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TMI Blog2023 (3) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... report did not mention the presence of any other ingredient. The Department was of the view that the goods are rightly classifiable as yeast under chapter 21 and not under CTH 29183090 as 'Carboxylic acid'. Yeast, active or inactive is specifically mentioned under CTH 2102. The 'Saccharomyces Boulardii' being yeast falls under CTH 21021090. Show Cause Notice was issued proposing to re-determine the classification of the goods and for demand of differential duty along with interest. After due process of law the original authority confirmed the classification under 21021090 and also confirmed the demand of the differential duty of Rs.13,57,549/- along with interest. On appeal, the Commissioner (Appeals) vide order impugned herein upheld the same. Hence this appeal. 2. On behalf of the appellant the learned counsel Shri. P.R. Renganath appeared and argued. It is submitted that the goods imported are 'Lyophilized Saccharomyces Boulardii' which is Saccharomyces Boulardii cells and 13% of lactose. The authorities below erred in observing that the test report issued by supplier did not mention the presence of any other ingredient. A mere perusal of the certificate issued by Biocodex (th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumed as per the dosage prescribed by a Physician. Further, that the imported goods are drug within the meaning of Section 3(b) of the Drugs and Cosmetics Act, 1940. The appellant holds necessary permission under the Drugs and Cosmetics Act & Rules to import Saccharomyces Boulardii. In the Analysis Certificate issued by the supplier it is stated that it has expiry period which is 3 years. This itself would indicate that it is a medicine, rather than an edible preparation under chapter 21 which products have usually shorter shelf-life. 5. To support the argument that the goods are medicaments, the learned counsel relied on various literature which are as under: (i) (Textbook) Gut Microflora-Digestive Physiology and Pathology-John Libbey Eurotext, Paris. "Lyophilised Saccharomyces boulardii is produced by freeze-drying in the presence of lactose, a method which preserves the yeast's viability and stability. Analysis of the pharmacodynamis properties of Saccharomyces boulardii has shown that its activities are largely dependent upon its ability to survive. As with all yeasts, Saccharomyces boulardii is naturally resistant to antibacterial antibiotics: its MIC for almost all antibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of diarrhoea in this syndrome. In addition, the immune system is probably supported by an enganced release of secretoy lgA into the intestinal lumen. Due to these specific effects of S.b. on the intestinal flora and in view of the mentioned immunopathogenic concepts concerning the etiology of Crohn's disease, there was good reason to investigate also the effects of S.b. in patients suffering from Crohn's disease." (iv) Journal Correspondence-Clinical infectious Diseases-February 1996- " However, S. boulardii is a completely different species of yeast from baker's, brewer's, or wine yeast, and thus the results of S. boulardii therapy in the cited clinical studies are not applicable to S. cerevisiae therapy or to the four case descriptions. S. boulardii has been shown to be a separate species of Saccharomyces on the basis of several taxonomic, metabolic, and molecular parameters. S. boullardi is a wild Saccharomyces strain that does not produce ascospores or use galactose as a carbon source (as do wild S. cerevisiae strains). This strain is also given a separate designation by the American Type Culture Collection (ATTC #74012). S. boulardii has different oxidative utilization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the appeal may be allowed. 10. The learned AR G. Anandalakshmi Ganeshram supported the findings in the impugned order. The chapter heading in Chapter 21 was referred by the learned AR to explain that "Yeast (active or inactive); other single cell micro-organisms, dead (but not including Vaccines of heading 30.02); prepared baking powders" come under this heading. In ordinary parlance the impugned goods are known as yeasts'. The goods are not medicaments so as to merit classification under 3003 or 3004. The main argument of the appellant is that the imported goods contain one other ingredient viz; lactose which is added for its pharmacological function. The said argument is incorrect. As per the Analysis report issued by the supplier the goods are described as "Ovoid Yeasts to the exclusion of all other micro-organisms". The presence of lactose in small quantity is only for the purpose of stabilization i.e; lyophilization. This not take away the essential nature of the goods which is nothing but active micro organism- yeast. The learned AR referred to Part (B) of Chapter 21 and argued that even if stabilizing agents and antioxidants are added, yeast has to be classified under Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . kg. 30% - 21023000 - Prepared baking powders . . . . . . . . . . . . . . . kg. 30% - "Chapter 21 Miscellaneous edible preparations: 1. This Chapter does not cover: (a) mixed vegetables of heading 0712; (b) roasted coffee substitutes containing coffee in any proportion (heading 0901); (c) flavoured tea (heading 0902) (d) spices or other products of headings 0904 to 0910; (e) food preparations, other than the products described in heading 2103 or 2104, containing more than 20% by weight of sausage, meat, meat offal, fish or crustaceans, mollusks or other aquatic invertebrates, or any combination thereof (Chapter 16); (f) Yeast put up as a medicament or other products of heading 30.3 or 30.04; or (g) prepared enzymes of heading 3507." " (A)Yeasts The yeasts of this heading may be in the active or inactive state. Active yeasts generally provoke fermentation. They consist essentially of certain micro-organisms (almost exclusively of the genus Saccharomyces), which multiply during alcoholic fermentation, according to the aeration process. The active yeasts include: (1) Brewery yeast, This forms in beer fermentation vats. It is pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Other Kg. 10% - "12. Chapter 29 Notes.1.