonate solution and also provide analysis certificate and inspection report with regards to the treatments carried out. Thereafter, the nuts will be imported and cleared from customs.

2.4. The preservatives can be removed before use of these nuts through simple processes. In ease of preservation carried out with sodium benzonate solution, the nuts can be treated with sodium bi carbonate and when washed with plain water the excess benzoic acid will get removed. In the process. by way of neutralization and after getting dissolved in water the benzoic acid get removed.

2.5. In eases where nut is treated with sulphur-di-oxide, these can be treated with hydrogen peroxide by which the sulphur-di-oxide is oxidized to sulphate and during the process addition of sodium bi carbonate and water will remove the excess peroxides.

2.6. Thus, after carrying out the above processes, the nut will become suitable for human consumption. With regards to the preservative treatment that are carried out on arccanuts. the Professor and Head of the Department of Food Process Engineering, College of Food and Dairy Technology. Koduveli. Chennai has issued a certificate clarifying the above. Thus it can be seen that the preservative treatment in this case is provisional and temporary and the preservatives can be removed before consumption of the areea nut.

2.7. 1 he above mentioned goods "Provisionally Preserved Areca Nuts" are specifically covered and are classifiable under CTH 0812 90 90 of he Customs Tariff Act, 1975.

Chapter 8 covers edible fruit and nuts, peels of citrus fruits or melons. Chapter note (3) to chapter 8 reads as follow-:

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 srobic 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 nut”

    Again, Chapter note (4) reads as follow-:

(a) Heading 0812 applies to fruit and nuts which have been treated solely to ensure their provisional preservation during transport or storage prior to use (for example, by sulphur dioxide gas. in brine, in sulphur water or in other preservative solutions), provided they remain unsuitable for immediate consumption in that state.”

2.8. Heading 0812 covers fruits and nuts provisionally preserved but unsuitable in that state for immediate consumption. Following are the four sub-headings under the above four-digit heading.

0812 10 00- Cherries
0812 90- Other:
0812 90 10 — Mango slices in brine
0812 90 90 — Other

2.9. Though areca nuts are separately mentioned under 0802, as nuts provisionally preserved but unsuitable in that state of immediate consumption, the areca nuts in the present case will answer more precisely the description under heading 0812 which occurs later in the schedule and accordingly, the nuts that are provisionally preserved need to be classified under heading 0812 90 90.

2.10. In the conspectus of submission supra, the Applicant seeks a ruling by the Hon’ble Authority as under:

"The goods sought to be imported namely "Provisionally Preserved Areca Nuts (whole) and Provisionally Preserved Areca Nut (Split)” are classifiable under Customs Tariff Heading 0812 90 90 of the First Schedule to the Customs Tariff Act. 1975".

2.11. The applicant has submitted the statement of relevant facts and respectfully sought the following questions of law

That prior to import the raw betel nuts are subjected to following processes like

2.11.1. After harvesting, the tender nut in dc-husked and then peeled. Thereafter, these are split and subjected to heat treatment and then dried. The process mentioned above can be mechanical or manually carried out. For preservation of these nuts and to protect them from fungi and moulds and to prevent deterioration while in storage and for safe transportation, these are subjected to preservative treatment before packing and export. The supplier of these nuts will treat them with sulphur-di-oxide gas or sodium benzoate solution and also provide analysis certificate and inspection report with regards to the treatments carried out.There after, the nuts will be imported and cleared from custom.

2.11.2. The preservatives can be removed before use of these nuts through simple processes. In case of preservation carried out with sodium benzonate solution, the nuts can be treated with sodium bi-carbonate and when washed with plain water the excess benzoic acid will get removed. In the process, by way of neutralization and after getting dissolved in water the benzoic acid get removed.

2.11.3. In cases where nut is treated with sulphur-di-oxide, these can be treated with hydrogen peroxide by which the sulphur-di-oxide is oxidized to sulphate and during the process addition of sodium bi-carbonate and water will remove the excess peroxides.

2.11.4. In view of the above facts and legal provisions, the product "Provisionally Preserved Areca Nuts (whole) and Provisionally Preserved Areca Nut (Split)” are classifiable under Customs Tariff Heading 0812 90 90 of the First Schedule to the Customs Tariff Act. 1975".

2.12. On the matter of interpretation of law of facts, the applicant submits that as per their best knowledge and belief the items are classified under classification heading no. given in Custom Tariff heading 0812 90 90.

2.13. The said entry' in Customs tariff Act’ 1975 reads as under:

Chapter 8 covers edible fruit and nuts, peels of citrus fruits or melons. Chapter note (3) to chapter 8 reads as follow-:

"3. Dried fruits or dried nuts of this Chapter may be partially rehydrated, or treated for the following purposes:

(c) for additional preservation or stabilization (for example, by moderate heat treatment, sulphuring, the addition of sorbic acid or potassium sorbate)

(d) 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 nut"

Again. Chapter note (4) reads as follow-:

(a) Heading 0812 applies to fruit and nuts which have been treated solely to ensure their provisional preservation during transport or storage prior to use (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), provided they remain unsuitable for immediate consumption in that state.”

2.14. The Applicant place reliance upon on the following judgments-:

i. Ruling No. CAAR/Mum/ARC/42/2023 dated 15.05.2023 of Hon'ble Authority passed in the matter of M/s. Hi Tech Prints Systems. Chennai Vs. The Commissioner of Customs (Import), Tuticorin. where identical goods are held classifiable under 0812 90 90.

ii. Ruling No. CAAR/Mum/ARC/26/2024 dated 22.02.2024 of Hon'ble Authority passed in the matter of M/s. Radiance Enterprises, Chennai Vs. The Commissioner of Customs II (Import). Chennai and The Commissioner of Customs, Tuticorin, where identical goods arc held classifiable under 0812 90 90.

