2025 (9) TMI 1348 - AT - Customs

Imported bulk Reishi powder classed as CTH 2106 other food preparations, not CTH 3003 medicaments

CESTAT CHENNAI - AT held the imported bulk Reishi powder is classifiable under CTH 2106 (other food preparations) rather than CTH 3003 (medicaments). The ... Classification of imported Bulk Reishi Gano Powder - to be classified under Customs Tariff Heading 3003 9011 as Medicaments of Ayurvedic System or under CTH 2106 9099 as other food preparations not elsewhere specified? - Precent of an earlier judgement of the tribunal against which an appeal has been admitted by the Supreme Court - HELD THAT:- Once an appeal had been admitted by the Hon’ble Supreme Court against a judgment of the Tribunal it is in jeopardy and cannot be relied upon. Hence no further action could be taken to decide the matter in this appeal before the tribunal till the issue is decided by the Hon'ble Supreme Court Firstly as stated by the Hon’ble Supreme Court in its judgment in the case of State of Orissa & Ors. Vs Md. Illiyas [2005 (11) TMI 469 - SUPREME COURT] a decision is a precedent on its own facts. It is found that this is not a case of an appellant who is before the Hon’ble Supreme Court on an identical mater for the past/ future period, in his own case - Secondly there is no stay granted by the Hon’ble Supreme court even in the appeal filed before it by DXN Manufacturing (India) Pvt. Ltd. [2015 (8) TMI 1418 - SUPREME COURT]. In fact, in the said case the Hon’ble Court found that duty and interest had already been paid and directed the appellant to pay the penalty also. Hence the judgment continued to be effective and binding on the appellant who was before the Hon’ble Court in appeal - Thirdly the admission of an appeal filed before a superior court cannot be held to be equivalent to a stay order. The Hon’ble Supreme Court in West Coast Paper Mills Ltd. [2004 (2) TMI 344 - SUPREME COURT], thus stated that as per the doctrine of merger there cannot be more than one decree or operative orders governing the same subject-matter at a given point of time. Hence an order is in jeopardy until the matter is decided by the last court and the finality of the lis is attained. However, this does not mean that all other proceedings involving the same issue would remain stayed till a decision was rendered in the reference. In facts when the Apex Court had felt it necessary that the Court and Tribunals below stay their hands on a matter, the same has been clearly stated. The primary onus is on the importer to produce the desired details/information, necessary for the assessment of the imported goods. Once the needful is done and such information etc. is supplied, then the burden shifts on the assessing authority to controvert the assessee's stand - it is thus opined that in tune with Section 101 in the Indian Evidence Act, 1872, the onus of establishing the truth of the use of the goods declared in the Bill of Entry and self-assessed, is on the assessee-appellant. The legal principle is that he who asserts must prove. [Section 104 of the Bharatiya Sakshya Adhiniyam, 2023]. It is satisfied that such evidence has not been submitted by the appellant and hence their claim cannot be taken at face value. After a detailed discussion the Ld. Adjudicating Authority concluded that the imported goods would merits classification under Customs Tariff Heading 3003, only if the goods possess any qualities for treatment or prevention of human or animal ailments. However, since the preparations are intended for maintaining general health or wellbeing it is appropriately classifiable under chapter 2106. Considering the facts and circumstances of the case, it is found that revenue has discharged its burden in the classification of the impugned goods and the appeals merits rejection. It is hence so ordered - appeal disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether an appellate tribunal is obliged to keep an intra-tribunal or similarly decided precedent in abeyance merely because an appeal from that precedent has been admitted by a superior court. 2. Whether the imported product described as 'Bulk Reishi Gano Powder' is classifiable as a medicament under tariff provisions applicable to Ayurvedic medicaments (Chapter 30) or as a food/health supplement/other food preparations (Chapter 21 / 2106), with attendant differential customs duty treatment. