TMI Blog2023 (6) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... ssification 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 ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BLE MR C J MATHEW, MEMBER (TECHNICAL) Shri T Viswnathan , Advocate for the appellant Shri Sydney D Silva , Additional Commissioner (AR) for the respondent ORDER PER : C J MATHEW Aggrieved by order [order [order-in-original no. CC-VA/22/2020-21 Adj (I) ACC dated 14th November 2020] of Commissioner of Customs (Import), Air Cargo Complex (ACC), Sahar, Mumbai fastening duty liability of ₹ 1,55,37,543 under section 28 of Customs Act, 1962, along with applicable interest under section 28AA of Customs Act, 1962, and penalty of ₹ 10,00,000 on them under section 112 of Customs Act, 1962, M/s Centaur Pharmaceuticals Pvt Ltd is in appeal disputing the classification adopted by customs authorities. The appellant, a manufacturer as well as contract research/clinical research specialist, also imports pharmaceutical and wellness products for marketing, distribution and sales in the country; they had, since June 2008, been importing Renadyl from M/s Kibow Biotech Inc., USA under a license for packing, marketing and sale of the product in India. The said product is claimed to improve quality of life by decreasing creatine and blood urea nitrogen levels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained by biotechnological processes: , vaccines for human medicine: and vaccines for veterinary medicine as other sub-headings therein. Per contra, the adjudicating authority preferred coverage of miscellaneous edible preparations of chapter 21 of First Schedule to Customs Tariff Act, 1975 and, more particularly, the residual other corresponding to tariff item 2106 90 99 within the residual that, along with diabetic foods and sterilised or pasteurised millstone , made up for Other: among custard powder , churna for pan , food flavouring material , compound preparations for making non-alcoholic beverages , sugarsyrups etc. , betel nut product known as supari , pan masala and soft drink concentrates: enumerated together under Other: corresponding to sub-heading 2106 90 within, and along with protein concentrates and textured protein substances , Food preparations not elsewhere specified or included corresponding to heading 2106. Thus, the dispute is about the imported goods being food preparation or being cultures of microorganisms (other than yeast) with the latter, though, corresponding to a tariff item, nonethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notes of the Harmonized System of Nomenclature (HSN) pertaining to the proposed heading 2106 of First Schedule Customs Tariff Act, 1975, comprising, besides residual food preparations, protein concentrates and textured protein substances for inferring that products, barring those intended specifically for prevention or treatment of diseases and ailments, are not pharmaceutical products even if assisting in promotion and maintenance of general health or well-being. Furthermore, it was also noted that the labeling, in accordance with the Food Safety and Standards Authority of India (FSSAI) directive for enforcement of the statutory requirements in Food Safety and Standards Act, 2006, could not be ignored as also over the counter sale without prescription, specifying dosage and period, from a medical practitioner that sets drugs and pharmaceutical products apart. 6. According to Learned Counsel for the appellant, the impugned goods are intended for oral ingestion by patients suffering from kidney ailments and the capsule, made of hypromelose gellam gum acid, and containing streptococcus thermophilus, lactobacillus and acidophilusbifidobacterium longum (all being probiotic), is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Tribunal, in Commissioner of Central Excise, Chennai-IV v. Tanmed Pharmaceuticals Ltd [2018 (1) TMI 1123-CESTAT Chennai], elaborating upon the genre of enumerations as determinant of classification therein, is applicable to them. According to him, the decision of the Hon ble High Court of Bombay in Blue Star Ltd v. Union of India and anr [1980 (6) ELT 280 (Bom)], and several others, support the various contentions recorded supra. We do not consider these to be of relevance in the light of the core of the dispute that is before us, viz., the coverage of the impugned goods within the description corresponding to the heading fastened on the appellant by the adjudicating authority. By default, non-adherence to the General Rules for the Interpretation of the Schedule in Customs Tariff Act, 1975 and failing, thereby, to discharge the onus devolving on the proper officer of customs to propose a heading that bears close affinity to corresponding description, renders the classification sought by the assessee to be final. It is only in the event of ambiguity in the descriptions sought by either side that other peripheral tests of determination, including common parlance , ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, would be required to be applied if a particular tariff entry is capable of being classified in more than one heads .. 24. . The Tribunal found that though in common parlance products involved may not be considered as carpets, in view of the wordings of the chapter, section notes, chapter notes and explanatory notes, the goods were classifiable under chapter Heading 5703.90.90. 25. We do not find any error in such reasoning. Thus, we see no reason as to why we should make a departure from the general trend of taking assistance of these Explanatory Notes to resolve entry related dispute. 11. According to Learned Authorised Representative, rulings of the competent authority in the United States Customs have persuasive value in the absence of settled law, applicable on all fours, to the dispute now before the Tribunal. Reliance has been placed by him on classification of probiotic powders in ruling no. HQ H253254 of August 2015 of Branch Chief, Tariff Classification and Marking Branch and ruling no. HQ W968085 dated 30th January 2007 on classification of encapsulated bacteria cultures by Director, Commercial and Trade Facilitation Division. 12. We fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Tariff Act, 1975 offers some understanding of the genre which is further reinforced by Provided that they are cannot covered by any other heading of the Nomenclature, this heading covers : (A) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption . in Explanatory Notes to heading 21.06 in Harmonised System of Nomenclature (HSN); the primacy of this heading vis- -vis any other, even if descriptions therein lack specificity, appears to us to be, unarguably, intended. It is not the contention of the appellant that the impugned goods can be sold only against a prescription; neither is it denied by them that the capsules are intended to directly ingested for promotion of general well-being and, even if it does aid in treatment of chronic disease in some particular organ, is not claim to be treatment for such ailment. A harmonious inference from all of these would, certainly, not exclude the impugned goods from coverage as food supplement of one sort or the other. Inclusion within this heading is avoided only upon specific enumeration elsewhere at the same level of comparis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or included. The probiotic powders at issue are not classified under heading 3002, HTSUS as cultures of micro-organisms (excluding yeasts) and similar products because Chapter Note 1(a) to Chapter 30, HTSUS, indicates that the chapter does not cover foods or beverages , other than nutritional preparations for intravenous administration. Although the probiotic powders of food preparations that contain cultures of micro-organisms, they are not designed for intravenous administration. Therefore, because the subject probiotic products are food preparations for oral ingestion, they are specifically excluded from classification by virtue of Note 1(a) to Chapter 30, HTSUS. 16. Likewise in ruling HQ W968085 dated 30th January 2007, it was held that after reviewing your arguments, we do not believe that the language of your preferred heading, cultures of microorganisms describes your client s products. It is clear from the language of the relevant definition of culture and the exemplars in the EN, the cultures of microorganisms referred to in the tariff are cultures that serve as starting materials for the manufacture of finished products - not as the components ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht 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. The differential duty computed in the impugned order lies entirely within normal period. Therefore, the computation thereof does not warrant to be interfered with. 19. 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. In the light of the findings supra on the complexity of the facts and circumstances leading to the invoking of section 28 of Customs Act, 1962, we are unable to hold that any material particular had been withheld in connection with clearance of the goods for ..... 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