AI OCR 
TaxTMI 
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2017 (12) TMI 105
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....ed order dated 30/11/201516.12.2015, the lower authority inter alia held that CMD, Elete Electrolyte and NanoSil were required to be classified under CTH 2106 9099 and declared value of CMD was enhanced to USD 1.21 for 1OZ bottle and USD 2.08 for 2 OZ bottle. So also, declared value of NanoSil was enhanced to 15.0 USD per bottle (8 OZ). Certain amount of freight was ordered to be added to the assessable value. The differential duty proposed in the SCN was confirmed by the lower authority. Entire quantity of the imported goods were confiscated and option given by the adjudicating authority for their redemption on payment of fines under Section 125 (1) of the Customs Act, 1962. Penalties were imposed under Section 114A and Section 114AA ibid on the importer appellant. Penalty under Section 112 (a) and 114 AA ibid were also imposed on the Director of the appellant Company and other persons who were noticees in the proceedings. 1.1 Appellants filed a writ petition W.P(C) 6660/2012 before the Hon'ble High Court of Delhi for issue of direction to Customs authorities to permit provisional release of goods. The Hon'ble High Court of Delhi directed the Commissioner of Customs to deliberate....
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....cipal Bench, New Delhi in the matter of CC, New Delhi Vs. Keva Industries - 2013 (292) ELT 90 (Tri.-Delhi). Para 4 of the said order dated 10.02.2012 is reproduced as under:- "......... We are satisfied that the goods being natural sea water have not gone any preparation to be called as food preparation or any other preparation. There is no test report brought out by the Revenue to discharge the burden of proof to claim that the goods in questions submit to tariff entry 2106 and also to satisfy that it is a preparation with or without certain composition and has undergone the process. In such circumstances, a stand of the respondent does not appear to be devoid of merit. The goods were classified under 2501 having heading as Salt (including Table Salt and Denatured Salt) and Pure Sodium Chloride, whether or not is Aqueous Solutions or Containing Added Anti-Cacking or Free Flowiong Agents; Sea Water. The imported goods of the appellant are exactly similar to the goods imported by Keva Industries. The goods imported by Keva Industries were classified as sea waterunder CTH 2501 by the Order dated 18.07.2010 passed by the Ld. Commissioner and further affirmed by the Order dated 10.0....
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.... Emphasis is laid on Note 6 of Supplementary Notes of Chapter 2106 "Tariff item 21069099 includes sweet meats commonly known as "Mithans' or Mithai or called by any other name. They also include products commonly known as "Namkeens", "Mixtures", "Bhujia", "Chabena" or called by any other name. Such products remain classified in these sub-heading irrespective of the nature of their ingredients." The said note 6 clearly states Tariff item 21069099 includes sweet meats (Mithans or Mithai) and also includes namkeens, mixures, bhujia, chabena etc. It is submitted that the imported goods are nowhere close to these products referred to in the said Note 6. It is submitted that the Supplementary Note 6 on Tariff Item 21069099 ie. "other" in which the Ld. Commissioner has classified imported goods makes reference to goods such as Mithans, Mithai, Namkeens, Mixtures, Bhujia, Chabena, which are produced by mixing their ingredient and then frying or roasting them in hot oil. These goods mentioned in the item are eatables and does not have mineral salt/sea water as their main constituents. It is submitted that imported goods in question had not gone through frying or roasting but a simple....
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....e passing the impugned order. (vi) In absence of definition of the term food preparation or food supplement under the Customs Tariff Act of 1975, the Ld. Commissioner ought to have interpreted the same according to common parlance or phrases prevalent in Indian Common masses. It is a settled principle of law through various judicial precedents that while interpreting Tax Statutes great emphasis should be on the knowledge and awareness available in common parlance. Reliance is place on Ramavatar Budkaiprasad Vs. Assistant Sales Tax Officer, Akola - AIR 1961 SC 1325 (Para 6). Therefore, the classification of duty on imported goods ought to have been according to the common understanding of the goods in the mind of consumers. It is submitted that consumer do not consider imported goods in the category of food supplement or food preparation but as sea water/mineral drops which are used to treat the deficiency of minerals and salts in the body. The imported goods are leftover of natural evaporation and have not gone through any process or preparation and none of its constituents are added to them. The imported goods are not even considered as food or food preparation by the consumers ....
