2023 (3) TMI 902 - AT - Customs

Classification of imported goods - import of a consignment of 270 Kg Saccharomyces Boulardii in bulk valued at Euro 80190 (CIF) - Department was of the view that the goods are rightly classifiable as yeast under chapter 21 and not under CTH 29183090 as Carboxylic acid - whether the imported goods merit classification under 29183090 as adopted by appellant or under 21021090 as determined by the Department? HELD THAT - It is very much clear that the goods do not merit classification under Chapter 29. The appellant though classified the goods under Chapter 29 now contends that the classification determined by department is incorrect for the reason that Chapter 21 excludes yeast put up as medicament or other products of heading 3003 or 3004. From the Safety Data Sheet itself it is clear that lactose is added as auxiliary for lyophilization. It is not an ingredient added to make it a medicine. Lyophilization is nothing but freeze drying. It is just a stabilizing process to preserve a perishable product for the convenience of transport. On the samples placed before us it is mentioned as Saccharromyces Boulardii and does not mention the ingredient of lactose so as to consider it as an ingredient added to make it a medicament - The appellant has furnished medical literature to argue that Saccharromyces Boulardii is used as medicine for diarrohea. However there is no evidence to show that this product is known in the market in ordinary parlance as a medicament for gut related problems. Thus in fact though much medical literature has been placed to contend that Saccharromyces Boulardii can be used in the treatment of gut related problems there is no evidence to establish that it is known as a medicament. The appellant has failed to show that it is sold as a medicine for diarrhoea. Merely because the appellant has been issued a License by the Drugs Cosmetics Act it cannot be said that the imported goods are known and understood as medicine. In the case of M/S. ZYMONUTRIENTS PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS CHENNAI 2019 (11) TMI 1287 - CESTAT CHENNAI the Tribunal followed the decision in the case of Kasturi Foods and Chemicals 1994 (12) TMI 208 - CEGAT NEW DELHI to hold that the goods imported are to be classified under Chapter 21 as determined by the Department. The decisions passed by the Tribunal as to the classification in the case of Kasturi Foods and Products Ltd. as well as in the case of M/s. Zymonutrients Pvt. Ltd. would apply and the impugned goods are to be classified under Chapter 21 as determined by the Department. The issue is answered in favor of revenue and against the appellant. Appeal dismissed.

Summary

Issues Involved:
1. Classification of imported goods.
2. Determination of whether the goods are medicaments.
3. Applicability of Chapter 21 or Chapter 30 of the Customs Tariff Act, 1975.

Summary:

Classification of Imported Goods:
The appellant imported 270 Kg of 'Saccharomyces Boulardii' under the DEPB Scheme, initially classified under CTH 29183090 as 'Carboxylic acid.' The Department, upon post-clearance audit, reclassified the goods under CTH 21021090 as yeast, asserting that 'Saccharomyces Boulardii' is yeast and falls under Chapter 21. The original authority confirmed this classification and demanded differential duty, which was upheld by the Commissioner (Appeals).

Determination of Whether the Goods are Medicaments:
The appellant argued that 'Lyophilized Saccharomyces Boulardii' contains 13% lactose, making it a medicament under Chapter 3003 of CTA, 1975. The appellant presented medical literature and claimed the product is used for treating various diarrhoeal conditions, thus qualifying as a drug under the Drugs and Cosmetics Act, 1940. However, the authorities noted that the product is primarily yeast, with lactose added only as a stabilizing agent, not altering its essential nature as yeast.

Applicability of Chapter 21 or Chapter 30:
The Tribunal examined the relevant tariff headings and concluded that the goods do not merit classification under Chapter 29. Despite the appellant's contention that the product should be classified under Chapter 30 as a medicament, the Tribunal found no evidence that the product is recognized in the market as a medicament. The product was described by the supplier as "Ovoid yeasts to the exclusion of all other micro-organisms," and the safety data sheet indicated lactose was added merely for lyophilization.

The Tribunal referenced previous decisions, including Kasturi Foods & Chemicals and M/s. Zymonutrients Pvt. Ltd., which classified similar products under Chapter 21. The Tribunal upheld the Department's classification under CTH 21021090, concluding that the imported goods are yeast and not medicaments.

Conclusion:
The appeal was dismissed, and the impugned order was sustained, affirming the classification of the imported goods under Chapter 21 as determined by the Department.