Custom, Excise & Service Tax Tribunal
Health & Happiness Trading India Pvt Ltd vs Commissioner Of Customs-Cc Air Cargo Ch ... on 8 January, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL,
SOUTH ZONAL BENCH, CHENNAI
COURT HALL No.III
CUSTOMS APPEAL Nos.40357 to 40359 OF 2021
(Arising out of Order-in-Appeal AIR C.CUS.I No.09/2021 dated 08.01.2021
passed by Commissioner of Customs (Appeals-I), No.60, Rajaji Salai, Custom
House, Chennai-600 001)
M/s.Health and Happiness (H&H)
Trading India Private Ltd. .... Appellant
No.6/12, Primrose Road, Gurappa Avenue,
Bengaluru (Bangalore) Urban,
Karnataka 560 025.
Versus
The Commissioner of Customs, ... Respondent
Chennai VII, No.60, Rajaji Salai,
Custom House,
Chennai 600 001.
APPEARANCE :
Ms. T. Shrayashree, Advocate
For the Appellant
Ms. Anandalakshmi Ganeshram, Assistant Commissioner (A.R)
For the Respondent
CORAM :
HON'BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
DATE OF HEARING : 02.01.2024
DATE OF DECISION : 08.01.2024
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Customs Appeal Nos.40357-40359 of 2021
FINAL ORDER Nos.40024-40026/2024
ORDER :Per Ms. SULEKHA BEEVI.C.S. The issue involved in all these appeals being the same, they were heard together and are disposed of by this common order.
2. Brief facts are that the appellant is engaged in the business of trading goods and commodities. As part of their business, they import certain goods from outside India for selling them in domestic market of India. The appellant classified the goods as "Miscellaneous edible preparations - Food preparations not elsewhere specified or included" as under CTH 21069099. Consequently, the appellant paid customs duty @ 50% on the assessable value and Integrated Goods and Service Tax @ 18%.
3. After such self-assessment of the Bills of Entry and payment of duty, the appellant was advised that they had inadvertently classified the products under incorrect chapter heading and that the correct classification is under Chapter Heading 1504 which reads as "Fats and oils and their fractions, of fish or marine mammals, whether or not refined, but not chemically modified". The Chapter Heading 15042020 specifies 'Fish lipid oil'.
4. According to appellant, due to the erroneous classification, the appellant had paid excess duty of Customs @ 50% of the assessable value instead of paying duty @ 30% of the assessable 3 Customs Appeal Nos.40357-40359 of 2021 value which is the rate applicable to the goods falling under CTH 15042020. So also, the appellant had paid the excess Integrated Goods and Service Tax at 18% instead of 12% rate, which is the rate of IGST payable when the goods are classified under 1504. The appellant would get benefit of concessional duty of IGST as per Sl.No.22 under Chapter II of Notification No.1/2017-Integrated Tax (Rate).
5. The appellant upon realizing the error in classification, filed a refund application dated 1.7.2020 under Section 27 of the Customs Act, 1962, claiming refund of excess duty paid to the extent of Rs.21,53,027/- in three Bills of Entry. The Assistant Commissioner of Customs, Refund Section vide order dated 13.08.2020 rejected the refund application as premature observing that prior to applying for refund, the appellant is required to get the Bills of Entry reassessed in view of the judgment of the Hon'ble Apex Court in the case of M/s.ITC Ltd. Vs CCE Kolkata in Civil Appeal No.293294 of 2009.
6. Consequently, the appellant filed appeal under Section 128 of the Customs Act, 1962 before the Commissioner (Appeals) seeking for amendment of the classification in the Bills of Entry and also for revision of the duty of Customs accordingly. After hearing, the Commissioner (Appeals) vide order impugned herein rejected the appeal on the ground that the appeal is filed beyond the period of limitation and also that the goods classified as "Food Supplement" 4
Customs Appeal Nos.40357-40359 of 2021 under CTH 2106 is correct and are not to be classified as "Fish Oil"
under CTH 1504. It was also observed that the appellant has not proved that the imported goods would meet the EXIM Policy conditions prescribed for import of goods classified under CTH 1504. Aggrieved by such order, the appellant is now before the Tribunal.
