Betel Nuts Industrial Grade and Edible Supari are same Products: Gujarat HC allows Special Additional Duty Refund [Read Order]

In a recent ruling, the Gujarat High Court allowed SAD ( Special Additional Duty ) refund observing there is no distinction between the Betel Nuts/Areca nuts industrial grade and the edible supari, upholding the decision of the CESTAT.

An appeal was filed by the Commissioner of Customs under Section 130 of the Customs Act, 1962, raising the question of whether the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) is right in upholding the refund under Notification No. 102/2007- Customs dated 14.09.2007 when the imported goods were "Betel Nut Industrial Grade" (not fit for human consumption), whereas goods sold in domestic market were "Supari" (edible).

The respondent-assessee, Baburam Harishand sought a refund for the Special Additional Duty paid on importing "Betel Nut Industrial Grade." The Customs adjudicating authority denied the refund, citing the difference between industrial betel nut and edible betel nut, in line with Notification 102/2007-Custom dated September 14, 2007.

Dissatisfied with this decision, the respondent-assessee appealed to the Commissioner (Appeals), who subsequently allowed the refund, ruling that industrial and edible betel nuts are essentially the same.

The Commissioner (Appeals) while allowing the appeal observed that “There is no dispute that the BOE was assessed by classifying the imported goods under Chapter 8 which covers "Edible Fruits and Nuts" with CTH 0802090 specified for betel nuts. Explanatory Note given under corresponding heading 080290 of HSN specifies that the heading includes areca [betel) nuts used chiefly as a masticator, which implies that both areca nut and betel nuts are one and same. Again, note given under heading 20.08 of the HSN to specify that prepared edible items are covered in the said heading, also refers areca nuts and betel nuts as the same product.”

The appellate-revenue, dissatisfied with the Commissioner (Appeals)' decision to grant a refund for duty on "Betel Nut Industrial Grade,” appealed to the CESTAT, which subsequently confirmed the Commissioner (Appeals)' order and dismissed the appeal.

The adjudicating authority rightly rejected the refund claim for the import of "Betel Nut Industrial Grade." The Port Health Officer's report, based on public analysis, found the betel nut unfit for human consumption, contended the counsel of the Customs Department/revenue.

Additionally, he asserted that the respondent-assessee failed to provide invoices proving the industrial purpose of the import. Instead, the provided invoices indicated sales to small traders who used the betel nuts for human consumption.

The Court observed that there is no dispute regarding the classification of areca nuts and betel nuts under CTH 0802090 of HSN at the time of importation as edible goods, which are not immediately suitable for consumption. The respondent-assessee also stated that these imported goods required further processing to become edible.

The bench of Justices Bhargav D. Karia and Niral R. Mehta further observed that the Commissioner (Appeals) and the Tribunal has also referred to and relied upon the information available on DGFT website wherein also areca nut and supari has been considered as the same product in the minutes of ALC meeting No. 02/2007 held on 20.4.2006.

Thus, the High court dismissed the appeal of the Customs Commissioner / revenue and upheld the decision of the Commissione (Appeals) and the CESTAT as no there is no question of law.

To Read the full text of the Order CLICK HERE

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