Commissioner of Customs - Chennai II (Import Commissionerate) vs M/s GURU KRUPA TRADERS

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH – COURT No. I

Customs Appeal No. 40433 of 2025
(Arising out of Order-in-Appeal SEAPORT C.Cus.II No. 64/2025 dated 08.01.2025 passed by
the Commissioner of Customs (Appeals-II), No. 60, Rajaji Salai, Custom House,
Chennai – 600 001)

Commissioner of Customs ...Appellant
Chennai II Commissionerate,
No. 60, Rajaji Salai,
Custom House,
Chennai – 600 001.

Versus
M/s. Guru Krupa Traders ...Respondent
Flat No. 302, Shri Harpal Singh
Ninak Ashtvinayak Apartment,
Nari Road, Kalpana Nagar,
Nagpur,
Maharashtra – 440 026.
APPEARANCE:
For the Appellant : Ms. O.M. Reena, Authorised Representative
For the Respondent : Mr. B. Satish Sundar, Advocate

CORAM:
HON’BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
HON’BLE MR. AJAYAN T.V., MEMBER (JUDICIAL)

FINAL ORDER No. 41119 / 2026

DATE OF HEARING : 07.05.2026
DATE OF DECISION : 28.10.2026

Per Mr. VASA SESHAGIRI RAO

The present appeal has been filed by the Revenue
assailing Order-in-Appeal No. Seaport C.Cus.II No.64/2025
dated 08.01.2025, whereby the learned Commissioner
(Appeals-II), Chennai, set aside Order-in-Original
No.106410/2024 dated 24.04.2024 passed by the Additional

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Commissioner of Customs, Group I. The controversy in the
present appeal relates principally to the classification of the
goods imported by the respondent and declared as “Betel Nut
Product Known as Supari (Unflavoured Supari)”. While the
respondent declared the goods under CTH 2106 90 30, the
adjudicating authority classified the same under CTH 0802 80
20, as split areca nuts. The Revenue contends that the learned
Commissioner (Appeals) erred in accepting the classification
under Chapter 21 notwithstanding the physical examination of
the goods and the CRCL reports describing the samples as split
pieces of betel nuts. The respondent filed four Bills of Entry
bearing Nos. 7666971, 7666975, 7666976 and 7666978, all
dated 27.02.2022, covering approximately 432.08 MTs of
goods declared as “Betel Nut Product Known as Supari
(Unflavoured Supari)” and classified under CTH 2106 90 30.
The consignments were subjected to examination and
representative samples were drawn and forwarded for testing.
The CRCL reports recorded the samples as being in the form
of split pieces of betel nuts, not fully dehusked and containing
fibre, and further recorded that the samples did not contain
lime, katha or tobacco. Proceedings were thereafter initiated
proposing, inter alia, rejection of the declared classification
and reclassification of the goods under CTH 0802 80 20,
redetermination of assessable value, consequential
reassessment of duty and confiscation under Section 111(d),

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111(m) and 111(o) of the Customs Act,1962 and penalties
under Section 112/114AA of the Customs Act, 1962.

1.1 The Ld. Additional Commissioner of Customs,
Group I, vide Order-in-Original No.106410/2024 dated
24.04.2024, confirmed the proposals and imposed, inter alia,
redemption fine of Rs.2 crores, penalty of Rs.1 crore under
Section 112(a), penalty of Rs.50 lakhs under Section 114AA
and penalty of Rs.4 lakhs under Section 117 of the Customs
Act, 1962.On appeal, the learned Commissioner (Appeals),
relying principally upon Supplementary Note 2 to Chapter
21and the judicial decisions relied upon by the respondent, set
aside the adjudication order and accepted classification under
CTH 2106 90 30. Aggrieved by the said order, the Revenue
preferred an appeal before this Tribunal, and hence the
present appeal.

1.2 The issues examined in this order are listed in the
index below: -
Sl.Nos. Topic
1. Facts of the case
2. Submissions of the Revenue
3. Submissions of the Respondent
4. Discussion and Findings
5 Burden of Proof in Classification Dispute
6 Evidentiary Value of the FSSAI Report vis-à-vis the CRCL Report
7 Moisture Content: Distinction between Dried and Roasted Areca Nuts
8 Discussion on Classification of the Subject Goods
9 Relevance of the HSN Explanatory Notes
10 Whether the Impugned Goods Constitute a Food Preparation
11 Common Parlance, GRI 1 and the Specific Tariff Entry for “Supari”
12 Specific entry vis-à-vis general/residuary entry
13 Relevance and Applicability of the Judicial Precedents Relied upon by
the Revenue

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14 Whether the impugned goods are eligible for benefit of concessional
rate of BCD, based on the COO Certificate as per FTA?
15 Whether the valuation done by the respondents in relation to the
subject goods is in accordance with law?
16 Whether consequent confiscation and penalty proceedings are
sustainable
17 Conclusion
18 Order

Submissions of the Revenue
2. The Ld. Authorized Representative, Smt. O.M.
Reena, appearing on behalf of the Revenue reiterated the
grounds of appeal and submitted that the learned
Commissioner (Appeals) had erred in setting aside the Order-
in-Original and accepting the classification of the impugned
goods under CTI 2106 90 30.

2.1 She has submitted that the advance ruling relied
upon by the learned Commissioner (Appeals), particularly in
the case of M/s. Isha Exim, was rendered in respect of another
importer and, in terms of Section 28J of the Customs Act,
1962, was not binding upon the respondent. It was therefore
contended that the said advance ruling could not have been
relied upon for determining the classification of the goods
imported by the respondent.

2.2 She further argued that the goods were physically
examined in the presence of DRI officers and the CRCL reports
categorically recorded that the samples were in the form of
split pieces of betel nuts, not fully de-husked and containing

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fibre, and did not contain lime, katha, tobacco or any
additives/flavouring material.

2.3 The Ld. AR submitted that, for classification under
CTI 2106 90 30, the goods must, in the first instance,
constitute a food preparation and, secondly, must not be
specified or included elsewhere in the Customs Tariff.
According to her, the impugned goods were merely dehusked
and dried areca nuts in split form and did not constitute a food
preparation. Since the goods were specifically identifiable as
split areca nuts, they were appropriately classifiable under CTI
0802 80 20.

2.4 She further submitted that Chapter Note 3 to
Chapter 8 recognises that dried fruit or dried nuts may
undergo certain processes while retaining their character as
dried fruit/nuts. Since the impugned goods continued to retain
their essential character as areca nuts, their classification
under Chapter 8 was warranted.

2.5 She placed reliance upon Rule 1 of the General
Rules for Interpretation and submitted that classification was
required to be determined on the basis of the terms of the
headings and the relevant Section and Chapter Notes. Since
the goods were specifically covered as areca nut splits under

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CTI 0802 80 20, resort to the residuary heading 2106 was not
justified. In support of the above contention, she relied upon
the decisions in Crane Betel Nut Powder Works v. CCE - 2007
(210) E.L.T. 171 (SC) and S.T. Enterprises v. CC -2021 (378)
E.L.T. 514 (Tri. - Chennai).

2.6 She further submitted that the incorrect
declaration of the goods under CTI 2106 90 30 enabled the
respondent to avail the benefit of exemption Notification and
to circumvent the restrictions applicable to import of areca
nuts, thereby rendering the goods liable to consequential
duty, confiscation and penalties.

2.7 She accordingly submitted that the impugned
Order-in-Appeal was contrary to the evidence on record, the
statutory provisions and the settled judicial position and
prayed that the same be set aside and the Order-in-Original
be restored.

Respondent’s submissions
3. The Ld. Counsel for the respondent supported the
impugned order. It was submitted that the goods had been
examined by an FSSAI-authorized laboratory and certified as
conforming to the standards prescribed for “Betel Nut Product
Known as Supari (Unflavored Supari)” under the applicable

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Food Safety and Standards Regulations. Reliance was also
placed upon the FSSAI NOC describing the product as “Betel
Nut Product Known as Supari (Unflavored)”.

3.1 The Ld. Counsel submitted that the CRCL
examination was essentially a physical examination and that
the CRCL report did not conclude that the goods were not
“supari”. It was submitted that the absence of lime, katha or
tobacco was itself consistent with the definition of “betel nut
product known as supari” under Supplementary Note 2 to
Chapter 21.

3.2 The Ld. Counsel placed reliance on the
decisions in the following cases, namely, Shahnaz
Commodities- ( 2023) 9 Centax 183 (Mad.), A.K. Impex- 2024
(4) TMI 85 - MADRAS HIGH COURT, Isha Exim- 2023 (12) TMI
920 - BOMBAY HIGH COURT (affirmed by SC - 2024 (12) TMI
849 - SC Order), Excellent Betel Nut Products- 2023 (5) TMI
668 - CESTAT MUMBAI, NBG International Private Limited -
2026 (3) TMI 1212 - BOMBAY HIGH COURT, Oliya Steel- 2026
(1) TMI 1018 - CESTAT KOLKATA, M/s N&N Traders (2024) 18
Centax 274 (Tri. - Del).

3.3 Reliance was also placed upon the certificates of
origin certificates issued by the Myanmar authorities, wherein

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the goods were described as betel nut products known as
supari and mentioned under HS Code 21069030. It was
stressed that same has not been disputed or challenged by
the revenue in the manner known to law. The Ld. Counsel
placed reliance on the decisions in the case of M/s. Ruby
Overseas Versus Commissioner of Customs, Chennai- Final

Order Nos : 41154 - 41157/2025 dated October 17, 2025.

3.4 The Ld. Counsel further relied upon the
subsequent Order-in-Original No.116366/2025 dated
28.10.2025 passed by the same Commissionerate in respect
of similar goods.

Discussion and Findings: -
4. We have carefully considered the rival submissions,
perused the records of the case and examined the grounds of
appeal and the impugned Order before us.The principal issue
which arises for determination is whether the impugned
goods, declared as “Betel Nut Product Known as Supari
(Unflavoured Supari)”, are classifiable under CTH 2106 90 30,
as claimed by the respondent and accepted by the
Commissioner (Appeals), or under CTH 0802 80 20 as split
areca nuts, as contended by the Revenue.

BURDEN OF PROOF IN CLASSIFICATION DISPUTES: -

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5. We find that as rightly declared by the Apex Court
in a catena of judgments, it is trite law that in matters of
classification of goods, the burden of proof rests on the
shoulders of the Revenue. The Apex Court in Union of India
and Ors. v. Garware Nylons Limited (1996) 10 SCC 413
observed: -
“The burden of proof is on the taxing authorities to show
that the particular case or item in question is taxable in the
manner claimed by them. Mere assertion in that regard is of
no avail. It has been held by this Court that there should be
material to enter appropriate finding in that regard and the
material may be either oral or documentary. It is for the
taxing authority to lay evidence in that behalf even before
the first adjudicating authority…”.

5.1 Further quoting para 35 of the judgment rendered
by Apex Court in Dunlop India Ltd. v. Union of India (1976) 2
SCC 241 , the Court held: -
“...When an article has, by all standards, a reasonable claim
to be classified under an enumerated item in the Tariff
Schedule, it will be against the very principle of classification
to deny it the parentage and consign it to an orphanage of
the residuary clause.”

5.2 Most recently, the Hon’ble Apex court in Gastrade
International v. Commissioner of Customs (2025) 8 SCC 342
at para 45 observes: -
“There cannot be any dispute to the proposition of law as
noted by the High Court that the burden of proof as regards
the classification of any goods of importation is upon the
Revenue/Customs authority and the standard of proof in
proceedings under the Tariff Act is not “beyond reasonable
doubt”. However, whether “preponderance of probability”
can be the appropriate test for classification under the
Customs Act would be required to be examined in the light
of the “General Rules for the interpretation of this Schedule”
as provided in the First Schedule – Import Tariff in Part 2 of
the Tariff Act (hereinafter referred to as the “Rules”)”

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5.3 It has been held in HPL Chemicals Ltd v. CC,
Chandigarh, 2006 (197) ELT 324 (SC), as under: -
“29. This apart, classification of goods is a matter relating
to chargeability and the burden of proof is squarely upon the
Revenue. If the Department intends to classify the goods
under a particular heading or sub-heading different from
that claimed by the assessee, the Department has to adduce
proper evidence and discharge the burden of proof. In the
present case the said burden has not been discharged at all
by the Revenue.….”

5.4 The said view has been consistently reiterated by
the Hon’ble Apex Court as can be seen from the decision in CC
& CE, Amritsar v. D.L. Steels, 2022 (381) ELT 289 (SC)
wherein it was held that when the Revenue challenges the
classification made by the assesses, the onus is on the
Revenue to establish that the item in question falls in taxing
category as claimed by them. The burden is on the Revenue
to adduce proper evidence to show that the goods are
classifiable under a different heading than that claimed by the
Assessee. The recent decisions in Hewlett Packard India Sales
Pvt Ltd v CC (Import), Nhava Sheva, 2023 (383) ELT 241 (SC)
as well as Gastrade International v CC, Kandla, 2025 (392)
ELT 529 (SC) also hold to the same effect.

5.5 We find that it is trite law that the burden of proof
rests upon the Appellant-Revenue, which is required to
discharge the same on the touchstone of the preponderance
of probabilities. Having acknowledged this settled position, we
now turn to the next limb of the arguments advanced by the

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parties, namely, the application of the settled principles of law
and rules of interpretation governing the resolution of
classification disputes and appreciation of relied upon
evidences, especially FSSAI reports and CRCL reports.

DISCUSSION IN RESPECT OF FINDINGS OF FSSAI
REPORT Vis-à-vis CRCL REPORT FOR RESOLVING THE
CLASSIFICATION DISPUTE : -
WHAT DO THE FSSAI AND CRCL REPORTS ACTUALLY
ESTABLISH?
6. It is a settled principle that classification of goods
under the Customs Tariff is required to be determined with
reference to the nature, character and composition of the
goods as presented for import, having regard to the terms of
the relevant tariff headings and the applicable Section and
Chapter Notes. In the present case, the examination
proceedings and the CRCL test reports relied upon by the
Revenue record that the goods were in the form of split pieces
of betel nuts, including damaged, blemished and cracked nuts,
and that certain nuts were not completely dehusked and
retained fibres. The report further record that the goods did
not contain lime, katha or tobacco. On the other hand, the
Respondent has placed reliance upon the reports and
clearance issued by the statutory authority, namely, the Food
Safety and Standards Authority of India (FSSAI), wherein the

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product has been described as “Betel Nut Product Known as
Supari (Unflavoured Supari)” and it has been recorded that
the sample conforms to the prescribed parameters for such
product under the applicable standards framed under the Food
Safety and Standards Regulations, 2011.In our considered
view, the CRCL reports and the FSSAI reports cannot be
regarded as mutually destructive. The two sets of reports
operate in different fields and proceed from different
parameters. Ordinarily, a CRCL report records the physical
characteristics and composition of the sample with reference
to the specific test parameters or queries placed before it by
the Customs authorities. The FSSAI examination, on the other
hand, is undertaken with reference to the statutory standards
governing food products and involves an assessment against
the prescribed quality and safety parameters. Consequently,
while the FSSAI reports cannot, by themselves, be regarded
as conclusive for determining classification under the Customs
Tariff, equally, the CRCL reports cannot, merely by describing
the goods as split betel nuts, be treated as conclusively
establishing their classification under Chapter 8. The
evidentiary value of the said reports has necessarily to be
assessed in the context of the precise parameters examined,
the nature of the goods as presented for import and, more
importantly, the requirements of the competing tariff entries.
We, therefore, consider that the question of classification

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cannot be determined merely on the basis of the nomenclature
employed in either of the reports. The same has to be resolved
upon an independent and holistic appreciation of the entire
evidentiary material, examined in the light of the language of
the competing tariff entries and the applicable Section and
Chapter Notes. It is in this backdrop that we proceed to
examine the relevant test parameters and the applicability of
the competing tariff entries.

6.1 Relevant extracts from FSSAI reports stand
extracted below: –

14

15


6.1 Further, at this stage, we find it apposite to refer
to the decision of the Hon’ble Bombay High Court in NBG
International Private Limited v. Commissioner of Customs,
2026 (3) TMI 1212 – Bombay High Court; 2026:BHC-
AS:13544 – DB- relevant paras extracted in later paras. The
issue before the Hon’ble High Court was, inter alia, whether
the Customs authorities could disregard the FSSAI test reports
and continue to detain the imported roasted areca nuts, and
whether the seizure memo and the conditions imposed for
provisional release, including furnishing of a bank guarantee
and execution of a no-use bond, were legally sustainable. The
Hon’ble High Court noted that the imported goods had been
examined by the authorized officers and tested by the FSSAI
laboratory, which had issued NOCs confirming conformity with
the applicable standards. The Court held that, once a
specialized statutory authority entrusted with the
responsibility of ensuring food safety had examined the goods
and certified them as conforming to the applicable standards

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and fit for human consumption, there was no satisfactory basis
for the Customs authorities to insist upon re-testing or to treat
the consignments as not being roasted areca nuts merely on
the basis of a subsequent CRCL report.

6.2 The aforesaid observations assume significance in
the facts of the present case. The FSSAI report before us
records that the imported goods conform to the characteristics
of “Betel Nut Product Known as Supari (Unflavored Supari)”.
The goods were tested for parameters including moisture,
contaminants, pesticide residues and microbiological
parameters. The test parameters, test methods and test
results are specifically set out in the report, and, upon such
examination, the FSSAI issued the NOC. The physical
appearance of the product has also been recorded as “Supari”.
We are conscious that the FSSAI report, by itself, cannot be
regarded as determinative of classification under the Customs
Tariff, which has to be independently determined in
accordance with the relevant tariff entries and the applicable
Section and Chapter Notes. At the same time, the said report
constitutes relevant evidence regarding the identity, nature
and characteristics of the goods as examined by the statutory
authority competent to assess imported food articles against
the prescribed standards. Its evidentiary value, therefore,
cannot be discarded without assigning cogent reasons or

17

bringing on record material which would demonstrate that the
findings recorded therein are incorrect, unreliable or otherwise
unsustainable.

6.3 In the present case, we do not find any material
on record to suggest that the FSSAI examination was
deficient, that the test results were erroneous or that the NOC
issued by the competent authority was subsequently
withdrawn, modified or otherwise called into question. It is
also not the case of the Revenue that the FSSAI officers had
failed to properly examine the imported goods with reference
to the correctness of the declaration and the applicable food
safety standards before issuing the NOC for their release. We
find it equally significant to examine what the CRCL report
establishes and, more importantly, what it does not establish.
No specific query appears to have been raised with the CRCL
regarding the exact processes or composition or chemical
parameters of the goods, or whether the goods could be
regarded as “Betel Nut Product Known as Supari” or otherwise.
The CRCL report, obtained at the instance of the Revenue
during investigation, does not record a specific finding that the
imported goods were not a Betel Nut Product Known as Supari.
The report also does not appear to ascertain whether the
goods were ripe or in raw form, or the nature and extent of
the processes, if any, which the betel nuts had undergone

18

before assuming their imported form. No specific query was
raised as to whether the goods constituted a preparation or
otherwise, or whether they were fit for human consumption.
The observations in the CRCL report, insofar as they relate to
minimal damage and the goods being in split form, may
describe certain physical characteristics of the samples;
however, such observations, by themselves, do not
satisfactorily establish that the goods could not be regarded
as a “Betel Nut Product Known as Supari”.

