1999(04)LCX0097
IN THE CEGAT, COURT NO. III, NEW DELHI
Ms. Jyoti Balasundaram, Member (J) and Shri G.R. Sharma, Member (T)
GERMAN HOMOEOPATHIC DISTRIBUTORS (P) LTD.
Versus
COMMR. OF C. EX., BOMBAY
Final Order No. 954/99-C and Misc. Order No. 89/99-C, dated 2-4-1999 in Appeal No. C/36/96-C with C/Misc/561/99-C.
CASE QUOTED
German Homoeopathic Distributors (P) Ltd. v. Collector — 1995(12)LCX0075 Eq 1996 (085) ELT 0329 (Tribunal)
— Followed [Para 6]
Advocated By : Shri L.P. Asthana, Advocate, for the Appellant.
Shri H.K. Jain, SDR, for the Respondents.
[Order per : G.R.Sharma, Member (T)]. - In the impugned order, the Commissioner (A) observed that “The main point for consideration in this case is whether the benefit of Notification No . 58/85 can be extended to subject import. Sugar of milk, according to the appellant is a homoeopathic medicine. The department’s stand is that sugar of milk is nothing but lactose HPL, which is only a medium for dispensing homoeopathic medicine, rather than a medicine available for ready sale. I find that the department has correctly classified the goods under Chapter Heading 17.02, since that heading provides more specific description of the goods as per Interpretive Rule 3(a). He also held that the earlier appellants had declared the goods as ”Homoeopathic Medicine" for basic form sugar of milk HPL. They claimed classification under Heading No. 30.04. He, therefore held that the appellants have suppressed these facts on the bill of entry. Being aggrieved by this order, the appellants have filed this appeal.
2. The facts of the case in brief are that the appellants imported a consignment of Homoeopathic Medicine “sugar of milk” from Holland and filed bill of entry for its clearance. The appellants also claimed the benefit of Notification No. 58/85-Cus., 17-3-1985 which provides concessional rate of duty on Homoeopathic Medicines under Chapter 30.03 or 30.04. The goods were assesseed under Heading 30.04 as Homoeopathic Medicine and the benefit of Notification No. 58/85 was extended. However, on examination of the goods, it was found that marking description containing the said goods were as ‘ Lactose‘. Samples were drawn and sent to the Laboratory. Test report confirmed that “The goods are as per Homoeopathic Pharmacopia of India (HPI). The goods conform to Homoeopathic Pharmacopia Specifications. The goods are a Homoeopathic Medicine. The goods have to be classified as drug. The drug cannot be generalised as an equivalent or same as ordinary lactose since these lactoses are of different grades and specification.” The department alleged that the imported goods are Lactose which conform to HPI specification; that though they will be used as Homoeopathic Medicine as it basically was Lactose of HPI grade; that the Lactose is classifiable under Heading 17.02; that this heading provides the most specific description of the imported goods and, therefore, should be preferred to other heading providing more general heading in terms of Interpretative Rule 3(a). It was alleged that as per Notification No. 50/91 Lactose conforming to HPI specification fell under sub-heading 1702.10; that HSN Explanatory Note to Heading 30.04 provides that the goods intended for sale directly to users without repacking are regarded as in the packing for retail sale for therapeutic or prophylactic uses; that the imported goods were in the packing of 25 kg. bag are sold to Government or private hospitals, etc. and not to the general public. Thus it was alleged that the packing of 25 kg. of imported goods cannot be considered to be packing for retail sale. It was therefore alleged that the lactose of 25 kg. bags cannot be classified under Heading 30.04. It was also alleged that the sugar of milk does not consist of two or more constituents, it cannot be classified under Heading 30.03 either and thus the benefit of Notification No. 58/85 is not available in this case, since the notification was applicable to the goods which fall under Chapter Heading 30.02 or 30.04. The authorities below, therefore rejected the claim of the importer for classification of the imported goods under Heading 30.04. They also denied the benefit of Notification No. 58/85, and Notification No. 50/91. The appellants filed an appeal before the Delhi High Court. Delhi High Court directed the appellant to file an appeal before the Commissioner of Customs (A). Commissioner (A) was also directed to decide the question of jurisdiction of assessing authority once the goods having been assessed as sugar of milk. Commissioner (A) decided the issue as indicated above.
