Advance Ruling on Classification of Roasted Areca Nuts – CAAR Delhi

In re R V International (CAAR Delhi)
M/s R V International, C-208, Mayapuri, Phase-II, New Delhi – 110064, hereinafter referred to as the applicant, in short, filed the instant application in Form CAAR-1 before the Customs Authority for Advance Rulings, New Delhi (CAAR, in short) for seeking advance ruling. The above said firm is a proprietorship firm of Mr. Prabhjyot Singh Dang. Importer-Exporter Code of the firm is 0513091645, PAN No. is AGQPD1949R and the GST Number is 07AGQPD1949R1ZN. The said application was received in the Secretariat of the CAAR, New Delhi on 31.07.2024 along with their enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The applicant intends to import “Roasted Areca Nuts (Whole), Roasted Areca Nuts (Split) and Roasted Areca Nuts (Cut)” from Myanmar, Indonesia, Sri Lanka, Thailand and Singapore etc.
2.1. That the applicant approached this Authority for seeking advance ruling qua th-goods as mentioned in the following paras as applicant intends to import the same and hewer would like to have a proper understanding and clarification as to whether the goods being imported shall be covered under a particular classification or the other. The applicant in the instant application submitted as under: –
2.2. That the nomenclature and details of the goods being sought to be imported by the applicant are as under: –
(i) Roasted Areca Nuts (whole)
(ii) Roasted Areca Nuts (Split)
(iii) Roasted Areca Nuts (cut)
2.3. That the processes carried out on the Roasted Areca Nut (Whole), Roasted Areca Nut (Split) and Roasted Areca Nut (Cut) are as under: –
a. De-husking the raw betel/ areca nut and drying the same before being fed into the roasting oven;
b. Feeding the fresh areca nuts into a seed roasting oven. heating up the betel nuts would be roasted well beyond 100 degree Celsius, usually in the range of 130-150 degree Celsius and roasting the fresh areca nuts is done using firewood/palm karnel-based ovens of the seed roasting machine and temperature of the flames is around 600 degrees Celsius.
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 areca nuts goes below 6%; and
d. The fresh areca nuts are repeatedly heated, roasted and cooled to ensure that the areca nuts are quickly cooled and shrunk after thermal expansion so that the roasted areca nuts have higher quality; the roasting time is around 2-3 days.
e. That packaging in industrial packs of 30kgs to 80kg as per the requirement.
2.4. That roasted betel nut, thus undergoes a change in its appearance as well as in its chemical characteristics on account of the roasting process. There is a substantial change in the chemical characteristics of the betel nut product on account of roasting process. The tannin and arecoline content of raw betel nut/areca nut get substantially changed by subjecting the same to roasting. Therefore, roasted betel nut is a distinctive product of betel nut making it suitable for immediate consumption. Roasting is not aimed at additional preservation or stabilization or to improve or maintain their appearance. Roasted Areca nut is used for eating (mukhwas) directly as well as with paan (betel leaf).
2.5. That according to the limited knowledge and information, the applicant has got the goods as stated above are covered and are classifiable under CTH 20081920 of the Customs Tariff Act, 1975. As per the HSN Explanatory Notes to Heading 2008, given below, Dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008.
2.6. That the CTH headings describe as bellow:
CTH 2008- Furit, 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
CTH 2008 19 20- Other Roasted Nuts and seeds.
2.7. That as per the Explanatory Notes to Chapter 8, fruits and nuts of this Chapter remain classified here even if put up in airtight packing (e.g. dried prunes, dried nuts in cans). In most cases, however, products put up in these packing have been prepared or preserved otherwise than as provided for in the headings of this Chapter, and are therefore excluded from chapter 8 (and will fall under Chapter 20). The processes mentioned in Chapter 8 are different from the processes performed on impugned goods; they are excluded for the purpose of classification from Chapter 8 of the Customs Tariff Act, 1975 (hereinafter also referred as “Tariff’).