6.4 Thus, the evidentiary material placed before us
presents a situation where the FSSAI, upon examination
against specified parameters, has identified the product as
“Betel Nut Product Known as Supari (Unflavored Supari)” and
issued the requisite NOC, whereas the CRCL report, while
recording certain physical characteristics of the goods, does
not address several of the material questions which would be
relevant for determining whether the goods fall within or
outside the description relied upon by the Respondent. In
these circumstances, we are unable to accept the proposition
that the FSSAI report and NOC can simply be brushed aside
on the basis of the CRCL report. If the Revenue sought to
displace the findings of the specialized statutory authority, it
was incumbent upon it to bring on record cogent material
demonstrating why the findings recorded by the FSSAI could

19

not be accepted, or to obtain an appropriate examination on
the specific parameters relevant to the issue in dispute. No
such material or exercise is discernible from the record before
us. We, therefore, find that the CRCL report, in its present
form, does not furnish a sufficient evidentiary basis to
disregard the FSSAI report and NOC or to conclude, merely
from the goods being described as split betel nuts with some
damage, that they were necessarily something other than
“Betel Nut Product Known as Supari (Unflavoured Supari)”.
The question of classification must consequently be
determined on an independent appreciation of the entire
evidence, keeping in view the statutory tariff entries and the
applicable principles of classification.

6.5 In the instant case, FSSAI report has confirmed
that imported goods comply with the characteristics of
betelnut Product known as Supari. It must be noted that goods
were tested for parameters like Moisture, contaminants,
pesticide residues, microbiological parameters. In fact, the
tested parameters, test methods and test results are clearly
mentioned in report and subsequent to test results, FSSAI has
issued NOC. Physical appearance finds mentioned as “Supari’.
In view of above, we find no justification or reason for revenue
to hold imported goods to be something other than SUPARI

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without re- examining or raising doubt in as far as credibility
of FSSAI reports/NOC/test results.

6.6 It is not even the case of revenue that FSSAI
officers have not fairly examined the imported goods ensuring
correctness of declaration and safety of food articles and there
after only issued NOC for release of imported goods. The issue
of questioning the test results and NOCs issued by FSSAI
without taking up the matter with concerned statutory
authorities and making such harsh allegations against the
respondent based on incomplete CRCL report is completely
arbitrary. No where, it is coming out from investigation that
FSSAI report has been challenged or perverse and at the same
time, no queries were made to CRCL as to what is the exact
composition, chemical parameters, classification of imported
goods and query whether the subject goods are Betelnut
products known as SUPARI or otherwise. CRCL report which
was issued at the insistence of revenue during investigation
also did not specify or come to finding that the imported goods
are not Betelnut product known as SUPARI. They have not
even ascertained whether the goods are ripe or in raw form or
as to what all processes it underwent to come in its present
form. No query was raised as to whether goods are
preparation or otherwise or whether goods are fit for human
consumption or not. CRCL test report, barring making

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observation regarding minimal damage and split betelnut,
have not been able to satisfactorily demonstrate as to how the
imported goods are not BETELNUT product known as SUPARI.
We find that it was not correct on the part of revenue to brush
aside and question the wisdom of FSSAI reports, FSSAI itself
being the statutory body recognized by legislature to certify
food imports.

6.7 The relevant extract from decision of High Court
of Bombay is extracted below for ready reference: -
“ 16 . We are thus in agreement with the contentions as
made on behalf of the Petitioner that once the FSSAI has
cleared the imported goods as fit for human consumption,
and also has specified the moisture content in the said test
reports, then to question the wisdom of FSSAI, would not
be an appropriate approach on the part of the Respondents,
as the FSSAI itself being a statutory body is recognized
under the Rules to certify the imports. It is not disputed on
behalf of the Respondents that the FSSAI is acting under
various rigorous provisions of the statute and also the
stringent Rules and Regulations framed thereunder.
Further, the Respondents have not been able to give any
plausible or satisfactory explanation as to why re-testing/re-
examination of the imported goods was sought to be done
by the Respondents. Learned counsel for the Respondents
has tried to canvass the argument that the imported goods
are not fit for human consumption by placing reliance on the
test reports issued by CRCL basis the observation by CRCL
that some parts of the imported goods were damaged nuts
and the damage was primarily on account of mould or
insects. We are not in agreement with the aforesaid
submission, considering the reports of the FSSAI.
The FSSAI reports cannot be disregarded, which was made
available immediately after the samples of the imported
goods were drawn for testing.

17 . A Division Bench of this Court in the case of Make Index
Impex Vs. Union of India and others 2023-SCC OnLine-
Bom-1678, of which one of us (G.S. Kulkarni, J.) was a
member, in the context of import of Soya bean, which the
Respondents had contended, was harmful for human
consumption, has clearly held that once a clear stand is
taken by the FSSAI that the Soya bean in question was in

22

no manner harmful for human consumption in whatever
form and was in light of the requirements and parameters
of FSSAI Rules, any contrary position could not be adopted
by the Customs Department *

18 . Further, the Food Import Manual issued by FSSAI clearly
specifies the steps to be taken insofar as laboratory analysis
is concerned. It is only after this laboratory analysis is made,
that a NOC is issued by the FSSAI and then on the basis
thereof, the goods can be released. The relevant procedure
for laboratory analysis is reproduced below :
“iv) Laboratory Analysis :
a) The sample of the imported food product is forwarded to
the notified laboratory that is auto selected randomly in the
Food Import Clearance System (FISC);
b) The samples of imported Food sent by the Officer
authorized by FSSAI are analyzed by the laboratory as per
parameters defined in the FSS Act and the Regulations
thereunder;
c) The laboratory shall complete the analysis and upload the
test report in FICS in Form 2 of the FSS (Import)
Regulations, 2017) within five days of receipt of the sample
with conclusive opinion about the product tested as
conforming or nonconforming.
d) For testing of food Import consignments through a
transparent and expeditious process, NABL accredited
laboratories have been notified by FSSAI throughout the
country. These FSSAI notified laboratories are also utilized
for testing of imported food consignments by the Authorized
Officers of Customs Department. FSSAI has also notified 22
Referral labs other than the Primary labs, for re-testing of
appeal samples of the Importers. The list of the food testing
labs is available at https://www.fssai.gov.in/cms/food-
laboratories.php.”
(Emphasis supplied)
It is seen from the above procedure that insofar as
laboratory analysis is concerned, the analysis and test
reports are made by FSSAI within five days from the date of
receipt of sample with conclusive opinion about the product
tested as conforming or non-conforming. This goes on to
show that the tests conducted by the FSSAI are of precise
nature and high standards of testing are ensured and made
applicable before clearing the food suitable for human
consumption. In this view of the matter, we are of the
opinion that any window for reclassification of the
categorised goods, itself is not on a sound premise, in the
facts and circumstance of the case.
Xxxxx
xxxxx
23 . There is another significant aspect which requires a
mention. Considering that the imports in question are meant
for human consumption, a note of caution needs to be
sounded. The FSSAI is under an onerous obligation to
adhere to the strictest standards in the examination of
imports, as its statutory obligation is of food safety and

23

maintenance of the highest standards in that regard. Food
safety also concerns quality of the food which includes its
raw materials. There cannot be any compromise,
whatsoever, on the quality of goods meant for human
consumption, be it imports or domestic products . It is not
acceptable that any rejected or inferior quality goods are
permitted to enter the country, thereby allowing dumping of
cheap or sub-standard products. Hence, in a given situation
irrespective of the adventure and the audacity of the
importers to bring into the country, any sub-standard
imports for human use and consumption, such imports
should be dealt with iron hands. In a given situation, such
imports would certainly achieve a colour of illegality. This
needs to be the yardstick even for indigenous products or
edibles or products that a human would consume.

maintain the quality of imports of edible goods
24 . Thus, to
(raw or otherwise), is certainly an obligation of FSSAI to
act with utmost care, precision and rigor, in certifying both
imported and domestically manufactured food products, as
the health of the nation equally lies in the hands of this
‘specialized authority’. It cannot be countenanced that the
Food Safety Standards, in any manner, are compromised
and “we the people” are subjected to any inferior or sub-
standard products. It is only when such highest standards
are achieved, a successful march in attaining international
standards on food safety and public health can be
ensured .”

6.8 We also find it apposite to place reliance on the
decision of M/s. Prenda Creations Pvt. Ltd. Ludhiana, M/s.
Prenda Creations Pvt. Ltd. Ludhiana Versus Union of India
&others.- 2026 (8) TMI 1298 - PUNJAB AND HARYANA HIGH
COURT , relevant extracts reproduced below -
“2. According to the petitioner-Company, the import of roasted
areca nuts has taken place from Indonesia and the petitioner is
willing to pay the Customs duty which is payable on it. The
respondents, however, have taken the decision that the produce
imported is not the 'roasted' areca nuts, rather its 'dried' areca
nuts, which involves a different rate of duty. It is on account of
this dispute that the imported goods are lying in the Customs
bonded warehouse from November, 2024 onwards. The basis of
the claim of the respondents is the test report obtained from
the Central Revenue Control Laboratory, New Delhi, which is
contained in Annexure P-2. The test report, for ready reference,
is reproduced hereunder:
“1. Lab No: CRCL/Food/08/4783(I)/dated: 17.01.2025Report
date:03.02.2025
2. Test Memo No: 1255337 Dated: 15.01.2025

24

3. B/E No: 7252907 Dated :15.12.2025
Name Contac information of customer
4. : Superintendent CFS,
OWPL, Ludhiana
5. Description of sample : Roasted Areca Nuts
Report: The sample as received is in the form of brown coloured
hard split nuts of irregular sizes and shapes, some nuts are
partially burnt having smoky odor. It has the characteristics of
Betel nut/Areca nut as per Regulation No.2.3.55 of Food Safety
& Standards Regulation 2011 and IS 16962:2018. It is having
following constants.
Sr.No. Parameters Test Method Result
1. Moisture % by mass AOAC 934.06/fssai manual-
dried fruits and vegetables -.
20.1
2.37
2. Damaged Nuts % (damaged nuts include
blemish or craked nuts, broken nuts, nuts
not fully dehusked& those the pithy of
which is black (% by mass)
FSSAI Manual/IS:16962
(Clause 3.5):2018
Nil
3. Damaged by moulds & insects (% by
mass)
9.97
4. Total Ash (% by mass) FSSAI Manual 2024 1.62
5. Aerocoline -- Present
6. Total Aflatoxin (ug/kg) CRCL/SOP/16/1:2020 BDL
7. Salmonella IS 5887 (P-III) (See 1):2020 Absent
8. Listeria Monocytogenes IS: 14988 (P-I):2020 Absent
9 Vibrio Cholerae IS: 5884 (P-V): 1976 Absent

1) Based on the above tested parameter sample u/r has the
characteristics of dried areca/betel nut as per FSSAI Regulation
2011 and IS 16962:2018.
2) The percentage of total aflatoxins exceed the limit as per
FSSAI standard.
3) On the basis of physical appearance, the sample u/r may not
be considered as roasted areca/betel nut.”
3. The petitioner contends that the test report essentially relies
upon standards laid down under the Food Safety Standards
Regulations, 2011, under the FSSAI manual, which mandates
such report to be given by the Laboratory within a period of five
days in respect of the food items tested. It is urged that the
laboratory has itself laid down a Standard Operating System
(SOP) for testing roasted areca nuts, which is contained in
Annexure P-33 of the lead case. The specification and test
method for areca nuts are clearly mentioned in the SOP, which
is reproduced hereunder:

SOP for Testing of Parameter for Arecanut Issue Date: 02/12/2024 Copy No.
Central Revenues Control Laboratory, New Delhi Issue No. 01
Doc. No. CRCI/Arecanut Rev. No. Page 1 of 17
Rev. Date:

Specification & Test method for Areca Nut (Roasted/Dried/Raw/Scented)
S.NO Parameter Specification/Limit Test Method
1. Physical Appearance Raw/Dried/Roasted Areca
Nut
White/Pale Brown/
Brown/Dark Brown Coloured

25

2. Moisture (% by mass) 7.0% (Max) AOAC 934.06/FSSAI
Manual-Dried Fruits and
Vegetables -. 20.1
3. Total Ash, (% by mass) --- FSSAI Manual 2024
4. Acid Insoluble Ash (% by mass) --- FSSAI Manual
5. Damaged Nuts % (damaged nuts include
blemish or cracked nuts, broken nuts, nuts
not fully dehusked& those the pith of which is
black (% by mass)
12% (Max) FSSAI Manual IS:16962
(Clause 3.5): 2018
6. Damaged by moulds & insects (% by mass) 14% (Max)
7. Total Aflatoxin (ug/kg) 15 ug/kg (Max) CRCL/SOP/16/1:2020
8. Copper(Cu) (mg/kg) 30 mg/kg (Max) AOAC 2015
9. Cadmium (Cd) (mg/kg) 1.0 mg/kg (Max) AOAC 2015
10. Lead (Pb) (mg/kg) 2.5 mg/kg (Max) AOAC 2015
11. Tin (Sn) (mg/kg) 250 mg/kg (Max) AOAC 2015
12. Arsenic (As) (mg/kg) 1 mg/kg (Max) AOAC 2015
13. Mercury (Hg) (mg/kg) 1.0 mg/kg (Max) AOAC 2015
5
14. Total Plate Count (CFU/g) 10 CFU/g IS: 5402(P-I):2021
14 a. E. coli Should be absent/25g IS 5887 (P-I):1976
4
15. Yeast & Mould Count 10 CFU/g IS:5403:1999
16. Salmonella Should be absent/25g IS 5887(P-III) (Sec 1):2020
17. Listeria Monocytogenes Should be absent/g IS: 14988(P-I):2020
2
18. S.aureus 10 CFU/g IS 5887(P-II): 1976
3
19. Enterobacteriaceae 10 CFU/g ISO: 21528:2017 (Part -II)
20. Vibrio Cholerae Should be absent/25g IS: 5887 (P-V): 1976
21. Menthol To be presented in scented
supari
---
22. Arecoline To be present ---

Note:
(i) Sr.No 1 to 6 and 21 & 22 parameters tested when the query
in test memo is whether the sample is
roasted/dried/raw/scented.
(ii) Sr.No 7 to 20 Parameters are tested when the query in test
memo is whether the sample is fit for human consumption .
Confidential: Not to be photocopied without the permission of
CRCL
Issued By
Chemical Examiner Gr-I
Approved by
Director (RL)”

4. When the test report relied upon by the respondent is
examined on the touchstone of parameters laid down in the
SOP, what is evident is that the conclusion of the laboratory that
the sample of roasted areca nuts is actually not 'roasted' areca
nuts, and rather 'dried' areca nuts, is based on the physical
appearance of the product, and not any other scientific
parameters determined for identifying the product as such.

5. Our attention has been invited to various documents and the
affidavits of the respondents, which would go to show that on
the basis of the physical appearance of the sample, its colour is
found to be brown, which is usually the colour of roasted areca
nuts. In addition to the test report extracted above, there are
other reports, most of which are ultimately about the sample

26

being dried areca nuts based upon the physical appearance of
the sample itself
*
9. We may also take into consideration the stand of the revenue
that the four consignments of areca nuts were released on
personal bond, only because the issue therein was with regard
to determination of country of origin, and the factum of
imported goods being roasted areca nut not being disputed,
deserves to be mentioned. We, however, find that in its reports,
both in respect of the four consignments which have been
released on personal bond and the other consignment, are
similar inasmuch as the moisture content, which is the major
determinative factor of the product in all such matters, is below
7%, which is within the permissible limit of moisture. The
petitioner otherwise has placed on record the test report of a
private laboratory as per which all the imported consignments
are determined to be roasted areca nuts. The specific assertion
made in para 26 of the writ petition, in this regard, remains
unrebutted. In such circumstances we are of the view that when
the report of Central Revenue Control Laboratory has based its
conclusion only on physical appearance and not on any other
scientific parameter, it would not be appropriate to allow the
respondents to withhold the release of goods for years together,
or call upon the petitioner to release such goods only on
furnishing of bank guarantee.”

6.9 We find that, in the instant case also, the
allegations of the Appellant are required to be examined on
the touchstone of the objective parameters laid down in the
SOP, if any. What emerges from the record is that the
conclusion sought to be drawn by the Revenue, namely, that
the sample declared and identified as “Supari” by FSSAI
officers after due statutory testing/examinations, in fact, not
“Supari”, does not emanate from the CRCL test report. It is
evident from the record that the Revenue has not subjected
the goods to the scientific parameters prescribed or otherwise
considered relevant for identifying the product as such. It is
significant that most of the parameters referred to above
neither formed part of the test query nor find any

27

corresponding mention in the CRCL test results. This assumes
significance when contrasted with the FSSAI test report, which
is more comprehensive and records testing against as many
as 52 parameters. Further, at places, even under the head of
physical appearance, the product has been recorded as
“Supari” by FSSAI Officers, while the analysis report
specifically describes the product as “BETELNUT PRODUCT
KNOWN AS SUPARI.” The FSSAI report also clearly sets out
the parameters tested, the test methods employed and the
corresponding test results. We find that the said test results
and methodologies have not been challenged by the Revenue,
nor has any material been brought on record to demonstrate
that the findings recorded therein are incorrect or unreliable.
In contrast, the CRCL test report does not record any
conclusive finding that the goods are not “SUPARI” or that
they do not constitute a “Betel Nut Product Known as Supari.”
The report, therefore, cannot, in our considered view, be
treated as conclusive for arriving at such a finding. The CRCL
report, at best, records certain characteristics of the samples,
but does not answer the material scientific or analytical
questions necessary to establish that the goods, despite being
identified by FSSAI as “Betel Nut Product Known as Supari,”
are not such a product. We, therefore, find that the evidentiary
material relied upon by the Revenue does not satisfactorily
establish the conclusion sought to be drawn by it that imported

28

goods are arecanut classifiable under Chapter 0802. The CRCL
report, in the absence of examination of the relevant scientific
parameters and in the absence of any specific finding that the
goods are not “Betel Nut Product Known as Supari,” cannot be
regarded as sufficient to displace the detailed findings
recorded in the FSSAI report. The latter, on the other hand,
specifically sets out the test parameters, test methods and
test results and identifies the product as “BETELNUT
PRODUCT KNOWN AS SUPARI.”

MOISTURE CONTENT AND DISTINCTION BETWEEN
DRIED NUTS AND ROASTED NUTS: -
6.10 We further note that the goods, as evidenced from
the FSSAI reports, are also distinguishable from raw areca
nuts. The said reports record a moisture content of less than
7%. Such low moisture content, in the context of the goods in
question, indicates that the moisture content has been
substantially reduced through a process involving intense
heating and not merely by a process of natural or ordinary sun
drying. It is also pertinent to note that various decisions of the
Hon’ble High Courts have recognized the distinction between
“roasted” and “dried” areca nuts. In view of the clear findings
recorded in the FSSAI reports, including the moisture content
specified therein, we find it difficult to accept the contention
of the Revenue that the subject goods are merely raw areca

29

nuts. The conclusion sought to be drawn by the Revenue on
the basis of the CRCL test report, which admittedly does not
record any test or finding with regard to the moisture content
of the goods, does not, in our considered view, provide a
sustainable basis for such a conclusion. Such a finding would
also be contrary to the legal position emerging from the
judicial pronouncements on the distinction between roasted
and dried areca nuts. The issue has been considered in detail
by the Hon’ble Madras High Court in CC v. Shahnaz
Commodities International Ltd., (2023) 9 Centax 183
(Madras), which shall be adverted to in the later part of this
order. At this juncture, it would also be apposite to refer to
the decision of the jurisdictional High Court in M/s. Unik
Traders, represented by its Legal Heir Shri Asif H. Thara v.
Commissioner of Customs, Chennai, 2025 (10) TMI 833 –
Madras High Court; Other Citation: 2025:MHC:2380 . The
relevant extracts of the said decision are reproduced
hereunder: -
“17. The First Bench of this Court, while disposing of
W.A.Nos.3647 and 3648 of 2024 by a common judgment
dated 04.3.2025, held as follows :

“15. Therefore, as per the parameters fixed by the
Authority for Advance Rulings, if the moisture content
is between 10% and 15%, the same would be
considered as a raw areca nut and anything below
the said category would be considered as roasted
areca nut. The said finding has attained finality. All
the laboratory reports also state that the moisture
content of the areca nuts is below 10%. Therefore,
we find no reason to interfere with the impugned
order.”

