2012(06)LCX0077
IN THE CESTAT, WEST ZONAL BENCH, MUMBAI
S/Shri Ashok Jindal, Member (J) and P.R. Chandrasekharan, Member (T)
Commr. Of Cus. (Import), Nhava Sheva
Versus
Ndc Drug & Chemical P. Ltd.
Final Order No. A/419/2012-WZB/C-KCSTB), dated 5-6-2012 in Appeal
Advocated By -
Shri D.D. Joshi, AR, for the Appellant.
Shri S.N. Kantazvala, Advocate, for the Respondent.
[Order per : P.R. Chandrasekharan, Member (T)]. -
This is a revenue's appeal directed against Order-in-Appeal No. 03/(GR.II-C)/2010 (JNCH)-IMP-03 dated 23-4-2010 passed by the Commissioner of Customs (Appeals), Nhava Sheva. The issue relates to classification of Xanthan Gum.
2. The respondent M/s. NDC Drug & Chemical P. Ltd. imported consignment of Xanthan Gum USP 80 Mesh vide bill of Entry No. 813195, dated 18-12-2009 and claimed classification under Heading No. 39.13 of the Customs Tariff. On examination of the goods, it appeared that the classification claimed by the appellant is not correct and the product merit classification under Heading No. 13.01. Accordingly, the matter was referred to the Dy. Chief Chemist along with catalogue and literature submitted by the importer. The Dy. Chief Chemist vide report dated 31-12-2009 opined that since the product under import is produced by natural process (bacterial fermentation of carbohydrates which are also natural in origin) and has characteristics of natural gum, hence it merits classification under CTH 13.01. Accordingly the adjudicating authority classified the product under CTH 13.01. The appellant preferred an appeal before the Commissioner (Appeals). The Ld. Appellate authority observed that the imported goods are polysaccharide produced by fermentation of carbohydrates (glucose or sucrose) by Xanthomonas campestris bacteria and it is not the same as Xanthium Gum classifiable under Heading 1301 90 34. Further, there was no finding by the lower authority that the goods in question were a vegetable secretion. He also observed that the US customs had issued a classification ruling in respect of the impugned goods under Heading No. 3913 90 as a natural polymer and on this basis, he set aside the order of the lower authority and allowed the appeal of the respondent. Hence the revenue is in appeal before us.
3. The Ld. counsel for the appellant submits that there is no evidence on record available that the impugned product is a vegetable secretion falling under Chapter 13. As per the manufacturers' product catalogue, it is seen that the product is obtained by fermentation of polysaccharide. The US customs authorities have considered the classification matter and have also given a ruling that the import classification as a natural polymer under Heading No. 39.13 of the Customs Tariff. In view of the above, the classification claimed by the respondent is correct in law.
4. The Ld. Superintendent AR for the revenue reiterates the finding of the lower authorities and submits that as per Dy. Chief Chemist's report available on record, the product has characteristics of a natural gum and the process involved in the manufacture of the product is a natural process and therefore, the product merits classification under Heading No. 1301 90 34.
5. We have carefully considered the rival submission. Heading 1301 90 34 refers to Xanthium Gum. The product under importation is Xanthan Gum
USP 80 Mesh. No evidence is available on record to show that the Xanthan Gum under import and the Xanthium Gum specified in Heading 1301 90 34 are one and the same. The product literature of the manufacturer shows the following :
"Xanthan Gum, which is mainly made from starch, is a high molecular weight polysaccharide produced by fermentation with Xanthomonas campestris under the conditions of special nutrient medium, pH, C*2-supply and temperature, then purified, dried and milled into while-like or light-yellow free-flowing powder."
From the above, it is seen that even though the product might have natural origin, it has been subjected to various processes and the product no longer retains the characteristics of a natural secretion. Heading 1301 covers Lac, natural gum, resins, resin gum, and oleo resins. The said heading does not cover products which have been processed further by using various processes.
5.1 The classification of the product has also been examined by the US customs and it has been noted in the classification ruling that "Xanthan Gum is obtained by microbial fermentation from the Xanthomonas campestris organism. At the end of the fermentation process, the Xanthium Gum is recovered from precipitation in isopropyl alcohol, then dried and milled." The said ruling further notes that CTH 13.01 covers natural gums, resins, gum resins, oleoresins and balsams. They may be crude, washed, purified, bleached, crushed or powdered, but excludes such items that have been subjected to more complicated processes such as treatment with water under pressure, treatment with mineral acids and treatment with heat. In other words, when the natural gum is further processed, it falls outside the CTH 13.01. Since the product is a natural polymer, the US customs has ruled that it merits classification under CTH 3913.90.
5.2 From the perusal of the product literature available on record, it is seen that the product has been subjected to various processes which takes it out of the purview of Chapter 13 as a natural gum. Therefore, the appropriate classification for the product is 3913 which covers natural polymers and modified natural polymer not elsewhere specified or included in the primary form.
5.3 According to Wiki.amuers.com, Xanthan Gum is a bacteria used during the fermentation process, Xanthomonas Campestris, Xanthium is a plant from the asteraceae plant. Their origin, molecular structure and molecular weight are different. In other words, they are altogether different substances.
6. In view of the above, we do not find any infirmity in the order passed by the lower appellate authority. Accordingly, we dismiss the appeal filed by the revenue as devoid of merits.
(Operative part pronounced in Court)
Equivalent 2012 (284) ELT 0366 (Tri. - Mumbai)