7. Ld. Counsel Ms. T. Shrayashree appeared and argued for the appellant. The details of the Bills of Entry and the differential duty paid in excess by the appellant is given as under :
Bill of Entry Differential Duty
No.6944499 dt. 19.02.2020 11,13,738
No.6958115 dt. 20.02.2020 4,19,997
No.6969704 dt. 21.02.2020 9,60,966
Ld. Counsel made the following submissions :
I. The Appeal filed is not time-barred:
7.1 It is submitted that the B/Es of the Appellant are dated 19.02.2020, 20.02.2020 and 21.02.2020 and the Appeal against these Bills of Entry were filed before the Commissioner (Appeals) on 21.09.2020. The same are well-within the limitation period in light of the decision of the Hon'ble Supreme Court in the case of Suo Motu Writ Petition (Civil) No(s). 3/2020 dated 10.01.2022, 5 Customs Appeal Nos.40357-40359 of 2021 which excludes the period from 15.03.2020 to 28.02.2022 from the calculation of the limitation period.
II. The Appellant can seek for change in classification in Appeal:
7.2 It is submitted that the impugned Order in Para 10 states that the Appellant cannot change classification in Appeal stage without any reason and should have been careful in mentioning the classification at the time of import.
7.3 In this regard, it is submitted that an Appeal against the Bills of Entry for change of classification can be preferred as Bills of Entry are nothing but assessment Orders which are appealable. In this regard, reliance is placed on the case of M/S Dipen Overseas Dipen Trading Company v. C.C., - Mundra, 2019 (1) TMI 255 -
CESTAT AHMEDABAD, wherein the following has been held:
"4. ...We absolutely disagree with the contention of the Ld. Commissioner (Appeals) that the appellant suo moto declared the classification of Used Jute Bags under 63051090; therefore, they cannot challenge the assessment of bill of entry. It is settled law by the Hon'ble Supreme Court in various judgments particularly in the case of Priya Blue Industries Ltd 2004 (172) ELT 145 (SC), that the assessment order of bill of entry is an appealable order. Therefore, the appeal is maintainable against the said assessment order."
7.4 It is submitted that the Appellant imported the products under dispute i.e. Fish Oil for the first time and inadvertently mis- classified them under CTH 2106 90 90, when the correct 6 Customs Appeal Nos.40357-40359 of 2021 classification is CTH 1504 20 20. In order to correct the classification, they have filed the Appeals which are permitted by law.
7.5 It is submitted that appellant cannot be denied the relief from claiming the correct and legal classification of the goods imported by them, as there is no estoppel in Law against a party in taxation matters. In this regard, reliance is placed on the case of Dunlop India Ltd. v. Union of India, 1975 (10) TMI 94 - SUPREME COURT, wherein the following was held:
"40. At one stage Mr. Sanghi pointed out that in certain Bill of Entry of Dunlop India Limited, their Agents, Messrs Mackinnon, Mackenzie & Co., Private Ltd., gave the I.C.T. Item No. 87 with regard to the imported V.P. Laitex. This, according to Mr. Sanghi, clearly shows how the appellants themselves have understood the matter. There is, however, no estoppel in law against a party in a taxation matter. In order to clear the goods for the Customs, the appellant Agents may have given the classification in accordance with the wishes of the authorities or they may even be under some misapprehension. But when law allows them the right to ask for refund on a proper appraisement and which they actually applied for, we do not attach any significance to this aspect of the matter pointed out by counsel. The question is of general importance and must be decided on its merits."
Further, reliance is also placed on the case of Reliance Jio Infocomm Ltd. v. Commissioner of Customs (Import), 2021 (10) TMI 392 - CESTAT MUMBAI.
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Customs Appeal Nos.40357-40359 of 2021 7.6 It is also submitted that it is not without reason that the Appellant is claiming change of classification. It is submitted that the right classification for the products imported by the Appellant and under dispute now is CTH 1504 20 20.
1. In fact, in the subsequent imports of identical products, the Appellant has adopted classification under CTH 1504 20 20 and the same has been allowed by Customs without any dispute.