2.8. That further HSN explanatory note qua Chapter 20 explains as below:
This Chapter includes:
(1) Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by vinegar or acetic acid.
(2) Vegetables, fruit, nuts, fruit-peel and other parts of plants preserved by sugar.
(3) Jams, fruit jellies, marmalades, fruit or nut purées, fruit or nut pastes, obtained by cooking,
(4) Homogenized prepared or preserved vegetables and fruit.
(5) Fruit or vegetable juices, neither fermented nor containing added alcohol, or of an alcoholic strength by volume not exceeding 0.5 % vol.
(6) Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by other processes not provided for in Chapter 7, 8 or 11 or elsewhere in the Nomenclature.
…..
It includes, inter alia:
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, flavour, spices or other additives
2.9. It is submitted that for the purpose of classification of goods the Explanatory notes are guiding factors wherever any dispute arises while interpretation the classification of particulars chapters or in case of similar or competing entries and this has been held time and again in catena of judgments by the Hon’ble Courts in India in the matters 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.).
2.10. That, in fact for similar product Ruling No. CAAR/Mum/ARC/39,40&41/2023 dated 07.12.2022 passed in the matter of M/s. Universal Impex, Mumbai Vs. the Commissioner of Customs II, Chennai, the Commissioner of Customs, Nhavasheva & the Commissioner of Customs (Krishnapatnam), Andhra Pradesh in Application No. CAAR/CUS/APPL/19, 21 22/2023-0/o Commr.-CAAR-MUMBAI, where identical goods are held classifiable under 20081920.
2.11. That, however the Customs Department had challenged the Advance Ruling of the CAAR, Mumbai of M/s Shahnaz Commodities International (P) Ltd. Chennai. M/s Neena Enterprises, Telangana and M/s Universal Impex, Mumbai, by way of a Civil Miscellaneous Appeal (CMA) No’s 600/2023, No. 1206/2023 and No. 1750/2023, dated 01.08.2023 respectively before the Hon’ble Madras High Court, wherein the Division Bench of Hon’ble Madras High Court after elaborately hearing all the parties dismissed the CMA’s of the Customs Department, thereby upholding the aforesaid ruling of the CAAR. Mumbai.
2.12. That, Ruling No. CAAR/Del/Shree Durga/26, 27 & 28/2023 dated 17.11.2023 of Hon’ble Authority passed in the matter of M/s. Shree Durga Traders, Kolkata Vs the Commissioner of Customs (Preventive) Kolkata, the Principal Commissioner of Customs, Chennai II (Import) & the Principal Commissioner of Customs Nagpur in Application No. 22. 23 & 24/2023-DELHI 0/o Commr-CAAR-NEW DELHI, where identical goods are held classifiable under 20081920.
2.13. That Ruling No. CAAR/Mum/ARC/67/2023 dated 16.10.2023 of Hon’ble Authority passed in the matter of M/s. Shree Ganesh Traders, Chennai Vs. the Commissioner of Customs II (Import), Chennai, in Application No. CAAR/ CUS/APPL/95/2023-0/0 Commr-CAAR-MUMBAI, where identical goods are held classifiable under 20081920.
2.14. That the process of roasting thus changes the chemical and physical characteristics of the areca nut by reducing arecoline and tannin as well moisture. In view of above the applicant would like to have advance ruling on the following issue:
“Whether the goods sought to be imported i.e. Roasted Areca Nuts (Whole), Roasted Areca Nuts (Split) and Roasted Areca Nuts (Cut)” is classifiable under the CTH 200 19 20.
2.15. That the applicant requested the Hon’ble Authority for Advance Rulings that the appropriate classification of the aforesaid goods may kindly be ruled under section 28H of the Customs Act, 1962.