30

18. The said common judgment of the First Bench of
this Court was also subsequently confirmed by the
Hon’ble Apex Court by dismissing the special leave
petitions in S.L.P.(Civil) Nos.17655 & 17656 of 2025
filed by the Department by a common order dated
25.7.2025 .

19. In view of the above, as a Single Judge, I am bound by
the common judgment of the First Bench of this Court, which
has categorically held that where the moisture content is
below 10%, it would be considered as roasted areca nut.
This view has been taken by various High Courts.



30. Considering the facts and circumstances of this case and
also considering the fact that the consignment that has been
imported has a moisture content below 10% as per the law
as it stands today, it can be considered only to be a roasted
areca nut. The goods that have been imported cannot be
treated as prohibited goods since the relevant Notification
dated 02.4.2025 has already been stayed by this Court.
Under such circumstances, the goods cannot be permitted
to lie in some godown since they will perish. In any case,
already, 10 consignments have been released based on the
same FSSAI report. This Court is of the considered view that
no prejudice will be caused if the remaining consignments
except two are also directed to be released, however,
subject to conditions.”

6.11 The Revenue has strongly relied upon the fact that
the Customs Tariff specifically provides for areca nuts under
Chapter 8 and contains separate tariff entries covering areca
nuts in whole, split and ground forms. There can be no dispute
with the proposition that, where the goods, as presented for
import, retain their character and identity as areca nuts,
classification under the appropriate tariff entry of Chapter 8
would necessarily follow. However, the mere existence of a
specific tariff entry for split areca nuts under Chapter 8 cannot,
by itself, conclude every dispute relating to the classification
of a betel nut product described as “Supari.” The form in which

31

the goods are presented is undoubtedly a relevant
consideration; however, it cannot be examined in isolation.
The nature and extent of processing undertaken, the resultant
characteristics of the goods, their identity and, where
relevant, their commercial character, are also required to be
considered while determining the appropriate classification. In
the present case, the Respondent has placed reliance upon
evidence indicating that the goods were imported and treated
as a “Betel Nut Product Known as Unflavored Supari.” The
FSSAI reports relied upon by the Respondent constitute a
relevant piece of evidence while examining the factual identity
and characteristics of the imported product, though such
reports, by themselves, cannot determine its classification
under the Customs Tariff. The Respondent has placed
considerable reliance upon the FSSAI reports and the Food
Safety clearance. The Revenue, on the other hand, has
contended that an authority functioning under the Food Safety
and Standards Act cannot determine the classification of
goods under the Customs Tariff. We agree with the Revenue
to this limited extent. The FSSAI authorities do not exercise
jurisdiction to determine the classification of goods under the
Customs Tariff Act, 1975. Consequently, an FSSAI report or
Food Safety clearance cannot be treated as conclusive on the
question of tariff classification. Nevertheless, the fact that the
FSSAI does not exercise jurisdiction over tariff classification

32

does not render its report irrelevant for the purpose of
determining the factual identity and characteristics of the
goods. A report issued by a competent statutory authority,
upon examination of the imported goods and assessment
thereof with reference to the standards applicable to a “Betel
Nut Product Known as Supari,” constitutes relevant evidence
which is required to be duly considered. Its evidentiary value,
however, has to be assessed along with the other material
available on record. In our considered view, therefore, the
appropriate approach is neither to treat the FSSAI report as
determinative of tariff classification nor to disregard it merely
on the ground that the FSSAI does not have jurisdiction to
determine classification under the Customs Tariff. The FSSAI
report is required to be considered as one relevant piece of
evidence, along with the examination report, CRCL report, the
nature and extent of processing undertaken on the goods,
their characteristics as presented for import, and the
applicable tariff entries and statutory Notes. Thus, while the
fact that the goods are in split form is undoubtedly a relevant
consideration, such form, by itself, cannot be regarded as
conclusive of their classification where the competing claim is
that, by reason of the processing undertaken and the resultant
characteristics and identity of the goods, they answer the
statutory description of a “Betel Nut Product Known as
Supari.” The classification must, therefore, be determined

33

upon a cumulative appreciation of the evidence on record and
the applicable principles governing classification under the
Customs Tariff.

DISCUSSION ON CLASSIFICATION OF THE SUBJECT
GOODS: -
7. At the outset, it is necessary to reiterate that the
classification of goods is required to be determined in
accordance with the General Rules for the Interpretation of the
Customs Tariff, the language of the relevant tariff entries, the
applicable Section and Chapter Notes and, wherever relevant,
the HSN Explanatory Notes. The competing tariff entries in the
present case indicate that the legislature has consciously
made distinct provisions for areca nuts, roasted nuts and a
“Supari.” Chapter 8 covers areca nuts, whether fresh or dried;
Chapter 20 contains specific provisions in relation to roasted
nuts; while Chapter 21 specifically provides for “Supari.”

7.1 The question of classification must, therefore, be
approached primarily with reference to the statutory
description of the goods, read in the context of the relevant
Chapter Notes and the nature and extent of processing
undertaken on the goods. Before proceeding further, it would
be appropriate to set out the relevant General Rules for
Interpretation, the competing tariff entries, the applicable

34

Section and Chapter Notes and the relevant HSN Explanatory
Notes, as these provisions constitute the statutory framework
within which the classification of the subject goods is required
to be determined. The relevant provisions are reproduced
hereunder: -
(i) General rules for the interpretation of this Schedule

Classification of goods in this Schedule shall be governed by the following principles:
1. The titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; for
legal purposes, classification shall be determined according to the terms of the headings and any
relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require,
according to the following provisions.

2. (a) Any reference in a heading to an article shall be taken to include a reference to that article
incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the
essential character of the complete or finished article. It shall also be taken to include a reference to
that article complete or finished (or falling to be classified as complete or, finished by virtue of this
rule), presented unassembled or disassembled.
(b) Any reference in a heading to a material or substance shall be taken to include a reference to
mixtures or combinations of that material or substance with other materials or substances. Any
reference to goods of a given material or substance shall be taken to include a reference to goods
consisting wholly or partly of such material or substance. The classification of goods consisting of
more than one material or substance shall be according to the principles of rule 3.

3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under
two or more headings, classification shall be effected as follows:
(a) the heading which provides the most specific description shall be preferred to headings providing
a more general description. However, when two or more headings each refer to part only of the
materials or substances contained in mixed or composite goods or to part only of the items in a set
put up for retail sale, those headings are to be regarded as equally specific in relation to those goods,
even if one of them gives a more complete or precise description of the goods.
(b) mixtures, composite goods consisting of different materials or made up of different components,
and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be
classified, as if they consisted of the material or component which gives them their essential
character, insofar as this criterion is applicable.
(c) when goods cannot be classified by reference to (a) or (b), they shall be classified under the
heading which occurs last in numerical order among those which equally merit consideration.

4. Goods which cannot be classified in accordance with the above rules shall be classified under the
heading appropriate to the goods to which they are most akin.
(ii) Relevant entries under the Customs Tariff Act:


Chapter 8
Edible fruit and nuts; peel of citrus fruit or melons
NOTES
1. This Chapter does not cover inedible nuts or fruits.
2. Chilled fruits and nuts are to be classified in the same headings as the corresponding fresh fruits
and nuts.
3. Dried fruit or dried nuts of this Chapter may be partially rehydrated, or treated for the following
purposes :
(a) for additional preservation or stabilization for example, by moderate heat treatment,
sulphuring, the addition of sorbic acid or potassium sorbate;

35

(b) to improve or maintain their appearance for example, by the addition of vegetable oil or small
quantities of glucose syrup), provided that they retain the character of dried fruit or dried nuts.

*
Tariff
Item
Description Unit Rate
of
Duty
Preferential
Area Rate
(1) (2) (3) (4) (5)
…… ………… …. …… …….
0802 Other nuts, fresh or
dried, whether or not
shelled or peeled

0802
80
- Areca nuts:
0802
80 10
-
-
-
Whole Kg. 100% 90%
0802
80 20
-
-
-
Split Kg. 100% 90%
0802
80 30
-
-
-
Ground Kg. 100% 90%
0802
80 90
-
-
-
Other Kg. 100% 90%
0802
90 00
- Other Kg. 100%



Chapter 20
Preparations of vegetables, fruit, nuts or other parts of plants
Notes
1. This Chapter does not cover:
(a) vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, 8
or 11 ;
(b) food preparations containing more than 20 by weight of sausage, meat, meat offal, blood, fish or
crustaceans, molluscs or other aquatic invertebrates, or any combination thereof (Chapter 16);

Tariff
Item
Description Unit Rate of
Duty
Preferential
Area Rate
…… ………… …. …… …….
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

- Nuts, ground-nuts
and other seeds,
whether or not mixed
together:

2008
11 00
-
-
Ground-nuts kg. 30% -

36

2008
19
-
-
-
Other, including
mixtures:

2008
19 10
-
-
-
Cashew nut, roasted,
salted or roasted and
salted
kg. 241[45%] -
2008
19 20
-
-
-
Other roasted nuts
and seeds:
kg. 30% -
2008
19 30
-
-
-
Other nuts, otherwise
prepared or
preserved
kg. 30% -
2008
19 40
-
-
-
Other roasted and
fried vegetable
products
kg. 30% -
2008
19 90
-
-
-
Other kg. 30% -


Chapter 21
Supplementary Notes
In this Chapter " betel nut product known as Supari" means any preparation containing betel nuts,
but not containing any one or more of the following ingredients, namely: lime, katha (catechu) and
tobacco whether or not containing any other ingredients, such as cardamom, copra or menthol.

Tariff
Item
Description Unit Rate of
Duty
Preferential
Area Rate
(1) (2) (3) (4) (5)
…… ………… …. …… …….
2106 Food preparations
not elsewhere
specified or included


2106
90 30
-
-
-
Betel nut product
known as "Supari"
kg. [150%] -
…... -
-
-
…….. … …… -


(iii) Relevant portions of the HSN:
HSN Explanatory Notes:
Chapter 8
Edible fruit and nuts; peel of citrus fruit or melons
NOTES
1. This Chapter does not cover inedible nuts or fruits.
2. Chilled fruits and nuts are to be classified in the same headings as the corresponding fresh fruits
and nuts.
3. Dried fruit or dried nuts of this Chapter may be partially rehydrated, or treated for the following
purposes :
(a) for additional preservation or stabilization by moderate heat treatment, sulphuring, the addition of
sorbic acid or potassium sorbate);
(b) to improve or maintain their appearance by the addition of vegetable oil or small quantities of
glucose syrup), provided that they retain the character of dried fruit or dried nuts
…
The Chapter further excludes:
(i) Fruit flour, meal and powder (heading 11.06).

37

(ii) Edible fruit and nuts and peel of melons or citrus fruit, prepared or preserved otherwise than as
described above (Chapter 20).
(iii) Roasted fruit and nuts (e.g., chestnuts, almonds and figs), whether or not ground, generally used
as coffee substitutes (heading 21.01)


Chapter 20
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) Homogenised 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:
(1) 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, flavours, spices or other
additives

Chapter 21
Miscellaneous edible preparations Notes .
1. This Chapter does not cover:
(a) Mixed vegetables of heading 07.12;
(b) Roasted coffee substitutes containing coffee in any proportion (heading 9.01);
(c) Flavoured tea (heading 9.02);
(d) Spices or other products of headings 9.04 to 09.10;
(e) Food preparations, other than the products described in heading 21.03 or 21.04, containing more
than 20% by weight of sausage, meat, meat offal, blood, fish or crustaceans, molluscs or other
aquatic invertebrates, or any combination thereof (Chapter 16);
(f) Yeast put up as a medicament or other products of heading 30.03 or 30:04; or
(g) Prepared enzymes of heading 35.07.

2. Extracts of the substitutes referred to in Note 1 (b) above are to be classified in heading 21.01.
3. For the purposes of heading 21.04, the expression" homogenised composite food preparations"
means preparations consisting of a finely homogenised mixture of two or more basic ingredients such
as meal, fish, vegetables, fruit or nuts, put up for retail sale as infant food or for dietetic purposes, in
containers of a net weight content not exceeding 250 g. For the application of this definition, no
account is to be taken of small quantities of any ingredients which may be added to the mixture for
seasoning, preservation or other purposes. Such preparations may contain a small quantity of visible
pieces of ingredients."


7.2 We find from a perusal of the relevant Section
Notes and Chapter Headings of the competing Tariff Headings
of the Customs Tariff, 1975, as well as the relevant extracts
of the Section Notes and Chapter Headings as given in the
HSN Explanatory Notes reproduced supra, that: -

38

i. Edible fruits and nuts are covered under Chapter 08. The
Chapter also contemplates dried fruits and nuts which
may be partially rehydrated or subjected to processes
intended, inter alia, for additional preservation or
stabilisation, or for improving or maintaining their
appearance, such as moderate heat treatment,
sulphuring, or the addition of sorbic acid or potassium
sorbate.
ii. While split areca nuts are specifically covered under
Heading 0802, it is significant that Chapter 08 does not
employ or specifically refer to the expressions “Supari”
or “Betelnut”.
iii. An areca nut, even when subjected to the treatments
contemplated under the relevant Chapter Note to
Chapter 08, would continue to fall within Chapter 08.
iv. It is equally significant that processes such as roasting,
or other specific processes which may be undertaken to
convert areca nut into Supari or another betel nut
product, are not specifically contemplated or
enumerated in Chapter 08.
v. The HSN Explanatory Notes to Chapter 08 specifically
exclude roasted nuts. This exclusion assumes
significance while examining the distinction between
goods which remain covered as areca nuts under
Chapter 08 and goods which, by virtue of the process to

39

which they have been subjected, may fall for
consideration under other Chapters of the Tariff.
vi. Chapter 20, inter alia, covers preparations of nuts;
however, it does not cover nuts prepared or preserved
by the processes specified in Chapter 08. This indicates
that the scheme of the Tariff does not contemplate an
absolute exclusion of all prepared or preserved nuts from
Chapter 08. The precise nature of the process and the
resultant character of the goods must, therefore, be
examined with reference to the relevant Chapter Notes
and tariff entries.
vii. Other roasted nuts are specifically covered under
Chapter 20. The inclusion of roasted nuts under Chapter
20, read with the corresponding HSN Explanatory Notes,
is therefore relevant while determining whether goods
subjected to a roasting process continue to retain the
identity of nuts covered by Chapter 08.
viii. The HSN Explanatory Notes to Chapter 20 specifically
refer to areca (or betel) nuts and other nuts which are
dry-roasted, oil-roasted or fat-roasted, whether or not
containing or coated with vegetable oil, salt, flavours,
spices or other additives. It is thus significant that, under
Chapter 20, both roasted areca nuts as well as roasted
betel nuts are expressly contemplated.In contrast,
Chapter 08 specifically refers to “areca nuts” and does

40

not employ the expressions “betel nuts” or “Supari”. This
distinction in the language employed in the respective
Chapters assumes significance in examining the
competing classifications.
ix. We also note that the expression “roasting” has not been
specifically defined in the relevant Chapter Note or in the
HSN Explanatory Notes to Chapter 20. Nor do the said
provisions expressly set out the parameters for
distinguishing the process of roasting from that of
drying. The absence of such a definition or parameters
necessarily requires the nature and extent of the process
undergone by the goods to be determined on the basis
of the evidence available on record.
x. “Betel Nut Product Known as Supari” is specifically
covered under Tariff Item 2106 90 30. The existence of
a specific tariff entry for such product cannot be
disregarded while examining the classification of goods
which are claimed to answer the description of Supari.
xi. The relevant Supplementary Note to Chapter 21 provides
that “Betel Nut Product Known as Supari” means any
preparation containing betel nuts, but not containing any
one or more of the specified ingredients, namely, lime,
katha (catechu) and tobacco, whether or not containing
any other ingredients such as cardamom, copra or
menthol.

41


7.3 It is significant that the statutory definition
principally stipulates that the product should constitute a
preparation containing betel nuts, while excluding the
specified ingredients, namely, lime, katha and tobacco. We
further note that neither the relevant Chapter Note to Chapter
21 nor the HSN Explanatory Notes thereto prescribe any
specific process which must necessarily be undertaken for a
product to qualify as “Supari”. Equally, no specific parameters
are prescribed therein for determining whether an areca nut
or betel nut has undergone a process so as to acquire the
character of Supari. Thus, the Tariff, while specifically
providing an entry for “Supari”, does not, in the relevant
statutory provisions, prescribe any exhaustive list of processes
by which areca or betel nuts must necessarily be converted
into Supari, nor does it prescribe any specific scientific or
physical parameters which alone would determine whether a
product answers that description. The competing provisions of
Chapters 08, 20 and 21 must, therefore, be read harmoniously
and in their proper statutory context. The mere fact that the
goods contain areca or betel nut as their principal constituent
cannot, by itself, conclude the classification. The material
question is whether, having regard to the nature and extent
of processing, the resultant characteristics and the evidence
on record, the goods answer the specific statutory description

42

of “Supari”, or whether they continue to covered under
identity of areca nuts falling under Chapter 08.

7.4 The Revenue has, however, not undertaken the
necessary factual or technical enquiry for this purpose. No
specific query appears to have been raised with the CRCL
regarding the exact nature of the processing undergone by the
goods. In particular, no opinion was sought as to whether the
goods had merely been dried, subjected to moderate heat
treatment, dehydrated, dry-roasted, oil-roasted or fat-
roasted. Nor was any conclusive opinion obtained as to
whether the goods were known as Supari, or whether they had
acquired the character of a preparation. The CRCL report,
therefore, does not answer the material questions necessary
for determining the classification of the subject goods. The
Revenue has also not produced any authentic technical or
commercial literature identifying objective parameters
distinguishing Supari from areca nut or betel nut. The
expressions “Arecanut”, “Betelnut” and “Supari” are, in
common and commercial usage, frequently employed
interchangeably. Consequently, a mere assertion that Supari
is necessarily a commodity commercially distinct from areca
nut cannot, without supporting evidence, constitute a basis for
rejecting the specific entry under which the goods are claimed
to fall. At the same time, the question whether the goods are

43

commercially regarded as the same commodity is not, by
itself, determinative of their classification. The legislature is
competent to classify products separately for the purposes of
taxation even where they may be commercially regarded as
the same or substantially similar. Equally, the existence of
separate entries does not dispense with the requirement of
examining whether the goods answer the statutory description
of a particular entry. Once the Tariff contains a specific and
independent entry for a “Betel Nut Product Known as Supari”,
the Revenue cannot disregard that entry merely on the ground
that the principal constituent of the product continues to be
areca nut. The proper enquiry is whether the goods, having
regard to their composition, processing and characteristics,
answer the description of the specific entry. It is not open to
the Revenue to bypass the statutory entry without first
establishing, on the basis of objective evidence, that the goods
do not answer that description.

