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CUSTOMS AUTHORI l Y FOR ADVANCE RULINGS
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NEW CUSTOM HOUSE, BALLARD ESTATE, MUMBAI - 400 001

f-WE-MAIL: cus-advrulings.muin(2/gov.in

The 1st of March, 2023

Ruling No. CAAR/Mum/ARC/22/2023
In
Application No. CAAR/CUS/APPL/89/2022-O/o Commr-CAAR-MUMBAl

T
Name and address of the applicant : M/s Nccna Enterprises, Shop No.Floor, 5-1-
767/8/FF, Vithal Das Market, Koti, Hyderabad,
Telangana - 500095

Commissioner concerned The Commissioner of Customs II, Chennai

Import Commissioncrate, Rajaji Salai,
Chennai-600001

Present for the application Shri. Vaibhav Uppal (representative)

Present for the Department Shri Prabhakaran, Dy Commr, Chennai

Ruling

M/s Necna Enterprises (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 15.12.2022 was received in the secretariat of the
CAAR. Mumbai on 16.12.2022 along with its enclosures in terms of Section 2811 (1) of the
Customs Act, 1962 (hereinafter referred to as the 'Act'). The applicant is seeking advance ruling
on the classification of Roasted Arcca Nuts (wholc/cut/split) which they intend to import.

2.1 The applicant bearing IEC no. AEXPU6482P is currently engaged in the local trading
of pan shop related spices & betel nuts items. In India, areca nut is chewed for a variety of
reasons such as stress reliever, mouth freshener, concentration improver and as a digestive
following food intake. The applicant intends to import Roasted Areca Nut(wholc), roasted
Areca Nut(Split) and Roasted Arcca Nut (Cut) from Myanmar, Thailand Indonesia, Vietnam,
Sri Lanka, Cambodia, Laos & Singapore (hereinafter referred to as the ‘subject goods’) and
seeks classification of these goods under chapter heading 20081920. They (the applicant)
intend to import the said goods through the seaport at Chennai. Accordingly, comments from
the jurisdictional Principal Commissioner/Commissioner of Customs were invited which have
been duly shared with the applicant.

Page 1 of 27

F
 t e

2.2 As per the applicant, the process of’roasting’ is neither defined in the Customs Tariff
r.cr in the HSN Explanatory/Sections/Chaptcrs Note. They have submitted the processes
nor
carried out on the raw betel nut which is mentioned as follows:
a) De-husking the raw bctcl/areca nut and drying the same before being fed into
the roasting oven.
b) Feeding the fresh arcca nut into a seed roasting oven, heating up to 130- 150
deg. C and roasting the fresh arcca nuts in an oven of the seed roasting machine.
c) Take the areca nuts out of the oven, cooling at room temperature and feeding
back into the oven, heat and roast them again, and perform this cycle until the
water content of the fresh arcca nuts is 10 to 15 percent: and
d) The fresh arcca nuts arc repeatedly heated, roasted and cooled to ensure that the
areca nuts arc quickly cooled and shrunk after thermal expansion so that the
roasted arcca nuts have higher quality; the roasting time is around 2-3 days.
e) Packaging in industrial packs of 50kgs to 80kg as per requirement.

' Tc applicant stated that the process of roasting changes the chemical and physical
characteristics of the arcca nut by reducing arecoline and tannin as well as colour and moisture.
They have also mentioned that the subject goods do not contain lime, katha(Catechu) or
tobacco. Such roasted Arcca Nut is used for eating(mukhwas) directly as well as with paan
(betel leaf). Roasting causes the deposition of an ash-like substance on the outer surface of the
betel nut.

2.3 The applicant has also further submitted annexures along with CAAR-1 form which
stated as follows:
a) The roasting is done using firewood/ palm kernel-based ovens and the temperature of
the flames is around 600 degrees Celsius. As a result, the betel nuts would be roasted
well beyond 100 degrees Celsius, usually in the range of 130-150 degrees Celsius.
b) Roasted betel nut undergoes a change in its appearance as well as chemical
characteristics on account of the roasting process, 'fhcrc is a visible deposition of an
ash-like substance on the outer surface of the betel nut. There is a substantial change in
the chemical characteristics of the betel nut product on account of the roasting process.
It has been established through research (submitted along with additional submission)
that the tannin and arecoline content of raw betel nut/ areca nut gets substantially
changed by subjecting the same to roasting and boiling. Therefore, roasted betel nut is
a distinctive product of betel nut making it suitable for immediate consumption.
c) Roasting is not aimed at additional preservation or stabilization or to improve or
maintain their appearance.
d) The article titled “Estimation of arecoline content of various forms of arcca nut
preparations by high-pressure thin-layer chromatography” throws light on the chemical
composition of various forms of arcca nuts. As per the article, Polyphenols (flavonols,
tannins) constitute a large proportion of the dry weight of the nut. Its content in areca
nut may vary depending on the degree of maturity and its processing method. The
tannin content is highest in unripe arcca nuts and decreases significantly with increasing
maturity. The roasted nut possesses the highest average content of tannins, ranging from
51 to 41% (mean, 1.4%); the average tannin content of sun-dried nuts is 25%; and the
lowest levels are seen in boiled nuts, which contain 17%. The article further states that
raw arcca nut contains the highest concentration of arecoline (1.15 ± 0.008) followed
by pan masala preparations (0.94 ± 0.006), least content in boiled arcca nut (0.79 ±
0.009), while roasted variety exhibited an intermediate level (0.85 ± 0.007).

Page 2 of 27
2.4 As per the applicant, the above mentioned goods are specifically covered and arc
classifiable under CTH 2008 19 20 of the Customs Tariff Act, 1975. As per the HSN
Explanatory notes to Heading 2008, given below, Dry Roasted Arcca (or Betel) Nuts are
specifically covered under Chapter Heading 2008.

CTH 2008: Fruits, mils and other edible parts ofplants, otherwise prepared
or preserved; whether or not containing added sugar or other sweetening
matter or spirit, not elsewhere specified or included
-Nuts, ground nuts and other seeds, whether or not mixed together:
20081920— Other roasted nut and seeds

The applicant has placed reliance on case laws of L.M.L Ltd Versus Commissioner of
Customs Reported in 2010 (258) E.L.T 321 (S.C), Holostick India Ltd. Versus Commissioner
of Central Excise, Noida Reported in 2015 (318) E.L.T 529 (S.C), Collector of Central Excise,
Shillong Versus 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.
As per the explanatory note to Chapter 8 fruits and nuts of th is Chapter remain classified
here even if put up in airtight packing (c.g. dried prunes, dried nuts in cans). In most eases,
however, products put up in these packing have been prepared or preserved otherwise than as
provided for in the headings of this Chapter, and arc therefore excluded from chapter 8 (and
will fall under Chapter 20). The processes mentioned in Chapter 8 arc different from the
processes performed on impugned goods, they arc excluded for the purpose of classification
from Chapter 8 of the Customs Tariff Act, 1975 (hereinafter also referred as "Tariff).

2.5 In respect of alternate CTH 2106, the applicant draws attention to Note 2 and
explanatory note (A) to Chapter 21. As per Note 2 to Chapter 21:

"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. ”

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.

2.6 In their application, the applicant also refers to and discusses the ease law of M/s. Crane
Betel nut Powder Works reported in 2007 (210) E.L.T 171 (S.C). In this case, Hon’ble SC
purely went into the aspect of whether crushing and adding other ingredients to betel-nut would
amount to manufacture or not. Upon convincing that crushing and mixing other ingredients to
the betel-nut into powder would not amount to manufacture, the Court ruled in favour of the
party thus permitting them to classify the item under the CTI1 0803. Based on the above, earlier
rulings issued by the Customs Authority for Advance Rulings rejected the classification of
betel-nut products under the HS Code 2106 90 30 and confirmed the same under I leading 0802
by holding that the processes such as boiling, slicing, removal of impurities, metal deflection,
garbling, polishing, roasting, cutting and adding flavours to the betel-nut do not alter the nature

Page 3 of 27
and characteristics of the product so as to take it outside the purview of the Heading 0802.
However, alter the subsequent amendment to the Central Excise Tariff Act, 1985 vide fhc
Finance (No.2) Act, 2009 (Act No. 33 of 2009 dated 19th August 2009) with the insertion of
Note to Chapter 21, the decision of Hon’ble SC in the above-mentioned case law was rendered
infructuous. In support of the above, they have cited the ruling issued in the case of M/s
Excellent Betel Nut Products by the Authority for Advance Rulings, wherein the authority took
proper judicial notice and distinguished the decision in the case of Crane Betel nut powder
works Vs Commissioner of Customs & C. EX, Thirupathi (2007 (210) ELT 171 (SC)) and held
the clas ification of processed betel nuts under the CTH 21069030. The applicant has also
relied ot the previous judgements of namely Ruling No. CAAR/Mum/ARC/44,45&46/2022
dated 0 .12.2022 of Hon'ble Authority passed in the matter of M/s. Shahnaz Commodities
Intcrnat onal, Chennai Vs. 'fhc Commissioner of Customs II, Chennai, 'fhc Commissioner of
Custom ;, Tuticorin, Tamil Nadu & 'fhc Commissioner of Customs (Indore), M.P in
Applica ion No. CAAR/CUS/APPL/70,77&78/2022-0/o-Commr-CAAR-MUMBAI, where
idcntica goods arc held classifiable under 2008 19 20.
In the context of their above-mentioned submissions, the applicant has requested the
correct classification of the roasted areca nuts as CTH 2008 19 20 of the Customs Tariff Act,
1975.

