BY TIOL News Service

NEW DELHI, DEC 09, 2015: THE applicant submits that they intend to import various types of betel nuts vis. API supari, Chikni supari, Unflavored supari and Flavored supari and market the same. It is claimed that the above goods do not fall under Chapter Heading 08029000. Inasmuch as in view of the manufacturing process, the four products which they intend to import are only 'preparations' and are covered under entry 2106 9030.

The Revenue representative submits that the aforementioned four products would be neatly covered in Chapter 8 of the Customs Tariff.

The authority adverted to supplementary note to Chapter 21 and observed -

++ From the preparation process of the four products, it is clearly seen that the original betel nut which is a main ingredient in all these four preparations is mixed with food starch after it undergoes the process of boiling. The addition of food starch is common in first two of products namely API Supari and Chikni Supari.

++ Insofar as the other two products are concerned, the unflavored Supari undergoes a process like removal of metal item then the product undergoes the process garbling and polishing in the polishing machine then it is further cut and cleaned in a blower machine then it is roasted in fire gas and thus undergoes a change in its character. Fourth product is a flavored supari which undergoes all the processes like unflavored supari but thereafter the products such as spices/or Mulethi are mixed with the cut pieces of supari. There can be no dispute that all these four products would be essentially known as supari. But as the learned counsel points out the original betel nut undergoes changes and is mixed with some other items like food starch, Mulethi, Copra etc. In our opinion, therefore, the products which the applicant intends to import prima facie fits in Chapter 21 Supplementary Note No. 2 which we have quoted above.

The argument of the Departmental Representative that in order to fit in Chapter 21, supari which is also known as betel nut should undergo a different character change, meaning it should not remain a supari was rejected by observing that the positive language of Supplementary Note No. 2 does not require any such basic change in the character of the product like betel nut.

Reliance placed by the DRon the Supreme Court decision [paragraphs 29 to 31] in Crane Betel Nut Powder Works - 2007-TIOL-37-SC-CX where it was held that 'process of cutting betel nuts into small pieces and the addition of essential/non-essential oils, menthol, sweetening agent etc. does not amount to manufacture' was observed as being uncalled for in view of the fact that the same was in the context of the Central Excise Act and, furthermore, after the decision an amendment was brought in CETA, 1985 by the Finance Act, 2009 and in terms of which the following chapter note came to be inserted -

'6. In relation to product of tariff item 2106 9030, the process of adding or mixing cardamom, copra, menthol, spices, sweetening agents or any such ingredients other than line, katha (catechu) or tobacco to betel nut, in any form, shall amount to "manufacture".'

Observing that this amendment is a complete answer to the Department's objections, the query put by the applicant was answered in affirmative in the sense that the products - API supari, Chikni supari, Unflavored supari and Flavored supari-were held to be covered in Chapter 21 and not in Chapter 8.

(See 2015-TIOL-11-ARA-CUS)