2017 (4) TMI 25 - AT - Central Excise

Classification Natural Beta Kerotene - impact of change in packing - Pro 9 Natural Mixed Kerotenoids - classified under Chapter Heading No. 2936 of Central Excise Tariff or under Chapter Heading 2108.99 as food/dietary supplement - appellant s case is that the items have been sold to customers under capsule form and as food supplement, and mere change in packing will not change the classification - Held that - there has been no change in the item imported in bulk form as well as a capsule. The item(s) are sold in retail to an ultimate consumer. The respondent has not added any extra material to the item(s) viz. Natural Beta Kerotene and Pro 9 Natural Mixed Kerotenoids. The respondent mentions that these items have only been filled into the capsule without adding or using any other vitamin or pro-vitamin or any other material. It may be that as a marketing requirement the subject item(s) have been sold as food supplement or dietary supplement but it does not change the classification of the item just because the item is packed into a retail form i.e. a capsule - appeal dismissed - decided against Revenue.

Summary

Issues: Classification of Natural Beta Kerotene and Pro 9 Natural Mixed Kerotenoids under Central Excise Tariff

Analysis:
The appeal before the Appellate Tribunal CESTAT Bangalore involved the classification of Natural Beta Kerotene and Pro 9 Natural Mixed Kerotenoids under the Central Excise Tariff. The Revenue challenged the Order-in-Appeal passed by the Commissioner (A), Bangalore-I, which classified the items under Chapter Heading No. 2936. The Revenue contended that the items should be classified under Chapter Heading 2108.99 as food/dietary supplements. The Tribunal noted the representations made by both parties, with the Revenue represented by Shri Parashiva Murthy and the respondent, M/s. Banner Pharmaceuticals, represented by Shri M.S. Srinivasan.

The Revenue argued that the items were sold to customers in capsule form as food supplements, warranting classification under Chapter Heading 2108.99. On the other hand, the respondent relied on a previous decision of the CESTAT Bangalore in the case of Banner Pharmacaps (I) Pvt. Ltd. v. CCE, Bangalore, emphasizing that a mere change in packing does not alter the classification of the item. The Tribunal carefully considered the submissions and case laws cited by both sides.

Upon examination, the Tribunal found that there was no alteration in the nature of the items, whether imported in bulk or in capsule form. The respondent did not introduce any additional material to the items, merely encapsulating them without incorporating extra vitamins or pro-vitamins. While the items were marketed as food or dietary supplements, this marketing strategy did not affect the classification under Chapter Heading 2936 of the Central Excise Tariff. The Tribunal highlighted that the Revenue failed to provide substantial evidence to support their argument for classification under Chapter Heading 2108.99.

Relying on the precedent set by the CESTAT Bangalore in the case of Banner Pharmacaps (I) Pvt. Ltd., the Tribunal affirmed that a change in packing does not alter the classification of the item. Therefore, the classification of the items under Chapter Heading 2936 remained unchanged even when marketed in capsule form. Consequently, the impugned order was upheld, and the appeal by the Revenue was dismissed for lacking merit. The judgment was pronounced in open court on 30-9-2016.