3.1 A virtual hearing was held on 30.01.2023 at 1530 hrs. Shri Vaibhav Uppal (Authorized
Representative) appeared for the hearing. Shri Prabhakaran, Deputy Commissioner of
Customs, Chennai Customs appeared on behalf of the jurisdictional commissionerate. During
the course of the hearing the applicant submitted additional submissions supported by few
empirical studies. Moreover, the comments from the jurisdictional commissionerate were also
shared with the applicant, which were received just before the conduct of personal hearing,
which stated that the proposed import of subject goods is covered under chapter 8 of Customs
Tariff Act, 1975 and not under chapter 20 or 21. The applicant was requested to respond to the
comments of the jurisdictional commissionerate within a stipulated time.
4. Comments of jurisdictional Chennai Customs Commissionerate are as follows:
4.1 The applicant's claim that roasting is not defined in the Customs Tariff Act 1975 is not
correct. Though roasting as a process is not defined, it will fall under the 'moderate heat
treatment' mentioned in Chapter Note 3 of Chapter 8.
"3. Driedfruits or dried nuts of this Chapter may be partially rehydrated, or treated
J9r
the following purposes:
a) For additional preservation or stabilization (for example, by moderate heat
treatment, sulphuring, the addition ofsorbic acid or potassium sorbate
b) ) To improve or maintain their appearance (for example, by the addition of
vegetable oil or small quantities ofglucose syrup), provided that they retain the
character ofdried betel nut. fruit or dried nuts. "

4.2 The applicant's claim that after repeated roasting for 2-3 days under 130-150 degrees
Celsius n a roasting oven due to which the water content is reduced to 10-15% is a complete
misrepresentation of facts. It is evident by the fact available with this office vide test reports
that a raw betel nut falling under Chapter 8 has a moisture content of less than 10% and the
betel nut undergoing repeated roasting and severe heat treatment has a water content 10 to 15%
appears incorrect.

Page 4 of 27
 4.3 In the process flow mentioned in para 2 to make roasted betel nut, one set of process
are found to be intended for cleaning, the second set for heating and roasting in addition to
cutting. These processes are clearly covered by the Chapter Notc3 to Chapter 8 (reproduced in
para 8). In the instant ease, betel nuts after being roasted are cooled and this fact per sc would
not exclude the end-products from the scope of "dried nuts".

4.4 Further, it is equally obvious that roasting or mere addition of certain additives for the
limited purpose of enhancing preservation or appearance or case of consumption per sc docs
not result in obtaining a preparation of betel nut.

4.5 Speaking more generally, in view of the design of the Schedule to the Customs Tariff
Act, 1975, HSN 080280 and plethora of judgements, besides common understanding and
parlance, every irreversible process docs not result in obtaining a new product with a distinct
classification at the 8-digit level. Therefore, the process to which raw betel nuts have been
subjected to roasted betel nut 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 nuts
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 21 and Chapter 20 also.

4.6 As per the applicant, packaging is done in industrial packs of 50 kgs to 80 kgs.
However, according the explanatory notes to Chapter 20, packaging should be less than
250gms.

4.7 The applicant has claimed that roasting changes the colour and reduce tannin and
arccolin content which is superficial as even boiling will result in similar physical and chemical
changes.
4.8 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 docs not render the product to be distinctive as claimed by the applicant
or does not alter the character of the original good. 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 nut. Hence it remains as
the betel nut which is rightly classifiable under Chapter 08.

4.9 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, in the process How mentioned
by the applicant it is evident that there is neither any mixture of products nor any change in the
original good which tantamount to no preparation

4.10 The article quoted is superficial as the credibility of the article could not be verified.
Mere quoting of a paper or article without any credible specific details like the year of
publication, name of the author, University at which it is presented, etc is an attempt to mislead
the CAAR.

4.11 Since the question relates to classification of goods proposed to be imported, guidance
of the Harmonized Commodity Description and Coding System of the World Customs
Organization, to which India is a signatory, would be useful. Even It is seen that with respect
to Chapter 8, the 11SN prescribes the following as general guidelines: -

Page 5 of 27

1
Fruit and nuts ofthis 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 offruit in this
Chapte '•

4.12 The applicant has claimed that dry Roasted Arcca (or Betel) Nuts are specifically
covered under Chapter Heading 2008.

CTH 2008: Fruits, nuts and other edible parts ofplants, otherwise prepared or preserved;
whether or not containing added sugar or other sweetening matte, or spirit, not elsewhere
specifed or included

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

20081920: — Other roasted nut and seeds

4.13 This is another misrepresentation of facts since Chapter 20 cannot and does not cover
any nuts or fruits prepared or preserved by the processes specified under Chapter 8. Since
Chapter note 3 of Chapter 8 includes roasting under 'moderate heat treatment' the impugned
goods cannot be classified under Chapter 20

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 ofsausage, meat,
d) meat offal, blood, insects, fish or crustaceans, molluscs or other aquatic
e) invertebrates, or any combination thereof (chapter 16)
J) Bakers' wares and other products ofheading 1905; or
g) Homogenized composite food preparations ofheading 2104.

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

IFhen by application of Ride 1 (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 be preferred to
headings providing a more general description. However, when two or more headings
each refer to part only ofthe materials or substances contained in mixed or composite
goods or to part only ofthe items in a set put up for retail sale, those headings are to
be regarded as equally specific in relation to those goods, even ifone of them gives a
more complete or precise description of the goods.

On the other hand. Chapter 21 covers miscellaneous edible preparations. The relevant
Supplementary Note 2 to the said Chapter lays down that,
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:

Page 6 of 27

♦
 lime, katha (catechu) and tobacco whether or not containing any other ingredients,
such as cardamom, copra, menthol.'

4.15 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." I lowcvcr, in the process flow mentioned in
para 2 it is evident that there is neither any mixture of products nor any change in the original
good which tantamount to no preparation.

4.16 According Cambridge English Dictionary, 'contain' means to "have something inside
or include something as a part'. As per Collins English Dictionary 'contain' means "if a
substance contains something, that thing is a part of it". Though by the process flow mentioned
in para 2 it is implied that arcca nut is involved in the preparation process claimed by the
applicant it is not dear whether any more ingredients arc involved in the process through the
submissions of the applicant.

4.17 Further as per Rule 3(a) of General Rules for the Interpretation of the Harmonized
System since the product is more specifically classified under CT11 08020 classification under
Chapter 2106 is unwarranted.

When by application of Rule 2 (b) or for any other reason, goods are, prima face,
classifiable under two or more headings, classification shall be effected as follows:
b) The heading which provides the most specific description shall be
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
ifone ofthem gives a more complete or precise description ofthe goods

4.18 Chapter Note 1 of Chapter 20 says that this chapter docs not cover: vegetables, fruit or
nuts, prepared or preserved by the processes specified in chapter 7, chapter 8, or chapter 11.
Chapter 20 heading reads "preparations of vegetables, fruit, nuts or other parts of plants". It is
pertinent to mention that the Chapters are organised 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 under Chapter 20 and miscellaneous edible preparations
under Chapter 21. Hence, since the roasted betel nut which did not undergo any preparation is
rightly classifiable under Chapter 8.

Further, reliance is placed on

a) CAAR Delhi vide ruling no. CAAR/Dct/Vaibhav/21/2021 in the case of
M/s. Vaibhav Enterprises
" The CAA rejects the application of M/s Vaibhav Enterprises by
giving the ruling that: API Supari, Chikni Supari, Boiled Supari, Boded and
Cut supari, unflavoured supari and flavoured supari, Roasted betel nut,
merit classification under chapter 8 of the first schedule to the Customs
TariffAct and more precisely, under the heading 0801"
where the CAAR ruled that inter alia roasted betel nut merits
classification under Chapter 8
b) CAAR Delhi vide ruling no. CAAR/Del/Sarveshroari/11/2021 in the
case of M/s Sarveshwari industries.

Page? of27

♦
 " the CAA rejects applicant appeal by stating that the goods; API
Supari, chikni supari, unflavoured supari, favoured supari and boiled
supari are not classifiable under sub-heading 21069030, since they have
not attained the character of " preparations" ofbetel nut, which is sine qua
non for a good to be considered"
c) CAAR Delhi vide ruling no. CAAR/Del/Naman Agri/09/2021 in the case
ofM/s Naman Agri Impex Private Ltd.
"the CAA rejects applicant appeal by stating that the goods; API
chikni supari, unflavoured supari, favoured supari and boiled supari, merit
classification under chapter 8 ofthefirst schedule to the Customs TariffAct,
and more precisely, under the heading 0802. This is so in view of the fact
that the processes to which raw green fresh betel nuts have been subjected
to obtain the said five goods are squarely in the nature of processes
mentioned in Note 3 to Chapter 8, and have not materially changed the
essential character of betel nuts, further these goods are not classifiable
under subheading 21069030."
d) Chennai CESTAT order in M/s S.T. Enterprises v/s Commissioner of
Customs (Chennai-vii) (2021(378) E.L.T.514CTri. Chennai)
" The Hon'ble Tribunal has addressed the question whether the mere
and betel nut it would merit classification under 21069030 and held that
since the import goods are betel nuts whole, these would merit classification
under Chapter 8."