2.16. In the statement containing applicant’s interpretation of law and / or facts, as the case may be, in respect of question (s)on which Advance Rulings is required, as under:
a. That the goods in question which are to be imported by the applicant is Roasted Betel Nut and hence should rightly be classifiable under CTH 2008 and more particularly in 20081920.
b. That as per the explanatory note to Chapter 8 fruit and nuts of this Chapter remain classified here even if put up in airtight packing (e.g., dried prunes, dried nuts in cans). In most cases, however, products put up in these packing have been prepared or preserved otherwise than as provided for in the headings of this Chapter, and are therefore excluded from Chapter 8 and therefore will fall under Chapter 20.
c. That as the processes mentioned in Chapter 8 are different from the processes performed on the goods intended to be imported by the applicant, they are Page 4 of 14 excluded for the purpose of classification from Chapter 8 of the Customs Tariff Act. 1975 (hereinafter also referred as ‘Tariff).
d. That there is specific entry for the goods i.e. Roasted Nuts as given under:
CTH 2008- 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.
CTH 2008 19 20- Other Roasted Nuts and seeds.
e. Further, the HSN Explanatory Note of Chapter 20 also support the contention that the Roasted Betel Nut are covered under CTH 20 as detailed below-
CHAPTER 20: This Chapter includes:
i. Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by vinegar or acetic acid.
ii. Vegetables, fruit, nuts, fruit-peel and other parts of plants preserved by sugar.
iii. Jams, fruit jellies, marmalades, fruit or nut purées, fruit or nut pastes, obtained by cooking,
iv. Homogenized prepared or preserved vegetables and fruit.
v. Fruit or vegetable juices, neither fermented nor containing added alcohol, or of an alcoholic strength by volume not exceeding 0.5% vol
vi. Vegetables, fruit, nuts and other edible parts of plants prepared or preserved by other processes not provided for in Chapter 7, 8 or 11 or elsewhere in the Nomenclature.
….
It includes, inter alia:
i. Almonds, ground-nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavors, spices or other additives.
f. That so far as the goods sought to be classified i.e. roasted areca nuts. These goods are chewed for a variety of reasons such as stress reliever, mouth freshener, concentration improver and digestive following food intake. The subject goods are specifically covered and are classifiable under CTH 2008 19 20 of the Customs Tariff Act, 1975. As per the HSN Explanatory Notes to Heading 2008, Dry Roasted Areca (or Betel) Nuts are specifically covered under Chapter Heading 2008.
g. CHANGE IN THE BETEL NUT BY THE PROCESS OF ROASTING: With regard to the goods in question, it is submitted that during the process of roasting, the roasting is done using firewood / palm kernel-based ovens and the temperature of the flames is around 600 degrees Celsius and as a result, the betel nuts would be roasted well beyond 100 degrees Celsius, usually in the range of 130-150 degrees Celsius. The roasted betel nut undergoes a change in its appearance as well as in respect of its chemical characteristics on account of the roasting process. After the processing, there is a visible deposition of an ash-like substance on the outer surface of the betel nut. The tannin and arecoline content of raw betel nut/ areca nut gets substantially changed by subjecting the same to roasting. Therefore, roasted betel nut is a distinctive product of betel nut making it suitable for immediate consumption. The roasting is not aimed at additional preservation stabilization or to improve or maintain their appearance.
h. That in this regard applicant takes support from the article titled “Estimation of arecoline content of various forms of areca nut preparations by high-pressure thin-layer chromatography” which throws light on the chemical composition of various forms of areca 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 areca nuts and decreases significantly with increasing maturity. The roasted nut possesses the highest average 17/65 content of tannins, ranging from 5 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 areca nut contains the highest concentration of arecoline (1. 15 ± 0.008) followed by pan masala preparations (0.94 ± 0.006), least content in boiled areca nut (0.79 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.
i. From the above detail and process mentioned above, it is clear that the product though uses the betel nut / areca nut as main raw material however, in the process for various other products are mixed and becomes a preparation and hence these goods clearly falls under the chapter heading 21 and more particularly CTH 2106 90 30 as stated and not under Chapter 8 of Customs Tariff and more particularly CTH 08029000 which is for the product namely Areca nut.
