The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Chennai has upheld the classification of imported unflavoured supari under Tariff Heading 2106 90 30, dismissing the Customs Department ’s attempt to reclassify the products as split areca nuts under Tariff Heading 0802 80 20. The ruling provides significant relief to the importer, Guru Krupa Traders, which faced substantial financial penalties and a total demand for reclassification of approximately 432.08 metric tonnes of goods. In its final order, the tribunal bench comprising Judicial Member Ajayan T.V. and Technical Member Vasa Seshagiri Rao noted that the Revenue had failed to discharge its burden of proof in establishing that the imported consignments did not conform to the specific statutory description of a "betel nut product known as supari."

The dispute originated from four Bills of Entry dated February 27, 2022 , in which the respondent declared the imported goods as "Betel Nut Product Known as Supari (Unflavoured Supari)" under CTH 2106 90 30. Following a physical examination and testing by the Central Revenue Control Laboratory (CRCL) , the Department contended that the samples were essentially split pieces of areca nuts, thus warranting their classification under the more restrictive Chapter 8. The Additional Commissioner of Customs had initially confirmed the proposal to reclassify the goods, leading to the imposition of a ₹2 crore redemption fine and substantial penalties totaling over ₹1.5 crore. The Commissioner (Appeals-II), Chennai , later overturned this decision in January 2025 , prompting the Revenue to approach the tribunal.

A central point of contention in the tribunal’s deliberation was the conflicting nature of the evidence provided by the CRCL and the Food Safety and Standards Authority of India (FSSAI). While the CRCL reports focused on physical observations such as the goods being split or having minimal damage, the tribunal found these reports lacked analytical depth regarding whether the products constituted a "supari" or a "preparation." By contrast, the FSSAI reports and the accompanying No-Objection Certificates (NOCs) were found to be more comprehensive. The tribunal emphasized that the FSSAI acts as a specialized statutory authority tasked with ensuring that imported food articles meet rigorous safety and quality parameters.

Addressing the evidentiary weight of these documents, the bench stated, "The CRCL reports, being inconclusive on the material parameters relevant to the dispute, cannot, 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." The tribunal noted that the Department had failed to challenge or disprove the findings of the FSSAI authority. Furthermore, the bench observed that the Revenue’s reliance on precedents such as Crane Betel Nut Powder Works was misplaced in the current legal landscape, as those cases were largely decided under different statutory contexts involving the definition of "manufacture" under the now-obsolete Central Excise regime.

The ruling also underscored the critical importance of maintaining a structured approach to tariff interpretation. The tribunal reiterated that classification should begin and, in most instances, end with the General Rules for the Interpretation of the Customs Tariff. Given that Chapter 21 contains a specific supplementary note defining a "betel nut product known as supari," the tribunal found it unnecessary to resort to residuary classifications when a specific entry was available. The court noted: "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 tribunal further addressed the Department's attempt to deny concessional duties by challenging the Certificate of Origin (COO) submitted by the respondent. The importer had presented a valid COO issued by the authorities in Myanmar, which was never formally contested or invalidated through the prescribed retroactive verification procedures set forth in the relevant international trade agreements. Relying on recent observations from the Supreme Court and other High Courts, the tribunal held that the Customs Department cannot bypass the established procedural framework for verification merely through local departmental opinions. The bench concluded that, in the absence of a formal challenge to the authenticity of the COO, the importer’s claim for preferential duty under the applicable trade agreement remained legally sound.

Finally, the bench addressed the Revenue's challenge to the valuation of the goods. The Department had argued that the classification should be based on Chapter 8, which would have triggered specific tariff value provisions. Since the tribunal affirmed the classification under Chapter 21, it ruled that the transaction value, as declared by the importer under Section 14(1) of the Customs Act, 1962, must be accepted in the absence of evidence proving that the transaction was not at arm’s length.

Consequently, the tribunal dismissed the Revenue’s appeal in its entirety, upholding the Order-in-Appeal from January 2025. By rejecting the Department’s reclassification bid, the tribunal effectively set aside the consequential orders of confiscation and the associated monetary penalties. This decision reinforces the legal requirement for the Revenue to produce objective, scientific, and conclusive evidence when attempting to move goods from a specific tariff heading to a more general one. The importer is now cleared to proceed with the remaining procedural steps for the release of the goods without further liability. The case serves as a reminder to the customs authorities that statutory interpretations must strictly adhere to the tariff’s text and that the specialized findings of agencies like the FSSAI cannot be discarded without substantial, credible evidence to the contrary. The order was formally pronounced on October 28, 2026, solidifying the legal position for future similar imports.