7.5 The classification must also be consistent, as far
as possible, with the HSN Explanatory Notes. The Hon’ble
Supreme Court has repeatedly recognized the HSN
Explanatory Notes as a safe and valuable guide in resolving
disputes relating to tariff classification, including in CCE v.
Wood Craft Products Ltd., (1995) 3 SCC 454, CCE & Customs
v. Phil Corpn. Ltd., (2008) 17 SCC 569, and LML Ltd. v.

44

Commissioner of Customs, (2010) 10 SCC 503. The relevant
statutory scheme also makes a clear distinction between
drying and roasting. The Chapter Notes to Chapter 8
contemplate processes undertaken for the preservation or
stabilization of dried nuts, including moderate heat treatment
and other specified processes. On the other hand, Note 1(a)
to Chapter 20 excludes nuts prepared or preserved by the
processes specified in Chapters 7, 8 or 11. Roasting and drying
are, therefore, treated as distinct processes for the purposes
of classification. Any interpretation equating roasting with
drying would substantially dilute the significance of the
exclusion contained in Note 1(a) to Chapter 20. Where the
Tariff specifically recognizes goods subjected to roasting
separately from dried nuts, the precise nature and extent of
the thermal treatment undergone by the goods assumes
material importance. In the present case, the samples drawn
immediately after import were reported to have a moisture
content of 6%. The fact that the moisture content was less
than 10% is not in dispute. However, the Revenue has not
established the process by which such substantial reduction in
moisture was achieved. The investigation does not disclose
whether the reduction resulted from mere drying or from a
more extensive thermal process such as roasting. This
omission assumes significance because the distinction
between moderate heat treatment for preservation and a

45

more intensive process of roasting may directly affect
classification. In the absence of any technical evidence
regarding the actual process undertaken, the conclusion that
the goods are merely dried areca nuts cannot rest solely upon
their visual examination, given their low moisture content or
the detailed FSSAI reports. The terms “dry-roasting”, “oil-
roasting” and “fat-roasting”, or the “processes mandated for
a product called SUPARI”, may not be specifically defined
under the Customs Tariff Act, 1975. Nevertheless, such
expressions are required to be understood in their ordinarily
accepted technical and commercial sense. Roasting cannot
automatically be equated with mere drying or moderate heat
treatment intended for preservation. The Revenue was,
therefore, required to establish the actual methods of the
processes undertaken on the goods before excluding the
possibility of their classification under the entries relating to
roasted nuts or Supari.

WHETHER THE IMPUGNED GOODS CONSTITUTE A
“FOOD PREPARATION”: -
7.6 The Revenue has contended that classification
under CTH 2106 90 30 is possible only where the goods
constitute a “food preparation” and are not specified or
included elsewhere in the Customs Tariff. We find that the
tariff description, read with the relevant Supplementary Note

46

to Chapter 21, requires careful consideration. The expression
employed therein is “Supari”, and the statutory description
specifically covers a betel nut product known as Supari. The
Revenue has contended that the expression “preparation
containing betel nuts” necessarily postulates the presence of
ingredients other than betel nuts and that, in the absence of
any such additional ingredients, the goods cannot fall within
Chapter 21. We are unable to accept the said proposition in
such absolute terms. The statutory description itself
contemplates a betel nut product with or without other
ingredients. Therefore, the mere absence of ingredients such
as flavoring agents or sweeteners, cannot, by itself, be
determinative of the exclusion of the goods from Chapter 21.
At the same time, due meaning and effect must necessarily
be given to the expression “preparation” occurring in the
statutory scheme. It cannot be held that every areca nut which
has merely been cut or split would, by that fact alone, acquire
the character of a preparation and consequently fall under
Chapter 21 merely because it is intended for human
consumption. The nature and extent of processing undertaken
on the goods, therefore, assume significance. The question,
consequently, is one to be determined on the basis of the facts
and the applicable principles of tariff classification, namely,
whether, having regard to the nature of the processing
undertaken, the characteristics of the goods as presented for

47

import, and their established commercial identity, the goods
have acquired the character of a “Supari”, or whether they
continue to retain the essential identity of areca nuts falling
within the specific tariff entries under Chapter 8.The
expression “with or without other ingredients” cannot,
therefore, be read in isolation so as to dispense with the
requirement that the goods must answer the statutory
description of a “Supari.” Equally, the absence of additional
ingredients cannot, by itself, be treated as sufficient to
conclude that the goods necessarily retain their identity as
areca nuts under Chapter 8.The determination must ultimately
turn upon the cumulative effect of the nature and extent of
processing, objective parameters, the characteristics of the
goods, and the evidence on record, considered in the light of
the relevant tariff entries and the applicable statutory notes.

7.6.1 We further find that the issue involved is
essentially interpretational in nature. The Revenue has not
been able to place on record any clear or authoritative
definition distinguishing Arecanut, Betelnut and SUPARI. As
against this, according to the Revenue, the aforementioned
SUPARI, not containing any other ingredient, would be
appropriately covered under Chapter 08 of the Customs Tariff.
Chapter 21 contains Supplementary Notes, of which
Supplementary Note 2 reads as under, "In this Chapter “Betel

48

Nut” product known as “SUPARI” means any preparation
containing Betel-Nuts, but not containing any one or more of
the following ingredients, namely: Lime, Katha (catechu), and
tobacco whether or not containing any other ingredients, such
as Cardamom, Copra or menthol.” The case of the Respondent
is that the subject products are appropriately classifiable
under CTH 2106 90 30, which reads as “Betel Nut Product
Known as Supari". We also taken note of cited Advance
Rulings, viz ., Shahnaz Commodities International Pvt, Ltd.,
Isha Exim, A.K. Impex, Excellent Betel Nut. We find that the
same deal with varieties of products, viz ., Roasted Areca Nuts
/ Betel Nut, API Supari, Chikni Supari, Unflavored Supari, and
Flavored Supari, Menthol Scented Supari, etc .. In the case of
Unflavored Supari, the following processes are undertaken on
raw dried betel nuts: removal of large impurities by labour;
removal of small impurities by a de-stoner; metal
detection/removal of metallic items, if any; garbling; polishing
in a polishing machine; three-stage cutting; blowing of
weightless particles in a blower; gravity separation by an
automatic gravity separation machine; roasting in a fire-gas
rotary roaster; metal detection by magnetic metal detectors;
and packaging. In view of the aforesaid processes and the
manner in which the product is commercially identified, it is
clear that neither Unflavored Supari, as it is known in the
market, nor Supplementary Note 2 to Chapter 21 mandates

49

the presence of any ingredient other than betel nut for a
product to qualify as SUPARI. The Revenue’s contention that
the presence of some additional ingredient is mandatory for
preparing SUPARI would, therefore, amount to importing
words into the tariff entry which are not found therein and, in
effect, rewriting or adding to the scope of Supplementary Note
2 to Chapter 21. Such an approach, if accepted, would run
contrary to the settled principles governing the interpretation
of taxing statutes and tariff entries.

7.6.2 We also take judicial notice of the observations
contained in paragraph 25 of the judgment of the Hon’ble
Supreme Court in Chief Commissioner of Central Goods and
Service Tax & Ors. v. M/s. Safari Retreats Private Ltd. & Ors.,
reported in 2024 (10) TMI 286 – Supreme Court, wherein the
Hon’ble Supreme Court reiterated the settled principles
governing the interpretation of taxing statutes. It is a settled
principle that a taxing statute must be read as it stands, with
no additions and no subtractions on the basis of legislative
intendment or otherwise. Where the language of a taxing
provision is plain and unambiguous, the possibility that its
application may lead to an inconvenient or even seemingly
absurd consequence is not, by itself, a ground for departing
from its plain meaning. It is for the legislature to address any
such perceived deficiency or absurdity. A taxing provision

50

must, therefore, be construed strictly and in accordance with
what is clearly expressed. The Court cannot import into the
statute words which are not found therein, nor can it supply
an omission on the assumption that such addition would better
advance the legislative intent. Equally, a taxing provision
cannot be interpreted on the basis of presumptions or
assumptions. Where two constructions of a taxing provision
are reasonably possible, the settled principle is that the
construction favourable to the assessee is ordinarily to be
preferred. There is, therefore, nothing inequitable in a
taxpayer escaping a liability where the language employed by
the legislature does not clearly impose such liability. It is also
well settled that where a word or expression employed in a
taxing statute has not been specifically defined therein, its
meaning cannot ordinarily be imported from another statute
which does not deal with a cognate subject. The meaning
must, in the first instance, be gathered from the statute in
which the expression occurs, read in its proper context and in
accordance with the scheme of the legislation. Reference is
also invited to the aforesaid principles reiterated by the Apex
Court in Commissioner of Central Excise, Raipur Versus M/s
Sepco Electric Power Construction Corporation-2022 (7) TMI
524 - Supreme Court , especially Para 8.3 wherein Apex Court
quotes principles emanating from 5 judge Constitution Bench
decision of the Hon’ble Supreme Court in Commissioner of

51

Customs (Import), Mumbai v. Dilip Kumar and Company,
wherein, inter alia, it was observed that a taxing statute
cannot be interpreted on the basis of presumptions or
assumptions; and that the statute has to be interpreted in the
light of what is clearly expressed. The Court further
emphasized that where the language is plain and
unambiguous, the plain meaning rule ordinarily leaves no
scope for adding to or subtracting from the statutory
language. The Constitution Bench further clarified that the
principle that an ambiguous taxing provision is ordinarily
construed in favor of the assessee. The principles emerging
from the aforesaid decisions are of particular relevance in the
present case. Where the legislature has employed the
expression “Betel Nut Product Known as Supari” and has itself
prescribed the scope of that expression through
Supplementary Note 2 to Chapter 21, it would not be
permissible to introduce an additional requirement, not
expressly contained therein, that the product must necessarily
contain an ingredient other than betel nut. Such an
interpretation would amount to supplying words to the tariff
entry or rewriting the statutory note, rather than interpreting
the provision as enacted. The question before us, therefore, is
not what the tariff provision ought to have provided, but what
it actually provides. The classification must necessarily be
determined on the basis of the language employed by the

52

legislature, read in its statutory context, and not by importing
an additional condition on the basis of an assumption as to
what the legislature may have intended to provide.

RELEVANCE OF COMMON PARLANCE, GRI 1 AND THE
SPECIFIC TARIFF ENTRY FOR ‘SUPARI’: -
7.7 The Respondent has also argued and invoked the
principle of common parlance, contending that the goods are
commercially recognized and traded as “Supari”. Where a
tariff entry employs an expression which is not defined with
complete technical precision, the commercial understanding
and common parlance meaning may be relevant. However,
common parlance cannot override an express and specific
statutory description. The principle becomes relevant only
after the nature of the goods and the scope of the competing
tariff entries have been properly determined. In the present
case, the expression “Supari” itself incorporates an element of
commercial identity. Therefore, evidence regarding the
manner in which the product is understood and recognised
cannot be completely disregarded. It may be noted that the
specific tariff entry for the item “SUPARI” must be given its
due meaning and effect. We find that the classification of
“SUPARI” begins and ends at the first door of the GIR, i.e.,
GRI 1 , unless the Revenue places on record relevant and
sufficient evidence to establish that the subject goods are not

53

“SUPARI”. Accordingly, the impugned goods are classifiable
under Heading 210690 in terms of Rule 1 itself, and we do not
find any necessity to revert to the subsequent rules of
interpretation.At this juncture, it is apposite to note that the
Hon’ble Supreme Court, in the case of Commissioner of
Customs (Import) v. M/s. Welkin Foods , reported as 2026
INSC 19, has analyzed the entire gamut of fundamental
concepts governing the classification of goods imported into
India, including the General Rules for the Interpretation of the
First Schedule—the Import Tariff—as well as the role of the
HSN Explanatory Notes, and has observed as under: -
“35. The primary purpose of the GRIs is to establish
mandatory boundaries for any classification inquiry,
ensuring a structured, uniform, and predictable approach to
classification. It is essential not to treat these GRIs as a
menu of options that can be invoked randomly, but rather
as a legal framework that dictates a precise and sequential
methodology for classifying all goods .

36. This Court has repeatedly reiterated that GRIs 1-4 must
be applied sequentially. [See Commissioner of Central
Excise, Nagpur v. Simplex Mills Co. Ltd., reported in (2005)
3 SCC 51 and Secure Meters Limited v. Commissioner of
Customs, New Delhi, reported in (2015) 14 SCC 239]. GRI
1, which gives primacy to the headings and notes, is the
non-negotiable starting point. GRI 2, which deals with
incomplete, unassembled or composite goods or mixtures,
often acts as an extension of GRI 1, by deeming the
headings to include incomplete/unassembled goods or
mixtures or combinations of a material or substance. GRI
3 is only invoked when the application of GRI 1 and/or GRI
2 results in a good being prima facie classifiable under two
or more competing headings. GRI 3 exists solely to resolve
this tie. GRI 4, the rule of last resort, is mutually exclusive
to GRI 3 and is only invoked if GRI 1 and 2 have failed to
find even one possible heading for the good. To illustrate,
let us take the analogy of “locked doorways”:

a. Classification begins and, in most cases, ends at the first
door: GRI 1.

b. If, upon applying GRI 1 and/or GRI 2, the result is a tie
between two or more headings, the key to the GRI 3 door is

54

granted to find the tie-breaker. Further, once the door to
GRI 3 is unlocked, the subsequent doors to GRI 3(b) and
GRI 3(c) are also unlocked in a sequential manner, i.e., the
door to GRI 3(b) unlocks only when the dispute is not
resolved through application of GRI 3(a), and similarly door
to GRI 3(c) unlocks only when the dispute is not resolved
through application of GRI 3(b)

c. If, upon applying GRI 1 and/or GRI 2, the result seems to
be that no heading applies at all, the key to the GRI 4 door
is granted to find the “most akin” good.”


7.8 The Revenue seeks to reject the classification
declared by the Respondent and to reclassify the goods under
CTI 0802 80 20. It is, therefore, incumbent upon the Revenue
to establish that the goods answer the description of the
proposed tariff entry and do not fall within the entry claimed
by the Respondent. In the present case, the Revenue has
alleged that the goods were in split form and retained certain
physical characteristics of areca nuts. However, the
Respondent has produced evidence indicating that the goods
conform to the prescribed standards for a product known as
unflavored Supari. In fact, no specific test query or test result
has been brought on record to demonstrate that the subject
goods are not a “Betel Nut Product Known as Supari.” The
Revenue has primarily relied upon the absence of any
ingredient other than betel nut and the fact that the goods
were found in split form. In our view, these factors, though
relevant, cannot conclusively determine the classification
without examining the entire statutory description of the

55

competing entries. The absence of flavoring material or any
other ingredient does not, by itself, establish that the goods
could not constitute unflavored Supari, particularly when the
relevant statutory description itself contemplates a betel nut
product which may not necessarily contain such ingredients.
On the facts of the present case, we find that the Revenue has
not produced sufficient material to establish that,
notwithstanding the FSSAI certification, the goods were
merely raw or unfinished areca nuts and were incapable of
falling within the description of a “Supari.”

7.9 We also take judicial notice of DGFT Notification
No. 57/2015-2020 dated 14.02.2023 concerning the
amendment in the import policy and policy conditions relating
to ITC (HS) Code 080280 of Chapter 08 and ITC (HS) Code
2106 90 30 of Chapter 21 of ITC (HS), 2022, Schedule-I
(Import Policy). By the said Notification, the import policy in
respect of Supari under ITC (HS) 21069030 was revised from
“Free” to “Prohibited”. The relevant ITC (HS) Code is
21069030 and the corresponding description is “Betel Nut
Product Known as Supari.” We also take note of the
subsequent issuance of Notification No. 02/2025-26 dated
02.04.2025 by the Directorate General of Foreign Trade
concerning the import policy applicable to roasted areca nuts.
While such subsequent policy clarification cannot, by itself,

56

determine the classification of the subject goods under the
Customs Tariff, it does indicate that the classification and
treatment of processed and roasted areca nuts have required
consideration and clarification at the highest departmental
level. This further underscores the need for an objective and
evidence-based examination of the nature, extent and effect
of the processing undergone by the goods before determining
their classification under the competing tariff entries.In the
facts and circumstances of the present case, and having
regard to the evidence discussed hereinabove, we find that
the Revenue has failed to place sufficient and cogent material
on record to establish that the subject goods do not answer
the description of “Supari.”

SPECIFIC ENTRY vis-à-vis GENERAL / RESIDUAL
ENTRIES: -
8. We have already held that the classification of
“SUPARI” begins and ends at the first door of the GIR, i.e.,
GRI 1, unless the Revenue places on record relevant and
sufficient evidence to establish that the subject goods do not
answer the description of “SUPARI.” It is further well settled
that, where two competing entries are otherwise attracted,
more specific description is ordinarily to be preferred
the
over the general description, consistent with the principle
embodied in Rule 3(a) of the General Rules for the
Interpretation of the Tariff
. The decisive enquiry in the

57

present case is, therefore, not whether areca nut, betel nut
and Supari are commercially identical or distinct in the
abstract. The question is whether, having regard to the nature
of the goods, the processing actually undertaken and the
statutory descriptions contained in the competing entries, the
Revenue has established that the goods do not answer the
specific description of a “Betel Nut Product Known as Supari.”
On the evidence available on record, we find that the Revenue
has failed to discharge this burden. The CRCL report does not
conclusively establish the nature of the processing undergone
by the goods; no objective parameters have been placed on
record to distinguish the subject goods from Supari; and the
Revenue has not undertaken the requisite technical enquiry to
establish that the goods underwent only such processes as
would necessarily retain them within the scope of Chapter 8.
Accordingly, the classification proposed by the Revenue
cannot be sustained merely on the premise that areca nut
constitutes the principal constituent of the subject goods. The
specific statutory entry for “Supari”, the distinction maintained
under the Tariff between drying and roasting, the relevant
HSN Explanatory Notes, and the inconclusive nature of the
technical evidence relied upon by the Revenue are all relevant
considerations which must be given due effect. Equally, the
FSSAI report, which has been disregarded by the Revenue
without any cogent material demonstrating the incorrectness

58

or unreliability of its findings, cannot be brushed aside while
appreciating the evidence as a whole. Upon a cumulative
consideration of the statutory scheme, the relevant tariff
entries and notes, the HSN Explanatory Notes, and the
evidence available on record, we find that the Revenue has
not established that the subject goods fall within CTI 0802 80
20 or that they do not answer the specific statutory description
of “Supari.” The classification proposed by the Revenue is,
therefore, not sustainable. The classification has to be
determined both according to the terms of the Headings and
according to the provisions of the rules unless, a particular
Heading or Note excludes the application of rules other than
Rule 1. However, if there is no such clear indication emanating
from the headings or notes as to the precise classification of
the goods, then classification has to be determined both
according to the terms of the Headings and according to the
provisions of the rules, in the sequential manner as elaborated
in the Judgement in Welkin Foods case supra.