j. That in fact, for similar product, Hon’ble CAAR Mumbai has already issued a Rulingthereby declaring the above said goods falls under CTH 20 and particularly under CTH 200819 20 and not under CTH 8. The said ruling has been given in the case of in Ruling dated 07.12.2022 no. CAAR/Mum/ARC/44, 45 & 46/ 2022 in Application no. AAR/Cus/APPL/70,77 & 78/2022 – 0/o Commr-CAAR-Mumbai (Applicant-M/s Shahnaz Commodities International, Chennai).
k. Further, in fact, the customs authority challenged the said Advance Ruling before the Hon’ble High Court of Madras vide CMA No. 600, 1206 and 1750 of 2023 – The Commissioner of Customs Chennai Vs. M/s Shahnaz Commodities International P. Ltd. However, the said cases were rejected by the Hon’ble High Court vide its judgment dated 01.08.2023. The Hon’ble High Court has after considering all the other chapter including chapter 08, and chapter 21 of Customs Tariff and also considered the other rulings as submitted by the customs authority though qua other goods i.e. boiled areca nuts, API supari, unflavored supari etc.
l. It has been observed by the Hon’ble High Court that the Rulings of the Advance Ruling Authority did not deal with Roasted Areca Nut and thus would have no relevant to the issue on hand. Further, it has been held that Roasting is a process treated to be distinct from the process of boiling and drying, in fixing the classification in respect of betel/ areca nut under CTH: that roasted betel /areca nut having been specifically classified under CTH 2008 19 20, the attempt to classify under CTH 08 02 80 would fall foul of the settled rule of construction that specific entry would prevail over general entry. Also it is held that HSN explanatory notes are normally a safe guide in determining classification under CTH. Roasted Areca / betel nut having mentioned in CTH 2008 19 20 under HSN the impugned Ruling is in consonance with HSN classification and that when there is a specific entry covering a product/ commodity, the test of common parlance is irrelevant in determining classification. Hence, the subject goods i.e. Roasted Areca Nuts are covered under the classification 2008 19 20 and cannot be covered under CTH 08 which stand has been taken by the customs authority before this Hon’ble Authority as well as before the Hon’ble High Court and their said contention has been rejected.
m. That the applicant has made the present application bonafide and seeks the kind indulgence of this Hon’ble authority thereby seeking the subject goods under classification CTH 20 and more particularly under the CTH 2008 19 20 and requested the authority to pass the order for appropriate classification of the goods as explained herein above.
3. The requisite Comments of the concerned Commissionerate i.e. Commissioner of Customs, Custom House, G.T. Road, Sahnewal, Ludhiana with regard to points raised in the application, has been received, as under: –
3.1 In this regard, it is intimated that with respect to the classification of the ‘Roasted Area Nut’, it is submitted that classification of any goods is decided as per General Rules of Interpretation, relevant chapter/section notes and references are also taken from HSN explanatory notes issued by WOO. For the classification of the goods Roasted Areca Nut and Roasted Areca Nut Cut, two headings 2008 & 0802 are being examined by this office. Text of these heading is reproduced below.
“CTH 0802: OTHER NUTS, FRESH OR DRIED, WHETHER OR NOT SHELLED OR PEELED CTH 2008: 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”
3.2. As per HSN Explanatory notes to Chapter 8, this Chapter covers fruit, nuts and peel of citrus fruit or melons (including watermelons), generally intended for human consumption (whether as presented, or after processing). They may be fresh (including chilled), frozen (whether or not previously cooked by steaming or boiling in water or containing added sweetening matter) or dried (including dehydrated evaporated or freeze-dried); provided they are unsuitable for immediate consumption in that state, they may be provisionally preserved (e.g., by Sulphur dioxide gas, in brine, in Sulphur water or in other preservative solutions). From the above-stated explanatory notes to Chapter 8, it appears that the processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. However, it does not specifically include the process of roasting.
3.3. The explanatory notes to CTH 0802 are reproduced as under:
“The principal nuts of this heading are almonds (sweet or bi/er), hazelnuts or filberts, walnuts, chestnuts (Castanea spp.), pistachios, macadamia nuts, pecans and pine nuts.
