1998 (9) TMI 412 - AT - Central Excise

Laviest - Benefit of exemption under Notification Nos. 211/69-C.E. and 37/85-C.E. available

Issues Involved:
Eligibility of "Laviest" capsules for the benefit of Notification 211/69 and Notification 37/85 under the Central Excise Tariff.

Detailed Analysis:

Issue 1: Eligibility of "Laviest" Capsules for Notification 211/69 and 37/85
The core issue in this appeal is whether "Laviest" capsules, manufactured by the respondents, qualify for the benefits under Notification 211/69 and Notification 37/85, which cover "culture of micro-organisms." The Assistant Collector initially denied this benefit despite acknowledging that the product is a culture of living micro-organisms (live yeast cells of Saccharomyces cerevisiae P). The Collector of Central Excise (Appeals) reversed this decision, leading to the Revenue's appeal.

Analysis by the Member (Judicial):
- Definition and Process: The product is a culture of micro-organisms, specifically live yeast cells. The process involves growing yeast in a special medium and then inactivating it through lyophilization, which is considered a manufacturing process under Sec. 2(f) of CESA, 1944.
- Adjudication Order: The Assistant Collector's order admitted that the product is a culture of micro-organisms. Consequently, the benefit of Notifications 211/69 and 37/85 should apply to the product, which is classified as a P or P medicine.
- Conclusion: The impugned order was upheld, and the appeal was rejected, affirming that "Laviest" capsules are eligible for the benefits under the specified notifications.

Contra View by the Vice President:
- Classification and Notifications: The respondents classified "Laviest" under Tariff Item 14E and claimed nil duty under Notification 211/69 and Notification 171/70. The Assistant Collector allowed only Notification 37/85 and provisionally classified the product pending test reports.
- Collector's Observation: The Collector noted that the Assistant Collector treated the issue as a classification dispute rather than focusing on the eligibility for the notifications. The Collector finalized the provisional assessment without extending the benefits of the notifications, implicitly denying them.
- Technical and Legal Examination: The Vice President emphasized the need to examine whether the product qualifies as a "culture of micro-organisms" as per the notifications. The Assistant Collector's and Collector's observations were scrutinized for their factual, technical, and legal correctness.
- Evidence and Expert Opinions: The department did not provide technical or commercial evidence to counter the respondents' claims. The respondents presented material, including definitions and expert opinions, to support their case.
- Preservation and Marketing of Cultures: The product, marketed as dried live yeast capsules, was examined against standard definitions and methods of preserving and marketing cultures. The Vice President highlighted that cultures are often sold in special vials and can be preserved through methods like lyophilization.
- Conclusion: The Vice President concluded that the product does not meet the criteria for "culture of micro-organisms" as intended by the notifications. Therefore, the benefit of Notification 211/69 and Notification 37/85 was not applicable.

Final Judgment:
The Tribunal was divided in its opinion. The Member (Judicial) upheld the eligibility of "Laviest" capsules for the benefits under Notifications 211/69 and 37/85, while the Vice President disagreed, emphasizing the need for a detailed technical and legal examination. The final outcome of the appeal depended on the majority view or further adjudication by a larger bench.

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