4.19 On perusal of the advance rulings given by the erstwhile AAR, New Delhi, which have
been referred to by the applicant, the ease of M/s Excellent Bctclnut Products Pvt. Eld. do cover
the four goods, i.c., API supari, Chikni supari, Unflavored supari and Flavored supari. In both
these ru ings, the erstwhile AAR has concluded that the said products merit classification under
sub-heading 21069030. In doing so, the erstwhile AAR has been of the view that on account
of the positive language of the Supplementary Note 2 to Chapter 21, it is not necessary for betel
nut (supari) to undergo a change of character for it to be classified under Chapter 21. The AAR
had considered the contention of the department that the said four goods merit classification
under Chapter 8, but rejected the same. However, while doing so, the erstwhile AAR did not
take any comment on the implications of the Chapter Note 3 to Chapter 8 on the processes by
which raw betel nuts were subjected to obtain the said four goods. Further, the erstwhile AAR
was of the opinion that the decision of the Ilon'blc Supreme Court in the case of M/s. Crane
Betel Nut however works reported at 2007 (210) E.L.T. 171 (S.C.))

" The SC gives the decision that the Commissioner of Customs and Central excise has
correctly analysed the factual as well as legal situation in arriving at the conclusion
that the process of cutting betel nuts into small pieces and addition of essential/ non-
essential oils, menthol, sweetning agent etc. did not result in a new and distinct product
having a different character and use. "

has no application in the facts of the cases before them.

4.20 4owcvcr, in order to arrive at the appropriate classification of the impugned goods, all
originating from common source viz. raw green fresh betel nut, a more comprehensive view
needs tc be taken than in the aforesaid M/s Excellent Betelnut ease, as has been done by AAR,
Mumbai in the ease of

Page 8 of 27
 a. M/s. Samreen International Pvt. Ltd (Ruling No. CAAR/Mum/ARC/3/202I
dated 15th of March, 2021)
"I find the observations of the Hon'ble Supreme Court in the case of
Crane Betel Nuts and the decision of Hon' ble Tribunal in the case of
Azam Laminators to be extremely enlightening"
"In view ofthe aforesaid discussions, 1 have reached the conclusion
that all the five products placed before me for consideration, i.e., API
supari, chikni supari, unfavoured supari, favoured and boiled supari
merit classification under chapter 8 of the customs tariff, and more
precisely, under the heading 0802, and not under subheading 21069030,
as contended."

b. M/s Dry Nut Enterprises (Ruling No. CAAR/Del/Dry Nut/01/2021 dated

16th March, 2021)
"..Ifind that the reference by the Principal Commissioner of Customs to
the Note 6 to chapter 21 of the Central Excise Tariff Act, which was
essentially intended to deem certain processes as " manufacture" is
inappropriate in the present context. This is particularly so, given the
judgement of the Hon'ble Supreme Court of India in the case of JVs.
Crane Betel Nut Powder Works and of the CESTAT, Chennai in the
case of Ws.Azam Laminators Pot. Ltd. Put simply, these decisions
clearly imply that addition of flavouring agents do not change the
character ofthe good, meaning in the present case betel nut would
continue to remain betel nuts and not become preparations ofbetel nuts"

From the various advance rulings quoted above, it is more than evident that the
applicant's submission of Hon'ble Supreme Court's decision in M/s. Crane Bctelnut Powder
works has been rendered infructuous post the amendments in 2009 is untenable and docs not
hold any water.

4.21 On perusal of of M/s. Shahnaz Commodities International advance ruling which is

relied upon by the applicant, the following arc observed:
a) Para 2.1 of the advance ruling mentions that the process of "roasting" is neither
defined in customs tariff nor in the HSN Explanatory/scctions/chaptcrs note. In
the chapter note 3 of chapter 8 'moderate heat treatment process' is mentioned.
“3. Dried fruit or dried nuts of this Chapter may he partially rehydrated, or
treatedfor the following purposes:
(a) for additional preservation or stabilization (for example, by moderate heat
treatment, sulphuring, the addition ofsorbic acid or potassium sorbate) ”
b) It is pertinent to note that roasting is also a heat treatment. The process
mentioned by the applicant is not clear and did not mention whether it is
sundried before roasting. The applicant has claimed that after roasting water
content comes down to 10-15 percent. However as per the test report available
with this office, the moisture content is normally less than 10% for various
consignments of raw betel nuts imported under Chapter 08. Applicant did not
provide any test report even before Advance Ruling authority and there was
no test in this regard before the decision is made by the authority. Hence it is
clearly evident that the applicant did not provide the complete process before
the CAAR and have mis-represented the facts.

Page 9 of 27
c) In para 2.2 applicant states that processes mentioned in chapter 8 arc different
from the processes performed on impugned goods. Since the claimed process
by the applicant is devoid of any test report and roasting is well inclusive in
heat treatment mentioned in. Chapter note 3 of Chapter 8, the applicant's
contention docs not hold any water. After roasting the end product remain
dried arcca nut which is well defined in chapter 8 up to 6-digit level.
d) In para 2.3 of the said order, applicant's contention is that roasted betel nuts
can be consumed directly by merely cutting them into pieces. Even raw betel
nut can be consumed directly by merely cutting into pieces.
e) In para 4.1 of the said order, the CAAR is of the view that the process of
roasting changes the chemical and physical characteristics of arcca nut
reducing arecoline and tannin content as well as colour and moisture.
However, CAAR did not order to test the goods and solely relied on the
submissions by the applicant which is not backed by any empirical evidence.
It is also noteworthy to mention that boiling will also change the chemical and
physical characteristics of arcca nut by reducing the arecoline and tannin
content and even sun drying will also reduce the arecoline and tannin content.
I) Point 3 of para 4.2 of the said order states that roasting is not aimed at
additional preservation or stabilization. In the absence ol test report to
ascertain such claim, the issue must be examined after due testing.
g) Point 4 of para 4.2 of the said order states about a research article to
substantiate the claims of the Importer. I lowevcr, there was no mention of the
name of the author, university or institute where the article is published.
h) In para 5.1, M/s. Shahnaz Commodities International has stated to CAAR that
the arcca nuts are roasted at the temperature of 130-150 degrees Celsius and
roasting changes the colour of the arcca nut. For that matter, heating or boiling
also change the colour of the product. Change of colour does not mean the
essential characteristics of the product also changes and no test report has been
provided to support their claim. The applicant has also further claimed that
roasted supari variants are approved by FSSA1, a government agency.
However, no FSSAI report was provided to back the claim. It is noteworthy to
mention that even raw arcca nut is also approved by FSSAI.
i) In para 5.2 of the said order, the CAAR states that under the present legal
framework M/s. Crane's ease is futile. However, it is pertinent to mention that
the M/s Crane's ease has been relied upon for plethora of advance rulings
passed in the past.
j) In para 5.3 of the said order, the CAAR is of the view that none of the rulings
referred by the jurisdictional Commissioncratc dealt with Roasted betel nut. It
is pertinent to mention that the earlier advance ruling in case of M/s Vaibhav
enterprises vide Ruling no. CAAR/Dcl/Vaibhav/21/ 2021 dated 21.01.2021
have discussed about the roasted betel nut in para 3(iv) as 'roasting in fire gas
rotary roaster' which is referred by the jurisdictional commissioncratc.
k) Para 5.4 of the said order states that GIR arc provided for ease of reference
only; for legal purpose classification shall be determined according to the
terms and headings and any relative section or chapter notes. Chapters are
organized as per the evolution of the goods and that is the reason for chapter
20 and chapter 21 discussing about preparation and they fall after chapter 8
which consists of raw/ single edible products. In Chapter 20, roasted nuts and
seeds comes after the heading jams, fruit jellies. Even heading 2008 is all about
"fruit, nuts and other edible parts ofplants, otherwise prepared or preserved,

Page 10 of 27
 whether or not containing added sugar or other sweetening matter or sprit,
not elsewhere specified or included". Since the raw betel nut is already
specified in chapter 08 under heading 080280, it cannot be classified under
chapter 20. Roasting alone will not change the product from chapter 08 to
chapter 20 to get classified with jam and marmalades.
l) In para 5.5 of the said order, CAAR states that the explanatory note to heading
0802 states that "this heading also covers areca (betel) nuts used chiefly as a
masticatory". It also states that roasted betel nut arc fit for immediate human
consumption without addition of any ingredients on the basis of examination
of FSSAI approved samples. However, FSSAI samples arc not provided to the
Commissioncratc and the applicant themselves has accepted in their
submissions that their product is also used for masticatory purposes.
m) In para 5.6 of the said order, CAAR gives reference of case of Alladi
Venkateswarlu v/s Govt of Andhra Pradesh in which the Ilon'blc Apex court
held that "the commonly accepted sense of a term should prevail in
constructing the description ofan article food". CAAR also states that drying
is moisture removal process involving methods such as dehydration,
evaporation, etc. whereas roasting is a severe heat treatment process. The
purpose of roasting inter alia is to reduce moisture water content and hence it
is also a form of drying. Roasting supplements the preparation and by itself
cannot be deemed to a preparation process.
n) Further it is observed based on test reports the moisture content even in case
of Chapter 08 areca nuts is normally less than 10% but the applicant has
claimed that the moisture content is 10-15% for the impugned goods which
has undergone a 'severe heat treatment process' compared to the 'moderate
heat treatment' mentioned in Note 3 of Chapter 8.