9. We find it apposite to place reliance upon the
judgment of the jurisdictional High Court in Commissioner of
Customs v. Shahnaz Commodities International Ltd., (2023)
9 Centax 183 (Madras). The relevant extracts from the said
judgment are reproduced hereunder: -
“ 8. Relevance of Common Parlance Test vis-à-vis Specific Tariff Entry
in determining Classification:

59


A perusal of the relevant entries under CTH 08, 20 and 21 would show that
while CTH 08 is meant to cover areca nut whole, split, grounded including
dried nuts subject to the process of drying which is by way of additional
preservation or stabilization by moderate heat treatment, sulphuring, the
addition of sorbic acid or potassium sorbate, Chapter 20
covers roasted nuts. Apparently, legislature has for the purpose of
classification treated drying and roasting as processes which are
distinct/different and importantly, relevant in determining whether the
nuts would fall under CTH 0802 or under 2008 . The submission of the
learned counsel for the appellant that roasted areca nut is in common
parlance treated as areca nut, in other words, by the process of
roasting a different commercial commodity does not emerge and thus,
keeping in view the restrictive language employed in Chapter 2008 viz.,
exclusion of items covered under CTH 8, the roasted areca nut would fall
under CTH 0802, is misplaced. The said submission that the products
that are commercially the same, must be classified under one heading,
overlooks the fact that legislature is competent to classify differently
or make a distinction even though the products in question are not
commercially different. I n this regard, it may be useful to rely on the
decision of the Hon'ble Supreme Court in case of Sterling Foods v. State
of Karnataka, reported in (1986) 3 SCC 469 = 1986 (26) E.L.T. 3 (S.C.)
wherein, while dealing with the question, whether prawns, shrimps and
lobsters locally purchased for export after subject to the process of cutting
their heads and tails, peeling, deveining, cleaning, freezing and exporting
was eligible to claim the benefit as a sale in the course of export under sub
section (3) to Section 5. It was found that the benefit ought to be extended
as prawns/lobsters even after being subject to the above processes do not
lose their identity, but commercially remain the same . Importantly, an
argument was advanced on the basis of the entries in the Schedule to the
Karnataka Act and the amendments made thereto particularly in relation to
classification of Shrimps, Prawns and Lobsters to suggest that
enumeration of Items in different entries in the Tariff Schedule is by
itself indicative of the fact that they are commercially different .
However, the said contention was rejected by the Hon'ble Supreme Court
in the following decisions, the relevant portion of which are extracted below:
Sterling Foods v. State of Karnataka, (1986) 3 SCC 469=1986 (26) E.L.T.
3 (S.C.):
"8. This conclusion on principle was not disputed by the High Court in its
judgment and the High Court conceded that even after processing such
as cutting of heads and tails, peeling, deveining, cleaning and
freezing, shrimps, prawns and lobsters subjected to such processing
continued in common parlance to be called "shrimps, prawns and
lobsters". But the High Court took the view that Entry 13-a after the
amendment effected in it with retrospective effect from September 1, 1978,
made a distinction between raw shrimps, prawns and lobsters and
processed or frozen shrimps, prawns and lobsters. In view of this distinction
made in entry 13-a, if was not possible to hold that processed or frozen
shrimps, prawns and lobsters were the same commodity as raw shrimps,
prawns and lobsters . The argument was that when the State legislature

60

itself made a distinction between these categories of commodities by
making purchases of one category amenable to sales tax under Entry
13-a and leaving out of the scope of taxation under Entry 13-a the other
category, how could it be said that both these categories represent the
same commodity and there is no difference in character and identity
between the two. This argument, we are afraid, is not well founded. It
is based on a total misapprehension in regard to the true object and
intendment of entry 13-a and it erroneously seeks to project that entry in the
interpretation and application of Section 5 sub-section (3) of the Central
Sales Tax Act. In fact Entry 13-a as amended, supports the argument
that even processed or frozen shrimps, prawns and lobsters are
known commercially and in the trade as "shrimps, prawns and
lobsters" . It is because Entry 13-a as it stood prior to its amendment, would
have, on the plain natural meaning of the expression "shrimps, prawns and
lobsters", included processed and frozen shrimps, prawns and lobsters, that
it became necessary for the State legislature to amend Entry 13-a with
retrospective effect so as to exclude from the scope and ambit of that entry
processed or frozen shrimps, prawns and lobsters. Now when the State
legislature excluded processed or frozen shrimps, prawns and lobsters from
the ambit and coverage of Entry 13-a, its object obviously was that the last
purchases of processed or frozen shrimps, prawns and lobsters in the State
should not be exigible to State sales tax under Entry 13-a. The state
legislature was not at all concerned with the question as to whether
processed or frozen shrimps, prawns and lobsters are commercially
the same commodity as raw shrimps, prawns and lobsters or are a
different commodity and merely because the State legislature made a
distinction between the two for the purpose of determining exigibility
to State sales tax, it cannot be said that in commercial parlance or
according to popular sense, processed or frozen shrimps, prawns and
lobsters are recognised as different commodity distinct from raw
shrimps, prawns and lobsters. The question whether raw shrimps,
prawns and lobsters after suffering processing retain their original
character or identity or become a new commodity has to be
determined not on the basis of a distinction made by the State
legislature for the purpose of exigibility to State sales tax because
even where the commodity is the same in the eyes of the persons
dealing in it the State legislature may make a classification for
determining liability to sales tax . This question, for the purpose of the
Central Sales Tax Act, has to be determined on the basis of what is
commonly known or recognised in commercial parlance. If in
commercial parlance and according to what is understood in the trade
by the dealer and the consumer, processed or frozen shrimps, prawns
and lobsters retain their original character and identity as shrimps,
prawns and lobsters and do not become a new distinct commodity and
are as much "shrimps, prawns and lobsters ", as raw shrimps, prawns
and lobsters, sub-section (3) of Section 5 of the Central Sales Tax Act would
be attracted and if with a view to fulfilling the existing contracts for export,
the assessee purchases raw shrimps, prawns and lobsters and processes
and freezes them, such purchases of raw shrimps, prawns and lobsters

61

would be deemed to be in course of export so as to be exempt from liability
to State sales tax."
(emphasis supplied)

9. From a reading of the above judgment, it is clear that the Hon'ble
Supreme Court had held that the legislature while classifying shrimps,
prawns and lobsters and treating it differently/separately from frozen
shrimps, prawns lobsters by placing it under different entries, has
unconcerned as to whether the two products are commercially same. This
is, in view of the fact that legislature was competent to classify the
products separately/differently even though they are commercially
one and the same. Thus, the question of examining
whether arecanut/betel nut and roasted areca nut are commercially
the same or otherwise, is an enquiry which is alien in determining the
classification which ought to be made on the basis of the Tariff entries.
Once legislature has chosen/provided for separate and independent
entry under the Tariff for roasted areca nut, it is no longer necessary
nor open to examine whether roasted areca nut is commercially the
same as areca nut or whether the process of roasting results in
emergence of a commercially new/different commodity having a
different name, character and use. It really does not matter whether
roasting of betel nut results in emergence of a new commodity for
even if it does not, it is still open to the legislature to classify the
product differently. Once the legislature has
classified roasted betel/arecanut under a separate entry, it is not open
to the Revenue to discard/abandon the entries in the Tariff while
examining/determining the classification of the product.

10. Relevance of HSN Explanatory Notes in determining classification
under CTH Secondly, there is considerable force in the submission of the
learned counsel for the respondents that the classification as far as possible
must be in conformity and in consonance with the HSN Explanatory Notes.
Perusal of HSN Explanatory Notes would leave no room for doubt that
"roasted areca nut" has been treated as falling under Chapter 20 . The
relevant portion of HSN Explanatory notes is extracted hereunder for better
appreciation:
It includes, inter alia:
(1) 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, flavours, spices or other additives

10.1 To appreciate the relevance of HSN Notes in determining
classification, it may be relevant to refer to the following judgments of the
Hon'ble Supreme Court:
(i) CCE & Customs v. Phil Corpn. Ltd.,(2008) 17 SCC 569 = 2008 (223)
E.L.T. 9 (SC):
"30. In a number of cases, this Court has clearly enunciated that HSN
is a safe guide for the purpose of deciding issues of classification. In
the present case, the HSN Explanatory Notes to Chapter 20
categorically state that the products in question are so included in

62

Chapter 20. The HSN Explanatory Notes to Chapter 20 also
categorically state that its products are excluded from Chapter 8 as
they fall in Chapter 20. In this view of the matter, the classification of
the products in question has to be made under Chapter 20."
(Emphasis Supplied)
(ii) LML Ltd. v. Commr. of Customs, (2010) 10 SCC 503 = 2010 (258)
E.L.T. 321 (SC)/[2010] 1 taxmann.com 333 (SC):
"13. In CCE v. Wood Craft Products Ltd. [(1995) 3 SCC 454 ] it was
held by this Court that as expressly stated in the Statement of
Objects and Reasons of the Central Excise Tariff Act, 1985, the
Central Excise Tariffs are based on the Harmonised System of
Nomenclature (HSN) and the internationally accepted nomenclature
was taken into account to reduce disputes on account of tariff
classification. Accordingly, for resolving any dispute relating to tariff
classification, a safe guide is the internationally accepted
nomenclature emerging from the Harmonised System of
Nomenclature (HSN).
(Emphasis Supplied)

10.2 The above judgments would show that HSN is a safe guide in resolving
dispute relating to Tariff classification. A perusal of HSN Explanatory
Notes would show that Chapter 20 would cover roasted areca/betel
nuts . The AAR being in conformity with the HSN Explanatory Notes, which
are treated to be a safe guide in matter of Tariff classification, is yet another
reason as to why it would not warrant interference.

11. Rule of Specific vis-a-vis General Entry in determining
classification - Process of Roasting of Betel nuts vis-a vis other process,
such as, drying, boiling, etc.
Thirdly, it is trite law that whenever there is specific entry, the same would
prevail over general entry . The said general principle is statutorily
incorporated in General Rules of Interpretation, in particular, under Rule
3(a) of the General Rules of Interpretation, which reads as under:

"3. When by application of Rule 2 (b) or for any other reason, goods
are, prima facie, classifiable under two or more headings,
classification shall be effected as follows:
(a) The heading which provides the most specific description shall be
preferred to headings providing a more general description.
However, when two or more headings each refer to part only of the
materials or substances contained in mixed or composite goods or
to part only of the items in a set put up for retail sale, those headings
are to be regarded as equally specific in relation to those goods, even
if one of them gives a more complete or precise description of the
goods...."
(emphasis supplied)

11.1 Now, applying the above test to the competing entries viz., CTH
080280 and CTH 2008 1920, we find that while CTH 080280 covers areca
nuts which are "fresh or dried whether or not shelled or pealed ",

63

chapter 2008 19 20 covers "other roasted nuts and seeds" which
include roasted areca nuts . Importantly, Note 3 to Chapter 8 provides that
dried nuts covered under the said Chapter are those which are partially
rehydrated or treated for additional preservation or stabilization by moderate
heat treatment, sulphuring, addition of sorbic acid or potassium sorbate.
Note 1 (a) to Chapter 20 expressly excludes nuts prepared or
preserved by the "processes specified in Chapters 7, 8 or 11", while
classifying roasted nuts and seeds. It is thus evident that roasting and
drying are treated to be distinct for the purposes of classification
under the Customs Tariff Heading. Any construction to the contrary
would result in rendering Note 1 (a) to Chapter 20 which excludes the
process specified in Chapter 8 of CTA, redundant. While fresh or dried
areca nuts are covered by 080280, roasted areca nuts are covered under
2008 19 20. Roasting is a process which has been treated to be distinct
from drying and has been the basis for fixing the classification under
Customs Tariff Heading under 2008 19 20.

11.3 We would think that CTH 2008 19 20 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 nut is made on the basis of the process which
it is subject to with a distinction between dried and roasted nut being
maintained , we would think that CTH 2008 19 20 which
covers roasted nuts including areca nut is a specific entry when contrasted
with the entries/items covering nuts under CTH 08.

11.4 It is well established that when a general law/entry and a special
law/entry dealing with same aspect are in question, the rule adopted
and applied is one of harmonious construction, whereby the general
law to the extent dealt with by the special law, would yield to the
Special Law/Entry. This principle finds its origins in the Latin maxim
of generaliaspecialibus non derogant i.e. general law yields to special
law should they operate in the same field on same subject . The maxim
generaliaspecialibus non derogant is dealt with in Vol. 44(1) of the 4th Edn.
of Halsbury's Laws of England at Para 1300, as follows:
"The principle descends clearly from decisions of the House of Lords in
Seward v. Vera Cruz [(1884) LR 10 AC 59] and the Privy Council in Barker
v. Edger [1898 AC 748)] and has been affirmed and put into effect on many
occasions….

Corpus Juris Secundum, 82 C.J.S. Statutes 482 states:

when construing a general and a specific statute pertaining to the same
topic, it is necessary to consider the statutes as consistent with one another
and such statutes therefore should be harmonised, if possible, with the
objective of giving effect to a consistent legislative policy. On the other hand,
where a general statute and a specific statute relating to the same subject-
matter cannot be reconciled, the special or specific statute ordinarily will
control. The provision more specifically directed to the matter at issue
prevails as an exception to or qualification of the provision which is more

64

general in nature, provided that the specific or special statute clearly
includes the matter in controversy (Edmond v. United States [137 L Ed 2d
917], Warden v. Marrero [41 LEd 2d 383])."

*

16. To sum up:
(a) .
(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 is normally a safe guide in determining
classification under CTH. Roasted areca/betel nut having been mentioned
in CTH 2008 19 20 under HSN, the impugned Ruling is in consonance with
HSN classification.
(d) When there is a specific entry covering a product/commodity, the
test of common parlance is irrelevant in determining classification .”

10. We find it apposite to place reliance upon the
judgment of the Allahabad High Court in Rawder Petroleum
Pvt.Ltd vs UOI - (2025) 32 Centax 169 .The relevant extracts
from the said judgment are reproduced hereunder:
“ 32 . This Court in examining the classification of 'roasted areca nuts", finds
that as a matter of fact, there is no definition of "roasted" given in the Custom
Tariff Act. As far as Chapter 08 is concerned, it speaks of process like
chilling or steaming, boiling, drying and provisionally preserving. It is
important to note that although, the said chapter contains the entry of
areca nuts at "0802 80" and consists of whole, split, ground and other
forms, but the description of these items has to be understood in the
form it assumes after the process as mentioned under the said chapter
is undertaken on them. That is to say, the end product obtained by the
process mentioned in this chapter becomes significant for its
classification. It has been rightly held by the CAAR that there is a marked
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. Although, the terms
dry-roasting, oil roasting and fat roasting are also not defined in the
Customs Tariff Act, 1975, however, these terms have to be understood
in a commonly accepted sense . Further, this court has no hesitation in
subscribing to the view of CARR 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

65

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.


34 . This Court finds 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, this court cannot be
oblivious to the fact that roasting, as submitted by the importer by virtue of
letter dated 04.06.2024 issued by ANL(S) Trading & services Pte Ltd.,
Singapore, 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 .
Thus, drying and roasting cannot be equated and both the process are
diametrically different.

35 . Additionally, this court finds that the Hon'ble High Court of Madras in its
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 areca Nuts' under CTH 2008 19 20. Further, this
court takes Judicial notice of the recent development, wherein a
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, Schedule-I(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.

36 . In view of the aforesaid recent development, it can be safely concluded
that a doubt always existed in the mind of the department relating to
the tariff entry of 'roasted areca nuts", otherwise there was no
occasion nor any need for issuance of the recent notification dated
02.04.2025, wherein the department was compelled to clarify and
specify in clear terms that 'roasted areca nuts' are not covered under
ITC (HS) Code 2008 19 20 as they are specifically covered under
08028090.
xxx
xxx

66

38 . As far as the second issue relating to 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 . It is pertinent to mention herein that the
commodity was imported on 06.11.2024 and samples were drawn from the
said commodity from time to time. The test report drawn from the samples
drawn from the commodity imported by the importer, along with the date of
collection of samples and the testing, whether being in conformity with the
existing guidelines or not, can be displayed in a tabular chart in the following
manner:

SI. No. Date of Collection
of Sample
Date of
Receiving of
sample
Date of
preparation
of Report
Consonance with
guidelines of
18/07/2017, report
should be within 5
days
Moisture
Content of
Commodity
Testing
agency
1. 18/11/2024 19/11/2024 22/11/2024 Yes 3.39% First Lab,
Gurgaon
2. 18/11/2024 27/11/2024 16/12/2024 No (sample received
after 9 days)
7.09% CRCL,
New
Delhi
3. 18/11/2024 19/11/2024 18/12/2024 Yes, Inference drawn
that commodity is
'roasted areca nuts"
and fit for Human
consumption
3.9% First Lab,
Gurgaon
4. 17/01/2025 (In
view of the
directions of this
court vide order
dated 17.12.2024)
11/02/2025 24/02/2025 No (sample received
after 25 days)
7.24% CRCL,
New
Delhi

41 . Further, this Court cannot be oblivious of the fact that the import is
governed by the Food Safety and Standards (Import) Regulations,
2017, wherein the regulations 9(9) and 9(10) specifically provides that
in case , if the test results of the first sample are adverse, then it is only the
importer, who can make an Application for its Re-testing and only thereafter
it could have been sent for Re-testing. However, in the present case, after
sending the sample on 19/11/2024, the department on their own and without
any reasons have sent another sample on 27/11/2024 to another laboratory
after 5 days from receipt of report dated 22/11/2024 which dehors the
provisions of the Regulations of 2017. Even, the Guidelines dated
12/07/2022, issued by Food Safety Standards Authority of India, has
been seemingly ignored, as although the said guidelines provide for
compliance for time-limit for analysis of sample under clause 2(ii), to
be of 5 days from the receipt of the sample in case of 'Import' , however
the department has flouted the said time-period as is apparent from the
tabular chart incorporated herein above, wherein the samples are received
by the testing center after 9 and 25 days respectively.
42 . There is 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. No sustainable grounds have
been made out by the department against the test-reports of First Lab,
Gurgaon, nor any reasons have been forthcoming disputing the test results

67

of the said First Lab, Gurgaon. This Court finds that the test-result
obtained from First Lab for samples drawn by the department,
immediately after its import, shows the moisture content of
'roasted areca nuts' to be 3.39%. The said test-report has been obtained
for a sample, which was collected on 18.11.2024 and was received in the
testing agency on 19.11.2024 and most importantly, the report was
prepared within 5 days of its receipt i.e on 22.11.2024. Seemingly, the said
report, which is the earliest report, appears to be the most authentic report
meeting the guidelines of the FSSA as well as the Customs Department and
this court finds no plausible reasons for denying the benefit of the said
earliest and/or first report to the importer.”

RELEVANCE OF CASE LAWS RELIED UPON BY THE
REVENUE: -
11. We find it appropriate, at this stage, to deal with
the case laws cited by the Appellant. We find that the Revenue
has heavily relied upon the decisions in Crane Betel Nut
Powder Works v. Commissioner of Customs and Central
Excise , reported in 2007 (210) E.L.T. 171 (S.C.); S.T.
Enterprises v. Commissioner of Customs, reported in 2021
(378) E.L.T. 514 (Tri. – Chennai); Azam Laminators v.
Commissioner of Central Excise, reported in 2019 (367) E.L.T.
A22; Commissioner of Central Excise v. ARS Company,
reported in ( 2006) 206 E.L.T. 1027 (Tribunal); and Ayush
Business Overseas v. Commissioner , reported in 2021 (378)
E.L.T. A142 . We also find considerable force in the reasoning
adopted by the Hon’ble jurisdictional High Court in
Commissioner v. Shahnaz Commodities International Pvt.
Ltd., wherein it was held that the ratio of the decision of the
Hon’ble Supreme Court in Crane Betel Nut Powder Works
cannot be mechanically extended to a dispute arising under

68

the Customs Tariff merely because the product continues to
retain the character of betel nut or areca nut after processing.
The issue before the Hon’ble Supreme Court was whether the
processes undertaken on betel nut amounted to
“manufacture” and resulted in the emergence of a new
commodity, whereas the present controversy concerns the
classification of imported goods under competing entries of
the Customs Tariff. Once the Tariff contains a specific entry
for a “Betel Nut Product Known as Supari” under Chapter 21,
the classification must be determined with reference to the
description of the goods, the relevant Chapter Notes and the
Rules for Interpretation, and not by importing into the
classification exercise the test of emergence of a new
commodity developed in the context of manufacture under
the Central Excise law. It is well settled that a precedent is an
authority only for what it actually decides and cannot be
extended to a materially different statutory setting by a
process of logical deduction. Consequently, the mere fact that
the processing does not result in the loss of the original
character of areca nut or betel nut would not, by itself, exclude
the applicability of the specific entry relating to Supari, which,
if otherwise attracted, would prevail over the general entry
relating to nuts under Chapter 8.We find it apposite to
reproduce the relevant findings of the Hon’ble High Court in
this regard: -
“5. Mr. N. Dilip Kumar, learned counsel for the appellant would
develop his arguments In this regard, he would place reliance *

69

on the decision of the Apex Court in Crane Betel Nut Powder v.
Commissioner of Customs and Central Excise, reported in 2007
(210) E.L.T. 171 (S.C.) = [2007] 2007 taxmann.com 1403 (SC). The
Apex Court, in this judgment has held that even when betel nut is cut
into smaller pieces, adopting a process of adding essential or non-
essential oils, menthol, sweetening agent etc., the same would not
result in a new or distinct product, having any different character and
resultantly, the classification would have to be only under Chapter 8
and not Chapter 21.

