The Division Bench of the Delhi High Court in the case of M/S Great Nuts Impex Pvt. Ltd. vs Commissioner of Customs Delhi & Ors. consisting of Justices Vibhu Bakhru and Amit Mahajan held that “Boiled Supari” cannot be classified as those covered under Chapter 21 (“Miscellaneous Edible Preparations India Custom Duty”) of the Customs Tariff Act, 1975 (hereafter referred to as ‘the Customs Tariff Act’).
The Bench also ruled that the goods covered under “Betel nut product known as Supari” means “any preparation containing betel nuts”. Therefore, the goods covered under this heading only implies preparation that contains betel nuts and not treating the products as betel nut.
Brief Facts:
The present appeals have been filed u/s 28KA of the Customs Act, 1962 (hereinafter referred to as “the Customs Act”) and involved a common question regarding the classification of “Boiled Supari” under the Customs Tariff Act.
Brief Background:
The Appellants applied for an advance ruling under Section 28H of the Customs Act from the Customs Authority of Advanced Ruling (“CAAR”). The Appellants intended to import "Boiled Supari", a preparation of Betal Nuts into India in consumer and bulk packaging. The proposed items were API, Chikni, Unflavoured, Flavoured, and Boiled and Cut Supari. It was proposed that the goods be classed as "Betel nut product known as ‘Supari'" under sub-heading 2106 90 30 in Chapter 21 of the First Schedule to the Customs Tariff Act.
The CAAR passed an order stating that the goods in question were classifiable under heading 0802 and not under sub-heading 2106 90 30 as contended by the Appellants.
Hence, the present appeals.
Contentions of the Appellants:
It was contended that the said goods were not classifiable under Chapter 8 of the Customs Tariff as “Areca nuts”. It was also contended that by applying the common parlance test, the said products would be classified as “Betal nut”. Moreover, the goods in question were commonly known as ‘Supari’ and sold as such. It was further contended that since a distinct product known in the market had come into existence because of boiling, it would be erroneous to classify the same as the original product.
Observations of the Court:
The Bench noted that both the Appellants proposed to import “Boiled Supari packed in consumer packing and bulk packing”. It referred to the goods as proposed to be imported by the Appellants and the process of preparation.
It opined that the question of classification of the products in question was squarely covered by the decision of the Supreme Court in Crane Betel Nut Powder Works v. Commissioner of Customs and Excise, Tirupathi & Anr. (2007 210 E.L.T. 171) wherein it was held that the product in question, sweetened betel nut powder, did not fall within the definition of “Betel nut powder known as ‘Supari’”. The Supreme Court agreed with the view of the Customs Excise and Service Tax Appellate Tribunal that “Betel nut remains a Betel nut”. It also held that the manufacturing process does not change the nature of the end product.
It also noted that the CAAR determined that API Supari, flavoured supari, unflavoured supari, chikni supari, boiled supari, and boiled and cut supari were only fundamentally cleaning, preserving, and enhancing presentation and so would be covered under Note 3 of Chapter 8 of the Customs Tariff.
The Bench also ruled that the goods covered under “Betel nut product known as Supari” means “any preparation containing betel nuts”. Therefore, the goods covered under this heading implies preparation that contains betel nuts and not treating the products as betel nut.
The decision of the Court:
Based on the aforementioned findings, the appeals were accordingly dismissed.
Case Title: M/S Great Nuts Impex Pvt. Ltd. vs Commissioner of Customs Delhi & Ors. and other connected matter
Coram: Hon’ble Justice Vibhu Bakhru, Hon’ble Justice Amit Mahajan
Case No: CUSAA 17/2022 & CUSAA 18/2022
Advocate for Appellants: Adv. Mr. S. Sunil
Advocate for Respondents: Adv. Mr. Satish Kumar
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