3. Arguing the case Shri L.P. Asthana, ld. Advocate submits that he has filed application for producing additional evidence; that he may be permitted to produce additional evidence in terms of Rule 23 of CEGAT (Procedure) Rules; that he wants to produce a copy of the Notification No. 50/91, certificates from the users of sugar of milk, a chart invoice-wise purchase by the various users and an affidavit. After hearing both sides and taking into consideration that the evidence produced was to be part of the proceedings, therefore, permission was accordingly accorded for additional evidence.
4. Arguing the appeal, ld. Advocate submits that the basic issue for decision in this case is two-fold i.e. whether the goods are classifiable under Chapter 17 or Chapter 30 and whether they are entitled to the benefit of Notf. No. 58/85. He submits that the reassessment of the goods was not covered by Section 17(4) because it did not fall in any of the situation envisaged in that sub-section; that the assessment in the instant case was the first part of sub-section (4) of Section 17; that this assessment is final was not covered by the second part of sub-section (4) which applies only to those cases or situations where subsequently on examination or testing of the goods, the statement in the bill of entry or documents or any other information furnished, is not found to be true. Ld. Counsel submits that sub-heading 1702.10 is controlled under by Note 1(c) to Chapter 17; that according to Note (c), Medicaments of Chapter 30 are excluded from Chapter 17; that considerable evidence has been produced that sugar of milk has therapeutic and prophylactic medicine value : that it can be considered as Homoeopathic medicine and, therefore it is excluded from Chapter 17 under Note 1(c) and will have to be classified under Heading 30.04. Ld. Counsel submits that the Commissioner (A) has not rejected the appellants’ contention that the goods are homoeopathic medicines and they are in retail packing; that Rule 3(a) has wrongly been applied to hold that the goods are classifiable under sub-heading 1702.10.
5. Ld. Counsel submits that the authorities below had ignored the opinion of the Drug Controller and HPL’s test report; that the opinion of Drug Controller was relevant for the purpose of classification; that HPL’s report clearly states that the goods are different from lactose and that they are classified as a drug; that in view of this test report, the product should have been classified under heading 30.04. He submits that the lower authorities held that the goods basically remain lactose classifiable under sub-heading 1702.10. He submits that the goods imported were of HPI grade and have different application and uses as compared to lactose of edible grade. He submits that Notification No. 58/85 exempted additional duty; that additional duty was exempted by Notification No. 32/89; that in any event, the goods are eligible for the benefit of Notification No. 32/89; that the findings of the Asstt. Collector that the lactose conforming to Homoeopathic Pharmacopia of India specification falls under sub-heading 1702.10 cannot be used for classifying the goods. He submits that even if the goods are classified under Chapter 17 the benefit of exemption under Notification No. 50/91 cannot be denied. He, therefore, prays that the product may be classified under Chapter 30.04 and the benefit of Notification Nos. 58/85 and 32/89 be extended to the appellants. He, therefore, prays that the benefit of Notification No. 50/91 may be applicable to the appellants and the appeal may be allowed.