2.15 The applicant, further, requested for the instant Advance Ruling to be kept confidential as per Point no.27 "Publication of Orders or Advance Ruling" vide notification no.63/2022-Customs (N.T) dated 20.07.2022.

3. Unfortunately, the response from the Customs Port Commissionerate has not been received in spite of multiple reminders being issued to the Commissionerate of ICD. Patparganj. New Delhi. The applicant had filed two applications pertaining to two ports on the same matter under consideration. The first application has the port Commissionerate of Customs. Nhava Sheva-1. JNCH. Mumbai, on which the comments were received and the personal hearing was conducted on 22.04.2024. The ICD, Patparganj Commissionerate was also asked to provide the comments and to participate in the hearing, as the matter under consideration was same in the two filed applications. However, the Commissionerate did not participate in the hearing, neither shared the comments. The authority is constrained to proceed to issue ex-parte Ruling in view of the provisions of the CAAR Regulation 2021 in order to stick to the 90 days mandatory' timeline given under the Act & Rules.

Finding, Discussion and Conclusion

4. 1 have taken into consideration of 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 for the other application filed for the Commissionerate of Customs. Nhava Sheva-I. .INCH, Mumbai. As no comments have been received from the Customs Port Commissionerate of Palparganj. New Delhi. 1 proceed to decide the present application regarding classification of Provisionally preserved Arecu nut (whole) and Provisionally preserved Areca nut (split) on the basis of the information on record as well as the existing legal framework having bearing on the classification of the / provisionally preserved Areca nut (whole) and Provisionally preserved Areca nut (split) under the first schedule of the Customs Tariff Act. 1975.

4.1 “As per the sub-rule 19 of the CAAR Regulation 2021 as provided under Notification I No.01/2021-Customs (N.T.) dated 04.01.2021 as amended vide Notification No.63/2022-Customs / (N.T.) dated 20.07.2022, Hearing of application ex parte. -

Where on the day fixed for hearing or any other day to which the case is adjourned, the applicant ' or the Principal Commissioner or Commissioner does not appear in person or through an authorised representative when the application is called for hearing, the Authority may dispose of the application ex parte on merits ;

Provided that where an application has been disposed of1[under this regulation] and the applicant or the Principal Commissioner or Commissioner, as the case may be, applies within seven days of receipt of a copy of the order or advance ruling and the Authority is satisfied that there was sufficient cause for his non-appearance when the application was called for hearing, the Authority may, after allowing the opposite party a reasonable opportunity of being heard, make an order setting aside the ex parte order or advance ruling and restore the application for fresh hearing. "

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, goods under Chapter 8 may be fresh (including chilled), frozen (whether or not previously cooked by streaming 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 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)

5.1. Chapter 8 under the Customs tariff Act 1975 covers Edible fruit and nuts; peel of citrus fruit or melons and note (3) to chapter 8 provided as:

“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 driedfruit or dried nut "

The Chapter note (3) specifies the physical status of the goods along with corresponding process that could be carried on those goods under this chapter. The areca/betel nut is mentioned in Heading 0802 as well as 0812. The explanatory note to Heading 0802 states that this heading also covers areca (betel) nuts used chiefly as a masticatory. One of the main uses of the goods under CTH 0802 is masticatory.

5.1.1 However, I find that the provisionally preserved betel nuts are not fit for immediate human consumption and they are more specifically covered under Chapter Heading 0812 due to following Chapter Note. The Chapter note (4) reads as follow-:

''4 Headings 0812 applies to fruit and nuts which have been treated solely to ensure their provisional preservation during transport or storage prior Io use (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), provided they remain unsuitable for immediate consumption in that slate."

Following are the four sub-headings under CTH 0812 reads as under:-

In view of  the process carried out by the applicant reproduced in para 7 supra. I find that the conditions of Chapter Note (4) as mentioned above are duly fulfilled and hence the said goods come within the ambit ofCustoms Heading 0812.

5.1.2 The Heading 0812 applies to fruit and nuts (whether or not blanched or scalded) which have been treated solely to ensure their provisional preservation during transport or storage prior to use (for example, by sulphur dioxide gas. in brine, in sulphur water or in other preservative solutions), provided they remain unsuitable for immediate consumption in that state. Though areea nuts are separately mentioned under 0802. nuts provisionally preserved but unsuitable in that state for immediate consumption, as the areca nuts in the present case, will get covered under Heading 0812 which occurs later in the schedule and accordingly, the nuts that are provisionally preserved and not fit for immediate consumption need to be classified more specifically under the CTH 08129090.

5.1.3 Further, reliance has also been placed upon on the following rulings-:

i. Ruling No. CAAR/Mum/ARC/42/2023 dated 15.05.2023 of Hon’ble Authority passed in the matter of M/s. Hi Tech Prints Systems. Chennai Vs. The Commissioner of Customs (Import), Tuticorin, where identical goods are held classifiable under 0812 90 90

ii. Ruling No. CAAR/Mum/ARC/26/2024 dated 22.02.2024 of Hon’ble Authority passed in the matter of M/s. Radiance Enterprises. Chennai Vs. The Commissioner of Customs II (Import), Chennai and The Commissioner of Customs. Tuticorin, where identical goods are held classifiable under 0812 90 90.

6. On the basis of aforesaid discussions and finding and also earlier CAAR Rulings in the matter, I am of the view that the Provisionally Preserved Areea Nut (whole) and Provisionally preserved Areea nut (split) merit classification under Custom Tariff Heading 0812. specifically under Sub-heading 08129090 of the First Schedule of the Customs Tariff Act. 1975.

7. I. rule accordingly.

(SAMAR NANDA)         
Customs Authority for Advance Rulings
New Delhi