2. In light of the above, it is submitted that the Appellant can claim for change in classification in an appeal filed by them. III. The imports of the Appellant are classifiable under CTH 1504 20 20 as "Fish Lipid Oil"
8. It is submitted that the imported product is classifiable under CTH 1504 20 20 as "Fish Lipid Oil" and not under CTH 2106 90 99 as "Food preparation not elsewhere specified" for the following reasons:
8.1 The product is made of natural fish oil/ concentrated omega-3 - fish along with inter alia glycerol and purified water. It is encapsulated in a gelatin shell.
8.2 CTH 1504 covers within its ambit Oils of Fish whether or not refined and CTH 1504 20 20 specifically covers 'Fish Lipid Oil'. As per Rule 1 of the General Rules of interpretation of the Import Tariff, the classification shall be determined according to the terms of the headings and any relative Section/ Chapter Notes. Going by the same, it is submitted that a mere perusal of the Heading and 8 Customs Appeal Nos.40357-40359 of 2021 the Descriptions shows that the instant imported Fish Oil is to be classified only under CTH 1504 2020.
8.3 Further, as per Notes to the Chapter 15, only edible preparations containing by weight more than 15% of the products of heading 0405 (butter and other fats and oils derived from milk;
dairy spreads) is excluded from Chapter 15 and classifiable under Chapter 21.
8.4 CTH 2106 90 99 is a residuary and general heading which cannot be resorted to when there is a more specific heading, namely CTH 1504 20 20 covering the said product. The heading itself states "food preparation not elsewhere specified". Therefore, when there is another Heading specifying the product, the same cannot be sought to be included under CTH 2106 90 99. As per Rule 3(a) of the General Rules of Interpretation of the Harmonized System, headings providing specific description shall be preferred to headings providing general description. Therefore, CTH 1504 20 20 is the more appropriate classification.
9. In support of the submission that residuary heading cannot be preferred over more specific heading, reliance is placed on the following cases:
- M/s. Bharat Forge & Press Industries Private Limited v. CCE,1990 (1) TMI 70 - SUPREME COURT
- Metals & Ferro Alloys Ltd., Cuttack v. Collector of Central Excise, Bhubaneshwar, 1991 Supp (1) SCC 125 9 Customs Appeal Nos.40357-40359 of 2021
- Mauri Yeast India Pvt. Limited vs. State of Uttar Pradesh, (2008) 5 SCC 680
- M/s. Aalayam Traders v. The Appellate Assistant Commissioner (CT), Puducherry, 2019 (7) TMI 1670 -
MADRAS HIGH COURT
- Commissioner of Customs (Import) Mumbai-I v. Abbott Health Care Pvt. Ltd. 2015 (328) E.L.T. 129 (Tri. - Mumbai)
10. Further, in support of the submission that specific heading is to be preferred over general heading, reliance is placed on the case of HPL Chemicals Ltd. v. CCE, Chandigarh, 2006 (4) TMI 1 - SUPREME COURT.
IV. The reasoning recorded by the Commissioner (Appeals) for rejecting the change in classification are not sustainable:
11. The reasoning provided in the impugned Order for rejecting the classification under CTH 1504 20 20 is not sustainable as:
On description in FSSAI NOC and Bill of Entry:
11.1 Mere mention of "Food Supplement" in the description in Bill of Entry or FSSAI is not decisive of the classification of the product.
It is pertinent to note that the Description also has the words "Fish Oil" in them. The ingredient of the product clearly shows that they are Oils of Fish and the same are rightly classifiable under CTH 1504 20 20.
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Customs Appeal Nos.40357-40359 of 2021 11.2 Further, as already submitted above CTH 2106 90 99 is a residuary entry for food preparations/ supplements which are not specified under any other heading. Even assuming that products imported by the Appellant are food supplements, they would still be classifiable under CTH 1504 20 20 as it specifically provides for the classification of Fish Oil.