This heading also covers areca (betel) nuts used chiefly as a masticatory, col-(kola) nuts used both as a masticatory and as a base in the manufacture Or beverages, and an edible, nutlike, spiny-angled fruit of the species Trepanations. sometimes referred to as a water chestnut.
3.3.1. This heading does not include:
a. The edible tuber of the species Eleocharis dulcis or Eleocharis tuberose. commonly known as the Chinese water chestnut (heading 07.14).
b. Empty walnut or almond hulls (heading 14.04).
c. Ground-nuts (heading 12.02), roasted ground-nuts or peanut butter (heading 20.08).
d. Horse chestnuts (Aesculus hippocastanum) (heading 23.08).
The above-mentioned explanatory notes to CTH 0802 includes areca nuts, however, it does not specifically include the roasted Areca-Nut/Betel Nut.
Further, these explanatory notes to CTH 0802 also mentions that Ground­nuts are of heading 12.02 whereas roasted ground-nuts are included under heading 20.08.
3.4. The relevant explanatory notes to CTH 2008 are reproduced as under:
“This heading covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise, than by any of the processes specified in other Chapters or in the preceding heading of this Chapter:
It includes, inter alia:
a. Almonds, ground-nuts, areca nuts and other nuts, dry-roasted, oil-roasted or fat roasted, whether or not containing or coated with vegetable oil, salt flavors, spices or other additives.”
The above-mentioned explanatory notes CTH 2008 specifically include the roasted areca nuts.
4. A personal hearing in the matter could not be conducted, as neither the Custom Port Authority requested for the opportunity of personal nor the applicant wished for the same. The requisite comments of the Custom Port Authority was forwarded to the AR of the applicant vide email dated 01.10.2024 for providing rebuttal / additional submission, if any. The AR of the applicant vide email dated 02.10.2024 submitted that the applicant M/s R V International do not want any further personal hearing in this matter and most humbly prayed that this Hon’ble Advance Ruling Authority may take the attached additional submissions on record along with the Advance Ruling passed by the Authority of Advance Ruling New Delhi and Mumbai, into consideration while passing orders in the interest of justice.
5. The authorised representative of the application in their rebuttal reply to the comments of the customs port Commissionerate along with additional submissions, submitted, as under:
a. That it is submitted that the comments on the application filed by the respondent, are not opposed for the advance ruling sought by the applicant for the goods i.e. roasted areca nut under CTH 20081920.
b. That the roasting falls under the process of Moderate Heat Treatment which mentioned under Chapter Note 3 of Chapter 8 which examined as under and found that the term “Moderate heat Treatment” moisture content in ‘Raw areca nut’ is anywhere between 10% to 15%. After, the process of drying the moisture content is reduced to a maximum of 6% to 7%. Further any amount of drying or moderate heat treatment cannot remove the moisture content below the said level of 6%. Further, only by the process of roasting, by use of roasting ovens / furnace. the moisture content in “Roasted Areca Nut” is brought below 4% by process of competing of multiple cycle of heating and cooling of the nuts at room temperature. The roasting of the nuts also made it crispy by changing its internal structure as well as chemical changing of the ingredients of the nuts by reducing of Arecoline by Homarcoline.
c. That the process is not uncontrolled repeat roasting. The process is controlled to the extent of converting “Raw Areca Nut” to “Roasted Areca Nut” of given standard. The process is controlled as to not resulting in overcooking which would spoil the product. All imports are tested for FSSAI standards before clearance of home consumption and the applicants shall abide by all the laws of the land applicable on the products. The applicant has produced the photographs and video of the process with these submissions. It can be seen that the product under consideration is prepared with processes other than those Chapter Note 3 and is thus excluded from chapter 8 In terms of HSN General Exclusion Note 3 to Chapter 8. It is contended that the process of roasting cannot be equated with the term drying as this would render the heading description “Roasted Nuts” of 2008.19.20 of schedule Ito Indian customs Tariff Act 1985, as otiose.
