The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, has rejected the Customs Department's attempt to reclassify imported unflavoured supari as split areca nuts, upholding the importer's declared classification.
A Bench of Judicial Member Ajayan T.V. and Technical Member Vasa Seshagiri Rao held that the Department had failed to produce sufficient evidence to establish that the goods should be classified as split areca nuts.
The dispute concerned four consignments imported by Guru Krupa Traders, covering approximately 432.08 metric tonnes of betel nut products. The importer had declared the goods as “Betel Nut Product Known as Supari (Unflavoured Supari)”.
Customs rejected the declared classification, ordered confiscation of the goods and imposed a redemption fine of ₹2 crore, along with penalties of ₹1 crore, ₹50 lakh and ₹4 lakh.
The Commissioner of Customs (Appeals-II), Chennai, set aside the adjudication order on January 8, 2025, and accepted the importer's classification. The Department challenged this decision before the tribunal.
The Department contended that the goods were raw areca nuts in split form and did not qualify as a food preparation. The importer relied on reports and a no-objection certificate issued by the Food Safety and Standards Authority of India (FSSAI), which identified the product as supari.
The tribunal found that the Central Revenues Control Laboratory (CRCL) reports recorded the physical characteristics of the goods but did not establish the precise nature or extent of processing they had undergone. No specific query had been raised with the laboratory on whether the goods were a product known as supari.
It also held that the FSSAI reports were relevant evidence of the goods' identity, although they were not conclusive for determining customs tariff classification. The Department had not shown that the reports were erroneous or unreliable.
“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, by themselves, determine the tariff classification of the impugned goods,” the tribunal held.
The tribunal further observed that the advance ruling relied upon by the importer was not binding on the Department under Section 28J of the Customs Act, but its reasoning could be considered persuasive.
It also upheld the importer's claim to concessional duty based on the Certificate of Origin issued by Myanmar, which had not been invalidated through the prescribed process. The tribunal found that the Department had also failed to establish grounds for redetermining the transaction value.
Holding that the Department had not produced sufficient evidence to justify reclassification, the tribunal dismissed its appeal and upheld the Commissioner's order. It consequently found no basis for differential duty, confiscation, interest, redemption fine, or penalties
For Appellant: O.M. Reena, Authorised Representative
For Respondent: Advocate B. Satish Sundar,