6. Apart from heavily relying on the above decision of the Apex
Court, the learned Counsel for the Appellant would also refer to the
decisions of the CESTAT Tribunal in ST Enterprises v.
Commissioner of Customs, reported in 2021 (378) E.L.T. 514 (Tri. -
Chennai), Azam Laminators v. Commissioner of Central Excise,
reported in 2019 (367) E.L.T. A22 and Commissioner of Central
Excise v. ARS Company, reported in (2006) 206 E.L.T. 1027
(Tribunal), where also it has been held that areca nuts, cut into pieces
and thereafter treated it with oils, sugar etc. would not entitle a
classification to be made under Chapter 8, but only under Chapter
21.

7. The Learned Counsel for the appellant would further state that
the decision of the Tribunal in ARS and Company was also
subsequently upheld by the Apex Court in the decision reported in
2015 (324) E.L.T. 619 (sic). The decision of the Apex Court in Ayush
Business Overseas v. Commissioner, reported in 2021 (378) E.L.T.
A142 is also relied on by the Learned Counsel for the Appellant. In
the said decision, the Apex Court had ruled in favour of the revenue
by holding that the classification of areca nuts would have to be under
Chapter 8.
Xxxxx
xxx
10. The learned counsel for the appellant would also invite our
specific attention to the decision of the Apex Court in Crane Betel
Nut Powder Works v. Commissioner of Customs & Central Excise
reported in (2007) 4 SCC 155 = 2007 (210) E.L.T. 171 (S.C.) = [2007]
2007 taxmann.com 1403 (SC) where the Hon’ble Supreme Court
held, rejecting the contention of the Department, that the process of
cutting betel nuts into smaller pieces and adding oils, whether
essential or non-essential would not result in a new and distinct
product, having a different character and use and that the end
product retained its original character.
xxxxx
16. The Learned Senior Counsel, Mr. Vijay Narayan would also
state that there has been a fundamental shift in the tax regime in
view of Central Excise being replaced by Goods and Service Tax
(GST), totally effacing the concept of manufacture in the area of
tax and the product, ‘Menthol Scented Supari’ also no longer coming

70

under the purview of Central Excise Tariff Act, 1985, no duty is
chargeable under the Act.

17. The Learned Senior Counsel would also contend that the
reference to the HSN Explanatory Note to Chapter 8 was wholly
misplaced as Rule (1) of the General Rule for Interpretation of Import
Tariff makes it abundantly clear that for all legal purposes,
classifications shall be determined according to the terms of the
headings and any related Section or Chapter Notes. Therefore, the
Senior counsel would primarily contend that when the subject
product was specifically defined under Supplementary Note 2
to Chapter 21 of the Customs Tariff Act, 1975, the classification
can only be under Chapter 21 and the reliance placed on HSN
by the Appellant was totally unconnected and unwarranted as it
was only relatable to Chapter 8 alone . The Learned Senior
counsel would further contend that the decision of the Apex Court in
Crane Betel Nut Work’s case as well as the decision of the Delhi High
Court in Great Nuts Impex Pvt. Ltd., lost its precedential value
because of a subsequent new scenario that has emerged, post
the Finance (No. 2) Act, 2009 dated 9th August 2009 and also in
view of the concept of ‘manufacture’ itself being of no
consequence in the wake of the introduction of GST in 2017 .

18. The Learned Senior counsel would place reliance on the
decision of this Court in Commissioner of Customs v. M/s. Shahnaz
Commodities International P. Ltd. and 2 others, rendered in CMA
Nos. 600, 1206 and 1750 of 2023 = 2023 (386) E.L.T. 214 (Mad.) =
(2023) 9 Centax 183 (Mad.), where a Division Bench of this Court, in
and by a Common Judgment dated 1-8-2023, held that when there
is a specific clause under Chapter 20, the classification cannot
be made under Chapter 8.

28(a). This Court in Commissioner of Customs v. M/s. Shahnaz
Commodities International P. Ltd. and 2 others, has elaborately
discussed the classification of roasted betel/areca nut and held that
it would only be under Chapter 20 and not Chapter 8. This Court
further held that the Common Parlance Test would be irrelevant
in determining classification, when there is a specific entry
covering a product.

28(b). We are in agreement with the ratio laid down by the
Division bench of this Court in the said case . In the case on hand
before us, instead of Chapter 20, Chapter 21 would apply since
Supplementary Note 2 under Chapter 21 specifically provides
for ‘supari’ and would therefore prevail over the general entry
for ‘nuts’ in Chapter 8.

28(c). Consequently, the argument advanced by the Counsel for the
Appellant that, to qualify for classification under Chapter 21, the
product should have undergone a process by which it lost its

71

original character of a betel nut or areca nut does not merit
acceptance .

29. In the case before the Hon’ble Supreme Court in Crane Betel
Nut Powder Work’s case referred herein supra, the issue was
relating to whether crushing of betel nut and adding ingredients
to it would involve any ‘manufacture’ or not and in that context it
was held that the process of boiling, slicing etc. and adding flavours
to the betel nut would not result in altering the nature and
characteristics of the product and therefore the classification would
have to be made under Chapter 8.

30. According to the Learned Senior counsel for the respondents,
post this judgment, two important subsequent factors have
intervened.

31. Firstly, vide Finance (No. 2) Act, 2009 dated 19th August,
2009, there has been an insertion of Note 6 in Chapter 21, which
specifically relates to Tariff Item 2106 90 30 relating to ‘supari’
and stating that the process of adding or mixing cardamom, copra,
menthol, spices, sweetening agents or any such ingredients other
than lime, katha (catechu) or tobacco to betel nut, in any form, shall
not amount to “manufacture”. However, we are conscious of the
fact that this amendment was only under the Central Excise
Tariff Act and not the Customs Tariff Act.

32. Secondly, w .e.f. 1-7-2017, the GST Act was introduced and
the concept of taxation itself has undergone a change from
‘manufacture’ to ‘supply’. The Supplementary Note 2 in Chapter
21 of CGST Tariff is also verbatim the same as Supplementary
Note 2 under Chapter 21 of the Customs Tariff Act, 1975. This
only exemplifies the intention of the legislature to have always
treated ‘supari’ as a special entry and not as a betel nut under
the general entry of ‘nuts’.

33. Though we find force in the submission of the Learned Counsel
for the Appellant that the Customs Tariff Act still continues to employ
the same phraseology that was available under the unamended
Central Excise Tariff Act and that too when the Apex Court had dealt
with the same issue, the ratio laid down by the Apex Court in
Crane Betel Nut Powder Work’s case would still hold the field
and apply to the case on hand, we are unable to accept the said
limb of argument, in view of our categorical finding that there
being a specific entry for ‘Supari’ under Chapter 21 and it would
take precedence over the general entry under Chapter 8, the
question of applying the ratio laid down by the Apex Court
would not even arise for the simple reason that the issue on
hand is only revolving around classification of ‘Supari’ under
Chapter 8 or Chapter 21 and the facts of the case before the Apex
Court was entirely different and the issue was whether process

72

involved in manufacture of sweetened betel nut pieces would result
in a totally new product or not.

34(a). It is also to be borne in mind that both the statutory enactments
viz., Central Excise Tariff Act and the Customs Tariff Act operate in
different spheres. In so far as the Central Excise Tariff Act, it deals
with goods that are manufactured inside the Country and the tariffs
applicable to various categories and products. In that context,
process or manufacture involved assumes significance.

34(b). However, under the Customs Tariff Act, the products are
imported from foreign countries and therefore the significance
attached to the concept of manufacture does not carry the same
weightage as it does under the Central Excise Tariff Act.

34(c). The Hon’ble Supreme Court in Crane Betel Nut Powder
Work’s case was dealing with an issue that arose only under the
Central Excise Tariff Act and not the Customs Tariff Act. The
amendments also have been incorporated only under the
Central Excise Tariff Act, clarifying that the process of adding
or mixing cardamom, copra, menthol etc. would not amount to
manufacture etc .

34(d). As already discussed herein above, under the Customs Tariff
Act, the question of manufacture loses its relevance since the Act
deals only with the tariff applicable to the goods or products imported
from outside the country, in an as is where is basis, or rather the
product as imported in whatever form is the basis for levy of
Customs Tariff. Thus, the judgment of the Hon’ble Supreme Court
in Crane Betel Nut Powder Work’s case cannot be said to be a bar
u/s. 28(i) of the Customs Act.

35. Here we have already found that by inserting a specific tariff
entry for ‘Supari’ under Chapter 21, the question of classifying
it under Chapter 8 does not even arise, especially when this was
neither the issue before the Apex Court nor the basis on which
the decision was rendered. It is also trite law that a decision is only
an authority for what is decided and it cannot be extended to
something which has not been decided by applying the process
of a logical deduction.

35. In fact, in P.Rajendran v. Assistant Director, in Crl. O.P. No.
19880 of 2022 dated 14-9-2022, the Division Bench of this Court, in
fact, one of us being a part of the Bench (Justice. RMT.TEEKAA
RAMAN) held that “a case is only an authority for what it decides”.
As observed by Lord Halsbury in Quinn v. Leathem, reported in 1901
AC 495, quoted hereunder for easy reference :

“... that every judgment must be read as applicable to the
particular facts proved or assumed to be proved, since the

73

generality of the expressions which may be found there are not
intended to be expositions of the whole law, but are governed and
qualified by the particular facts of the case in which such
expressions are to be found. The other is that a case is only an
authority for what it actually decides.”

35. (c) In Rajendra Singh v. State of U.P. & others, reported in
(2007) 7 SCC 328, also the Apex Court approved the said position,
by citing the above passage as well. Thus viewed from these
angles also, the ratio laid by the Apex Court in Crane Betel Nut
Powder Work’s case cannot be enlarged and read into the facts
of the present case, under the guise of logical reasoning.”

11.1 Now, coming to the decision in Crane Betel Nut
powder's case, there importantly, the question was whether
the process of boiling and drying would constitute
manufacture. However, in the instant case, the question is not
as to whether the activity of SUPARI making would constitute
manufacture, but whether in view of a separate entry for
SUPARI, it is permissible to continue to classify the SUPARI
under CTH 08 02 80 which covers fresh or dried areca nuts.
We have already found that when there is a specific entry for
SUPARI, the same cannot be classified under Chapter 8. The
question as to whether the process involved in making SUPARI
would constitute manufacture and whether a new product
would emerge as a result of the above process are questions
that are alien, while determining the classification of imported
goods in terms of the Customs Tariff Headings. In view of the
foregoing, reliance on the aforesaid judgment of the Hon’ble
Supreme Court for resolving the present dispute concerning
customs classification is misplaced, legally unsustainable, and
devoid of logical relevance.

74


12. We are of the view that CTH 2106 90 30 is a
specific entry insofar as it covers “SUPARI” and would,
therefore, prevail over the general entry under Chapter 08, in
view of the settled principle that a specific entry would prevail
over a general entry. Reliance was sought to be placed by the
learned counsel for the Revenue on the decision of the
Tribunal in the case of S.T. Enterprises, which, upon being
carried in Civil Appeals before the Hon’ble Supreme Court,
came to be dismissed, to submit that the goods imported, viz.
Supari, continue to remain areca nuts and are thus classifiable
under Chapter 08.We find that reliance upon the aforesaid
decision for determining the classification of Supari under the
Customs Tariff Act is misplaced for the following reasons. First,
in the said decision, the question that arose for consideration
was whether the goods involved therein, viz. boiled betel nuts,
would merit classification under CTH 2106 90 30 or CTH 0802
80 10. The case was not concerned with goods certified as
Supari by a statutory authority such as the FSSAI. Secondly,
while the present case concerns with the classification of
“SUPARI”. The process examined by the Tribunal in S.T.
Enterprises was confined to boiling and drying. Significantly,
none of the aforesaid processes was examined or tested by
the Revenue authorities in the present case. The Revenue has
also not been able to demonstrate, on the basis of objective

75

material, that the subject goods are not Supari, particularly
when the FSSAI report has neither been challenged nor have
the goods been subjected to testing with reference to the
relevant parameters. The Revenue has not been able to place
on record any clear or cogent material establishing the
essential characteristics of areca nut as distinct from those of
Supari. Nor has it been able to establish what, if any,
ingredients other than areca nut are essential for a product to
be described as Supari, or what specific processes are required
to be undertaken on areca nut for it to acquire the character
of Supari. Further, no material has been placed on record to
explain the distinguishing physical characteristics, if any,
between Supari and areca nut. In these circumstances, the
classification of the goods under CTH 0802 80 10 in S.T.
Enterprises cannot, in our view, be treated as a precedent for
the question which arises for our consideration, namely,
whether the subject goods, identified and certified as Supari,
are classifiable under CTH 2106 90 30, particularly in the light
of the FSSAI reports, the absence of testing of relevant
parameters by the Revenue and the unchallenged FSSAI
certification. The question which arises for determination in
the present appeals was, in our considered view, never
directly considered by the Tribunal in S.T. Enterprises. It is
trite law that a decision is a precedent only for what it actually
decides. The specific issue arising in the present case,

76

including the evidentiary significance of the FSSAI test results,
the specific tariff entry for Supari, and the absence of testing
of the relevant parameters by the Revenue, did not arise for
consideration in S.T. Enterprises. Where a question has
passed sub silentio, the decision may not have precedential
value on that particular issue. A material difference in facts,
or the presence of an additional fact, or the absence of a fact
which was material to the determination in the earlier case,
may have a bearing on the precedential value of such decision.
In this regard, it may be useful to refer to the judgments of
the Hon’ble Supreme Court in Municipal Corpn. of Delhi v.
Gurnam Kaur, (1989) 1 SCC 101 (para 11); Padma Sundara
Rao v. State of T.N., (2002) 3 SCC 533 (para 9); State of
Orissa v. Mohd. Illiyas, (2006) 1 SCC 275 (para 12); and
Bhavnagar University v. Palitana Sugar Mill (P) Ltd., (2003) 2
SCC 111 (para 59), which elucidate the principle that a
precedent must be understood in the context of the facts and
the issue actually decided therein. It is thus clear from the
aforesaid judgments that the decision of the Tribunal in S.T.
Enterprises, affirmed by the Hon’ble Supreme Court, cannot
be understood as laying down a general proposition governing
the classification of all products described as Supari. The said
decision cannot, therefore, be treated as determinative of the
present dispute, which requires consideration of whether the
subject goods merit classification under CTH 2106 90 30,

77

having regard, inter alia, to the specific tariff entry for Supari,
the FSSAI reports and unchallenged Certificate of Origin
certification, and the failure of the Revenue to test the relevant
parameters or otherwise establish, by objective evidence, that
the goods do not answer the statutory description of “Supari.”
In view of the same, the reliance on the judgment of the
Hon’ble Supreme Court in the said case is misplaced and
irrelevant. Reliance is also placed on decision of jurisdictional
HC in the case of 2023 (8) TMI 492 - MADRAS HIGH COURT-
The CC Chennai Versus M/s. Shahnaz Commodities
International P. Ltd., M/s. Neena Enterprises, M/s. Universal
Impex. At the cost of repetition, and in order to enhance
clarity, the relevant extract is reproduced below for ready
reference: -
“11.6. We are of the view that CTH 20 08 is a specific entry insofar as it
covers roasted nuts and would thus prevail over CTH 08, in view of the above
settled rule that specific entry would prevail over general . This is yet
another reason, we would think that the conclusion of the Advance Rulings
Authority does not warrant interference.

12. Relevance of the judgment in S T Enterprises :
Having found that roasted areca / betel nuts ought to be classified under
CTH 20, let us examine the order of the Tribunal in the case of ST
Enterprises on which reliance was placed by the appellant to see, if it
would have any relevance / bearing on the issue. Reliance was sought to
be placed by the learned counsel for the Revenue on the decision of the
Tribunal in the case of S.T.Enterprises which on being carried in Civil
Appeals, which came to be dismissed, to submit that the goods imported
viz., roasted areca nut/ betel nut continues to remain betel nut and thus
classifiable under CTH 08. We find that reliance on the above decision to
determine the classification of roasted betel / areca nut under the Customs
Tariff Act is wholly misplaced for the following reasons:

78

(a) In the above decision, the question that arose for consideration was
as to whether the goods involved therein viz., boiled betel nuts would
merit classification under CTH 21069030 or CTH 08028010. It was not
concerned with CTH 2008 19 20 which covers “roasted nuts”. The
following extract of the order of the Tribunal, wherein the issue framed
would make this clear:

“9. The issue to be decided is whether the impugned goods merit
classification under CTH 21069030 or CTH 08028010. According to
appellants the raw betel nut obtained from tree has been subjected to
boiling and made ready for human consumption. By process of
cleaning and boiling the nuts, the moisture content is reduced and are
longer fresh and dry nuts so as to fall under Chapter 8.”
(emphasis supplied)
(b) While in the present case, the issue is with reference to classification
of “roasted areca nuts” . The process that was examined by the Tribunal
in the case of S.T.Enterprise was confined to boiling and drying .
Importantly, roasting was not one of the processes that was examined.
The relevant portion would make this clear :

“12. ….Though several stages/ process are claimed to be done in the write
up given by supplier, 17 during the argument the process undertaken was
mainly confined to boiling in water and drying in sun light . It is argued
that such processing of boiling is a stage of preparation in making “betel
nut product”. That therefore the goods would merit classification under
CTH 21069030. Even if we assume that the impugned goods have
undergone the stage of boiling or have been boiled in water and dried, we
have to say that it does not take away the essential character of the
betel nut being “whole”.”
(emphasis supplied)

(c) The competing entries that were examined in the above case were CTH
21069030 vis-a-vis CTH 08028010. In other words, the question that was
being examined was, whether the goods in question would qualify as
“preparation of betel nut” or “betel nut as mentioned in Chapter 8”. The
Court's attention was never drawn to CTH 20081920 which covers roasted
nuts including areca/ betel nuts, inasmuch as the facts as set out by the
Tribunal in its order was not concerned with the process of roasting.
In this regard, the following portions of the order are relevant to extract
hereunder:
“15. ……The appellants do not have a case that their goods contain
cardamom, copra or menthol or any additives. Counsel for appellants has
made much effort to contend that after boiling though “whole” the betel
nut becomes “betel nut product”. In our view, since betel nut has
retained its character of being whole and it does not contain any other
ingredients such as cardamom, copra or menthol, it cannot be said that
impugned goods are “preparations containing betel nut” or “betel nut
product/supari” so as to fall under tariff heading 21069030.
…………..

