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CC, New Delhi (ICD, TKD) Versus M/s Daxen Agritech (India) Pvt. Ltd.

2018 (1) TMI 572 - CESTAT NEW DELHI

Classification of imported goods - bulk Reishi Gano Powder - bulk Ganocelium Powder - claim of the respondent is to classify the product as Ayurvedic Proprietary Medicine under heading 30039011 claiming the benefit of N/N. 53/2011 (Sl. No. 363). The Revenue did not agree with the same and intended to classify the product as food supplement under CTH 21069099. - Whether the decision of Tribunal, Chennai in the case of DXN Manufacturing (India) Pvt. Ltd. [2017 (11) TMI 608 - CESTAT CHENNAI] ap .....

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ced before them and we have no reason to differ from the ratio and finding arrived by the Tribunal, Chennai. - The impugned order has erred in classifying the product as Ayurvedic medicine and it should have been correctly classified as food supplement as pleaded by the Revenue - appeal allowed - decided in favor of Revenue. - Customs Appeal No. 53498 of 2014 - Final Order No. 50102/2018 - Dated:- 10-1-2018 - Hon ble Shri S.K. Mohanty, Member ( Judicial ) And Hon ble Shri B. Ravichandran, M .....

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y Medicine under heading 30039011 claiming the benefit of Notification 53/2011 (Sl. No. 363). The Revenue did not agree with the same and intended to classify the product as food supplement under CTH 21069099. The Original Authority held against the respondent. On appeal, by the impugned order, the Commissioner (Appeals) held that the classification will be as claimed by the respondent under Heading 30039011. Aggrieved by this, the Revenue is in appeal. 2. The learned AR elaborating the grounds .....

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l to examine the matter afresh. A direction was given for fresh examination after considering all the evidences that are to be submitted by the assessee. Thereafter, the Tribunal again decided the matter issuing a final order No. 42811-42821 of 2017 dated 08/11/2017. All the evidences and submissions made by both the sides have been examined in detail and it was concluded that the products, which are identical to the one now in dispute in Delhi, were to be classifiable under CETH 2108.99. This i .....

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detailed examination as made by the Tribunal, Chennai is squarely applicable to the present dispute. He further submitted that the recognition of the respondent/assessee for the product now in question by the Ayush Authorities and Drugs and Cosmetics Authorities by itself will not be the guiding principle by classifying under Custom Tariff. He submitted that the classification under Custom Tariff should be guided by the statutory entries and the explanatory notes including HSN notes. The parame .....

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Tribunal, Chennai on the similar product. It is his submission that the product under import are recognised by the State Authorities/ Ayush Authorities and were duly licenced for manufacture and distribution. Further the ingredients of the product under import were indicated in the authoritative text/granth as explained by the Drug Authorities. Further he relied on the HSN Note 16 which he submitted has not been fully reproduced by the Tribunal in Chennai. In other words, it is the submission o .....

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e impugned order is correct in classification as Ayurvedic Medicaments. He also submitted that case laws relied upon by the Tribunal, Chennai did not fully support the case of the Revenue. In fact, the principle that the product as identified in the market should form basis for classification is not fully appreciated by the Revenue. 4. The learned Counsel further submitted that they have the product certified as drug after due clinical trial. The learned Counsel for the respondent pleaded that t .....

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case. Towards this end, the learned Counsel for the respondent submitted various points narrated above. We have carefully considered the appeal records as well as the decision of the Tribunal in DXN Manufacturing (India) Pvt. Ltd. (supra). The relevant portions of the order of the Tribunal is reproduced below for better appreciation :- 9.4 Accordingly, on the lines directed by Hon'ble Apex Court, we intend to analyze issues relating to these appeals. The main thrust of the appellant's co .....

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Various documents have been submitted by appellant to justify their stand that the impugned goods are classifiable as Ayurvedic medicaments and Ayurvedic text books mention mushrooms in generic category of Bhuchatra. According to appellants, these documents would establish that the products are Ayurvedic medicaments which merit classification under Chapter 3003.39. 10. The twin test laid down by the Hon'ble Apex Court in the Richardson Hindustan case judgment cited by the Ld. Advocate for t .....

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on above discussed documents are advanced by the Learned Counsel to contend that the products are Ayurvedic Proprietary Medicines, on perusal of the label of the product we cannot find anything suggesting so. Bottles of the products GL were placed before us by Ld. Sr. Advocate. For ready reference, a scanned copy of the bottle label is reproduced below: This space is purposely put blank. The label indicates the product to be an Ayurvedic Proprietary Medicine. It is shown that each capsule conta .....

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the product contains some quantities of Chatrakh & Shiitake the appellant cannot contend that it is a medicament. The only inference that can be drawn from the indications in the label is that the product is only meant for general well being. As stated earlier, it is also a fact that the products were originally sold as food supplements. Though the Learned Sr. Counsel Sh. Lakshmi Kumaran took assistance of various literature, reports of clinical studies and other documents, which we have ana .....

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are the diseases the products intend to cure by taking such measured doses, is not conveyed through the label or the pamphlet to satisfy the common parlance test. What is important is how the consumer looks at the product, and what is his perception in respect of the product. 11.2 The goods which were imported earlier from Malaysia were marketed as "food supplements". In fact, from the record it emerges that they were then called as "The Miraculous King of Herbs". 11.3 While .....

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rtant word is disease. When a product is offered as a specific treatment for a disease, it becomes a drug.... It is very important to bear in mind that you are recommending a food supplement and that you do not intend to be misconstrued as a recommending a drug." From the investigations conducted with distributors and stockists, it is seen that a number of stockists / distributors from whom statements were taken categorically stated that the RG and GL are not used to prevent any specific di .....

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both RG & GL highlighted a common tag line An ounce prevention is better than a pound of cure . In respect of RG, the claim was made that the commodity contains more than 200 active elements divided into three categories consisting 30% water soluble elements, 65% organic soluble elements and 5% volatile elements . The contents were indicated as Polysaccharides, Organic germanium, Adenosine, Triterpenoids, Ganoderic Essence, Protein, Fibre . Nowhere in these pamphlets was a claim made that t .....

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urposely put blank. 12.1 No doubt, the appellants have claimed that the ingredients in respect of RG are Ganoderma (Chatrakh) and Shiitake (Bhuchatra) and in respect of GL also, ingredient Shiitake (Bhuchatra) has been shown and another ingredient Ganomycelium has also been indicated as Chatrakh . To counter this, Revenue have obtained a statement from Dr. D.Athisayaraj, Head of Section of Siddha/Auurveda, Aringnar Anna Hospital of Indian Medicine who has deposed that Bhuchatra does not mean Shi .....

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.2 It is also not disputed that Dr. D. Athisaya Raj, Head of Siddha, Ayurvedic Department, Arignar Anna Hospitals of Indian Medicine who had earlier recommended classification of RG and GL capsules as ayurvedic proprietary medicines but later had admitted that his recommendation was incorrect since it was based on bogus clinical reports. It further appears that Dr. D. Athisaya Raj was cross examined before the adjudicating authority, on which occasion also, he deposed that he did not consider &# .....

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s for classification. The classification for the purpose of collection of revenue is to be on the basis of Excise / Customs legislations. The primary object of Excise Act being to raise revenue, the classification of the product so as to determine the rate of duty has to be considered independent from the Drugs and Cosmetics Act, 1940 and like legislations. The Hon ble Apex Court in the case of Shree Baidyanath Ayurved Bhawan Ltd. (supra) opined in para 41 as under : "41. True it is that Se .....

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