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2024 (7) TMI 1530
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....30219 and consequent to a legal opinion they felt that the product was more appropriately classifiable under CTH 29161590 as the Chapter covers linolenic acids. The original authority vide Order in Original dated 24.2.2009 reclassified the goods under CTH 13021990 based on the Chapter notes on the reasoning that it is an extract from marine algae, that CTH 13091990 specifically classifies vegetables saps and extract and there is no exclusion found for item in the Chapter notes. Aggrieved by the Order in Original dated 24.2.2009, the importer filed an appeal before Commissioner of Customs (Appeals) who vide Order in Appeal dated 16.6.2011 remanded the issue back to the original authority for fresh consideration and mentioned that the product was obtained from algae and CTH 2106 appeared to be the appropriate classification. The department filed an appeal before CESTAT against the said order of Commissioner (Appeals). The Tribunal vide Final Order dated 27.8.2013 remanded the matter back to the original authority. Vide Order in Original dated 5.5.2017, the lower authority classified the goods under CTH 29161590 as claimed by the respondent. Hence department filed an appeal before Com....
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.... the classification of camphor a chemically defined organic compound under CTH 2914 2110 and 2914 2120, whereas camphor oil is classified under CTH 3301 2941 as discussed at para 22.14 of the OIO. The Ld. AR referred to the definition of 'food' as per section 3(j) of FSAS Act, 2006 and Regulation 6 of FSSAI wherein health supplements are stated to contain concentrated source of plants or botanicals nutrients among others. He referred to the impugned goods as per the product literature of the suppliers, M/s Martek Biosciences, USA to state that DHA Algal oil is used as a novel food ingredient/food supplement in various food and milk items. He drew attention to the Technical Evaluation Report compiled by ICF international for USDA National Organic Program, wherein it is further mentioned that DHA Algal oil is used as an ingredient, as a source of DHA in foods, beverages, etc. That, the Food, Safety and Standards (Food Products Standards and Food Additives) Regulations 2011, mentions Algal and fungal oil as source of DHA and ARA at the level of maximum 0.5% DHA of total fatty acids and ratio of ARA: DHA as 1:1 minimum. Reliance was also placed on Cross Ruling N293133 dated 19/01/2018 ....
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....adings of the said chapter apply to separate chemically defined organic compounds, whether or not containing impurities. In addition, as per the HSN Explanatory Notes for chapter 29 and chapter 28, a product falling under one of these chapters may contain impurities, i.e. substances whose presence in the product results solely and directly from the production process and which may be unconverted starting materials or impurities present in the starting materials. Further, as per note 1(f) of Chapter 29, the products mentioned in note 1(a) may contain added stabilizers (including anticaking agent) for their preservation or transport. In view of the above, the respondent sought classification of the DHA imported by it under CTH 2916 1590 which was accepted both by the Original Authority and by the Commissioner (Appeals) in the impugned order. He hence prayed that the appeal may be rejected. 4. We have carefully gone through the appeal and have heard the rival parties. We find that the following issues arise for consideration; (A) Whether the appeal before the Commissioner (Appeals) is time barred. (B) Whether the goods as imported under the brand name "Martech DHA....
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....ttee to decide about filing of the appeal." 28. In our considered opinion, the analysis made by the Full Bench is correct in view of the opinion expressed by us in the preceding paragraph and accordingly we hold the said view to the correct." (emphasis added) In the light of the said judgement, we find that the appeal filed by revenue before the Commissioner (Appeals) was not time barred and that the matter related to classification needs to be examined and disposed of on merits. 6. Before taking up the second issue, we find that the appellant-department have, in their oral and written submissions before us, made reference to certain 'evidence' downloaded from the internet site amazon.com. We had during the hearing stated that the said evidence could not be admitted. Rule 23 of the Customs Excise Service Tax Appellate Tribunal (Procedure) Rules, 1982 states that the parties to the appeal shall not be entitled to produce any additional evidence, either oral or documentary, before the Tribunal. Thus, the general principle is that the appellate court should not travel outside the record of the Original Authority, unless the Tribunal itself feels the need to do so. No....
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....o for the reason that these sources, despite being a treasure trove of knowledge, are based on a crowdsourced and user generated editing model that is not completely dependable in terms of academic veracity and can promote misleading information as has been noted by this court on previous occasions also. The courts and adjudicating authorities should rather make an endeavor to persuade the counsels to place reliance on more reliable and authentic sources. (emphasis added) We hence disregard the internet-based print-outs of advertisement sought to be used by the appellant. 7. The classification of goods is a matter relating to chargeability and the burden of proof is squarely upon the Revenue. If the Department intends to classify the imported goods under a particular category different from that claimed by the assessee, the Department has to adduce proper evidence and discharge the burden of proof. The judgments of the Hon'ble Supreme Court in Union of India v. Garware Nylons Ltd. [1996 10 SCC 413]; H.P.L Chemicals vs. Commissioner of Central Excise, [2006 (197) E.L.T. 324 (S.C.)]; Puma Ayruvedic Herbal (P) Ltd. v. Commissioner of C. Ex., Nagpur [2006 (196) E.L.T. 3 (S.C.)....
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.... supplements, based on extracts from plants, fruit concentrates, honey, fructose, etc and containing added vitamins and sometimes minute quantities of iron compounds. These preparations are often put up in packing with indications that they maintain general health or well-being." They are of the opinion that the note clearly clarifies that the impugned goods which are manufactured from the extract of algae, which is undoubtedly a plant source are specifically covered under the CTH 2106. The respondent has stated that there is a fundamental difference between a "food preparation" which is marketed and consumed as such, and a product which is used in microscopic quantities in the manufacture of a "food preparation", as in their case. The HSN Explanatory Notes cited by revenue has failed to note that the goods do not contain "added vitamins" and have not been "put up in packaging with indications that they maintain general health or wellbeing", as required for the goods to be classified under CTH 2106. 10. The respondents have submitted that if the goods are rightly classifiable under Chapter 29, then they cannot go out of Chapter 29 merely based on the end use of the goods. The....
