1998 (3) TMI 508 - AT - Central Excise

Summary

Issues Involved
1. Eligibility of "Laviest" capsules for the benefit of Notification 211/69 and Notification 37/85.
2. Classification of "Laviest" capsules under the Central Excise Tariff.
3. Proper application and interpretation of the term "culture of micro-organisms."

Detailed Analysis

1. Eligibility of "Laviest" Capsules for the Benefit of Notification 211/69 and Notification 37/85

The core issue in this appeal is the eligibility of the product "Laviest" capsules to the benefit of Notification 211/69 and Notification 37/85, which cover "culture of micro-organisms." The Assistant Collector initially denied the benefit, although he acknowledged that the product is a culture of living micro-organism (live yeast cells of Saccharomyces cerevisiae P). The lower appellate authority confirmed that the product is indeed a culture of micro-organisms. The respondents argued that the active culture is inactivated by lyophilization, a process incidental to manufacturing, making the product marketable as a P or P medicine. This argument was not contested by the Revenue. Thus, the benefit of Notifications 211/69 and 37/85 was deemed available to the product.

2. Classification of "Laviest" Capsules under the Central Excise Tariff

The respondents classified "Laviest" capsules under Tariff Item 14E, claiming a nil rate of duty under Notification 211/69 and Notification 171/70. The Assistant Collector approved the classification provisionally, pending test reports, and allowed the benefit of Notification 37/85. The Assistant Collector's order focused on whether the product was a proprietary medicine classifiable under TI-14E prior to 28-2-1986. However, it was noted that the respondents themselves claimed classification under TI-14E, and the Collector correctly observed that the Assistant Collector treated it as a classification dispute instead of focusing on eligibility for the notifications.

3. Proper Application and Interpretation of the Term "Culture of Micro-organisms"

The term "culture of micro-organisms" is central to determining the product's eligibility for the notifications. Various authoritative sources, such as medical dictionaries and scientific encyclopedias, describe a culture as the propagation of micro-organisms in special media conducive to their growth. The respondents submitted materials supporting that "Laviest" capsules contain a culture of micro-organisms. However, the Assistant Collector and the Collector did not thoroughly examine whether the product in its sold form could be considered a "culture of living organisms." The respondents' evidence, including letters from Haffkins Institute and Microbiological Consultants, was not sufficiently detailed to support their claim. The Assistant Collector's initial doubt about whether the product was akin to baker's yeast was reasonable but not adequately resolved.

In conclusion, the judgment upheld the product's classification under TI-14E and its eligibility for the benefits of Notifications 211/69 and 37/85, based on the acknowledgment that "Laviest" capsules are a culture of micro-organisms. The appeal by the Revenue was rejected, and the impugned order was upheld.