d. That 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 11 are classifiable in Chapter 20. The processes specified in Chapters 7, 8 or 11 mainly include freezing. steaming, boiling, drying, provisionally preserving and milling. Therefore, any vegetable, fruit, nut or edible parts of a plant which is prepared or preserved by any other process than these are liable to be classified under Chapter 20. Heading 2008 covers Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included. Roasting is a process used for bringing in to existence roasted nuts and as discussed earlier I find that the processes mentioned in chapter 8 do not cover roasting process. Therefore, The Roasted Areca Nut is totally different from Dry Areca Nut.
e. That the processes as mentioned in Chapter 8 includes chilling, steaming, boiling, drying and provisionally preserving. It does not specifically include the process of roasting. Here it is important to understand the difference between the processes of moderate heat treatment & dehydrating/drying referred in chapter 8 and processes of dry roasting, oil-roasting and fat- roasting referred in chapter 20. The terms dry-roasting, oil roasting and fat- roasting however are not defined in the Customs Tariff Act, 1975. Therefore, these terms have to be understood in a commonly accepted sense. The Hon’ble Apex Court in the case of Alladi Venkateswarlu v. Government of Andhra Pradesh 1978 AIR 945 held that “the commonly accepted sense of a term should prevail in construing the description of an article of food In common trade parlance, “drying is a method of food preservation by the removal of water content. On the other hand, “roasting” means the excess or very high heat treatment that produces fundamental chemical and physical changes in the structure and composition of 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 completed in multiple cycles of process of heating and cooling.
f. That on examining the scope of CTH 2008 it is found that. as per HSN Explanatory Notes, heading 2008 covers fruit. nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter. Specifying what is included in this heading. the explanatory note states that almonds, ground nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat- roasted, whether or not containing or coated with vegetable oil, salt, flavour, spices or other additives. Dry-roasting, oil-roasting & fat-roasting, as a process, are very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes. It is also pertinent to observe that none of these processes are mentioned in the chapter note 3 to Chapter 8 of the Customs Tariff Act, 1975 as well as HSN Explanatory Notes to Chapter heading 0802.
g. That Chapter 8 specifically 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 are not as specified in the said note. Further, as per the above note, the processes that could be carried out are moderate heat treatment, sulphuring, and the addition of sorbic acid or potassium sorbate by the addition of vegetable oil or small quantities of glucose syrup whereas, roasting is different from all the processes mentioned above. Roasting, as submitted by the applicant, is carried out using roasting ovens due to which betel nuts are roasted up to 140 – 150 degrees Celsius then cooled in room temperature and the cycle is repeated until the moisture content is about to 6%. 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. Therefore, the impugned goods do not satisfy Note 3 to Chapter 8.
h. That the vital question as to whether roasted nuts would fall under Chapter 0802 or Chapter 008 was affirmatively answered in favour of Chapter 2008 by the decision of Hon’ble Supreme Court in the case of Commissioner of Customs & Central Excise, Goa vs Phil Corporation Ltd. reported in 2008 (223) EL.T9/S.C. Hence, the settled position of law is that nuts falling under Chapter 08 would be classified under Chapter 20, if the same is subjected to the process of roasting.
i. That the classification as far as possible must be in conformity and in consonance with the HSN explanatory Notes. The law says that whenever there is specific entry, the same would prevail over general entry; the said general principal is statutorily incorporated in General Rules of Interpretation, in particular, under Rule 3(a) of the General Rules of Interpretation. CTH 2008 1920 is a special entry covering nuts subject to the process of roasting when contrasted with CTH 08 02 90 which covers dried nuts. Having come to the conclusion that the classification of areca nuts is made on the basis of the process which it is subject to with a distinction between dried and roasted nut being maintained CTH 2008.19.20 which covers roasted nut including areca nut is a specific entry which opposed with the entries/items covering nuts under CTH 08.
