Refund entitlement for imported goods hinges on classification within HSN and the nature of goods sold domestically.

ORAL ORDER

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. By way of this appeal filed under Section 130 of the Customs “the Act”Act, 1962 (for short ) the appellant -revenue has proposed the following substantial questions of law arising out from the order dated 13th July, 2024 passed by the Customs, Excise &“the CESTAT” Service Tax Appellate Tribunal (for short ), Western Zonal Bench at Ahmedabad in Custom Appeal No. C/11704/2014.

“(1) Whether the 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) ?

(2) Whether in the facts and circumstances of the case, the Hon'ble CESTAT is right in upholding the refund on the ground that the correlation between the imported goods and goods sold has not been contested by the revenue, whereas the revenue has in fact contested that the correlation between the imported goods "Betel Nut Industrial Grade" and goods sold in domestic market as "Supari" could not be established ?

(3) Whether in the facts and circumstances of the case, the CESTATE is right in dismissing the appeal of the Revenue ?

2. The respondent-assessee filed refund claim of Special Additional Duty paid on import of “Betel Nut Industrial Grade”. The adjudicating authority rejected the refund claim on the ground that the item imported by the respondent-assessee is industrial betel nut is not the same edible betel nut and therefore, the refund was not granted as per the Notification dated 102/ 2007- Custom dated 14th September, 2007.

3. Being aggrieved the respondent-assessee preferred an appeal before the Commissioner (Appeals) who allowed the refund claim holding that edible betel nut and industrial betel nut are one and the same.

4. The Commissioner (Appeals) while allowing the appeal filed by the respondent- assessee held as under:-

“7. The main ground pointed out by the adjudicaling authority is that the appellant had imported goods declared in the BOE as "Betel nuts industrial Grade falling under CTH 0802090" whereas the goods subsequently sold were declared as supari. Appellant's argument is that there is no difference between industrial grade betel nuts and supari and that the same could be used for edible purpose after processing or as such for industrial purposes. Although adjudicating authority has not recorded his finding on these arguments, I have examined the matter in the light of HSN, tariff descriptions and other documents. 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. This is supported with the information available on http://en.wikipedia.org/wiki/Areca-nut which states that areca nut is the seed of the areca palm, and is commonly referred to as betel nut . Again, DGFT has referred areca nut and supari are as same product in the minutes of ALC Meeting No. 02/2007 held on 20.4.2005 published with URL of http://dgftcom.nic.in/exim/2000/co