Chennai CESTAT Upholds ‘Supari’ Classification For 432 Tonnes Of Split Betel Nuts, Finding CRCL Report Inconclusive And FSSAI Findings Unchallenged

The respondent imported approximately 432.08 MT of goods described as “Betel Nut Product Known as Supari (Unflavoured Supari)” under four Bills of Entry dated 27 February 2022, declaring classification under CTH 2106 90 30.

CRCL reports described the samples as split pieces of betel nuts, some not fully dehusked and containing fibre, and recorded that they contained no lime, katha or tobacco. FSSAI reports, by contrast, identified the goods as unflavoured supari and issued a no-objection certificate after testing against food-safety parameters.

The adjudicating authority classified the goods under CTH 0802 80 20, redetermined value and ordered confiscation and penalties. The Commissioner (Appeals) set that order aside and accepted the declared classification. The Revenue appealed to the Tribunal.

Classification is governed by Rule 1 of the General Rules for Interpretation (GRI), which gives primacy to the terms of tariff headings and relevant Section and Chapter Notes; the rules are applied sequentially.

Supplementary Note 2 to Chapter 21 defines “Betel Nut Product Known as Supari” as a preparation containing betel nuts but not lime, katha or tobacco, whether or not it contains other ingredients; the Tribunal held that the note does not require an additional ingredient.

The Revenue bears the burden of establishing its proposed classification with proper evidence, applying the preponderance-of-probabilities standard; the Tribunal relied on Union of India v. Garware Nylons Ltd., HPL Chemicals Ltd. v. CCE and Gastrade International v. Commissioner of Customs.

HSN Explanatory Notes are a recognised guide to classification, while Commissioner of Customs v. Shahnaz Commodities International Ltd. distinguished drying from roasting and treated tariff classification as distinct from the manufacture inquiry in Crane Betel Nut Powder Works.

FSSAI findings are relevant evidence of the goods’ identity and characteristics, though not conclusive of tariff classification.

The Tribunal also applied Section 14 of the Customs Act to valuation and required a factual foundation and, where applicable, prescribed verification before denying preferential treatment or ordering confiscation.

The Tribunal found that the CRCL reports recorded physical features but did not determine the processing undertaken or conclude that the goods were not supari.

The FSSAI reports identified the goods as supari, documented testing and were not shown to be erroneous or unreliable; they therefore could not be disregarded, although they did not decide tariff classification.

The absence of lime, katha, tobacco or other added ingredients did not exclude CTH 2106 90 30, and the goods’ split form alone did not establish classification under Chapter 8. Applying GRI 1 and the specific statutory description, the Tribunal held that the Revenue had not produced sufficient evidence that the goods failed to answer the description of supari.

It also found no adequate factual basis or prescribed verification to invalidate the Certificate of Origin or deny the preferential-duty claim; the declared transaction value was not displaced by a lawful valuation exercise.

Because the classification and related allegations were not established, the grounds for confiscation and penalties likewise failed.

It found no basis to restore the proposed reclassification, redetermination of value, confiscation, redemption fine or penalties.