On NOC by FSSAI:
11.3 The FSSAI NOC has been issued based on Report of Food Analyst wherein it has been stated that the products are falling under Regulation 7.0 of the Food Safety and Standards (Food or Health Supplements, Nutraceuticals, Foods for Special Dietary uses, Foods for Special Medical Purpose, Functional Foods and Novel Food) Regulations, 2016 which specifies conditions for nutraceuticals. It is submitted that the goods imported by the Appellant i.e. the Fish Oil capsules are nutraceuticals. It is pertinent to submit that nothing in the NOC certificate substantiates the Ld. Respondent's contention that the classification under CTH 2106 90 99.
On encapsulation of the Fish Oil:
11.4 It is further submitted that the mere fact that it is in the form of a capsule does not change its characteristics/ chemical composition/ identity/ its classification. This finds support from the 11 Customs Appeal Nos.40357-40359 of 2021 decision/ opinion of the Harmonized System Committee of the World Customs Organization in its 13th Session, vide Document No. 38.625E dated 18.02.1994, wherein it was held that encapsulation of the product is not sufficient to exclude the product from Chapter 15.
12. Relying on the above Opinion of the HSC, the Customs Commercial Rulings Division of the United States of America in HQ 964808 dated February 19, 2002, held that Fish Oil Capsules, even after they are encapsulated, are to be classified under the HSN heading 1504.
13. It is submitted that the above opinion of the HS Committee has a great value and has also been treated as binding in the case of Manisha Pharma Plasto Pvt. Ltd. v. Union of India 1999 (5) TMI 33 - HIGH COURT OF DELHI.
14. Further, it is also pertinent to place reliance on the case of M/S SR Foils & Tissues Ltd. v. Commissioner of Central Excise, 2013 (8) TMI 534 - CESTAT NEW DELHI, wherein it has been held that HS Committee opinion is binding on Indian authorities and the foreign cases which are rendered following such HS Committee opinions are also applicable and have good force. In the said case, decision of South Africa Court was considered.
15. Further, in Commissioner of Customs, New Delhi v. C-Net Communication (l) Pvt. Ltd., 2007 (9) TMI 15 - SUPREME COURT, 12 Customs Appeal Nos.40357-40359 of 2021 the Hon'ble Supreme Court took into consideration decision of a Canadian Tribunal while arriving at a conclusion to the issue of classification.
16. Therefore, it is submitted that the above opinion of the HS Committee and Customs Commercial Rulings Division of the United States of America shall be applicable here.
On compliance with import conditions:
17. The Appellant submits that the compliance parameters or conditions laid down under the Import Policy, which are required for ensuring "Free" import does not have any bearing on the question of classification of the Goods imported. It is pertinent to submit that even if the Fish Oil imported does not meet the import policy condition applicable for CTH 1504, it will not change the classification of the Fish Oil, which continues to be classifiable under CTH 1504.
18. The validity of the import is not the question or issue in the instant case. It only pertains to Classification, and therefore, the Import Policy which works independently, cannot be relied upon for the aforesaid reason, while determining the correct Classification of the imported goods.
19. Nevertheless, without prejudice to the above submission, it is submitted that contrary to what is held by the Respondent in the impugned Order, the goods imported i.e. Fish Oil by the Appellant 13 Customs Appeal Nos.40357-40359 of 2021 do satisfy the parameters/ conditions stipulated in the Import Policy for importing of goods, namely Fish Lipid Oil under CTH/ HSN Code 1504 2020. Lab Reports have been obtained for the same.
On "food supplement" explanatory note:
20. It is submitted that the Ld. Respondent in the impugned Order referred to explanatory note below:
(16) Preparations, often referred to as food supplements, based on extracts from plants, fruit concentrates, honey, fructose, etc. and containing added vitamins and sometimes minute quantities of iron compounds. These preparations are often put up in packagings with indications that they maintain general health or well-being. Similar preparations, however, intended for the prevention or treatment of diseases or ailments are excluded (heading 30.03 or 30.04).
21. It is submitted that the above explanatory note referred to by the Respondent would not include fish oil, as firstly, it is not specifically mentioned and secondly, it cannot be added under the "etc." in the Note, which follows the words "extracts from plants, fruit concentrates, honey, fructose" as applying the Rule of Ejusdem Generis, it can be said that only extracts from plant based items are included under the said Note, and hence the Heading and not those from animals/ mammals, like fish.