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....mitted that the department had failed to produce any evidence regarding the use of the imported goods in common parlance or substantial report which states that the imported goods are food preparations. The appellant has also placed on record the letters of the consumers and certificate from the doctors which provides that the imported goods (CMD) are mineral salt drop and have some medicated qualities. The imported goods (CMD) are consumed for treating the digestive infections and many times detoxifying the kidney. Other medicated qualities of the imported goods included relief from the joint and bone pain of body. (ix) The Ld. Commissioner has without applying any judicial mind has confirmed the contentions of the Department as stated in the SCN more specifically in paras 51 to 55 of the said SCN. The Departments stand merely relies upon the agreement between the appellant and the Mineral Resources Intl. Inc., whereby the appellant was entitled to a discount of 2.5 to 3% on account of advance payment, a discount of 5% on account of order of full container load, 10% discount for full pallet load and a further discount of 5% for adhering to the schedule. The Department in its SCN....
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....ms as indicated on the bottles themselves. The Ld. AR reiterated the findings in the impugned order. On receiving specific intelligence that appellants have been importing dietary supplements but clearing them on the guise of medicaments, by classifying them under CTH 30045020 instead of under CTH 2106 9099, and thus evading payment of CVD on Retail sale price, investigations were conducted by DRI. According to appellants, CMD is natural, sea supplement from Utah Great Salt Lake manufactured by solar evaporation process. On the label of the product it is indicated that a dosage of 2 ml of CMD contains 220 mg of Magnesium, 600 mg of Chloride and 3 mg of Sodium apart from 45 mg of sulphur. The method to consume is also indicated in the label. 1/4 to 2 ml of CMD has to be taken mixed with food or beverages so that daily consumption will become 2 ml. It is stated that it is not a drug and not for medicinal use. All those would show that CMD is a dietary supplement to supplement the mineral deficiencies in the human body especially magnesium and trace elements. Elete also is from the same source, but with lesser concentration. These products are rich source of magnesium apart from other....
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....tment is in order ? 6. The appellants have argued that CMD is an 100% natural mineral concentrate sourced from Great Salt Lake in Utah, USA; that CMD is harvested by using natural evaporation process which takes place over a two year period; that during the course of evaporation, the Sodium content is removed to a large extent and the other minerals are left in micro/traces quantity; that it is used as supplement to reduce the mineral deficiencies in the body, which, in turn, prevents various diseases and is for general health and well being. In respect of the product, Elete, the appellants have similarly averred that it comes from the same source as CMD but with lesser concentration and contains more sodium than CMD and is good for athletes and for people who lose lot of salts through sweat; that it is also a supplement which is used for reducing mineral deficiencies in the body. Appellant has also represented that both CMD and Elete are pure, all-natural, low sodium mineral concentrates, with a healthy pH balance. Hence these are 100% natural products and cannot in any manner be classified under Heading 21069099 which covers "food preparations". 7. The Appellants had classified....
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....s not sea or salt water but a dietary supplement rich in minerals; therefore CMD or Elete cannot be classified under Heading 2501. 10. From a perusal of the impugned order, it emerges that controversy to be adjudicated relates to (1) Concentrate Mineral Drops (CMD), 1 oz (30 ml) and 2 oz (60 ml) packings(2) CMD imported through Chennai (Seaport-Export) (3) CMD and Nanosil imported through Chennai (Airport & Aircargo) (4) CMD imported through Bangalore Customs and (5) CMD imported through IGCAR New Delhi. 11. During the hearing, appellants have furnished that a sample bottle of the Andersons Concentrated Mineral Drops 1 oz (30 ml) bottle imported by them. The label of that bottle has been scanned and reproduced below for ready reference : This space is purposely left blank 12. From the above label, what is seen claimed is that CMD is "originally, all natural, sea mineral supplements from UTAHs Great Lake made through solar evaporation". The ingredients of the bottle have been declared as pure Salt lake concentrate containing magnesium, chloride, sodium and sulphate, lithium and boron. It is also indicated that CMD is not drug. Not for any medicinal use. No approved therapeutic c....
