High Court upheld classification of roasted areca nuts under Custom Tariff Entry 2008 19 20
In a recent judgment, the Allahabad High Court held that “roasted areca nuts’ have been rightly classified under Custom Tariff Entry 2008 19 20
ABCAUS Case Law Citation:
4601 (2025) (06) abcaus.in HC
Important Case Laws relied upon by Parties:
Alladi Venkateshwarlu V/s Government of Andhra Pradesh: AIR 1978 SC 945
Commissioner Customs Vs Shehnaz commodity International Pvt. Ltd.
STP Ltd. Vs Collector of Central Excise, Patna, (1998) 1 SCC 297
In the instant two custom appeals filed by the Department and the importer, the core issue before the Hon’ble High Court was relating to the custom tariff entry and the HSN code applicable to “roasted areca nuts” and their consequential import made in India.
The case of the imported was premised on the fact that they were informed by their overseas suppliers that the production and processing of ‘roasted areca nuts’ is carried out by husking of the raw betel/‘areca nuts’ and drying the same before being fed into roastry roasting oven, wherein it is roasted well beyond 100 degree Celsius in the range of 130-150 degrees using firewood/palm kernel based over of the seed roasting machine and the temperature of the same is around 600 degree Celsius.
The petitioner applied for obtaining an ‘advance ruling’ wherein a reply was also filed by the department before the Custom Authority for Advance Ruling (CAAR). The CAAR considering the claim of the importer, ruled that the ‘roasted areca nut’ obtained from the process flow as mentioned in the letter of the overseas suppliers, would be falling under Chapter 20 of the Customs Tariff Act, 1975.
It was the case of the Importer that pursuant to the said advance ruling, they placed their orders to the overseas supplier for supply of ‘roasted areca nuts’ under HSN 2008 19 20 and the goods arrived in India.
The Department challenged the advance ruling passed by the CAAR, before the Hon’ble High Court. However, by that time, the assesse had already imported the commodity, which, according to them, was ‘roasted areca nuts’ and according to the department was ‘dried areca nuts’.
The department for determination of their true nature and character drew samples of the imported commodity and sent for testing to the laboratory, The said laboratory submitted a preliminary report that the moisture content of the imported ‘areca nut’ was around 3.39% and subsequently, a detailed report was given giving a finding that the moisture content was 3.9% and that the commodity was ‘roasted areca nuts’ & fit for human consumption. However, in the intervening period, the samples sent by the department for testing to the CRCL, New Delhi, submitted a report finding that the moisture content was 7.09% and the commodity was ‘dry areca nuts’ and not ‘roasted areca nuts’, which was not fit for human consumption.
When dispute arose, the Importer demanded the samples and test reports of the commodity imported to be provided to them. Department refused to oblige the importer with the sealed samples and test memo taking shelter of section 144 of the Customs Act, 1962 and also vide the impugned letter observed that the goods imported were dried Betelnuts/Areca nuts as indicated by CRCL, New Delhi instead of Roasted Areca Nuts and as such held that there was a mis-declaration/misclassification of the goods under Customs Act, for which necessary action was proposed, thus prompting the importer to file the Writ.
The Hon’ble High Court observed that the department has sought to interdict the advance ruling on the ground that the commodity sought to be imported by the importer at the stage of advance ruling were not sent for independent testing or verification of the process, supporting documents, test reports etc. However, such an argument by the department is completely alien to the concept of advance ruling as provided in Section 28E(b) of the Customs Act.
The Hon’ble High Court observed that no doubt, the advance ruling ought to be based on the materials brought on record of the advance ruling authority, however to say that advance ruling ought to be mandatorily based on the empirical data, test or laboratory report of a sample, at the stage of advance ruling, when these samples, may nor may not be even in existence for the purpose of export or import, is in aberration to the concept and scope of ‘Advance ruling’.
The Hon’ble High Court further observed that although, it can be well argued by the department that the commodity, now imported as per the test reports are not ‘roasted areca nuts’, however it cannot be argued that since the advance ruling is not based on any testing or verification of the commodity sought to be imported at the stage of advance ruling is liable to be set-aside, merely because the advance ruling authority did not examine any test or laboratory report of the commodity sought to be imported/exported.
The Hon’ble High Court noted that as a matter of fact, there is no definition of “roasted” given in the Custom Tariff Act. The end product obtained by the process becomes significant for its classification. The Hon’ble High Court concurred with CARR view that in common trade parlance, “drying” is a method of food preservation by the removal of water content, whereas 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, while drying is a moisture removal process involving methods such as dehydration, evaporation, etc., whereas roasting is a severe heat treatment process. The end product changes with the degree of heat it is subjected at the time of processing.
The Hon’ble High Court noted that roasting is a process used for bringing in to existence roasted nuts and finds that the processes mentioned in chapter 8 do not cover roasting process. Further, roasting, as submitted by the importer by virtue of letter issued by overseas supplier, was 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 indicated that the roasting was 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. Thus, drying and roasting cannot be equated and both the process are diametrically different
The Hon’ble High Court further noted the Madras High Court had upheld the classification of ‘Roasted areca Nuts’ under CTH 2008 19 20. Further, Notification No. 02/2025-26 dated 02.04.2025 has been issued by the Department of Commerce, Directorate General of Foreign Trade, relating to “amendment in import policy and policy condition of Roasted Areca Nuts falling under ITC(HS) Code 2008 19 20 of chapter 20 of ITC(HS), 2022, ScheduleI (Import Policy). The effect of the said notification is that the import policy of ‘roasted Areca nuts’ falling under ITC (HS) Code 08028090 and 2008 19 20 stands revised from “free” to “prohibited” and a kind of clarification has been sought to be given by the department, that as far as the Tariff entry 2008 19 20 relating to other roasted nuts and seeds are concerned, “roasted areca nuts” are not covered as they are specifically covered under 08028090
As a result, and in view of the CAAR findings, the Hon’ble High Court held that “roasted areca nuts’ had been rightly classified under Tariff Entry 2008 19 20. The grounds raised by the department challenging the advance ruling was unmerited and, as such, the same was dismissed.
The Hon’ble High Court noted that with respect to the question whether the commodity imported by the importer/petitioner of the Writ Tax No. 71 of 2025 are “roasted areca nuts”, so as to be classifiable under CTH 2008 19 20 or are merely dried areca nuts and could be classified under CTH 080280 is concerned, the test reports gains prominence.
The Hon’ble High Court noted that there had been a gross violation of the guidelines dated 18/07/2017, issued by Central Board of Excise and Customs wherein it is clearly mentioned that the samples ought to be drawn in the presence of the importer for testing purposes. Further, it is specifically provided that the test reports if are adverse or otherwise shall be communicated to the importer who can request a second test.
The Hon’ble High Court opined that it was not understood as to how the department could not be satisfied with any test report in the first place. The act of the department apparently seemed to be motivated and suspicious, in not providing the impugned letter in the first instance and then not taking the importer in confidence while sending for re-testing, if at all re-testing was permissible by the state as per the rules. There was no reasons forthcoming as to why and in what circumstances, the second samples were drawn by the department and that too without any application by the importer, as per the rules.
This Court while directing for the release of the commodity imported as ‘roasted areca nuts” classified under CTH 2008 19 20 on usual compliances of the prevailing rules, hereby quashes the seizure memo dated 10/03/2025. It is made clear that this court has only dealt with the issue relating to classification of the ‘roasted areca nuts’ imported by the petitioner under CTH 2008 19 20 and has not expressed any opinion on the other avenues of the import or any issue not raised in these Appeal/petitions.
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