TaxTMI 
TaxTMI 
2023 (6) TMI 74
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....rmaceutical 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 in patients suffering from chronic kidney disease. 2. The dispute is about import of 'Renadyl bulk probiotic dietary supplement capsules', valued at Rs. 2,39,99,912, between 22nd June 2018 and 28th November 2019 against 7 nos. bills of entry claiming conformity with description corresponding to tariff item 3002 9030 of the First Schedule to Customs Tariff Act, 1975 and consequent eligibility for rate of 'basic customs duty (BCD)' in notification no. 50/2017-Cus dated 30th June 2017 (at serial no. 218) and for 'integrated goods and services tax (IGST)' in notification no. 01/2017 dated 28th June 2017 (at serial no. 61) respectively. Customs authorities, being of the opinion that the impugned goods were, owing to specified exclusions in notes to chapter 30 of the First Schedule to Customs Tariff Act, 1975, more appropriately akin to....
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....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, nonetheless, is also specified in the heading among other pharmaceutical products. 4. This elaborate layout is intended to afford a perspective of the architecture of the tariff that should not have been susceptible to such dispute and, therefore, appears to have been actuated by the allure of effective rate of 'basic customs duty (BCD)' at 5% intended, at serial no 218 in notification no. 50/2017-Cus dated 30th June 2017, for 'probiotics' corresponding to tariff item 3002 90 30 attended upon by 'integrated goods and service tax (IGST)' at 12% extended, inter alia, to goods conforming to the description corresponding to heading 3002, replicating the heading in First Schedule to Customs Tariff Act, 1975, at serial no 61 of Schedule II of the IGST Rates in notification no. 01/2017 (IT-R) dated 28th June 2017. The classification adopted in the order impos....
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....ical 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 also filled with prebiotic viz., inulin and xylo-oligosaccharides with magnesium stearate as emulsifier rendering it to be, essentially, a mixture of probiotics. He contended that the evidence offered by them, in the form of certification by nephrologists, of clinical studies and of test reports from patients using the product, make it abundantly clear that these are not food supplements. 7. He emphasized further that the overwhelming presence of probiotics indicates conformity with the description corresponding to the tariff item sought by them and objected to the finding in the impugned order on the ground that a residual heading of broad description would not meet the test entailed by the decision of the Hon'ble Supreme Court in HPL Chemicals Ltd v. Commissioner of Central Excise, Chandigarh [2006 (197) ELT 324 (SC)] and in Hindustan Fero....
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....nus 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', are resorted to. 9. Likewise, the reiteration of the adjunct evidence, relied upon in the impugned order, by Learned Authorized Representative serve only to divert attention from the essence of classification laid out in, and universally accepted as, the General Rules for the Interpretation of the Schedule in Customs Tariff Act, 1975. Nor are we concerned with the use to which the product is put, or intended by, its consumers. It is contended by him that from 'probiotics' as well as tariff item 3002 90 30 of First Schedule to Customs Tariff Act, 1975 in the notification, there can be no doubt that 'probiotics' would not be classifiable as 'other edible food preparations' but the claim of appellant would have some traction if that was the description in the impugned bills of entry; he postulated that, in the event of resort to rule 3 of General ....
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....re 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 find that the task before us is straightforward. 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 and in re HPL Chemicals Limited, 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 'probioti....
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.... 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 comparison; we do not find any other heading in the First Schedule to Customs Tariff Act, 1975 that is specifically intended for 'probiotics' which the appellant claims the impugned goods to be. We are also constrained from depending upon entry in an exemption notification, such as notification no. 50/2017-Cus dated 30th June 2017, to decide upon acceptability of any tariff item in First Schedule to Customs Tariff Act, 1975 as a specific enumeration; in fact, having to resort to such premise manifests absence of specific description elsewhere affording primacy, thereby, to the proposed classification owing to the Explanatory Notes supra. In the circumstances, classification of the impugned goods within heading 2106 of First Schedule to Customs Tariff Act, 1975 would not be in breach of rule 1 of General Rules for the In....
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....guments, 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 of an already finished product. The products classified in the two New York rulings cited in support of your desired classification are distinguishable from your client's product. The products classified in NY L86890 and NY D80280, in their condition as imported, consisted simply of pure, freeze-dried cultures of microorganisms diluted with cornstarch. The imported products were to undergo further processing (with the addition of inactive ingredients) before undergoing encapsulation as finished products to be marketed as dietary supplements. Your client's products have already undergone that processing and are that final product....' 17. It is apparent that 'probiotics' may have been, as seen from the referred notification, legislatively intended to be counted as pharmaceutical pro....