2026-VIL-1898-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs - Classification of unflavoured Supari - Tariff Items 2106 90 30 and 0802 80 20 - The Respondent imported goods declared as Betel Nut Product Known as Supari (Unflavoured Supari) under Tariff Item 2106 90 30. The Appellant-Revenue reclassified them as split areca nuts under Tariff Item 0802 80 20, relying on the CRCL reports that described the samples as split pieces of betel nuts without lime, katha or tobacco. The Respondent relied on FSSAI reports and NOC identifying the goods as Supari. The Commissioner (Appeals) set aside the reclassification - Whether the goods are classifiable under Tariff Item 2106 90 30 or Tariff Item 0802 80 20 - HELD - The burden of proof in classification disputes rests on the Revenue, which must adduce cogent evidence to displace the classification declared. The FSSAI and CRCL reports operate in different fields and are not mutually destructive. The FSSAI reports record moisture below the limit for roasted nuts, identify the product as Supari and have not been shown to be erroneous. The CRCL reports raised no query on the processing undergone, the moisture content or whether the goods were known as Supari, and merely describe physical characteristics. Chapter 21 provides a specific entry for Supari, defined as any preparation containing betel nuts but not lime, katha or tobacco, whether or not containing other ingredients. No specific process is prescribed for a product to qualify as Supari, and absence of other ingredients does not take the goods out of Chapter 21. Classification ends at GRI 1 unless the Revenue establishes that the goods do not answer the description of Supari, and the specific entry prevails over the general entry. The ratio of earlier decisions cannot be mechanically extended to every product commonly known as Supari. The Revenue failed to discharge its burden - The goods are classifiable under Tariff Item 2106 90 30 as declared and the reclassification is set aside - Concessional rate of duty - Section 111(o) of Customs Act, 1962 - The Respondent claimed the benefit of the exemption notification on the strength of Certificates of Origin issued by the competent authority of the exporting country, describing the goods as Betelnut Product known as Supari under the same HS Code. The Revenue denied the benefit and proposed confiscation under Section 111(o) - Whether the benefit can be denied and the goods confiscated under Section 111(o) - HELD - The Certificates of Origin were certified by the competent authority and were neither challenged on any substantive ground nor shown to be invalidated in accordance with law. The Revenue did not follow the prescribed verification mechanism and made no investigation into suppression or dishonest intention to make a false representation. A dispute only on classification does not permit denial of the preferential rate to goods covered by a valid Certificate of Origin - The Respondent is entitled to the benefit of the exemption notification and confiscation under Section 111(o) is unsustainable - Valuation of imported goods - Section 14 of Customs Act, 1962 - The Revenue redetermined the assessable value on the basis of classification under Tariff Item 0802 80 20 - Whether the redetermination of value is sustainable - HELD - Tariff values under Section 14(2) apply to raw areca nuts, whereas no tariff value is fixed for Supari, so valuation must be under Section 14(1). The valuation proposed rested on classification under Tariff Item 0802 80 20, which has been negatived, and there was no dispute on the transaction value. The mandatory procedure under Section 14 read with the Valuation Rules was not followed - The declared transaction value is to be accepted and the valuation proposed by the Revenue is contrary to law - Confiscation, redemption fine and penalty - Sections 111(d), 111(m), 112 and 114AA of Customs Act, 1962 - Confiscation was proposed on the ground that split areca nuts below the minimum import price were imported in contravention of the import restriction and were misdeclared, and redemption fine and penalties were imposed - Whether confiscation, redemption fine and penalties are sustainable - HELD - The premise of the prohibition rested on classification under Tariff Item 0802 80 20, which does not survive, so Section 111(d) is not attracted. Confiscation under Section 111(m) is unsustainable in the absence of cogent evidence, in view of the FSSAI reports and the inconclusive CRCL reports. As the Respondent cannot be faulted for adopting classification under Tariff Item 2106 90 30, no differential duty, interest, redemption fine or penalty arises - The appeal of the Revenue is dismissed.
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