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2023 (6) TMI 74 - AT - CustomsClassification of imported goods - Renadyl bulk probiotic dietary supplement capsules - to be classified under tariff item 3002 90 30 of First Schedule to Customs Tariff Act, 1975 or not - applicability of concessional rate of duties of customs, extended by notification no. 50/2017-Cus dated 30th June 2017 - extended period of limitation - penalty u/s 112 of CA - HELD THAT:- The concessional rate of duties of customs, extended by notification no. 50/2017-Cus dated 30th June 2017, is available to imported ‘probiotics’ corresponding to tariff item specified therein; ‘probiotics’ that are ‘cultures of micro-organisms (excluding yeast)’, corresponding to heading 3002 of First Schedule to Customs Tariff Act, 1975, are, doubtlessly, eligible to the benefit thereof which, being the default classification and as set out by the Hon’ble Supreme Court in re Hindustan Ferodo Ltd [1996 (12) TMI 49 - SUPREME COURT] and in re HPL Chemicals Limited [2006 (4) TMI 1 - SUPREME COURT], may be controverted only by proposing alternative classification established as adhering to the General Rules for Interpretation of Schedule in Customs Tariff Act, 1975. Of itself, mere enumeration in the exemption notification does not render all ‘probiotics’, or compounds containing probiotics, to be classifiable within heading 3002 of First Schedule to Customs Tariff Act, 1975. The General Rules for Interpretation of Schedule in Customs Tariff Act, 1975 require that classification should proceed from the heading to the sub-heading and tariff item and that the description in the first of these is critical for proceeding to the next two levels, notwithstanding the conformity, even having all the appearances of being unquestionably so, of an impugned article with description corresponding to a tariff item. It is apparent that ‘probiotics’ may have been, as seen from the referred notification, legislatively intended to be counted as pharmaceutical product and, as ‘cultures of microrganisms’, would not be excluded. In the rulings of United States Customs, the significance of not being amenable to further manufacture has ruled the probiotic products impugned therein to certain inclusion as ‘food supplement’ of some sort. In the absence of any domestic decisions that are contrary, or distinguishable on the given set of facts, foreign rulings offer sufficient guide insofar as customs assessment, endeavouring for universal uniformity, is concerned - there are no hesitation in holding that the classification adopted in the impugned order does not merit to be interfered with. Consequently, the appropriate rate, corresponding to the said description, in the notification for levy of ‘integrated goods and services tax (IGST)’ applies. The concessional rate of duty sought for by the appellant in the bills of entry cannot be extended to them. Extended period of limitation - HELD THAT:- All that remains for consideration at this stage is exclusion from recovery under section 28 of Customs Act, 1962 owing to bar on invoking the extended period - there is no evidence of misdeclaration or suppression in the bills of entry filed by the appellant. It is also abundantly clear from our exposition leading to the outcome of upholding the classification sought to be fastened by the customs authorities that this was not so evident as even to speculate, let alone conclude, that the ingredients essential to invoking the extended period of limitation did exist. The demand is, thus, restricted to the normal period of limitation intended by section 28 of Customs Act, 1962 which, with effect from 14th May 2016, is two years from the relevant date. Penalty u/s 112 of Customs Act, 1962 - HELD THAT:- Penalty has been imposed on the appellant under section 112 of Customs Act, 1962 and appears to have been a consequence of the finding that the goods are liable for confiscation under one or the other provision of section 111 of Customs Act, 1962. Of the several elements therein, the sole breach that needs to be considered for evaluation is section 111(m) of Customs Act, 1962 - there are no material particular had been withheld in connection with clearance of the goods for home consumption. Hence, the goods are not liable for confiscation and, consequently, liability for penalty will not arise. Appeal allowed to the extent of setting aside the liability to confiscation and the penalty imposed - the recovery of differential duty is upheld - appeal disposed off.
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