- Except where the context otherwise requires, the headings of this Chapter apply only to: a. Separate chemically defined organic compounds, whether or not containing impurities; b. Mixtures of two or more isomers of the same organic compound (whether or ot containing impurities), except mixtures of acyclic hydrocarbon isomers (other than stereo isomers), whether or not saturated (Chapter 27);" 15. From the above, 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. At the cost of repetition it has to be stated that though the appellant contends that the imported goods are in the nature of medicine for diarrhoea, they have not adopted the classification under chapter heading 3003 or 3004 in the Bill of Entry but has classified the goods under chapter heading CTH 29. Tariff Item Description of goods Unit Rate of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oulardii is manufactured from yeast cells to which is added a small quantity of lactose as auxiliary of lyophilization." 18. 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. 19. 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 before us 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. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the above, the following conclusion may be drawn: (i) The imported "Saccharomyces Boulardii" is found to be "Yeast" a "living microorganism". (ii) It does not fall under chapter 29 as it is not an "organic compound" like carboxylic acid in view of its character and the sense of the chapter. (iii) It is also not a "culture media" to be classified under 3821. (iv) It did not attain the form required to be classified under 3003 or 3004. (v) It is specifically covered as "Yeast" whether active or inactive under Chapter 21021090." 22. We are in full agreement with the findings of the adjudicating authority and do not find any material to accept the contention of appellant that the imported goods are medicaments. We are supported by the proposition laid in the case of Kasturi Foods & Chemicals (supra) wherein similar issue came up for consideration before the Tribunal. The assessee therein had imported dried yeasts (BPC 73) or pharma yeast. The contention of the assessee in the said case was that they have imported pharma yeast and wanted to classify it under Chapter 30. The Tribunal in the case of Kasturi Foods and Products Ltd. observed as under: "9. From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... containing hydrocarbons (such as gas-oils or n-paraffins) or carbohydrates. These dried yeasts are particularly rich in protein and are used in animal feeding. They are commonly known as petroproteins or yeast bioproteins". It will be apparent from the above Explanatory Note that what the respondents manufacture are inactive yeasts in dried form, basing on carbohydrates. The same are not used as medicine and there is no evidence that they are used as medicines though respondents may have obtained a licence under Drugs and Cosmetics Act. What are used as medicines are prepared from inactive dry yeasts, by several manufacturers of medicines who buy the respondents' products and after compression and addition of binding material, such compressed yeast tablets are sold as medicines. Further the definition of Medicaments, given in Chapter Note 2 of Chapter 30 of Central Excise Tariff Act also does not cover appellants' product which is unmixed product and not put up in measured doses or in packings for retail sale or for use in hospitals. Therefore, the claim of the respondents that their products squarely fall under 3003, is not correct. For the products manufactured out of their i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumption on the basis of CFTRI report and hence do not fall under 2102. However, we find that under chapter sub heading 2102, there is no condition stating that it should be fit for human consumption. Either under 2102 or 21022000, one single dash covers yeasts; other single micro-organisms, dead; prepared baking powders; inactive yeast, other single cell micro organisms, dead. We find that there is no exclusion for yeast which are declared not to fit for human consumption. On the contrary, we find that heading 23.09 has got only two single dashes. One single dash contains dog or cat food, put up for retail sale and the second single dash contains "others" and 9 the various foods and concentrates for animals are listed subsequently. It is clear that the entire heading 2309 talks of preparations of a kind used in animal feeding. By no stretch of imagination the impugned products imported by the appellants are preparations of a kind animal feeding. At the best, they may be used for preparation of animal feeds that is to say that they are raw material used for preparation of animal feed. Therefore, they cannot be classified along with animal feed merely by virtue of the inclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellants. We further find that in the above case of Sonam International Tribunal has discussed and distinguished the case of Tetragon Chemie (supra) and moreover, it is the later judgment on the issue and directly on the subject of import of similar items. In view of the above, we uphold the classification of impugned goods under CTH 21022000 as assessed by the department and as upheld by the Commissioner (Appeals). 12. In view of the above, we find that to extent of classification of the impugned goods is concerned; the order of the Ld. Commissioner (Appeals) does not require to be interfered with. In the result, we uphold the impugned order in so far as the classification of the impugned goods is concerned. We hold that classification of impugned goods i.e. yeast is correctly arrived by the Revenue under CTH 21022000. Under such circumstances, the appellant's submissions on the issue of time bar loose relevance in the instant case." 24. After appreciating the facts and the evidence placed before us, we are of the considered opinion that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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