j. That it is submitted that the betel nut in its various forms finds classification in chapters 8, 20 and 21 of the schedule I of the Customs Tariff Act, 1975 read with HSN 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 roasted arena nut which is proposed to be imported by the applicant.
k. That 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 prime facie, classifiable under more than one Heading, the ‘most specific description’ is Section notes along with terms of heading and explanatory notes are examined for both Headings 0802 and 2008. it is observed that roasted nuts which include roasted betel nuts find a specific description in Heading 2008. Therefore, on the application of GIR 3(b), the subject goods merits classification under Heading 2008 and more specifically under Subheading 2008 19 20 as “Other roasted nuts and seeds”,
l. That it is submitted that in view of specific CTH 2008 19 20: Other roasted nuts & seeds in chapter 20 of the first schedule to the Customs Tariff, HSN Explanatory note to CTH 2008, various Supreme Court rulings upholding guiding value of the HSN Explanatory notes for deciding classification under Customs Tariff Act, 1975 and previously mentioned two Supreme Court judgments classifying roasted nuts which include almonds. betel nut and other nuts under chapter 20 by taking recourse to HSN explanatory note to Tariff Heading 2008. In view of the above, it is submitted that roasted betel nuts are correctly classifiable under the tariff item 2008 19 20 of chapter 20 of the first schedule of the Customs Tariff Act, 1975.
m. That on the basis of foregoing, it is submitted that the Roasted betel nuts fall under Tariff heading 2008, specifically under Tariff entry 2008 1920: “Other roasted nuts & seeds of chapter 20 of the first schedule of the Customs Tariff Act, 1975.
n. In view of the above, it is requested that this Hon’ble Advance Ruling Authority may take the aforesaid additional submissions along with the Advance Ruling passed by the Authority of Advance Ruling New Delhi and Mumbai, into consideration while passing orders in the interest of justice.
6. I have taken into consideration of all the materials placed on record in respect of the subject goods including the additional submissions made by the applicant. I have gone through the response from the Customs Port Commissionerate of Ludhiana. I therefore proceed to decide the present application regarding classification of Roasted Areca Nut on the basis of the information on record as well as the existing legal framework having bearing on the classification of the roasted areca nut under the first schedule of the Customs Tariff Act, 1975.
6.1. I note that the processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. It does not specifically include the process of roasting. Here, it is important to understand the difference between the processes of moderate heat treatment & dehydrating/drying referred in chapter 8 and processes of dry roasting, oil-roasting and fat-roasting referred in chapter 20. The terms dry-roasting, oil roasting and fat-roasting however are not defined in the Customs Tariff Act, 1975. Therefore, these terms have to be understood in a commonly accepted sense. The Hon’ble Apex Court in the case of Alladi Venkateswarlu v. Government of Andhra Pradesh 1978 AIR 945 held that “the commonly accepted sense of a term should prevail in construing the description of an article of food”. In common trade parlance, “drying” is a method of food preservation by the removal of water content. On the other hand, “roasting” means the excess or very high heat treatment that produces fundamental chemical and physical changes in the structure and composite 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”.
6.2. I also note that Chapter 20 of the Tariff covers the Preparations of vegetables, fruits. 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 11 are classifiable in Chapter 20. The processes specified in Chapters 7. 8 or 11 mainly include freezing, steaming, boiling, drying, provisionally preserving and milling. Therefore. any vegetable, fruit, nut or edible parts of a plant which is prepared or preserved by any other process than these are liable to be classified under Chapter 20. Heading 2008 covers 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. Roasting is a process used for bringing in to existence roasted nuts and I find that the processes mentioned in chapter 8 do not cover roasting process.
