Supreme Enterprises Versus Commr. Of Cus. (Export), Nhava Sheva>2014(09)LCX0142

2014(09)LCX0142

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI [COURT NO. II]

S/Shri P.R. Chandrasekharan, Member (T) and Ramesh Nair, Member (J)

Supreme Enterprises

Versus

Commr. Of Cus. (Export), Nhava Sheva

Final Order No. A/1585/2014-WZB/C-I (CSTB) and Stay Order No. 1120/2014-WZB/C-I (CSTB), dated 30-9-2014 in Application No. C/Stay/95889/2013-Mum in Appeal No. C/87397/2013-Mum

Cases Quoted -

Banner Pharmacaps (India) Pvt. Ltd. v. Commissioner - 2004(12)LCX0252 Eq 2005 (183) ELT 0151 (Tribunal)
- Followed [Paras 2, 4.2]
Commissioner v. Capsulation Services Ltd. - 2007(08)LCX0033 Eq 2007 (216) ELT 0346 (S.C.)
- Distinguished [Paras 3, 4.2]

Advocated By -

Shri S.N. Kantawala, Advocate, for the Appellant.
Shri A.K. Singh, Addl. Comm. (AR), for the Respondent.

[Order per : P.R. Chandrasekharan, Member (T)]. -

The appeal and stay petition are directed against Order-in-Appeal No. 395(Sez-Arshiya)/2013 (JNCH)/Exp-89, dated 30-4-2013 passed by Commissioner of Customs (Appeals), Mumbai. Vide the impugned order, the lower appellate authority has upheld the classification of Inca Inchi Oil in soft vegetarian Gel Capsules under CTH 3004 as P or P medicines, as against the claim of the appellant that these are "Extra Virgin Vegetable Oil (Inca Inchi) meriting classification under CETH 1515 90 91. Aggrieved of the same, the appellant is before us.

2. The learned Counsel submits that this product is of Amazon origin and inca inchi oil is a natural oil extracted from the seeds of the Inca Inchi tree. The oil contains natural vitamins and antioxidants (Omega 3) and has not been chemically modified at all. The product is not intended to diagnose, treat, cure or prevent any disease and is not for any medicinal use. The oil is extra virgin oil encapsulated in 500 Mg capsule so that it can be directly consumed so as to benefit from its natural properties. It is a 100% vegetarian oil. The product was tested by the Food Safety and Standards Authority of India, Mumbai, and has been certified as not containing any harmful ingredients in excess of the limits prescribed as per the provisions of Food Safety and Standards Act, 2006. However, the adjudicating authority has concluded that since the product contains vitamins, proteins and antioxidants, it merits classification under Heading 3004 as medicaments (excluding Headings of 3004, 3005, and 3006) consisting of mixed or unmixed for therapeutic or prophylactic uses, put up in measured doses in forms of packing for retail sale. The product has never been tested by the department or by the Drugs Control authorities nor any authority like the Indian Pharmacopeia is cited to come to the conclusion that the product has therapeutic or prophylactic use. The learned Counsel relies on the decision of this Tribunal in the case of Banner Pharmacaps (I) Pvt. Ltd. v. CCE, Bangalore - 2004(12)LCX0252 Eq 2005 (183) ELT 0151 (Tri.-Bang.) wherein also a question arose whether "Primosa" and "Simrose" which are encapsulated in 500 Mg/1000 Mg capsules would be classifiable as "Dietary Food Supplement" under CETH 2108.99 or as edible oil under CTH 1503 and this Tribunal held that inasmuch as there is no mixing of vitamins and the item continues to be vegetable oil and no ingredients are added, merely because of the product is encapsulated, it cannot be taken out the purview of CTH 1503 and put under CTH 2108 and accordingly, allowed the appeals. The ratio of the said decision would apply to the facts of the present case and therefore, he pleads that the impugned order be set aside and the appeal allowed.

3. The learned Additional Commissioner (AR) appearing for the Revenue reiterates the findings of the lower authorities and submits that as per the product literature, the product is claimed to have properties of preventing blood clotting triglycerol blood sugar and so on and therefore, as per the claim of the appellant itself, down loaded from the website, the product has to be considered as medicine meriting classification under CTH 3003. Reliance is placed on the Hon'ble Apex Court's decision in the case of CCE, Mumbai v. Capsulation Services Ltd. - 2007(08)LCX0033 Eq 2007 (216) ELT 0346 (S.C.) wherein it was held that preparations containing vitamins, Omega 3 fatty acids, etc., having therapeutic and prophylactic value would fall under the category of medicaments. It is the DR's contention that the ratio of the said decision would apply to the facts of the present case.

4. We have carefully considered the submissions made by both the sides. As the issue lies in a narrow compass, we take up the appeal itself for consideration after dispensing with the requirement of any pre-deposit and with the consent of both the sides.

4.1 It is the Revenue's case that the product merit classification under CTH 3004 as P or P medicaments. Therefore, the onus of proving classification under the said heading lies on the Revenue. The Revenue has not even got the product tested by the Drugs Control authorities to come to the conclusion that the product has therapeutic or prophylactic properties or have been prepared or made so as to have these properties. On the contrary, we find that the product description on the packaging itself, clearly indicates that the product does not have any medicinal use and is not intended to diagnose, treat, cure or prevent any disease. The product has natural ingredients such as, vitamins "A" & "D" and Omega 3, 6 & 9 which has antioxidant properties. There are many products which are naturally occurring which have therapeutic or prophylactic properties. For example products like neem, turmeric, basil leaves, etc., all have medicinal value but nobody considers them medicaments, when they are used as such, without subjecting to any chemical modification. In fact many of these items are used in daily cooking also. Therefore, merely because a product possess certain natural properties, it cannot be said to fall under the classification of medicaments.

4.2 We find that in the Banner Pharmacaps (I) Pvt. Ltd. case, an identical issues arose for consideration before this Tribunal as to whether "Primosa" and "Simrose" oil which are encapsulated would fall in the category of vegetable oil under CTH 1503 or as Dietary Food Supplement under CTH 2108.99. This Tribunal came to the conclusion that these are merely encapsulated and nothing has been added and the product remains vegetable oil meriting classification under CTH 1503. In our view, the ratio of the said decision would apply squarely to the facts of the present case. As regards the Capsulation Services Ltd. case relied upon the Revenue, the issue involved related to a classification of a preparation containing vitamins and pro-vitamins. They were manufactured goods and not naturally occurring substances. Hence the said decision is distinguishable on facts and hence has no application. Accordingly, we agree with the contention of the appellant that the product merits classification under CTH 1515 90. Accordingly, the appeal is allowed and the impugned order is set aside. The stay petition also stands disposed of.
(Dictated in Court)

Equivalent 2015 (316) ELT 0274 (Tri. - Mumbai)