CTH Hv.it treatment Moisture

Content
I
C hapter 08 Moderate lie.il treatment [ 1 est report
( moisture
' content <10%

1
c H \l*I ER 20 lu pMl -O Ki’.isbiig .ind M'vcrv Moistu re
(impugned hval treatment as claimed by I content as jx‘r
goods in this the applk ant applicant 10
case) I 15%
—1
o) In para 5.7 of the said order, the CAAR gives reference to explanatory notes
of chapter 20 and 08 and is of the opinion that process of roasting is not
covered by note 3 to chapter 8. The purpose of roasting is to reduce moisture
which is well covered under note 3 of chapter 8.
p) In para 5.8 of the said order, CAAR refers that applicant submitted sample
products of packaged, labelled and marketed items as roasted betel nuts.
Packaged and labelled items were not submitted by the applicant. To the
complete dismay not even photos of such items were submitted by the
applicant. Invoices of the sample produced were not checked for the CTH and
hence the process itself is incomplete. They further stated that packages will
bear FSSAI stamp of approval, no information provided by the applicant on
label and marketing. As per explanatory notes of chapter 20 packaging should

Page 11 of27
 be less than 250gm and no details has been provided as far as packaging is
concerned.
q) In para 5.9 of the said order, CAAR refer chapter notes of chapter 8 and states
that roasting is different from all the processes mentioned in chapter 8, which
is not correct. The purpose of roasting is to reduce water content, arccolin and
tannin. It docs not change the end product and the end product still remains as
betel nut. Drying is well defined under chapter note 3 of chapter 8, most
specifically under heading 0802.

4.22 Several advance ruling applications are filed for betel nut to avoid classification under
Chapter 08 as there is a MIP as well as a tariff rate which is regularly revised by CBIC vide
notification. It is pertinent to mention that the revision of tariff value is on a continuous upward
trend (USD $4937 in Dec 2021 to USD $9093 in January 2023).

4.23 However, several new applications are being submitted to circumvent the minimum
import price and increasing tariff values by legalizing betel nut import through mis-dcclaration
and mis-classification. the CAAR may not entertain such applications considering that several
advance rulings have already rejected the classification of betel nut under chapter 20 and 21 in
the interest of the local areca nut industry and to safeguard the interest of the revenue.

5. In response to the comments from the jurisdictional Customs Commissioncrate,

Chennai, the applicant has filed additional submissions dated 1.2.2023. Additional submissions
of the applicant dated 1.2.2023 are reproduced verbatim as follows.

5.1 The applicant has stated that The Oxford Learner's Dictionary defines "dried" as "with
all the liquid removed in order to preserve something" and "freshi" as "(usually offood)
recently produced or picked and not frozen, dried or preserved in tins or cans". With respect
to the interpretation of the HSN classification, the goods falling under CTH 0802 must
essentially ONLY be either "fresh" (recently produced or picked) or "dried" (with all the liquid
removed in order to preserve something). Any goods which are not fresh or which have
undergone any processes besides the drying process will fall beyond the scope of this Chapter
Heading.

The essential characteristics for the goods to merit classification under CTH
0802 0 arc as below:
• They MUST be known as Arcca Nuts
• They MUST be cither FRESH or DRIED (moisture removed with
a suitable method of drying such as sun drying, solar drying,
shade drying or artificial drying)
• They MAY be cither shelled or peeled
• Further classification may be WHOLE (0802 80 10), SPLIT (0802
80 20), GROUND (0802 80 30), OTHER (0802 80 90)
It may be seen that the heading 0802 covers only fresh and dried Arcca Nuts/Betel
Nuts and not preparation thereof There fore when the Betel Nuts arc roasted, they lose the
character of-Fresh or Dried" and will not be classified under the heading 0802 of the Tariff

5.2 The second competing entry for the Roasted Arcca Nut is at Chapter 20 of the
Customs Tariff. It provides as below:

CHAPTER 20 Preparations of Vegetables, Fruit, Nuts or Other Parts

Page 12 of 27
 ofPlant

2008 Fruits, nuts and other edible parts ofplants, otherwise prepared
or preserved; whether or not containing, added sugar or other sweetening
matter or spirit, not elsewhere specified or included

20081920- Other roasted nuts and seeds

Chapter 20 deals with Preparations of Nuts which arc not elsewhere specified or
included. As per Chapter Note 1(a) of Chapter 20, "Nuts, prepared or preserved by the
processes specified in Chapter 7, Chapter 8 or Chapter II; shall not fall in Chapter 20. Other
Roasted Nuts and Seeds arc specifically mentioned in Chaptcr/I leading 20081920. CTH
20081920 stipulates one specific condition for goods to be classified under CTH 20081920 i.c
nuts should be roasted. It is submitted that any roasted nut will merit classification under
Chapter 20 under the condition that they have not already been specified or included elsewhere.

5.3 Roasting is not aimed at additional preservation or stabilization or to improve or

maintain their appearance.

5.4 Roasting causes the deposition of an ash-like substance on the outer surface of the betel
nut. As per the article "Estimation of the Major Constituents of Areca nut in its different forms"
(copy attached) published on May 03, 2019 shows 'fable I as below-

?\rccanut Total Total Arecoline Total Alkaloids Total Protein Total Tannin Total Copper
I form Carbohydrate Concentration in Concentration Concentration Concentration Concentration
Concentration % in 96 in % in 96 by weight
in %

Unripcd 1.287879 0.052241035 0.062048193 0.039808 2.929166667 2.07

Riped 1.668182 0.07553*497 o-139759036 0.079615 6.572916667 3-3«
Dried 78568'18" 0.037091668 0.061445783 0.031058
I-------------------- 0.280492091 3-63
Rousted 0.759097 0.044850856 0.06445783’ 0.045385 3-56875 3-3<»
____________ I

It clearly indicates Areca nut forms unripe, riped, dried and roasted. Roasting process
causes substantial change in the chemical composition.

5.5 In the article "Estimation of Arecoline contents in Commercial Areca (Betel) Nuts
and its Relation to Oral Precanccrous Lesions" (copy attached) it states "the sundried nut
sample contained arecoline from 0% to 1.4% (mean: 0.5%): nuts from boiled varieties varied
from 0.4% to 13% (mean: 0.8%) and those roasted samples contained arecoline from 0.4% to
1.3% (mean: 0.9%), figure 1.

5.6 According to Oxford Dictionary "moderate” means neither very hot nor very cold. On
the other hand "roasting" means excess or very high heal treatment.

5.7 The goods arc known & traded in the market by the name "Roasted Areca Nuts". The
same can be viewed on various online marketplaces like https://www.amazon.in,
https://flipkart.com, https://indiamail.com

Page 13 of 27
5.8 urisdictional Commissioncratc has relied on various advance rulings which are
related o the products namely-:
a) Api Supari
b) Chikni Supari
c) Unfiavoured Supari
d) Flavoured Supari
c) Boiled Supari
The product is question is "Roasted Areca Nut" which is a distinctly different from all
the products mentioned above.

5.9 All the advance rulings CAAR/Dcl/Vaibhav/21/2021 in the ease of M/s Vaibhav
Enterprises, CAAR/Dcl/Sarvcshwari/11/2021 in the ease of M/s Sarveshwari industries,
CAAR/Dcl/Naman Agri/09/2021 in the case of M/s Naman Agri Impex Private Ltd,
CAAR/Mum/ARC/3/2021 in the ease of M/s Samreen International, CAAR/Del/Dry
Nut/01/2021 in the ease of M/s Dry Nut Enterprises arc relied on the Hon'blc Supreme Court
case of M/s. Crane Betel Nut however works reported at 2007 (210) E.L.T. 171 (S.C.)) which
stands nullified after the Central Government vide Clause 113 read with Schedule V of the
Finance Act (No.2) of 2009 dated 19th August 2009, amended the Chapter Note of Chapter 21
by including Note 6 in the chapter.

5.10 Chennai CESTAT order in M/s S.T. Enterprises v/s Commissioner of Customs
(Chennai-vii) [2021(378) E.L.T.514(Tri. Chennai)] referred by jurisdictional Commissioncratc
is for the imported goods being "Boiled Supari". So it cannot be relied upon as "Roasted Arcca
Nut" is distinctly different.

On the basis of above submissions, applicant has stated that Roasted ArccaNut (whole),
Roasted Arcca Nut (Cut) and Roasted Arcca Nut (Split) do not fall under the Chapter 8 of the
Tariff. Accordingly, they requested to issue a ruling.

6.1 I have considered all the materials placed before me in respect of the subject goods. I
have gone through the submissions made by the applicant during the personal hearing and a
rebuttal to the jurisdictional Customs Commissioncrate’s response as well as the response to
the application received from the jurisdictional Customs Commissioncrate. Therefore, I
proceed to pronounce a ruling on the basis of information available on record as well as existing
legal framework having bearing on the classification of the roasted arcca -nut. The issue before
me is to decide the classification of roasted arcca nuts under the Customs Tariff Act, 1975.