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....n attention to various legal provisions / Acts / Reports and also to foreign sources to arrive at the nature of the impugned goods. It is to be stated that the primary method for the classification of imported goods under the Customs Tariff is by referring to the General Rules of Interpretation of the Tariff and in case of doubt to take assistance from the HSN. In case the matter is not resolved by this process, aid can be taken from external judgments, references etc. Even so the in Hari Khemu Gawali Vs Deputy Commissioner of Police, Bombay and another [AIR 1956 SC 559], a Constitution Bench of the Apex Court has cautioned as under: "It has been repeatedly said by this Court that it is not safe to pronounce on the provisions of one Act with reference to decisions dealing with other Acts which may not be in pari materia." 14. In its judgment in Commissioner of Customs and Central Excise, Amritsar (Punjab) Vs. D.L. Steels etc. [2022 SCC OnLine SC 863], the Apex Court discussed the issue of classification and the assistance that can be taken from the HSN, as extracted below. 9. The Harmonised System of Nomenclature, developed by the World Customs Organisation, ha....
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....Acid, as imported is manufactured from Oil extract of Marine Algae which is a plant source and is micro encapsulated in powder form. It is not a defined chemical to be classified under CTH 2916 as % of DHA is in the range of 10-17 only as per the web site of the supplier and are used in infant food preparations. As per trade parlance, explanatory notes to HSN for 2106 and TRU's clarification letter dated 27/07/2017, the goods are rightly classifiable under 2106 as food supplement/ ingredients. Para 2.15 of the Grounds of Appeal which reproduces Board's letter dated 04/09/2017 and encapsulates the views of Revenue is reproduced below. 2.15 Further, the Tariff Unit, CBEC, New Delhi vide letter in file F. No. 521/07/2017-STO (TU) dated 27.7.2017 has clarified about the classification issue of the subject goods "Market DHA" in powder form on the basis of its composition and form is appropriately classifiable under CTH 2106 90 99. The relevant parts are reproduced below:- Para 2 - (i) "The issue has been examined on the basis of the product composition as mentioned in the OIO dated 5.5.2017. On that basis it is clear that the product is in two forms: i) Oil form ii) Po....
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.... structural diagram. They rely upon the Technical Opinion dated 3-10-2016 given by the Department of Biotechnology, IIT Madras. They also rely upon the decision of this Tribunal in Vipor Chemicals Pvt. Ltd. v. CC [2003 (156) ELT 420] which holds that a technical opinion stating that a product is a separate chemically defined organic compound is conclusive for classification under Chapter 29. Further Unsaturated Acyclic Monocarboxylic Acids are specified in CTH 2916 and Linolenic Acid and its Derivatives are specified in CTSH 291615. Revenue's argument that the goods cannot be classified under CTH 291615 since there is no mention of linolenic acid in the Bill of Entry is totally misconceived since what is required to be stated in a Bill of Entry is the description of the goods and not what the goods are a derivative of. Once the goods are described as DHA, and DHA is shown by technical material to be an Unsaturated Acyclic Monocarboxylic Acid falling under CTH 2916 and a derivative of Linolenic Acid falling under CTH 29161590, the same would be classifiable there under. 18. We find that the case of the department is that the impugned goods which are a product containing only 10-1....
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....order at para 5.5 has stated that the goods are "highly unstable, subject to rapid oxidation and carry a typical algal odour, making it totally inappropriate to call them food or food preparation or food supplement" and the goods are "not understood in common parlance as food or food preparation." has not been directly disputed. 22. As discussed above, revenue itself has alleged that the impugned goods are used in a host of industries like food, beverage, dietary supplement, pharmaceutical and allied industries. However, it has not been shown as to why "Martech DHA" has acquired the characteristics of food preparation alone and is not for example an ingredient of the pharma or allied industry when the goods are supplied to the said industries. The problem of trying to classify goods as per their perceived end use without first examining that the other ingredients present are permissible or not as per the chapter notes and whether they alter the nature of the product, is a fatal flaw in the arguments set out by Revenue. Further the Assistant Commissioner and the Commissioner (Appeals) have held, based on customer declarations produced before them, that DHA, which contains impurit....
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....ed at para 22.5 of the OIO, the impugned goods, in oil and powder form, is a separate chemically defined organic compound (DHA) that is an unsaturated acyclic monocarboxylic omega-3 fatty acid and a derivative of linolenic/ alpha linolenic acid, present with impurities and additives that are intended solely for stabilization and transport. (iv) the impugned goods are used in a host of industries like food, beverage, dietary supplement, pharmaceutical and allied industries. (v) as per Note 1(a) of Chapter 29 of the Customs Tariff, the headings of the said Chapter apply to separate chemically defined organic compounds, 'whether or not containing impurities'. (vi) as per Note 1(f) of Chapter 29, the products mentioned in Note 1(a) may contain added stabilizers (including anti-caking agent) for their preservation or transport. (vii) it has not been shown by revenue as to why "Martech DHA" has acquired the characteristics of food preparation alone and is not for example an ingredient of the pharma or allied industry and takes the characteristics thereof. (viii) the Original Authority, Appellate Authority and Commissioner of Customs Mumbai hav....