79

20. The question is whether by mere boiling and drying whole betel nut
it would merit classification under 21069030 so as to surpass the
prohibition of import. Ld. counsel for appellants has relied upon Advance
Rulings in the case of M/s.Excellent Betelnut and M/s. Oliya Steel Pvt.
Ltd.…….The process of preparation of the items proposed to be imported
is given in detail and includes boiled supari which is nothing but raw supari
subject to boiling for 4 hours, removing the husk, boiling again for 2
hours, drying by hot air, sterilizing, sorting, polishing and packing .
……..
21. In the case of A.R.S & Company Vs CCE Trichy the Chennai Bench of
the Tribunal vide Final Order No.41961/2017 dated 29.08.2017 in 23
Appeal No.E/492/2009 followed the judgment of the Hon”ble Supreme
Court in their own case reported in 2015 (324) ELT 30 (SC). The Tribunal
held that process of crushing betel nuts and sweetening the same with
essential oils does not amount to manufacture . We do not find any
reason to deviate from the view taken by the Chennai Bench in following
the decision of Hon’ble Apex Court. Though appellants herein contend that
after the amendment by adding of Chapter Note 2 to Chapter 21 the
position is changed, we do not think so. Even after such amendment, the
position of law settled by the Hon’ble Apex Court in the case of M/s. Crane
Betel Nut Powder Works (supra) would still be applicable. The
amendment relied upon by the appellants only clarified what ‘supari’
would be and as such would not be of much help in deciding the
classification of impugned goods . Moreover, it can be seen that the
impugned products in the case of Crane Betel Nut Powder Works (supra)
have undergone much more elaborate processes like cutting into different
sizes; adding essential / non-essential oils, menthol, sweetening agents
etc. Even when the physical appearance undergoes a change, Apex
Court held that the processes undertaken do not amount to
manufacture . Whereas, the processes undertaken in the instant case are
less complex and simple like de-husking, cleaning, boiling and drying. For
the reasons cited above, the processes cannot be held to be amounting to
manufacture so as to necessitate the movement of goods from Chapter 8
to Chapter 21.”
(emphasis supplied)
13. From the above extracts, it is clear that the Court was not examining
CTH 20081920 nor were the goods involved subject to the process of
roasting . The competing entries which were considered by the Hon’ble
Supreme Court, were CTH 21069030 vis-a-vis CTH 08028010. In the
circumstances, classification of goods under CTH 08028010 in the case
referred above, cannot be treated as a precedent for the question that we
are now required to resolve viz., whether roasted areca / betel nut is
classifiable under CTH 2008 1920 for the following reasons:

(a) The question which needs to be resolved in the present appeals,
was never under consideration before the Tribunal , which order stands
affirmed by the Hon’ble Supreme Court. It is trite law that a decision is a
precedent only for what it decides.
(b) Where a question passes sub-silentio, then, it may have no
precedential value.

80

(c) A little difference or additional fact or absence of certain facts can
have a bearing on the precedential value.

13.1. In this regard, it may be useful to refer to the following judgments,
which would make the above position on precedents clear:
(i) Sub-Silentio - Value as a Precedent Municipal Corpn. of Delhi v.
Gurnam Kaur , (1989) 1 SCC 101 at page 110 :
“11. Pronouncements of law, which are not part of the ratio decidendi are
classed as obiter dicta and are not authoritative. With all respect to the
learned Judge who passed the order in Jamna Das case [ Writ Petitions
Nos. 981-82 of 1984] and to the learned Judge who agreed with him, we
cannot concede that this Court is bound to follow it. It was delivered without
argument, without reference to the relevant provisions of the Act conferring
express power on the Municipal Corporation to direct removal of
encroachments from any public place like pavements or public streets, and
without any citation of authority. Accordingly, we do not propose to uphold
the decision of the High Court because, it seems to us that it is wrong in
principle and cannot be justified by the terms of the relevant provisions. A
decision should be treated as given per incuriam when it is given in
ignorance of the terms of a statute or of a rule having the force of a statute.
So far as the order shows, no argument was addressed to the court on the
question whether or not any direction could properly be made compelling
the Municipal Corporation to construct a stall at the pitching site of a
pavement squatter. Professor P.J. Fitzgerald, editor of the Salmond on
Jurisprudence, 12th Edn. explains the concept of sub silentio at p. 153 in
these words:

A decision passes sub silentio, in the technical sense that has come to be
attached to that phrase, when the particular point of law involved in the
decision is not perceived by the court or present to its mind. The court may
consciously decide in favour of one party because of point A, which it
considers and pronounces upon. It may be shown, however, that logically
the court should not have decided in favour of the particular party unless
it also decided point B in his favour; but point B was not argued or
considered by the court. In such circumstances, although point B was
logically involved in the facts and although the case had a specific
outcome, the decision is not an authority on point B. Point B is said to pass
sub silentio.

12. In Gerard v. Worth of Paris Ltd. (k). [(1936) 2 All ER 905 (CA)] , the
only point argued was on the question of priority of the claimant's debt,
and, on this argument being heard, the court granted the order. No
consideration was given to the question whether a garnishee order could
properly be made on an account standing in the name of the liquidator.
When, therefore, this very point was argued in a subsequent case before
the Court of Appeal in Lancaster Motor Co. (London) Ltd. v. Bremith Ltd.
[(1941) 1 KB 675] , the court held itself not bound by its previous decision.
Sir Wilfrid Greene, M.R., said that he could not help thinking that the point
now raised had been deliberately passed sub silentio by counsel in order
that the point of substance might be decided. He went on to say that the

81

point had to be decided by the earlier court before it could make the order
which it did; nevertheless, since it was decided “without argument, without
reference to the crucial words of the rule, and without any citation of
authority”, it was not binding and would not be followed. Precedents sub
silentio and without argument are of no moment. This rule has ever since
been followed. One of the chief reasons for the doctrine of precedent is
that a matter that has once been fully argued and decided should not be
allowed to be reopened. The weight accorded to dicta varies with the type
of dictum. Mere casual expressions carry no weight at all. Not every
passing expression of a judge, however eminent, can be treated as an ex
cathedra statement, having the weight of authority.”
(emphasis supplied)

13.2. Precedent only on the basis of Facts
(a) Padma Sundara Rao v. State of T.N., (2002) 3 SCC 533:
“9. Courts should not place reliance on decisions without discussing as to
how the factual situation fits in with the fact situation of the decision on
which reliance is placed. There is always peril in treating the words of a
speech or judgment as though they are words in a legislative enactment,
and it is to be remembered that judicial utterances are made in the setting
of the facts of a particular case, said Lord Morris in Herrington v. British
Railways Board [(1972) 2 WLR 537 : 1972 AC 877 (HL) [Sub nom British
Railways Board v. Herrington, (1972) 1 All ER 749 (HL)]] . Circumstantial
flexibility, one additional or different fact may make a world of difference
between conclusions in two cases . “
(emphasis supplied)
(b) State of Orissa v. Mohd. Illiyas, (2006) 1 SCC 275:
“12. ......According to the well-settled theory of precedents, every decision
contains three basic postulates :
(i) findings of material facts, direct and inferential. An inferential finding of
facts is the inference which the Judge draws from the direct, or perceptible
facts;
(ii) statements of the principles of law applicable to the legal problems
disclosed by the facts; and
(iii) judgment based on the combined effect of the above. A decision is an
authority for what it actually decides. What is of the essence in a decision
is its ratio and not every observation found therein nor what logically flows
from the various observations made in the judgment.......”
(emphasis supplied)

© Bhavnagar University v. Palitana Sugar Mill (P) Ltd., (2003) 2 SCC 111:
“ 59. A decision, as is well known, is an authority for which it is decided
and not what can logically be deduced therefrom. It is also well settled that
a little difference in facts or additional facts may make a lot of difference in
the precedential value of a decision. [See Ram Rakhi v. Union of India
[AIR 2002 Del 458 (FB)] , Delhi Admn. (NCT of Delhi) v. Manohar Lal
[(2002) 7 SCC 222, Haryana Financial Corpn. V. Jagdamba Oil Mills
[(2002) 3 SCC 496and Nalini Mahajan (Dr) v. Director of Income Tax
(Investigation) [(2002) 257 ITR 123 (Del)]”
(emphasis supplied)

82

13.3. It is thus clear from the above judgments that the order of the
Tribunal in S.T. Enterprises affirmed by the Hon’ble Supreme Court
cannot be understood to be a precedent to the question, whether
roasted areca / betel nut merit classification CTH 008 or CTH 2008 19
20.

14. Relevance of judgment in the case of Crane Betel Nut Powder
Works:

Now, coming to the decision in Crane Betel Nut powder's case, there
importantly, the question was whether the process of boiling and drying
would constitute manufacture . However, in the instant case, the
question is not as to whether the activity of roasting of betel nut would
constitute manufacture, but whether in view of a separate entry for
roasted betel nut, it is permissible to continue to classify the roasted
betel nut under CTH 08 02 80 which covers fresh or dried areca nuts .
We have already found that when there is a specific entry for roasted nut
and HSN Explanatory notes specifically include roasted betel nuts under
Chapter 20, the same cannot be classified under Chapter 8. The question
as to whether the process of roasting would constitute manufacture
and whether a new product would emerge as a result of the above
process are questions that are alien, while determining the
classification in terms of the Customs Tariff Headings. In view of the
same, the reliance on the judgment of the Hon’ble Supreme Court in the
said case is misplaced and irrelevant “

13.1 The Ld. Advocate appearing for the respondent
has also placed reliance on the recent decision of the Kolkata
Bench of this Tribunal in Commissioner of Customs
(Preventive), Kolkata v. M/s. Oliya Steel Pvt. Ltd., 2026 (1)
TMI 1018 – CESTAT Kolkata . The issue before the Tribunal in
the said case was whether imported goods declared as supari
were classifiable under CTH 21069030 or under CTH 080280
as betel/areca nuts. After considering the nature and extent
of processing undertaken on the imported goods, the
applicable provisions of the Customs Tariff and the relevant
judicial precedents, including those cited by revenue in the
present dispute, the coordinate bench of this Tribunal held

83

that the goods in question were classifiable under CTH
21069030. The relevant extracts from the said decision are
reproduced below for ready reference: -
“2.1 Examination of the goods pertaining to above 6 BS/E were
conducted by the DRI in presence of Examiner and Superintendent of
Customs, representative of CHA M/s. PDP International Pvt. Ltd.,
representative of ICD, and independent witnesses, wherein the goods,
prima facie, appeared to be betel nuts, either whole or in split
condition and not any preparation containing betel nuts


4. We find that it is not disputed by the Revenue that the Betel Nuts have
undergone processes, such as, boiling in water for four hours, removing the
husk, drying by hot air, sterilizing, sorting, polishing, removal of large and
small impurities, 3-stage cutting, roasting in fire etc. Therefore, the betel
buts has lost its character as betel nuts after preparation. In that
circumstances, the betel nuts has lost its character to the classified under
Chapter 080280. The ld.Adjudicating Authority has rightly relied on the
Advance Ruling holding that CTH 0802 covers only fresh and dried areca
nuts/betel nuts, the items (i) API Supari, (ii) Chikni Supari, (iii) Unflavoured
Supari, (iv) Flavoured Supari & (v) Boiled Supari termed as preparations of
betel nuts.
5. Admittedly, in this case, when the betel nuts is boiled, then, it has
lost its character, therefore, the betel nuts have been rightly classified
under CTH 21069030.

6. In view of this, we do not find any infirmity in the impugned order and the
same is upheld.

7. In view of this, the appeal filed by the Revenue, deserves no merits.
Accordingly, the same is dismissed.”

13.2 We find that the ratio of the aforesaid decision by
Kolkata Bench of this Tribunal, is equally applicable to the
dispute before us. This is particularly so because the Revenue
has not undertaken any investigation to ascertain the nature
and extent of the processes undergone by the imported goods.
Further, the CRCL report does not contain any specific finding
that the goods, notwithstanding any specific processes
undertaken or specific parameters tested, still retain the
essential character of raw areca nuts. On the contrary, the

84

FSSAI report clearly indicates that the moisture content of the
goods is less than 7% and identifies the goods as supari. In
these circumstances, and in the absence of any cogent
evidence adduced by the Revenue to establish that the
imported goods retain the character of raw areca nuts, we find
no justification to distinguish the ratio of the aforesaid decision
from the facts of the present case.

14. Reliance is also placed on the decision of the
Hon’ble High Court of Bombay in Isha Exim v. Union of India
& Ors., reported in 2023 (12) TMI 920 – Bombay High Court,
wherein the issue relating to the binding precedent of the
decisions in S.T. Enterprises and Ayush Business Overseas
was examined. In the said case, there was a categorical report
on which reliance was placed by the Revenue. In the instant
case, however, the CRCL report is inconclusive, as no relevant
parameters were tested, while, at the same time, the FSSAI
report is clear and categorical. We further find that the SLP
filed by the Revenue against the said order was dismissed by
the Hon’ble Supreme Court on 08.11.2024 in Union of India &
Ors. v. Isha Exim, reported in 2024 (12) TMI 849. The relevant
paragraphs of the judgment of the Division Bench of the
Hon’ble High Court of Bombay are extracted below: -
“12. Even otherwise, the facts of S.T. Enterprises’ case
(supra) as stated in paras 2 and 3 of the said decision are
also different and therefore even on facts same is
distinguishable from the facts of the petitioner. In the case
of S.T. Enterprises the revenue’s case was that Areca nuts

85

is a prohibited item for import as the CIF value of the goods
was lesser than Rs. 251/- per Kg. Furthermore, in the case
of S.T. Enterprises, there was a finding that as per report,
“process” stated by the importer have not been undertaken
to make the betel nut “product of betel nut” to merit
classification under CTH 2106 which is not the case in the
impugned proceedings before us. The CESTAT, Chennai
Bench in para 11 observed that based on chemical
examiner’s report the betel nuts were not subjected to any
processes. However, on the contrary report in the case of
the petitioner before us certifies that processes were carried
out on betel nut and therefore even on this count decision
in the case of S.T. Enterprises is not applicable.”

14.1 Further, the Respondent has brought to our notice
OIO No. 116366/2025 dated 28.10.2025, involving a similar
dispute relating to the classification of the goods. In particular,
Table III of the said order contains the details of the
examination reports, wherein the Shed Officers had clearly
recorded that the goods were cut pieces of dried betel nuts
and did not appear to have undergone any change in
character. The goods were accordingly opined to be
classifiable under Chapter 0802.In fact, the CRCL reports, as
detailed in Table IV of the said order, also reported that the
product under reference fell under Chapter 0802. The CRCL
reports expressly recorded that the goods did not exhibit the
characteristics of a processed food or prepared food product
and were classifiable under Chapter 0802. It may be noted
that, despite the aforesaid examination observations and
CRCL test reports, the goods were cleared by the Customs
officers .Further, at paragraph 22.9 of the said order, we find
that the laboratory test reports issued by Doctor’s Analytical

86

Laboratories Pvt. Ltd., Mumbai and ARDF, Mangalore,
confirmed that the goods were cut/split raw areca nuts,
without additives, and did not constitute a food preparation.
The learned adjudicating authority, however, rejected the
Revenue’s contention regarding classification of the goods
under Chapter 0802, as also its contentions relating to denial
of the COO benefit and invocation of the extended period of
limitation, and ultimately dropped the entire proceedings. We
find that, although the findings recorded in the said order may
not be treated as binding for the purpose of adjudicating the
present case, they nevertheless assume relevance in
appreciating the evidentiary position in the instant dispute. In
the present case, the FSSAI report is clear and categorical in
identifying the goods as “Supari”. On the other hand, the CRCL
report is silent as to whether the goods are not Supari. Neither
have the requisite parameters been tested, nor has the CRCL
expressed any opinion regarding the classification of the goods
under Chapter 08.The Respondent’s case, therefore, stands on
a considerably stronger footing, particularly in view of the
favorable FSSAI reports, the inconclusive nature of the CRCL
report, and the failure to test the requisite parameters
relevant to the classification of the goods.

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Whether the impugned goods are eligible for the benefit
of concessional BCD on the basis of the Certificate of
Origin (COO) issued under the FTA?
15. The Ld. Advocate for the respondent, in its written
submissions dated 18.05.2026, emphasised that the
impugned goods are of Myanmar origin. The COO issued by
the statutory authorities in Myanmar certifies that the
impugned goods are “BETELNUT PRODUCT KNOWN AS
SUPARI” and specifies the HS Code as 21069030. The said
certificate has not been challenged in the manner known to
law. The learned Advocate submitted that the Rules of Origin
prescribe the procedure and mechanism for verification of the
information and particulars furnished in the COO. Admittedly,
neither the investigating agency nor the office of the appellant
has undertaken any verification of the particulars mentioned
in the COO, particularly the HS Code and the description of
the goods. He further submitted that it is a settled principle of
law that where an exemption is claimed on the basis of a
certificate issued by a competent statutory authority, the
benefit thereof cannot be denied, nor can the goods be treated
as otherwise described or classified, merely on the basis of the
opinion of the departmental authorities, without first
questioning or discrediting the certificate in the manner
prescribed by law.

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Accordingly, the learned Advocate contended that the
respondent's claim for concessional duty, founded on the valid
COO which remains unchallenged, is legally sustainable and
that the Commissioner of Customs (Appeals) was justified in
allowing the benefit under the impugned order.

15.1 The Respondent has relied upon the Certificate of
Origin and other documents describing the goods as a Betel
nut product known as Supari. These documents, by
themselves, do not determine the classification of the goods
under the Indian Customs Tariff. However, the description
consistently adopted in the commercial and statutory
documentation may constitute a relevant circumstance in
determining the commercial identity of the goods. Such
evidence is required to be considered along with the physical
and technical evidence available on record. As seen from the
Show Cause Notice, it appears that the benefit of Notification
No. 96/2008-Cus dated 13.08.2008, as amended, can be
extended only when the eligible goods are properly declared.
The case of the Revenue is that the importer had misdeclared
the correct description of the goods and had consequently
misclassified them. As reflected in Tables I to IV of SCN dated
21.09.2022, the importer had claimed the benefit of the
SAPTA Notification on the basis of the Certificate of Origin. The
charge of the Revenue is that the goods are not eligible for

89

exemption benefit on account of mis-classification and
misdeclaration of description of imported goods and are also
liable to confiscation under Section 111(o) of the Customs Act,
1962. It is, however, concerning to note that, except for
merely quoting Section 111(o) in paragraphs 46, 47 and 48 of
SCN, no specific allegation or finding emerging from the
investigation, warranting confiscation of the goods under the
said provision, finds mention in the Show Cause Notice. The
issues relating to Sections 111(d) and 111(m) of the Customs
Act, 1962, are dealt with separately in the subsequent
paragraphs. In our considered view, where confiscation is
proposed under Section 111(o), the Show Cause Notice must
set out the factual foundation and the specific contravention
alleged to have attracted the said provision. A mere reference
to the statutory provision, without setting out the
corresponding factual allegations and the manner in which the
conditions prescribed therein are satisfied, cannot by itself
constitute a sufficient basis for sustaining the proposed
confiscation.