6.2 At the outset I have observed that the applicant has relied on the CAAR ruling issued
on 71/12/2022 in M/s Shchnaz Commodities International Pvt. Ltd.’s ease. Jurisdictional
Customs Commissioncrate has raised multiple objections in response to the application on two
fronts (1) on the claim of applicant to classification of Areca nut under CT1I 2008 of the
Customs Tariff Act, 1975, and (2) contents of the CAAR ruling in M/s Shchnaz’s case.
Normally, objections raised in case of any other ruling even if they pertain to same issue raised
under section 28(H)(2) of the Customs Act, 1962 will not be a subject matter of
analysis/examination in the ease of present application. However, since applicant has relied on
the contents of CAAR ruling in M/s Shchnaz’s ease and jurisdictional Customs
Commissioncratc has raised multiple objections on that ruling I prefer to examine various
aspect of the jurisdictional Customs Commissionerate’s response.

Page 14 of 27
6.3 Arccanut is a natural produce obtained from a tropical plant. This tree belongs to the
palm tree species. The kernel obtained from the fruit of arcca nut palm is known as the betel
nut or supari in India. The raw betel nut obtained is subjected to various processes to produce
various products. Depending upon the specific value additions made to raw arcca nut, different
varieties of arcca/betel nut such as API Supari, chikni supari, boiled supari, dried supari,
unflavoured supari, roasted supari, supari preparations etc. arc obtained. The goods covered
under the present application arc roasted betel nuts.
6.4 Applicant has stated that the following processes are involved in producing roasted
betel nuts. The raw betel nut is dc-husked and then sun-dried. The dried betel nuts arc then fed
to roasting ovens where they are roasted at the temperature of 130-150 degrees Celsius.
Subsequently, the roasted betel nuts arc cooled at room temperature. This cycle of roasting and
cooling is repeated a few times till the desired quality of the product is obtained. The processes
mentioned above cause changes in physical and chemical characteristics. Roasting causes the
deposition of an ash-like substance on the outer surface of the betel nut. It imparts a charred
appearance to the betel nut. Roasting also causes a substantial change in chemical composition,
especially in respect of tannin and arecoline content. Roasted Arcca Nut is used for eating
(mukhwas) directly as well as with paan (betel leaf).
During the course of the hearing, the samples of roasted supari were presented by the
applicant and same were examined. These were not the samples of the imported products. On
visual comparison the colours of roasted supari and normal supari were found different.
Roasted supari was dark grey in colour while normal supari was brown in colour. Roasted
supari without the addition of any ingredients to it is saleable in the Indian market in various
forms like tukda (pieces) roasted supari as well as shredded roasted supari. It was observed that
these roasted supari products arc sold in the market without any additives or without subjecting
to any other preparation than the roasting process. From the samples of products sold in the
domestic market it is observed that these roasted supari variants arc approved by FSSAI, a
government agency.
6.5 Before deciding on the issue, let me deliberate on the legal framework and relevance of
various case laws and rulings cited by both the applicant and jurisdictional commissioncratc.
The present application of the applicant needs to be seen in the context of a legal framework
governed by the Customs Tariff Act, 1975, Chapter/ Section notes along with IISN explanatory
notes and relevant judgments of the Courts. Rule 1 of the General Interpretation Rules (GIR)
lays down that the titles of sections, chapters and sub-chapters arc provided for case of
reference only; for legal purposes, classification shall be determined according to the terms of
the headings and any relative Section or Chapter Notes. Based on this fundamental rule I
proceed further to analyze present issue.
6.6 From the submissions of the applicant, the comments from the jurisdictional
commissionerate, previous CAAR rulings and honorable Supreme Court’s judgments in two
different cases the classification of roasted betel nuts involves examination of three different
chapters of the first schedule to the Customs Tariff Act, 1975 and relevant tariff entries therein
in which areca nut in one or the other form finds mention. Titles of these chapters are
reproduced below:
Chapter 8 Edible fruit and nuts; peel of citrus fruits or melons
Chapter 20 Preparations of vegetables, fruit, nuts or other parts of plants
Chapter 21 Miscellaneous edible preparations

6.7 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

Page 15 of 27
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 tor
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 be carried on
those goods under this chapter. Note 3 to Chapter 8 further states that Driedfruit or dried nuts
of this Chapter may be partially rehydrated, or treatedfor the following purposes:
(a) for additional preservation or stabilization (for example, by moderate heat
treatment, sulphuring, the addition ofsorbic acid or potassium sorbate);
(b) to improve or maintain their appearance (for example, by the addition ofvegetable
oil or small quantities ofglucose syrup), provided that they retain the character ofdried
fruit or dried nuts.
'The arcca/ betel nut is mentioned in Heading 0802, specifically under subheading
080280. 'The explanatory note to 1 leading 0802 states 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 impugned goods satisfy this note. However, the process of
roasting is not finding mention anywhere in this Explanatory Note to Chapter heading 0802. 1
also find that the roasted betel nuts - complete or cut - are fit for immediate human consumption
without addition of any other ingredient as seen from the printout of catalogue of the roasted
supari products sold in the domestic market submitted along with additional submissions. It is
important to note that these were not the samples of the proposed imports.

6.8 Now let me examine whether processes carried out on the subject goods arc covered by
the processes specified in the chapter 8. The processes mentioned in Chapter 8 include chilling,
steam ng, boiling, drying and provisionally preserving. It does not specifically include the
process of roasting. I lore it is important to understand the difference between the processes of
moderate heat treatment & dehydrating/drying referred in chapter 8 and roasting referred in
chapter 20. 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 I lon'blc Apex Court in
the case of Alladi Venkatcswarlu 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 offood". 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.
Dry roasting, oil roasting & fat roasting as a processes arc very much a part of chapter
heading 2008 by virtue of HSN Explanatory Notes. It is also pertinent to observe that none of
these processes are mentioned in the chapter note 3 to Chapter 8 of the Customs larill Act,
1975 as well as HSN Explanatory Notes to Chapter heading 0802.

6.9 Now, let me turn to the relevant chapter heading and tariff entry in chapter 20 of the
first schedule to the Customs Tariff Act, 1975.
CT11 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, ground nuts and other seeds, whether or not mixed together:

Page 16 of 27
 2008 19 20 — Other roasted nuts and seeds
While examining the scope of CTII 2008 I find 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, arcca
(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 is observed that the impugned goods i.c. roasted betel nuts, 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 specif cal ly mentioned as a process of
preservation or stabilization or a process to improve or maintain the appearance. This
corroborates the finding that the process of roasting is not covered by Note 3 to Chapter 8 and
hence these products, roasted betel nuts - whole, cut and split - arc not classifiable under
chapter 8 of the 'fariff.

6.10 I find that in two Supreme Court judgments, both under the Central Excise law just as
M/s Crane Betel nut case, the classification of roasted nuts was upheld by the apex court in
chapter 20 of the Central Excise Tariff Act, 1985. Interestingly, in both cases it was a case of
the Central Excise department that the roasted nuts fall under the chapter 20 of the Central
Excise Tariff Act. Further, unlike in Crane Betel nut case judgment, there was no legislative
change in the legal frame work to alter the effect of these judgments. 1 find that the ratio laid
down by the Supreme Court in two case laws in (1) Amrit Agro Industries Ltd. & Anr. v.
Commissioner of Central Excise, Ghaziabad (2007) 201 ELT 183 (SC), and (2) 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 upholding
the classification of roasted nuts, which also include roasted betel nut, under chapter 20 of the
then Central Excise Tariff Act, 1985 and present Customs Tariff Act, 1975.
Honorable Supreme Court’s decisions pertain to dispute over roasted nuts’
classification under one of the chapters among chapter 8, chapter 20 and chapter 21. In this
context it is pertinent to note that the Supreme Court of India in case of Commissioner of
Customs & Central Excise vs Phil Corporation Ltd in Appeal (civil) 2215 of 2002 dated
07/02/2008 has decided the classification of roasted nuts under Chapter 20 of the then Central
Excise Tariff. Relevant extracts of the judgment are as follows:
9. The learned Additional Solicitor General submitted that in the HSN Notes to Chapter
8, roasted groundnuts have been specifically excluded whereas in Note 1 ofChapter 20 of
the Central Excise TariffAct, all products where preservative solution is applied or dried,
dehydrated or evaporated, have been included. Note 1 of Chapter 20 states as under: -
"This chapter covers only products which are prepared or preserved by processes other
than merely chilled or frozen, or put in provisional preservative solution or dried
dehydrated or evaporated."
10. The learned Additional Solicitor General further submitted that the
controversy involved in this case is no longer res Integra. He placed reliance on the recent
judgment of this court in Amrit Agro Industries Ltd. & Anr. v. Commissioner of Central