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....said chapter notes 5 & 6. In fact, in the three dash heading (---) "Other", the following four dash (----) sub headings are found as under : 2106 90 91 ---- Diabetic foods 2106 9092 ---- Sterilized or pasteurized millstone 2106 9099 ---- Other 15. Another question that pops up is whether CMD drops can be brought into the umbrella of the "residual" heading 21069099, when all the other prior sub headings are evidently relating to specific preparations made out of food, like sterilized or pasteurized millstone, and the like. In our opinion, the answer to this query would be resoundingly in the 'negative'. We are therefore unable to appreciate the conclusion arrived at in the impugned order that CMD drops would fall under 21069099. 16. Appellants have also brought to our attention the decision rendered by Tribunal in respect of identical item imported by their competitors namely KEVA's CONCENTRANCE MINERAL DROPS which, according to them, were held not to be classified under 2106 as alleged by department. Appellant had also submitted sample bottle of (30 ml) of the said product imported by Keva Industries. The label of which is scanned and reproduced below :- This s....
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....on the body. The goods in question is the natures gift and reduces deficiency of certain mineral in the body. Therefore, his prayer is that ld. Commissioner (Appeals) having examined the goods in terms of the nature thereof has come to appropriate conclusion for classification and that need not be disturbed. 3. Heard both sides and perused the record. 4. Learned DR for the Revenue reading para 3 of the grounds of appeal, brings out that in the website of the manufacturer the goods has been described as food supplement. Such ground clearly support the case of the respondent. Since the respondent has made an averment that the goods are fit for human consumption to remove certain deficiency. Now the question to be decided is under which tariff entry the goods fall. We are satisfied that the goods being natural sea water has not gone any preparation to be called as food preparation or any other preparation. There is no test report brought out by Revenue to discharge burden of proof to claim that the goods in question submit to tariff entry 2106 and also to satisfy that it is a preparation with or without certain composition and has undergone process. In such circumstances, stand of....
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....tion in the SCN it is found that certain details had been retrieved from the hard disc and other documents recovered from the premises of the appellant. From these documents, it emerged that commercial invoices submitted by the appellant at the time of import indicated lower values per bottle against actual values. For example, rate was indicated as USD 12.60 per bottle of Nanosil of 8 ounce where as the rate as found from the documents recovered was USD 15.00 per bottle. The attachment to mail from [email protected] to [email protected] contains attachment titled PRICE LIST.xlsx. The pricelist mentions the MRP of 30 Ml CMD bottle as Rs. 710/- and 60 Ml CMD bottle as Rs. 1300/.- 15. Recovery of these documents or their authenticity has not been disputed by appellant. The invoice documents of appellants have been analysed in detail by the adjudicating and the conclusions arrived are re-produced for ready reference :- "27. The Show Cause Notice also brought out in detail in paras 51,52, 53 & 55 with regard to the mis-declaration of the value and mis-declaration of terms of invoice. M/s.Itspossible had entered into a contract with their supplier i.e., MRI for the exclusi....
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.... It is also pertinent to mention that when the value of CMD 30 ML was enhanced to $ 1.21 per bottle based on the broker agreement, by the assessing group at ACC, Bangalore in respect of the second bill of entry, the enhancement was accepted by Itspossible without any protest / dispute. i. Investigation also revealed that Itspossible had resorted to mis-declaration of the terms of invoice as CIF / CF in some of their bills of entry viz., 3004134 dated 19/03/2011, 2981918 dated 16/03/2011 and 3030554 dated 24/03/2011, when it is evident from the broker agreement that the consignments would be shipped on FCA MRIs factory. It was also revealed that they had resorted to mis-declaration of the actual freight paid and also non-declaration of pre-importation charges such as Ex-Works, CC charges etc., incurred in respect of some of the consignments a discussed in para 53 of the Show Cause Notice. ii. When Shri Vipin Kumar was questioned about the above discrepancies, he admitted that freight charges were not properly declared to the Customs and the values mentioned at para 55 of the Show Cause Notice are correct as they reflect the actual freight and other charges paid by them for the....