15.2 In this regard, we find considerable force in the
decision of the Hon’ble Supreme Court in M/s. L.G. Electronics
India Private Limited v. Commissioner of Customs, reported in
2025 (9) TMI 1175 – Supreme Court. The relevant extract

90

from the said judgment is reproduced below for ready
reference:–
“19. We are afraid the Tribunal does not seem to be right in
taking such view.

20. Our attention was drawn to the Certificate of Origin
which has been annexed and is a part of this Paper Book
(Annexure A1).

21. The original Certificate is at page 130 of the Paper Book.

22. The Certificate reads thus:-

12 Declaration
by the
exporter
The undersigned hereby The declares that
the above details and statement are
correct , that all goods were produced in THE
REPUBLIC OF KOREA and that they comply
with the origin requirements specified for
these goods in the KOREA-INDIA
Comprehensive Economic Partnership
Agreement for the goods exported to
INDIA
SEOUL Republic of Korea,
MAR 08, 2019
Place and date, signature of authroised
signatory
13 Certification It is hereby certified, on the basis of control
carried out, that the declaration by the
.
exporter is correct
Song Eui Jeong
MAR. 08, 2019 PYEONGTAEK
CUSTOMS REPUBLIC OF KOREA
Place and date, signature and stamp of
issuing authority

23. Clause 12 of this particular Certificate is with
respect to declaration by the exporter and Clause 13
provides for the certification by the Customs
Department. The information furnished vis-a-vis
Clause 12 makes it very clear that the goods were
imported and originated from the Republic of Korea .
At this stage, Mr. Bharathi would submit that if that be so
then what was the good reason for the appellant – herein to
state as against the clause 7 that the claim was made under
entry 9102.92.

24. We believe that while trying to bring the case within
entry 9102 1900, the case of the appellant – importer was
that what was imported were actually wrist watches and
though there may be a particular device in the same, the
same would not bring such goods within the ambit of 8517
62 90.

91

25. Otherwise also, we see no lack of good faith or any
dishonest intention to make a false representation before
the authority concerned.

26. Even if they would have declared or shown as against
Clause 7 the entry 8517 62 90, they would have been still
entitled to the benefit of the Notification 151/2009.

27. At one point of time, we were inclined to remit the
matter to the Tribunal for fresh consideration of the last
argument of the learned counsel appearing for the appellant
in so far as the applicability of the Notification 151/2009 is
concerned.

28. However, having looked into the Original
Certificate of Origin which is not disputed otherwise,
we are convinced that the appellant is entitled to the
benefit of the Notification 151/2009 .
29. We clarify that we have not recorded any finding as
regards the fine distinction between 9102 1900 vis-a-vis
8517 62 90.
30. In view of the aforesaid, these appeals succeed and are
hereby allowed.
31. The impugned order passed by the Tribunal is set aside.
Consequently, the order in original also set aside.”

15.3 We are afraid that the contention of the
Department that the importer is not eligible for exemption
benefit under valid COO cannot be legally justified and also it
is not correct or proper in seeking to invoke Section 111(o)
without any substantive discussion or factual foundation in
respect of the alleged contravention. We further find that the
Certificate of Origin (COO) has neither been specifically
challenged nor shown to have been cancelled, revised or
otherwise invalidated in accordance with law. Our attention
has been drawn to the Certificates of Origin produced by the

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Respondent in respect of the relevant Bills of Entry.


15.4 The Certificate of Origin pertaining to the present
dispute contains the particulars reproduced above. Box 11 of
the said certificate pertains to the declaration by the exporter.
The information furnished therein makes it clear that the
exporter has declared that the particulars and statements
furnished in the certificate are correct and that the goods
comply with the origin requirements specified for those goods
under the Duty-Free Tariff Preference Scheme for Least
Developed Countries. Box 12, on the other hand, provides for
certification by the Assistant Director, Department of Trade,
Ministry of Commerce, Yangon, Myanmar, to the effect that,
on the basis of the control carried out, the declaration made
by the exporter is correct. Thus, the competent authorities in
Myanmar have certified, on the basis of the control

93

undertaken, the correctness of the exporter's declaration.
Further, the particulars furnished in Box 5 specify the HS Code
as 21069030, while Box 6 describes the goods as “Betelnut
Product known as SUPARI (Unflavoured Supari)”. We are
unable to appreciate the denial of the exemption benefit and
the invocation of Section 111(o) of the Customs Act, 1962, by
the Customs authorities in the absence of any substantive
investigation into the alleged suppression, lack of bona fides,
or dishonest intention on the part of the importer to make a
false representation of particulars like HS code and description
of imported goods before the notified foreign authority
concerned. In the absence of any such investigation or finding,
the denial of the exemption benefit and the invocation of
Section 111(o), without establishing the factual basis for the
applicability of the said provision, cannot be sustained. Having
examined the Certificate of Origin, which has neither been
disputed on any substantive ground nor shown to have been
cancelled, withdrawn, or invalidated in accordance with law,
we find that the respondent is entitled to the benefit of the
relevant exemption notification, as claimed.

15.5 Further, we place reliance on the decision of the
Coordinate Bench of this Tribunal in Hyundai Motors India Ltd.
v. Commissioner of Customs, Chennai, reported in 2025 (6)

94

TMI 608 – CESTAT Chennai . The relevant extracts from the
said decision are reproduced below: -
“8.7 We find that the Government of India signed an Agreement on
Trade in Goods Under the Framework Agreement of the
‘Comprehensive Economic Co-operation between the Republic of
India and the Association of Southeast Nations (ASEAN)’ in the year
2009. A lot of thought has gone into framing the policy for the benefit
of trade and industry in the participating Countries. As per the said
international agreement preferential tariff treatment was agreed to be
accorded by India in respect of imports of specified goods, provided
certain conditions are fulfilled. One such condition was that the goods
imported under a Trade Agreement are required to be covered under
a Certificate of Origin issued by the Designated Authority of the
exporting country. When the Rules of 2009 are comprehensive in
nature and contain the complete operative mechanism on various
substantive and procedural aspects for facilitating preferential tariff
treatment for goods covered by AIFTA, the said Rules would have to
be diligently followed before any concession is sought to be denied
to goods, coming within the ambit of the Agreement. Otherwise, the
whole procedure set out in the 2009 Rules would be rendered
redundant and it would upset the certainty of duty that had been
notified by the agreement, for the benefit of trade and industry.

8.8 When an importer produces a COO Certificate which covers the
imported goods, it has to be considered as substantive and
conclusive evidence of being goods as declared and duty concession
as eligible should be allowed, in the normal course, as the
concession originates from an international treaty entered between
the contracting States of which India is a signatory. In case the
concession is felt to be not eligible then the department has to take
recourse to the provision of the Rules of 2009 and follow the
procedure set out there in. When the Customs Department of the
importing Country does not take any action as provided for in
Paras 7, 16 and 17 of Annexure III to the Rules of 2009 it cannot
then question the concession from payment of duty as eligible
as per the COO Certificate. As per Para 7, in case the AIFTA
Certificate of Origin is not accepted by the Customs Authority of the
importing party it shall be returned to the Issuing Authority within a
reasonable period but not exceeding two months, duly notifying the
grounds for the denial of preferential tariff treatment. As per para 16
the importing party may request a retroactive check at random
and/or when it has reasonable doubt as to the authenticity of
the document or as to the accuracy of the information regarding
the true origin of the goods in question or of certain parts
thereof. In case of reasonable doubt as to the authenticity or
accuracy of the document, the Customs Authority of the
importing party may suspend provision of preferential tariff
treatment while awaiting the result of verification. As per Para

95

17 if the importing party is not satisfied with the outcome of the
retroactive check, it may, under exceptional circumstances,
request verification visits to the exporting party .

8.9 In the present case Revenue has not demonstrated that they
have taken any steps as required by paras 7, 16 and 17 of Annexure
III ibid and have thereby wrongfully sought to deny the exemption. In
its judgment in Noble Import Pvt Ltd. Vs Union of India [2017 (349)
E.L.T. 44 (A.P.)], the Hon’ble Andhra High Court held as under;
“19. It is only after a retroactive check is conducted, and the
concerned authorities are satisfied that the Certificate of Origin
cannot be accepted, are they entitled, thereafter, to pass an
adjudication order under the Customs Act. Without conducting a
retroactive check, in terms of Clause 16(a) of Annexure-III to the
2009 Rules, it was not open to the 3rd respondent to pass an
adjudicating order. The impugned orders dated 30-10-2015, passed
even before conducting a retroactive check in terms of Clause 16(a),
are without jurisdiction.”

8.10 We find that Rule 5 of the CAROTAR allows, the Principal
Commissioner of Customs or the Commissioner of Customs, to
disallow the claim of preferential rate of duty without further
verification, for the reasons to be recorded in writing, where the
importer relinquishes the claim or the information and
documents furnished by the importer and available on record
provide sufficient evidence to prove that goods do not meet the origin
criteria prescribed in the respective Rules of Origin. However, the
present issue does not involve a dispute on the origin criteria,
but only on the classification of the goods and is hence not
applicable .

8.11 Thus, while the Customs department can after following the
due process change the classification of the imported goods as
per the domestic laws, it cannot deny “preferential rate of duty”
(which has been defined under CAROTAR to mean rate at which
customs duty is charged in accordance with a trade agreement),
to the goods covered by a valid COO Certificate issued as per
an international treaty obligation, that satisfies the conditions
of a notification issued under Section 25 of the CA 1962, unless
the classification had been challenged successfully as provided
for in the Rules of 2009 . Hence the action taken by the AA in
denying concessional rate of duty for the goods by rejecting the
Country-of-Origin Certificate is untenable and merits to be set aside.”

15.6 We also take judicial notice of the decision of the
Hon’ble High Court of Bombay in Commissioner of Customs,
Airport Special Cargo, Mumbai v. Neelam Jewels, dated

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25.06.2026, in Customs Appeal No. 24 of 2025. The relevant
paragraphs of the said judgment are extracted below: -
“5. Having perused the impugned order of the CESTAT, we find
absolutely no infirmity in the said Order. Firstly, once the Authorities
in Thailand have confirmed that the authenticity of the Certificates of
Origin and that they have been issued by the Department of Foreign
Trade, Thailand, the Indian Authorities cannot go behind that
Certificate of Origin and deny the concessional rate of duty to
the importers. If this was to be allowed, the entire sanctity of the
“Interim Rules of Origin under Indo-Thai Free Trade Agreement”
would be set at naught . Once the Designated Authority in Thailand
has issued the Certificate of Origin, and the same has been in fact
authenticited by the said Authority, the Indian Authorities cannot
embark upon an investigation to assail the said Certificate of Origin.
Once this is the case, any purported statement made by the
importer under Section 108 of the Customs Act, 1962, can have no
bearing on the authenticity of the Certificate of Origin .”

15.7 In view of the foregoing discussion and the judicial
precedents discussed above, we find that the denial of the
concessional rate of duty and the proposed confiscation under
Section 111(o) of the Customs Act, 1962, are unsustainable
in the absence of adequate factual foundation and recourse to
the prescribed verification mechanism. The Certificate of
Origin, issued by the competent authorities of Myanmar and
neither successfully challenged nor invalidated in accordance
with law, supports the respondent’s claim to preferential tariff
treatment. Accordingly, we find no infirmity in extending the
benefit of the relevant exemption notification to the impugned
goods.

97

WHETHER THE VALUATION DONE BY THE RESPONDENTS IN
RELATION TO THE SUBJECT GOODS IS IN ACCORDANCE
WITH LAW?
16. Insofar as the question/issue of valuation is
concerned, we find that this aspect is covered by the
provisions contained in Section 14 of the Customs At as held
by the Apex Court in the case of Century Metal Recycling India
Pvt.Ltd vs UOI - 2019 (367) ELT 3 9 and M/s Vaibhav
International Versus The Commissioner Of Customs City
Customs -2026 (3) TMI 1695 KARNATAKA HIGH COURT (Para
18.3). In the case on hand, if the subject goods are construed
or treated as raw areca nuts, their valuation would have to
take place under Section 14(2) of the Customs Act, 1962,
wherein tariff values are fixed through a Notification issued by
the Board; conversely, in view of our findings recorded herein
before that the subject goods are Betelnut Product known as
Supari, the government has not fixed the tariff values and
therefore, it is essential to resort to the valuation mechanism
under Section 14(1) of the Customs Act; further, since the
valuation of the revenue rested on the classification under
Chapter 08028020 which has been already been negatived by
us supra, it is clear that the transaction value in terms of
Section 14(1) has to be accepted, especially in the absence of
any quarrel on the transaction value and consequently, having
regard to the fact that the mandatory procedure in terms of
Section 14 and Rule 12 as set out by the Apex Court having

98

not been followed, the transaction value declared by the
respondent deserves to be accepted by holding that valuation
proposed by the revenue in relation to the subject goods is
contrary to law.

WHETHER CONSEQUENT CONFISCATION AND PENALTY
PROCEEDINGS ARE SUSTAINABLE: -
17. Revenue contends that the goods imported by the
respondent are, in substance, split areca nuts classifiable
under CTH 0802 80 20. It is further contended that import of
areca nuts falling under the said tariff entry is prohibited
where the CIF value is below 251 per kg and, consequently,
the goods, having been imported in contravention of the
applicable import restriction, are liable to confiscation under
Section 111(d) of the Customs Act, 1962. In view of our
detailed findings hereinabove on the classification of the
impugned goods, the very premise on which the alleged
prohibition is founded does not survive. Consequently, the
goods cannot be held to have been imported in contravention
of any prohibition so as to attract Section 111(d) of the
Customs Act, 1962. Accordingly, we find no infirmity in the
order of the Commissioner (Appeals) setting aside the
confiscation of the impugned goods under Section 111(d) of
the Customs Act, 1962. The Revenue's challenge on this
count, therefore, also fails

99

17.1 The issue of confiscation under Section 111(o) of
the Customs Act, 1962, has been discussed in detail in Para
16. In view of the foregoing discussion and the judicial
precedents cited above, we find that the proposed confiscation
under the said provision is unsustainable in the absence of an
adequate factual foundation or discussion in SCN and recourse
to the prescribed verification mechanism. The Certificate of
Origin, issued by the competent authorities of Myanmar and
neither successfully challenged nor invalidated in accordance
with law, supports the conclusion that the impugned goods are
not liable to confiscation under Section 111(o) of the Customs
Act, 1962. Further, in view of our findings on the classification
of the impugned goods and the evidentiary value of the relied
upon FSSAI and inconclusive CRCL reports, we find that the
proposed confiscation under Section 111(m) of the Customs
Act, 1962, is also unsustainable in the absence of relevant and
cogent evidence establishing the essential ingredients
necessary for invoking the said provision.

17.2 Inasmuch as we have, on merits, found that the
respondent cannot be faulted for adopting the classification
under CTH 21069030, the question of visiting the respondent
with consequential liabilities such as interest, redemption fine
or penalty does not arise.

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CONCLUSION : -
18. The Constitution Bench of the Hon’ble Supreme
Court in E.P. Royappa v. State of Tamil Nadu & Anr., reported
in AIR 1974 SC 555 , held that the burden of establishing mala
fides is very heavy upon the person who alleges the same.
Allegations of mala fides are often easier to make than to
prove, and the seriousness of such allegations necessarily
requires proof of a high order of credibility. In the present
case, we find that such evidentiary foundation is lacking. We
further take note of the judgment of the Hon’ble Supreme
Court in Angadi Chandranna v. Shankar & Ors., 2025 INSC
5321, Civil Appeal No. 5401 of 2025, decided on 22.04.2025,
wherein it has been observed that “It is well established that
the contents in a document would prevail over any contrary
oral evidence.” In the present case, the FSSAI reports, issued
by the competent statutory authority, are clear and
categorical in identifying the goods as “Betel Nut Product
Known as Supari (Unflavored Supari)”. No material has been
placed on record to demonstrate that the said reports are
erroneous, unreliable, or otherwise liable to be discarded. In
the absence of any cogent material to displace the evidentiary
value of the said reports, we find no sufficient basis to interfere
with the findings recorded by the learned Commissioner
(Appeals). Accordingly, having regard to the clear and
categorical reports issued by the FSSAI, read with the other

101

evidence available on record, we find that the impugned order
passed by the learned Commissioner does not warrant any
interference. Inasmuch as we have, on merits, found that the
Respondent cannot be faulted for adopting the classification
under CTI 2106 90 30 in respect of the goods declared as
SUPARI, which have also been identified as SUPARI after
detailed testing by the statutory authority, namely, the FSSAI,
and the Revenue has failed to place sufficient and cogent
documentary evidence to establish otherwise, no liability to
pay differential duty can arise. Consequently, there can be no
occasion to hold the impugned goods liable to confiscation or
to impose the attendant detriments of interest, redemption
fine or penalty. In view of the foregoing discussion and our
findings recorded hereinabove, and having regard to the
reasoning and conclusions contained in the impugned OIA
dated 08.01.2025 passed by the Commissioner (Appeals), we
find no infirmity therein warranting any interference.

19. Upon an overall consideration of the evidence and
the rival submissions, we find that the learned Commissioner
(Appeals) was justified in holding that the impugned goods
could not be reclassified under CTI 0802 80 20 merely on the
ground that they were found in split form and did not contain
lime, katha or tobacco. The CRCL reports, being inconclusive
on the material parameters relevant to the dispute, cannot,

102

by themselves, determine the tariff classification of the
impugned goods. At the same time, while the FSSAI reports
cannot be regarded as conclusive for the purpose of tariff
classification, they constitute relevant and material evidence
regarding the identity and description of the goods as a “Betel
Nut Product Known as Supari (Unflavored Supari)”. The said
reports have not been shown to be erroneous, unreliable or
otherwise liable to be discarded. In the absence of any cogent
material to displace their evidentiary value, the same cannot
be disregarded while determining the nature and character of
the impugned goods. The Advance Ruling relied upon by the
Respondent is admittedly not binding upon the Revenue in
view of Section 28J of the Customs Act, 1962. However, the
absence of statutory binding force does not render the
reasoning contained therein irrelevant; the same may
legitimately be considered as persuasive material, particularly
where the factual and statutory issues involved bear similarity
to those arising in the present proceedings. The precedents
relied upon by the Revenue, including Crane Betel Nut Powder
Works and S.T. Enterprises, are required to be understood and
applied having regard to the facts, evidence and statutory
provisions that fell for consideration in those cases. The ratio
of a decision cannot be mechanically extended to every
product described or commercially known as Supari,
irrespective of the nature of the goods, the processes is

103

undertaken, the evidence available and the specific tariff entry
sought to be applied.

20. In the facts and circumstances of the present
case, we find that the Revenue has not brought on record
sufficient and cogent evidence to establish that the impugned
goods do not answer the description of “Betel Nut Product
Known as Supari” under CTI 2106 90 30 so as to warrant their
reclassification under CTI 0802 80 20. We, therefore, find no
sufficient reason to interfere with the conclusion arrived at by
the learned Commissioner (Appeals). Consequently, the
appeal filed by the Revenue is devoid of merit and is liable to
be dismissed. The same is accordingly dismissed.

ORDER
21. In view of the foregoing discussion, the appeal
filed by the Revenue is dismissed. The Order-in-Appeal No.
Seaport C.Cus.II No. 64/2025 dated 08.01.2025 passed by
the Commissioner of Customs (Appeals-II), Chennai, is
upheld, as no interference therewith being warranted.
(Order pronounced in open court on 28.10.2026)


Sd/- Sd/-
(AJAYAN T.V.) (VASA SESHAGIRI RAO)
MEMBER (JUDICIAL) MEMBER (TECHNICAL)

MK