Page 17 of 27
 Excise, Ghaziabad (2007) 201 ELT 183 (SC), according to which roasted peanuts would
fall under Chapter 20.
Para 6 of the judgment reads as under: - "Having gone through the records and having
examined the process undertaken by the assessee, we are in agreement with the view
expressed by the Tribunal ("CEGAT") regarding classification ofroasted peanuts under
Heading 20.01. The Tribunal had adopted a correct test when it says that the essential
structure of the peanut is not changed by the process of roasting. The assessee merely,
applies salt to roasted peanuts which does not obliterate the essential character
Moreover, roasting is a process. That process has not been excluded in Note 1 to Chapter
20. Therefore, roasted peanuts are covered by Chapter 20.
Even according to the Explanatory notes of IISN 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."
11. The learned Additional Solicitor General has also drawn our attention to
paragraph 7 ofthe saidjudgment which reads as under: -
"As stated above, roasted peanut is also a preparation, however, it is a preparation oj
nuts like almonds, peanuts, ground-nuts etc. They are products which are prepared or
preserved by processes like roasting. As stated above, roasting is not chilling, it is not
freezing. As stated above, roasting is not one of the enumerated processes in Chapter
Note No. 1 to Chapter 20. Heading 20.01 specifically refers to preparations ofvegetables
fruit, nuts or plants. Sub-heading 2001.90 refers to the word 'Other'. In the
circumstances, we are in agreement with the view expressed by the Tribunal that roasted
peanut falls under Chapter 20 and not under Chapter 21."
12. He contended that HSN is quite relevant for the purpose of deciding issues of
classification. In the present case, the HSN 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 clearly indicate that its products are excludedfrom Chapter 8 as
hey fall in Chapter 20 In these circumstances, it has been submitted that the classification
of the products in question have to be made under Chapter 20.
13. The learned Additional Solicitor General also placed reliance on the judgment of this
court in Collector of Central Excise, Shillong v. Wood Craft Products Ltd. (1995) 3 SCC
454. This court in paragraph 12 of the saidjudgment observed as under: -
"Accordingly, for resolving any dispute relating to tariffclassification, 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 ofany doubt the HSN is a safe guide for ascertaining
the true meaning ofany expression used in the Act. "
According to the department’s submission, in view of the LISN notes and the judgment oj
this court in Amrit Agro Industries (supra), the classification of the products in question
ought to be made only under Chapter 20.
28. We have heard the learned counsel for the parties at length and carefully analysed the
judgments cited at the Ear. The Central Excise TariffAct is broadly based on the system

Page 18 of 27

I
 ofclassification froi 77 ^ie International Convention called the Brussels' Convention on the
Harmonised Commo ^dlty Description and Coding System (Harmonised System of
Nomenclature) with ne< '-cssary modifications. HSN contains a list of all the possible goods
that are traded (include animals, human hair etc.) and as such the mention of an item
has got nothing to do who d is manufactured and taxable or not.
29. In a number ofcases, th. ;s court has clearly enunciated that the HSN is a safe guide for
the purpose of deciding issue ’s of classification. In the present case, the HSN explanatory
notes to Chapter 20 categori ;cally state that the products in question are so included in
Chapter 20. The HSN explan atory notes to Chapter 20 also categorically state that its
products are excludedfrom Chapter 8 as theyfall in Chapter 20. In this view ofthe matter,
the classification of the product's in question have to be made under Chapter 20.
32. In the instant case, for tfie comprehensive reasons, as stated in the preceding
paragraphs, it is crystal clear t hat the products of the respondent assessee have to be
classified under Chapter 20 of tha Central Excise TariffAct.
From the forgoing it is observed that the roasted nuts find specific mention in the then
chapter 20 of the Central Excise Tariff A cl and 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 expla natory 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 & 11 of the SC judgment (M/s Phil
Corporation) in which paras 6 & 7 of SC judgm'ent in case of M/s Amrit Agro arc relied upon.
I ionorable apex court’s conclusions corroborate the finding that the process of roasting is not
covered by Note 3 to Chapter 8 and hence these products, roasted betel nuts - complete as well
as cut - arc not classifiable under chapter 8 of the Tariff. Supreme Court judgments referred
above form the answer to multiple questions raised by the jurisdictional Customs
Commissioncrate.
Further, I find that, in view of clarity of both Supreme Court judgments, there is no
need to take recourse to the dictionary meaning of various terms like “preparation’,, ‘dried’,
‘fresh’ etc. It is important to note that it was a case of the department that the roasted nuts
should be classified under the chapter 20.
While delivering Phil Corporation judgment honorable Supreme Court has clearly spelt
out importance of IISN Explanatory notes in deciding the matters of elassification placing
reliance on the judgment of Supreme Court in the ease of Collector of Central Excise., Shillong
v. Wood Craft Products Ltd. (1995) 3 SCC 454. Honorable 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 ofany doubt the HSN is a safe guide for ascertaining the
true meaning ofany expression used in the Act.”
HSN Explanatory notes specifically mention that the dry-roasted, fat roasted and oil
roasted arc a (betel) nut arc included under CTH 2008 of the Customs Tariff. 'I’hcsc facts
completely wipe out the jurisdictional Commissioncrate’s claim that the term roasted betel nut

Page 19 of 27
is not referred.. inj the Customs Tariff Act, 1975. In the ease of CoHector of Customs, Bombay
Vs Bus incss Forms Ltd. 2002-TIOL-277-SC-CUS-LB, the HoiTble Supreme court held that
Explanatory Notes to HSN need to be given due consideration for classifying goods.
In regards to remaining competing Chapter 21, it is observed that it includes within its
ambit, miscellaneous edible preparations. Supplementary note 2 to Chapter 21 states '* ' in
' that
this Chapter “betel nut product known as Supari” means any preparation containing betel nuts,
but noj containing any one or more of the following ingredients, namely: lime, Katha (catechu)
« 1* TZ j1 /_____ J_______ 1-.-^

and tobacco whether or not containing

( any other ingredients, such as cardamom, copra or
imenthol. Betel nut .product
' known as “Supari
_ ” is mentioned in Subheading 21069030. Heading
2106 covers food preparations not elsewhere specified1 or included. Those food preparations
not specified or included elsewhere in the tariff being preparations for human consumption arc
heading. 'fhqreforc,
to be classified under this heading, Therefore, it appears that it is a residuary entry in respect
of edible fqod preparations. As a rcsylt. edible preparations shall be classified under this entry
only i 'the same is not classifiable under any of the other specific entries for edible preparations.
As the goods under consideration are already included in Heading 2008 of the Customs 1 aril!
Act, 1975,-they stand excluded from the scope of Chapter 21.

6.12 Now. let me discuss the relevance of M/s. Crane Betelnut Powder Works reported in
2007 (210) E.L.T 171 (S.C), which formed the basis for various rulings quoted by both the
applicant as well as jurisdictional commissioncrate. The aforementioned decision was in
relation to the Central Excise Act. 1944 and the question was as to whether certain changes
brought in the betel nut amount to manufacture under definition in section 2(f) of the Central
Excise Act' 1944 or not. Further, most importantly, this judgment pertains to dispute whether
the betel nut product under question falls under Chapter 8 or Chapter 21 of the Central Excise
T ariff Act. this ratio cannot be imported for the classification dispute between chapter 8 and
chapter 20.'
The Supreme Court judgement in the ease of M/s Crane Beetlenut stands nullified due
to subsequfcn't amendment in Chapter 21 of the Central Excise tariff Act, 1985 due to the
insertion of a chapter note in chapter 21 in the year 2009. Hence recourse to any CAAR rulings
which were primarily based on the honorable Supreme Court judgement in M/s Crane's case
is futile unde?the present legal framework. Further, I find that the betel nut in its various forms
finds classification in chapters 8, 20 and 21 of the schedule I of the Customs lariff Act, 1975
read with 1ISN Explanatory notes to the relevant headings under these chapters. General Rules
of Interpretation (GRI), specifically rule 1 and rule 3(a), to the Customs Tariff Act, 1975
provide further context for understanding of various tariff entries in the Tariff. The legal
framework mentioned above has to be factored in while deciding classification of betel-nut
proposed to be imported by the applicant
I observe that the ratio of M/s Crane Betel nut judgment of the apex court cannot be
followed in case of present application
(1) due to legislative change in the Central Excise Tariff subsequent to M/s Crane Betelnut
Powder Work’s judgment,
(2) for deciding the classification under chapter 20 of the Customs Tariff Act, 1975,
(3) due to availability of commodity specific SC judgments (1) Amrit Agro Industries Ltd.
& Anr. v. Commissioner of Central Excise, Ghaziabad (2007) 201 ELT 183 (SC), and (2)
Commissioner of Customs & Central Excise vs Phil Corporation Ltd in Appeal (civil)
2215 of 2002 dated 07/02/2008 on classification of roasted nuts under chapter 20 of
Central Excise Tariff Act.