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Effect of admission of a superior court appeal on the precedential value of a tribunal decision Legal framework: The principle of precedent and finality of judicial orders; doctrine of merger; distinctions between admission of an appeal and a stay; duty of inferior courts/tribunals to decide matters on the law as it stands unless specifically directed otherwise by a superior court. Precedent Treatment: The Tribunal applied and relied on multiple constitutional and apex court authorities articulating that (a) a decision is precedent on its own facts, (b) admission of an appeal does not equate to a stay, and (c) inferior fora must ordinarily decide matters on the law presently in force rather than await outcomes of appeals or references to larger benches. Interpretation and reasoning: The Tribunal reasoned that (i) admission of an appeal before a superior court does not render the earlier decision non-binding or automatically inoperative; (ii) absence of any stay order means the decision relied upon remains effective and may be followed; (iii) the doctrine of merger explains that finality is in jeopardy until the highest court disposes of the lis, but that jeopardy does not justify paralysing appellate functioning or refusing to decide appeals; and (iv) superior courts have repeatedly directed tribunals and high courts to decide matters on existing law rather than defer pending higher court proceedings. Ratio vs. Obiter: Ratio - A tribunal is not required to keep proceedings pending or to refrain from following a coordinate decision merely because that decision is the subject of an admitted appeal to a superior court, absent a stay or specific direction to await the higher court's ruling. Obiter - Illustrative references to various High Court and Supreme Court decisions emphasizing norms of judicial discipline and principles against undue delay. Conclusion: The Tribunal is entitled and obliged to decide the appeal on its merits and may follow a binding coordinate bench decision unless a stay or contrary authoritative direction has been issued by a superior court. Issue 2 - Classification of the imported 'Bulk Reishi Gano Powder' as medicament (Chapter 30) versus food/health supplement (Chapter 21 / 2106) Legal framework: Classification is governed by the tariff headings and HSN/Chapter Notes - in particular the distinction that preparations intended for prevention or treatment of diseases fall under Chapter 30 (medicaments), whereas preparations promoting general health or well-being (food supplements/other food preparations) fall under Chapter 21 (e.g., 2106 / 2108 / 2106 9099). Burden of proof principles: the importer/asserting party bears primary onus to establish the declared use/character of the goods (he who asserts must prove; reliance on evidentiary provisions and established principles shifting burden once evidence is furnished). Precedent Treatment: The Tribunal adhered to a coordinate-bench decision that classified similar Reishi/Ganoderma products as food supplements and applied HSN notes distinguishing medicaments from food supplements. The Tribunal treated the coordinate decision as binding precedent on facts of similar import and emphasized judicial discipline in following that ratio. Interpretation and reasoning: (a) Factual findings of the adjudicating authorities and Commissioner (Appeals) - manufacturer's materials and website described the product as a health/food supplement rather than a therapeutic medicament; product composition included nutrients (polysaccharides, adenosine, triterpenoids, protein, fiber) and the manufacturer represented it under health/food supplements; no credible or substantiated documentary proof was furnished by the importer that the product possessed therapeutic properties for treatment or prevention of specific diseases; (b) the importer's pleaded claims of therapeutic use were unsupported by documentary evidence in the appeal papers or by production at personal hearings; (c) classification as medicament requires proof that the preparation possesses qualities for treatment or prevention of human ailments - the goods here were promoted and presented for general health/well-being and therefore meet the description of 'food preparations not elsewhere specified' under Chapter 21/2106 (and related sub-headings), not Chapter 30; (d) distinctions relied upon by the importer (e.g., Chapter 7/20 for unprepared/prepared mushrooms or a larger bench decision on white button mushrooms) were factually inapposite and do not assist classification of the subject mushroom extract/powder. Ratio vs. Obiter: Ratio - On the available evidence and in absence of substantiating proof that the product is intended for prevention or treatment of disease, the product is properly classifiable as a food/health supplement under Chapter 21 (other food preparations) rather than as a medicament under Chapter 30; that the onus lies on the importer to prove medicament character. Obiter - Observations on manufacturer's website content and broader policy implications of deferring to superior-court appeals when no stay exists. Conclusion: The Tribunal concluded that revenue discharged the burden to demonstrate correct classification as food/health supplement; the appellant failed to substantiate claims of therapeutic/medicinal use; the correct classification is under the food preparations heading (Chapter 21 / 2106/9099 as applicable), and the appeal challenging reclassification and reassessment is rejected. The appellant remains eligible for any consequential relief as per law.