22. In view of the above submissions, Ld. Counsel prayed that the appeals may be allowed.
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Customs Appeal Nos.40357-40359 of 2021
23. Ld. A.R Ms. Anandalakshmi Ganeshram appeared and argued for the Department. The findings in the impugned order was reiterated by Ld. A.R.
24. Heard both sides.
25. The main issue that arises for consideration is whether the goods imported by the appellant is classifiable under CTH 15042020 as claimed by the appellant or under CTH 21069099 as confirmed by the Commissioner (Appeals). It has to be noted that the appellant had filed Bills of Entry by declaring the classification as CTH 21069099. Thereafter, as the appellant entertained a view that the goods are correctly classifiable under CTH 15042020, they have filed appeal against the self-assessment before the Commissioner (Appeals). Before proceeding to discuss the issue on classification, it would be beneficial to note the relevant chapter headings:
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Customs Appeal Nos.40357-40359 of 2021 Tariff Item Description of Unit Rate of duty Goods Standard Preferential Areas (1) (2) (3) (4) (5) ... ... ... ... ...
1504 FATS AND OILS
AND THEIR
FRACTIONS, OF
FISH OR MARINE
MAMMALS,
WHETHER OR
NOT REFINED,
BUT NOT
CHEMICALLY
MODIFIED
1504 10 - Fish live oils and
their fractions:
1504 10 10 --- Cod liver oil kg .30% -
--- Other:
1504 10 91 ---- Squid liver oil kg. 30% -
1510 10 99 ---- Other Kg. 30% -
1504 20 - Fats and oils and
their fractions of
fish, other than
live oils:
1504 20 10 --- Fish body oil kg. 30% -
1504 20 20 --- Fish lipid oil kg. 30% -
1504 20 30 --- Sperm Oil kg. 30% -
1504 20 90 --- Other Kg. 30% -
1504 30 00 - Fats and oils and kg. 30% -
their fractions, of
marine mammals
Tariff Item Description of Unit Rate of duty
Goods
Standard Preferential
Areas
(1) (2) (3) (4) (5)
... ... ... ... ...
2106 FOODS
PREPARATIONS
16
Customs Appeal Nos.40357-40359 of 2021 NOT ELSEWHERE SPECIFIED OR INCLUDED 2106 10 00 - Protein kg. 40% -
concentrates and textures protein substances 2106 90 - Other:
--- Soft drink concentrates:
2106 90 11 ---- Sharbat kg. 150% -
2106 90 19 ---- Other kg. 150% -
2106 90 20 --- Pan masala kg. 150%
2106 90 30 --- Betel nut product Kg. 150% -
known as "Supari"
2106 90 40 --- Sugar-syryps kg. 150% -
containing added
flabvouring or
colouring matter,
not elsewhere
specified or
included; lactose
syryp; glucose
syrup and malto
dextrin syrup
2106 90 50 --- Compound kg. 150% -
preparations for
making non-
alcoholic
beverages
2106 90 60 --- Food flavouring kg. 150% -
material
2106 90 70 --- Churna for pan kg. 150% -
2106 90 80 --- Custard powder Kg. 150% -
--- Other:
2106 90 91 ---- Diabetic foods kg. 150% -
2106 90 92 ---- Sterilized or kg. 150% -
pasteurized
millstone
2106 90 99 ---- Other kg. 150% -
26. The foremost ground on which the Commissioner (Appeals) has rejected the appeal is that the appeal is time-barred. The goods were imported vide Bills of Entry in February 2020. Ld. 17 Customs Appeal Nos.40357-40359 of 2021 Counsel has argued that the appeal filed by the appellant on 21.09.2020 before Commissioner (Appeals) is well within time when considering the extension of limitation period as per the decision of the Hon'ble Supreme Court in Suo Motu Writ Petition (C) No.3/2020 dt. 10.01.2022. The said decision excluded the period from 15.03.2020 to 28.02.2022 for calculation of the limitation period due to COVID-19 Pandemic. We find that the rejection of the appeal by the Commissioner (Appeals) holding that there is more than 90 days delay from the date of Bill of Entry in filing the appeal and therefore the appeal is hit by limitation is without considering the extension of limitation by the Hon'ble Supreme Court. We hold that the rejection of the appeal as time barred cannot sustain. This issue is answered in favour of the appellant.
