Ms Shreedhra Agro LLP Through Its Designated Partner vs. Commissioner Of Customs Delhi Function As Customs Authority For Advance Ruling New Delhi & Ors.

Facts

The appellant, M/s Shreedhra Agro LLP, filed an appeal against an order dated June 22, 2022, passed by the Customs Authority for Advance Rulings (CAAR), New Delhi. The CAAR classified the appellant's proposed import, "Scented & Flavoured and Sweetened Supari," under sub-heading 080280 of the First Schedule of the Customs Tariff Act, 1975. The appellant contended that the product should be classified under Chapter 21, specifically sub-heading 21069030. The appellant relied on a GST circular dated October 6, 2021, which clarified that "Scented Sweet Supari" falls under tariff item 21069030 as "Betel Nut product" attracting an 18% GST rate. The respondent argued that GST classification can be separate from Customs classification.

Held

The High Court found no infirmity with the decision of the learned CAAR. The Court stated that it was not called upon to examine the validity of the GST circular dated October 6, 2021. The decision of the CAAR, as well as the previous decision of the High Court in M/s. Great Nuts Impex Pvt. Ltd., was rested on the Supreme Court's decision in Crane Betel Nut Powder Works v. Commissioner of Customs and Central Excise, Tirupathi & Anr. The CAAR had not accepted the GST circular as material in determining the question of classification and was not persuaded to accept a different view based on it. The CAAR had also noted that the circular did not provide any reasons for its clarification. Therefore, the appeal was dismissed.

Key Issues

1. Whether the "Scented & Flavoured and Sweetened Supari" imported by the appellant is correctly classified under sub-heading 080280 of the First Schedule of the Customs Tariff Act, 1975, as held by the CAAR, or under sub-heading 21069030 as argued by the appellant, in light of the GST circular dated October 6, 2021. Petitioner's arguments: The appellant argued that the product is classifiable under sub-heading 21069030 based on Circular No.163/2019/2021-GST dated 06.10.2021, which clarifies that "Scented Sweet Supari" falls under tariff item 21069030 as "Betel Nut product" and attracts an 18% GST rate. They submitted that this circular was not brought to the notice of the court in a previous similar case. Revenue's arguments: The respondent argued that it is possible for the GST Department to have a separate classification which is not governed by the Customs Tariff Act, 1975. They also noted that the CAAR did not accept the GST circular as material for determining the classification and had not been persuaded to accept a different view from the Supreme Court's decision in Crane Betel Nut Powder Works.