6. Shri H.K. Jain, ld. SDR submits that insofar as classification of the product is concerned, the case was fully covered by the decision of this Tribunal in the case of the appellants themselves reported in 1996 (089) ELT 329 wherein the Tribunal held that the lactose is classifiable under sub-heading 1702.10 and that the benefit of Notification No. 58/85 is not available to the goods in question. He submits that insofar as reassessment of the goods in terms of Section 17(4) is concerned, the case of the appellants is covered not by part one of sub-section (4) but by part two of sub-section (4) wherein it has been laid down that “But if it is found subsequently on examination or testing of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act, be reassessed to duty.” He submits that in exercise of this power, the goods have been rightly reassessed. Counsel’s assertion that the demand should be raised under Section 28, ld. SDR submits that the issues before the Tribunal are classification of the product and availability of the notification and thus the question of raising demand under one section or the other is not the issue before the Tribunal. He submits that Notification No. 58/85 exempted homoeopathic medicines under Heading 30.03 or 30.04. He submits that the Tribunal has come to the conclusion that the product Lactose imported by the importer does not fall under Heading 30.03 or 30.04 and, therefore has rightly denied the benefit of this notification. He submits that the benefit of Notification No. 50/91 has rightly been denied to the appellants as they did not satisfy the various conditions under which the benefit of notification was available. He, therefore, prays that the appeal may be allowed.
7. Heard the rival submissions. Perused the case law and the Notification Nos. 58/85 and 50/91. We find that insofar as reassessment of the goods under Section 17(4) is concerned, the authorities below has rightly exercised the power under sub-section 4 of Section 17. In the present case on examination of the goods, they were found to be Lactose and not the goods as declared in the bill of entry and, therefore, for reassessment Section 17(4) has rightly been invoked. In the bill of entry, the goods were declared to be homoeopathic medicines in basic form of sugar of milk. The examination report of the goods clearly brings that the goods are lactose and thus it was clearly established that the examination of the goods did not conform to the description given in the bill of entry. We note that the Tribunal in the case of appellants themselves had held that the Lactoses imported by the appellants was classifiable under chapter sub-heading 1702.10. We do not have reason to disagree with this decision of the Tribunal.
8. Insofar as invocation of Section 17(4) and the jurisdiction to reassessment is concerned, we note that in this case the description given in the bill of entry was different from what was found on examination of the goods. On examination, the goods were found to be Lactose whereas in the bill of entry, they were described sugar of milk. Thus, reassessment has rightly been done following the provisions of sub-section (4) of Section 17. We have perused the Note 1(c) of Chapter 17. Note 1(c) provides that Chapter 17 does not cover Medicaments or other products. Since we have already held that the product imported by the appellants was classifiable under Chapter 17, therefore we hold that the product was not classifiable under Chapter 30. Insofar as classification of the product is concerned, we have followed the Tribunal decision in their own case cited by the appellants.
9. Insofar as applicability of Notification No. 58/85 is concerned, we note that this notification is applicable only if the goods are classifiable under Chapter 30. In this case we have already held that the imported goods are classifiable under Chapter 17 and hence this notification will not be applicable to the imported goods.
10. We have also examined the provision of Notification No. 50/91. We note that this notification was applicable only if the certain conditions were fully complied with. There was no evidence placed on records before the authorities below to show that those conditions were complied with. We note that the appellants placed before us certain documents new as additional documents. These documents comprised of Notification Nos. 50/91 and 58/85 and certificate from eight parties as also a chart showing invoice-wise purchase by various users and an affidavit. We note that the import took place in 1992 and these documents are being submitted now. We have also seen the affidavit. These documents do not serve any purpose now as to hold that Notification No. 50/91 was applicable to the case. One of the conditions of Notification No. 50/91 was that the said imported goods shall be used for the purpose specified above. There is no method by which the appellants could ensure that the imported goods were used for the purpose specified. No doubt, they have produced some evidence about sale of these goods to certain parties. Condition (b) of the notification inter alia provides that an account of the said imported goods received and consumed in place of manufacture for the aforesaid purpose shall be manufactured by the manufacturer in the manner specified by the Asstt. Collector of Customs. No such account has been prepared by the appellants or produced by the appellants to show that this condition was satisfied. Thus, we hold that the benefit of Notification No. 50/91 was not applicable to the appellants. Notification No. 32/89 is also not applicable as goods are classifiable under Chapter 17.
11. Having regard to the above findings, we reject the appeal. Misc. application is also disposed of accordingly.
______
Equivalent 2000 (119) ELT 448 (Tribunal)