In C.M.A. No .600 of 2023 -MADR HC- Madras High Court upholds Customs Authority's ruling on classification of ‘Roasted Areca / Betel Nuts’ under CTH 2008
Justice R. Mahadevan & Justice Mohammed Shaffiq [01-08-2023]

Read Order: The Commissioner of Customs Chennai II Commissionerate v. M/s. Shahnaz Commodities International P. Ltd and Ors.

Chahat Varma

New Delhi, August 22, 2023: The Madras High Court has upheld the ruling of the Customs Authority for Advance Rulings (CAAR) that ‘roasted areca nut/ betel nut (whole/cut/split)’ merit classification under CTH 2008, more particularly, sub heading 2008 19 20 of the First Schedule to the Customs Tariff Act, 1975.

The Revenue had filed the present Civil Miscellaneous Appeals to contest the decisions made by the CAAR regarding the classification of 'roasted areca nut/betel nut (whole/cut/split)' under the Customs Tariff Act.

The division bench of Justice R. Mahadevan and Justice Mohammed Shaffiq remarked that once the legislature had classified roasted betel/areca nut under a separate entry, it was not open to the Revenue to discard/abandon the entries in the Tariff while determining the classification of the product.

The bench examined the decision rendered by the Supreme Court in Sterling Foods v. State of Karnataka [LQ/SC/1986/231], wherein it was ruled that the legislative body, while classifying items such as shrimps, prawns, and lobsters, had the authority to treat them differently and place them under separate entries, even if they were commercially identical. In this context, the legislature's classification took precedence over the commercial similarity of the products. Therefore, the bench observed that determining whether areca nut/betel nut and roasted areca nut were commercially the same was deemed irrelevant when it came to classification based on tariff entries.

The bench also considered the argument presented by the respondents' counsel, which emphasized the importance of aligning classification with the HSN Explanatory Notes. The bench acknowledged the validity of this submission, noting that a review of the HSN Explanatory Notes confirmed that ‘roasted areca nut’ was categorized under Chapter 20.

Furthermore, the bench highlighted that the distinction between roasting and drying was essential for classification purposes under the CTH. Any interpretation that blurred this distinction would render Note 1(a) to Chapter 20, which excluded the processes specified in Chapter 8 of the Customs Tariff Act, redundant. While the classification for fresh or dried areca nuts fell under 080280, roasted areca nuts were categorized under 2008 19 20. Roasting had been distinctly recognized as a process separate from drying, and this distinction served as the foundation for assigning the classification under the CTH 2008 19 20.

In conclusion, the bench upheld that CTH 2008, specifically sub-heading 2008 19 20, was a specific entry that encompassed roasted nuts. Consequently, this specific entry took precedence over the more general CTH 08.

Thus, the bench ruled that there was no reason to interfere with the ruling of the CAAR.