Page 20 of 27
6.13 Here it is important to examine the claim that the CAAR, New Delhi in cases of M/s
Cosmos International, M/s Dry Nut Enterprises, M/s Exor Overseas, M/s Global Impex, M/s
Great Nuts Impex Pvt. Ltd., M/s Perfect Trading, M/s PG International, M/s Sarveshwari
Industries, M/s Star Spices,' M/s UBS Exports International Pvt. Ltd. and M/s Vaibhav
Enterprises, has classified the betel nut products under Chapter 8. I find that in none of these
CAAR rulings the classification of product ‘roasted betel nut’ was at all under consideration
and for that reason these rulings arc not applicable to the case in hand. However, I would like
to examine this matter in further details, jurisdiction Customs Commissioncrate, Chennai while
relying on the CAAR ruling in M/s Vaibhav Enterprises’ case (CAAR Delhi ruling no.
CAAR/Dct/Vaibhav/21/2021) has stated as follows:
" The CAAR rejects the application ofM/s Vaibhav Enterprises by giving the ruling that: API
Supari, Chikni Supari, Boiled Supari, Boiled and Cut supari, unfavoured supari andflavoured
supari, Roasted betel nut, merit classification under chapter 8 of the first schedule to the
Customs TariffAct and more precisely, under the heading 0801“
where the CAAR ruled that inter alia roasted betel nut merits classification under Chapter 8.
For analyzing the merit of this objection let us visit this ruling of the CAAR, New Delhi
which is reproduced verbatim below:

16. In view ofthe aforesaid discussions, I have reached the conclusion that all the six goods
placed before me for consideration, i.e., API supari, Chikni supari, boiled supari, boiled &
cut supari, unflavored supari, and flavored supari, merit classification under Chapter 8 of
the First Schedule to the Customs Tariff Act, and more precisely, under the heading 0802.
This is so in view ofthe fact that the processes to which raw green fresh betel nuts have been
subjected to obtain the said six goods are squarely in the nature ofprocesses mentioned in
Note 3 to Chapter 8, and have not materially changed the essential character of betel nuts,
as held by the Hon 'ble Supreme Court in the M/s Crane lietel Nuts case. Further, the said six
goods are not classifiable under sub-heading 2106 9030, as contended by the applicant, since
they have not attained the character of “preparations ” ofbetel nut, which is sine qua non for
a good to be so considered.
In this ruling the reliance is placed on judgement of the Ilon’blc Supreme Court of India
in the ease of M/s Crane Betel Nut Powder Works and of the CESTAT, Chennai in the ease of
M/S Azam Laminates Pvt. Ltd. From the text of ruling reproduced above it is clearly seen that
the classification of‘roasted betel nut’ was not at all a subject matter of ruling. Reference in
para 3 (iv) of this ruling related to flavor supari is not a reference to roasted betel nut/supari.
Process of roasting in fire gas rotary roaster is mentioned as one of the processes in preparation
of flavoured supari. This ruling has not taken into consideration legislative amendment in
Central Excise Tariff Act, 1985 by insertion of clause 113 read with Schedule V of the Finance
Act (No.2) of 2009 dated 19th August 2009, amending the Chapter Note of Chapter 21 by
including Note 6 in the chapter. As pointed out in two member AAR ruling in M/s Excellent
Betel Nut ease the effect of I lon’blc Supreme Court’s judgement in Crane Betel Nut Power
Works stands nullified and hence reliance on that judgement will not help in determining
present classification issue.
In this CAAR, New Delhi’s ruling the judgment of CESTAT Chennai in the case of
M/S Azam Laminates Pvt. Ltd is relied upon. This ruling relates to the product scented betel

Page 21 of 27
nut, and not to roasted betel nut. Jurisdictional Customs Commissioncrate has reproduced
falling portion from para 14 of M/s Vaibhav Enterprises’ ruling.
^Speaking more generally, in view ofthe design ofthe Schedule to the CTA, HSN andplethora
ofjudgements, besides common understanding and parlance, every irreversible process does
not result in obtaining a new product with a distinct classification even al the eight or ten­
digit level; and every irreversible process does not result in coming into being of a
‘'preparation of the raw material". Therefore, I conclude that the processes to which raw
betel nuts have been subjected to obtain API supari, Chikni supari, unflavored supari, boiled
supar' and boiled & cut supari are squarely in the nature of processes referred to in the
Chapter Note 3 to Chapter 8 and IISN Note. Therefore, at the end of the said processes, the
betel nuts retain the character of betel nut and do not qualify to be considered as
"preparations ” ofbetel nut, which is sine qua non for a good to be classifiable under Chapter

6.13.1 Merc it is pertinent to observe that these observations, relied upon by the
jurisdictional Customs Commissionerate, relate only to API supari, Chikni supari, unflavored
supari. boiled supari and boiled & cut supari. These observations do not relate even to flavoured
supari. not to talk of roasted betel nut/supari. Further the underlined portion of para 14 of the
CAAR ruling is squarely addressed in Supreme Court judgments in the cases of (1) Amrit Agro
Indust ■ies Eld. & Anr. v. Commissioner of Central Excise, Ghaziabad (2007) 201 ELT 183
(SC), ; ind (2) Commissioner of Customs & Central Excise vs Phil Corporation Ltd. Appeal
(civil) 2215 of 2002 dated 07/02/2008 while deciding the classification of roasted nut under
chapter 20. CAAR observations were pertaining to classification claim of applicant under
chapter 21 and not under chapter 20.
Therefore, arguing on the basis of findings of CAAR in M/s Vaibhav Enterprises’ ruling
in the matter of classification of roasted betel nut, falling under chapter 20 as per provisions of
the CI I 2008 of the Customs Tariff Act, 1975 and HSN Explanatory Notes related to Cl 1 2008,
is legally unsustainable. In case of M/s Vaibhav Enterprises ruling it is claimed by
jurisdictional Customs Commissionerate that the CAAR New Delhi has placed roasted betel
nut under chapter 8.1 lowcvcr, as discussed at length in para 6.10 ‘roasted betel nut’ was not at
all a subject matter of that ruling. I find that in view of specific CTH 2008 19 20 “Other roasted
nuts” in chapter 20 of the first schedule to the Customs Tariff, MSN Explanatory note to CTI1
2008 and previously mentioned two Supreme Court judgments I hold that ratio of the CAAR
ruling in M/s Vaibhav Enterprises’ case is not applicable to the classification of roasted
Areca/betel nut and hold that roasted betel nut is correctly classifiable under the tariff item
2008 19 20 of chapter 20 of the first schedule of the Customs Tariff Act. 1975.
6.13.2 I observe that none of the rulings referred by both the applicant as well as
jurisdictional commissionerate dealt with the impugned goods i.c. roasted betel nuts. Any
reference to previous CAAR rulings related to API Supari, Chikni supari, boiled supari and
unflavourcd supari is not relevant in the present case as a product for which an application for
advance ruling is filed is distinctly different from all these varieties of betel nut/supari.
Applicant has claimed that the Roasted arcca nut, which is a roasted supari, is a distinctly
different product in terms of physical & chemical character, colour as well as the presence in
the market as a distinct saleable product from the betel nut variants covered under various
CAAR rulings quoted by the jurisdictional Customs Commissioncrates.

Page 22 of 27
6.14 The jurisdictional Commissioncrate in their comments submitted that mere roasting of
the betel nut does not constitute a ‘preparation’. They have, in respect of Chapter 20, pointed
out that Chapter 20 docs not cover vegetables, fruit or nuts, prepared or preserved by the
processes specified in Chapters 7, 8 and 11. Merc roasting of betel nut does not render a new
product or docs not alter the character of the original good, but remains the betel nut which is
already classified under Chapter 8. As the betel nut is already mentioned in Chapter 8, it can’t
be classified in Chapter 20. It is stated that the process of mere roasting of betel nut docs not
render a new product or docs not alter the character of the original good, but remains the betel
nut which is already classified under Chapter 8. As the betel nut is already mentioned in
Chapter 8, it can’t be classified in Chapter 20.
This aspect was discussed at length in the Hon’ble Supreme Court's judgements in M/s Phil
Corporation case. Relevant extracts are reproduced below.
10. The learned Additional Solicitor General further submitted that the controversy involved
in this case is no longer res Integra. He placed reliance on the recent judgment ofthis court in
Anirit Agro Industries Ltd. & Anr. v. Commissioner of Central Excise, Ghaziabad (2007) 201
ELT 183 (SC), according to which roasted peanuts wouldfall under Chapter 20.
Para 6 of the judgment reads as under: - "Having gone through the records and having
examined the process undertaken by the assessee, we are in agreement with the view expressed
by the Tribunal ("CEGAT") regarding classification ofroasted peanuts under Heading 20.01.
The Tribunal had adopted a correct test when it says that the essential structure ofthe peanut
is not changed by the process of roasting. The assessee merely applies salt to roasted peanuts
which does not obliterate the essential character. Moreover, roasting is a process. That process
has not been excluded in Note 1 to Chapter 20. Therefore, roasted peanuts are covered by
Chapter 20.

Even according to the Explanatory notes ofHSN 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. "
11. The learned Additional Solicitor General has also drawn our attention to paragraph 7 of
the saidjudgment which reads as under: -

"As stated above, roasted peanut is also a preparation, however, it is a preparation ofnuts like
almonds, peanuts, ground-nuts etc. They are products which are prepared or preserved by
processes like roasting. As stated above, roasting is not chilling, it is not freezing. As stated
above, roasting is not one of the enumerated processes in Chapter Note No. 1 to Chapter 20.
Heading 20.01 specifically refers to preparations of vegetables fruit, nuts or plants. Sub­
heading 2001.90 refers to the word 'Other'. In the circumstances, we are in agreement with the
view expressed by the Tribunal that roasted peanut falls under Chapter 20 and not under
Chapter 21."

