Gujarat High Court Upholds SAD Refund For Betel Nuts, Rules No Distinction Between Industrial And Edible Varieties

The Gujarat High Court has upheld the decision of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) allowing the refund of Special Additional Duty (SAD) on betel nuts. The court observed that there is no distinction between industrial grade betel nuts and edible supari.

The division bench comprising Justices Bhargav D. Karia and Niral M. Mehta ruled, “Considering the facts of the case which is not in dispute that there is no distinction between the areca nuts betle nuts as certified under CTH 0802090 of HSN at the time of importation as edible goods which are not suitable for immediate consumption.”“It is also the case of the respondent-assessee that such imported goods were required further processing to make them edible. 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,” the bench added.

The ruling came in an appeal filed under Section 130 of the Customs Act, 1962 by the revenue department, posing several legal questions regarding the distinction and correlation between industrial grade betel nuts and edible supari. The key questions were:

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 the domestic market were "Supari" (edible)?
2. Whether the 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 the domestic market as "Supari" could not be established?
3. Whether the CESTAT is right in dismissing the appeal of the Revenue?

The dispute originated when the Customs department rejected the refund claim, arguing that industrial betel nuts and edible supari are distinct products. However, the Commissioner (Appeals) reversed this decision, asserting that both variants serve the same end-use purposes after processing.

Conclusively, the Gujarat High Court upheld the Commissioner (Appeals)' decision, affirming that industrial betel nuts and edible supari are effectively the same product under the law. The Court ruled, “In view of the above, we are of the opinion that there is no infirmity in the impugned order passed by the Tribunal while upholding the order passed by the Commissioner (Appeals), the appeal is therefore being devoid of any merits do not give rise to any questions of law. This appeal is accordingly dismissed.”

Case Title: Commissioner Of Customs Versus Baburam Harichand

LL Citation: 2024 LiveLaw (Guj) 95

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