6.3. I also note on the submissions of the applicant that the Note 3 to Chapter 8 specifies 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 are not as specified in the said note. Further, as per the above note, the processes that could be carried out are moderate heat treatment, sulphuring, and the addition of sorbic acid or potassium sorbate by the addition of vegetable oil or small quantities of glucose syrup. Roasting is different from all the processes mentioned above. Roasting, as submitted by the applicant, is carried out using roasting ovens due to which betel nuts are roasted in the range of 150 degrees Celsius then cooled in room temperature and the cycle is repeated until the moisture content is less than 6 %. 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. Therefore, the impugned goods do not satisfy Note 3 to Chapter 8.
6.4. While examining the scope of CTH 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. areca (or betel) nuts and other nuts. dry-roasted, oil-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavour, spices or other additives. Dry-roasting, oil-roasting & fat-roasting, as a process, are very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes. It is also pertinent to observe that none of these processes are mentioned in the Chapter Note 3 to Chapter 8 of the Customs Tariff Act, 1975 as well as HSN Explanatory Notes to Chapter heading 0802.
6.5. Moreover, it is, an established fact that in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Tariff Act. While delivering Phil Corporation Judgment Honourable Supreme Court has clearly spelt out importance of HSN Explanatory notes in deciding the matters of classification placing reliance on the dement of Supreme Court in the case of Collector of Central Excise, Shillong v. Wood Craft Products Ltd. (1995) 3 SCC 454. Honourable Supreme Court in paragraph 12 of the said judgment observed as under:
“Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged basis of the structure of the Central Excise Tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act.”
6.6. Further, in the CAAR, Mumbai Ruling No. CAAR/Mumbai/ARC/39,40,41/2023 in the case of M/s. Universal Impex, the Authority has stated his findings and has ruled accordingly-“in view of the specific CTH 2008 19 20: Other roasted nuts & seeds in chapter 20 of the first schedule to the Customs Tariff, HSN Explanatory note to CTH 2008, various Supreme Court rulings upholding guiding value of the HSN Explanatory notes for deciding classification under Customs Tariff Act, 1975 and previously mentioned two Supreme Court judgments classifying roasted nuts which include almonds, betel nut and other nuts under chapter 20 by taking recourse to HSN explanatory note to Tariff Heading 2008″, I rule that roasted betel nuts are correctly classifiable under the tariff item 2008 19 20 of chapter 20 of the first schedule of the Customs Tariff Act, 1975.”
6.7. Also, the Honourable High Court of Madras in its recent judgement on Civil Miscellaneous Appeal (CMA) No’s 600/2023, No. 1206/2023 and No. 1750/2023, dated 01.08.2023, had upheld the classification of Roasted Betel Nuts under CTH 2008 19 20. The Honourable High Court went on to analyse the various aspects in determining classification and summed up that:
(a) Roasting is a process treated to be distinct from the process of boiling and drying, in fixing the classification in respect of betel/areca nut under CTH.
(b) Roasted betel/areca nut having been specifically classified under CTH 2008 19 20, the attempt to classify under CTH 08 02 80 would fall foul of the settled rule of construction that specific entry would prevail over general entry.
(c) HSN Explanatory Notes are normally a safe guide in determining classification under CTH. Roasted areca / betel nut having been mentioned in CTH 2008 19 20 under HSN.
(d) When there is a specific entry covering a product/commodity, the test of common parlance is irrelevant in determining classification.
(e) There is considerable force in the submission that the classification as far as possible must be in conformity and in consonance with the HSN Explanatory Notes.
7. I find that the issue dealt with i.e. Classification of “Roasted Betel Nuts” in the judgement of the Honourable High Court of Madras is similar in nature to that of the impugned issue in this application and therefore is squarely applicable to this case. On the basis of aforesaid orders of Hon’ble Courts and also earlier CAAR Rulings in the matter, I am of the view that the “Roasted Areca Nuts (Whole), Roasted Areca Nuts (Split) and Roasted Areca Nuts (Cut)” fall under Custom Tariff Heading 2008, specifically under Sub-heading 20081920 covering “Other roasted nuts & seeds” of the First Schedule of the Customs Tariff Act, 1975.
8. I rule, accordingly.
(SAMAR NANDA)Customs Authority for Advance Rulings New Delhi