Therefore, an argument that a mere roasting doesn’t amount to preparation is not a

sustainable ground for rejecting the classification of roasted nuts under Chapter 20 of the
Customs Tariff Act, 1975. I observe that in the previously referred 11SN Explanatory Note to
chapter 20 a reference to “dry-roasted, oil-roasted or fat-roasted" indicates the principal
processes of preparation that would change the classification of nuts from Chapter 8 to Chapter
20. Further, the goods under consideration arc not excluded by any chapter note or explanatory

Page 23 of 27
note from CT Heading 2008. Therefore, it is evident that the roasted betel nuts arc classifiable
under Heading 2008 based on the terms of the Heading 2008 and HSN Explanatory Notes to
Chapter 20. Therefore, I find the statement of the jurisdictional commissioncratc as legally
untenable.
6.15 The jurisdictional Commissioncratc in their comments stated that the term roasted betel
nut is not mentioned in the Customs Tariff Act and that roasted betel nut is a term of common
trade parlance/inventcd word. In this regard, 1 disagree with the observations of the
jurisdictional commissioncratc that the term is not mentioned in the Customs Tariff Act. I find
following CT11 specifically mentioned in the Tariff.
CTH 2008: Emits, 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, ground nuts and other seeds, whether or not mixed together:
2008 19 20 — Other roasted nuts and seeds

While examining the scope of CTH 2008 1 find 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.

6.16 Further, it is argued that the term ‘roasted betel nut’ is an invented word. I don’t find
the term- “roasted betel nuts”, as the invented words of the applicant. “Other (than groundnut)
roasted nuts” is a specific tariff entry at CTH 2008 19 20 of the first schedule to the Customs
Tariff Act, 1975. Previously referred two Supreme Court judgments viz. Commissioner of
Customs & Central Excise vs Phil Corporation Ltd in Appeal (civil) 2215 of 2002 dated
07/02/2008. and Amril Agro Industries Ltd. & Anr. v. Commissioner of Central Excise,
Ghaziabad (2007) 201 ELT 183 (SC) have decided the issue of Roasted nuts classification
under chapter 20 of Central Excise Tariff significantly relying on relevant HSN Explanatory
Notes. In fact, HSN Explanatory Notes to CTH 2008 of the Customs Tariff specifically mention
that the heading includes “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,
flavor rs, spices or other additives”.

6.17 Among many objections 1 find one observation of the jurisdictional Customs
Commissioncratc quite important. The applicant's claim that after repeated roasting for 2-3
days under 130-150 degrees Celsius in a roasting oven due to which the water content is
reduced to 10-15% is a complete misrepresentation of facts. Jurisdictional Commissioncratc
has stated that it is evident by the fact available with this office vide (based on) test reports that
a raw betel nut falling under Chapter 8 has a moisture content of less than 10% and the betel
nut undergoing repeated roasting and severe heat treatment has a water content 10 to 15%
appears incorrect. I agree with this observation of the Commissioncratc. As mentioned earlier,
actual samples of the imported goods can be drawn and tested for ascertaining the actual
moisture content by the jurisdictional Customs Commissioncratc at the time of Customs
Compliance Verification (CCV) of the imported goods before clearance (Out of Charge
(OOC)) is granted to ensure that the goods arc conforming to what is declared in the import
documents. I also do not agree with the comment of the jurisdictional commissioncratc that

Page 24 of 27
there was any misrepresentation of facts or non-observanee of due process. Applicant has a
right to present its case during the course of personal hearing. Veracity of applicant’s claim
related to issues like moisture content can be very well examined by the jurisdictional Customs
Commissioneratc at the time of actual import by drawing and testing of the samples of imported
goods from the concerned agency.

6.18 1 have also observed that there arc few comments on the structure of the chapter 20 in
the Tariff. Chapter 20 contains 9 chapter headings. These headings belong to preparations of
vegetables, fruits and nuts - three categories. It is obvious that in those 9 headings few headings
will be preceded by altogether unrelated chapter headings. For example, entry related to nuts
may precede by entry related to cither fruits or vegetables. Merely because of this fact it cannot
be argued that the entry related to nut cannot find its place alongside jams and marmalades.
Comments arc expected on the applicant’s claim to classification and not on the structure or
design of the tariff or the I ISN Explanatory notes. Such issues arc beyond the scope ofCAAR’s
rulings.
It is further suggested by the jurisdictional Customs Commissioncrate that the CAAR
may not entertain such applications considering that several advance rulings have already
rejected the classification of betel nut under chapter 20 and 21 in the interest of the local areca
nut industry and to safeguard the interest of the revenue. CAAR ruling is based on the extant
legal framework which is assumed to have factored in considerations like protection of local
trade and industry as well as revenue interest. No additional bias can be brought in by the
CAAR in the prevailing legal framework.

6.19 Note 3 to Chapter 8 specifics certain treatments that could be carried out on the dried
nuts for additional preservation or stabilization or to improve or maintain their appearance. The
applicant in their application has declared that the objectives of the roasting arc not as specified
in the said note. Further, as per the above note, the processes that could be carried out arc
moderate heat treatment, sulphuring, and the addition of sorbic acid or potassium sorbate by
the addition of vegetable oil or small quantities of glucose syrup. Applicant has submitted that
the process of roasting is different from all the processes mentioned above. Roasting, as
submitted by the applicant, is carried out using firewood/ palm kernel-based ovens and the
temperature of the flames is around 600 degrees Celsius, due to which betel nuts arc roasted
well beyond 100 degrees Celsius, usually in the range of 130-150 degrees Celsius. This clearly
indicates that the roasting is much more than mild heat treatment. 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, 'fhcrcforc, the impugned
goods do not satisfy Note 3 to Chapter 8. Consequently, 1 find that the claim of the jurisdictional
commissioncrate that the process of roasting is covered in only Chapter 8 is untenable. If it was
really a case, then neither the Customs 'Tariff Act, 1975 would have accommodated an
independent tariff entry for ‘Other roasted nuts’ in chapter 20 nor the IISN Explanatory Notes
would have provided explanation for various types of roasting processes carried out on
different types of nuts, including areca nut.

6.20 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 Chapter does not cover vegetables, 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 1 I arc classifiable in Chapter 20. The processes specified in Chapters 7, 8 or
11 mainly include freezing, steaming, boiling, drying, provisionally preserving and milling,
'fhcrcforc, any vegetable, fruit, nut or edible parts of a plant which is prepared or preserved by

Page 25 of 27
 I

any other process than these arc 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
earlier 1 find that the processes mentioned in chapter 8 do not cover oil, dry or roasting
processes.

6.21 As per General Rules of Interpretation (GIR) 3(a) of the Customs Tariff Act, 1975,
when by application of GIR 2(b) or for any other reason, the goods are, prima facie, classifiable
under more than one Heading, the ‘most specific description’ is preferred. When the Chapter/
Section notes along with terms of heading and explanatory notes arc examined for both
Headings 0802 and 2008, it is observed that roasted nuts which include roasted betel nuts find
a spcci le description in Heading 2008. Therefore, on the basis of application of GIR 3(b) also,
the subject goods merit classification under Heading 2008 and more specifically under
subheading 2008 19 20: “Other roasted nuts and seeds”.

6.22 The applicant, vide letter dated 10.02.2023, has requested the Authority to keep
ordcr/ruling in case of their applications confidential. Regulation 27 of the Customs Authority
for Advance Rulings Regulations, 2021 as amended vide Notification No. 63/2022-Customs
(N.T.) dated 20.07.2022 reads as:
27 . Publication of orders or advance rulings. - Such of the orders or advance rulings of
the Authority, as the Authority deems fit for publication in any authoritative report or the
press, may be releasedfor such publication on such terms and conditions as the Authority
may specify.
Provided that at the request of the applicant, the Authority may take necessary steps in
order to protect commercially confidential information.
Accordingly, the request of the applicant to protect commercially confidential
information is approved by keeping the ruling confidential.

7. I rule on the basis of foregoing that the Roasted areca/betel nuts - whole, split and cut­
fall under Chapter heading 2008, specifically under Tariff entry 2008 19 20: ‘Other roasted
nuts & seeds’ of the first schedule of the Customs Tariff Act, 1975.

o J W vy
(Narendra V. Kulkarni)
Customs Authority for Advance Rulings,
Mumbai
=4^^ For Advonea

Page 26 of 27
-
F.No. CAAR/CUS/APPL/89/2022-O/o Commr-CAAR-Mumbai Dated: 01.03.2023
This copy is certified to be a true copy of the ruling and is sent to: -

1. M/s Neena Enterprises, Shop No. 8, First Floor, 5-1-767/8/FF, Vithal Das Market,
Koti, Hyderabad, Telangana - 500095.
Email: neenaenterprises2022@gmail.com
2 The Commissioner of Customs II, Chennai Import Commissioneratc, Rajaji Salai,
Chennai-600001
Email: commr2-cuschn@gov.in

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

4. The Principal Chief Commissioner of Customs, Mumbai Customs Zone-I, Ballard

Estate, Mumbai -400001.
Email: ccu-cusmuml@nic.in

5. The Chief Commissioner(AR), Customs Excise & Service Tax Appellate

Tribunal(CESTAT), West Block-2, Wing-2, R.K. Puram, New Delhi - 110066.
Email: cdrcestatl 23@gmail.com, ccar.cestat-delhi@gov.in

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

7. The Member (Customs), Central Board of Indirect Taxes, North Block, New Delhi-
110001 Email: mem.cus-cbec@nic.in

8. Guard file.
^Sf«
(ManofdCumaA lissa)
>5 Sccretary/Additional Commissioner,
Customs Authority for Advance Rulings,
*
I
'C
b'^^ority For
Mumbai

Page 27 of 27