27. The second ground on which the appeal has been rejected is by rejecting the request for change of classification of the goods. The appellant had classified the goods in the Bills of Entry as 21069099 as 'Food Supplement'. They had also produced No Objection Certificate issued by the Food Safety and Standards Authority of India (FSSAI). It is observed by the Commissioner (Appeals) that in these certificates the goods are noted as 'Food Supplements' and therefore goods have to be considered as 'Food Supplements' only and would fall under CTH 2106. It is also observed that the appellant has not satisfied the parameters as per 18 Customs Appeal Nos.40357-40359 of 2021 Exim Policy condition (5) in case of import of 'fish oil' which falls under CTH 1504 and therefore goods cannot be classified under CTH 15042020.
28. On perusal of the impugned order, we find that the Commissioner (Appeals) has referred to the NOC issued by Food Safety and Standards Authority of India. A decision on classification cannot be made merely because the goods are mentioned by the said Authority as 'Food Supplement' in these documents. We do not find any discussion made by the Commissioner (Appeals) as to the classification with regard to the tariff or the ingredients of the goods imported. Though the goods are claimed by the appellant to be 'fish oil', they are imported in the form of capsules. It requires to be examined whether there are any other ingredients other than 'Fish Lipid Oil' and whether these are chemically modified or not. The appellant has not been able to place any evidence to substantiate the ingredients of the 'Fish Lipid Oil Capsules' imported by them. The Ld. Counsel for appellant has submitted that they would be able to furnish details with regard to the ingredients of the goods imported and requested for a further opportunity. It is also submitted that this consignment was their first import and that subsequently the appellants have imported the very same goods and classified these under CTH 15042020 as 'Fish Lipid Oil' even though imported in the form of capsules. There has been no dispute on classification by the department for 19 Customs Appeal Nos.40357-40359 of 2021 subsequent consignments in regard to assessment and classifying the goods under CTH 15042020 has been accepted by the Department. Taking note of these submissions, we are of the considered opinion that the matter has to be remanded to the adjudicating authority to consider the issue of classification after giving opportunity to the appellant to produce documents / evidence, if necessary. It also requires to be stated that the Chapter Heading 21069099 refers to 'Other" which a residual entry of Chapter Heading 2106 which includes 'Food Preparations not elsewhere specified or included'. 'Fish Lipid Oil' is specified under CTH 15042020. However, the impugned goods whether are fish oil alone or contain any other ingredients has to be examined on the basis of evidence for which the matter requires to be remanded.
29. The Commissioner (Appeals) has also observed that the appellant has not complied with the condition No.5 of EXIM Policy for import of Fish Oil. The said condition requires the importer to produce certificates issued by a Laboratory. Ld. Counsel submitted that subsequent to the filing of appeal, the appellant had sent the samples of the goods for a lab test and the report issued to the appellant was furnished to the Commissioner (Appeals). However, the said report was not considered at all. It is contended by the learned counsel that appellant has thus fulfilled condition No.5 of the EXIM Policy. In remand proceedings, the Commissioner (Appeals) is directed to consider the lab report and also look into 20 Customs Appeal Nos.40357-40359 of 2021 the issue as to whether there is compliance of the EXIM Policy in regard to import of "Fish Oil" falling under Chapter Heading under 1504.
30. In view of the above discussions, the impugned order is set aside. The matter is remanded to the Commissioner (Appeals) to reconsider the issue of classification and the eligibility of refund as discussed above.
31. The appeals are allowed by remand in above terms.
(Pronounced in court on 08.01.2024)
sd/- sd/-
(VASA SESHAGIRI RAO) (SULEKHA BEEVI. C.S.)
Member (Technical) Member (Judicial)
gs