Custom, Excise & Service Tax Tribunal
Commissioner Of Customs(Import), ... vs M/S. Abbott Healthcare Pvt. Ltd on 10 October, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO.C/87691/13-MUM
[Arising out of Order-in-Appeal No.356 (CFS/Mulund) /2013 /JNCH /IMP-280 dt. 05.04.2013 passed by the Commissioner of Customs (Appeals), Jawaharlal Nehru Custom House, Sheva, Mumbai-II]
For approval and signature:
Honble Mr. P.R. Chandrasekharan, Member(Technical)
Honble Mr Ramesh Nair, Member(Judicial)
1. Whether Press Reporters may be allowed to see :No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :Seen
of the Order?
4. Whether Order is to be circulated to the Departmental :Yes
authorities?
=======================================================
Commissioner of Customs(Import), Mumbai I :
Appellant VS M/s. Abbott Healthcare Pvt. Ltd :
Respondent Appearance Shri M.S. Reddy, Dy. Commissioner, (A.R.) for the Appellant. Shri T. Vishwanathan, Advocate with Ms. Srinidhi Ganeshan, Advocate for the Respondent.
CORAM:
Honble Mr. P.R. Chandrasekharan, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 10/10/2014
Date of decision 10/10/2014
ORDER NO.
Per : Ramesh Nair
This appeal is directed against the Order-in-Appeal No.356 (CFS/Mulund) /2013 /JNCH /IMP-280 dt. 05.04.2013 passed by the Commissioner of Customs (Appeals), Jawaharlal Nehru Custom House, Sheva, Mumbai-II. In the said impugned order the Ld. Commissioner has set aside the order of the Assistant Commissioner and allowed the appeal of the assessee. The issue involved in this case is the custom classification of the imported goods SIMILAC 2. The Revenue during assessment made the classification under CTH 21069099 as a food supplement, as against the claim of the respondent under CTH 19011090 as food preparation for infants. The assessing authority vide order in original no. 247/2012-13 dated 30/07/2012 held that subject goods is classifiable under CTH 21069099 and attracting BCD at the rate of 30%; the said goods is not eligible for benefit of notification no. 010/2008-Cus Sr. No.9, as the goods of 21069099 are not covered; goods are also directed to be assessed on RSP based CVD as applicable vide CE notification No. 49/2008; duty shall be paid with interest accordingly. Being aggrieved, the respondent filed appeal before the Commissioner of Custom (Appeals), Mumbai Zone II, which was allowed vide order-in-Appeal No. 356(CFS MULUND) 2013/JNCH/IMP-280 dated 5/4/2013, wherein the Ld. Commissioner(Appeals) has held that the product is specifically marked as food supplement for infant. It is a substitute for the mothers milk. It was held that product in question can not be classified or termed as supplement. Aggrieved with the said order dated 5/4/2013, the Revenue is before us.
2. Shri M.S. Reddy, Ld Dy. Commissioner, (A.R.) appearing for the Revenue submits that the product SIMILAC-2 is not baby food but food supplements containing proteins, minerals, vitamins, carbohydrates fats. The product is required to be taken under medical advise as seen from the leaflet pasted on the product. It has restrictive use, it needs, doses have to be prescribed by the doctor. It is his submission that when any product has to be used as per physicians advise, the same can not be treated as food preparation. He submits that all food supplements are classifiable under CTH 21069099. The ingredient in SIMILAC-2 indicates that it is supplement having medicinal and nutritional qualities as specific proteins, minerals, vitamins. This can not be said to be obtained from milk of chapter 4 as in this case the importer has not provided fat content of skimmed milk which is restricted to 1.5 %. He submits that the product literature indicates that the product mainly contained Omega 3 and 6 fatty acid which builds block of brains and eye development, chlorine- which develops brain memory centre, iron, chlorine , zinc, folic acid, iodine etc. all in specified proportion to provide nutrients for healthy growth of an infant. Thus the product is formulated to support nutrient need of the baby during early stages, therefore it can not fall under the category of food obtained from milk. It is his submission that CTH 19.01 covers only basic food preparation of flour, meal etc. Subject raw material have been put through process of complicated extraction and separation resulting in products and other nutrients have been added to manufacture the subject goods. The product under import are supplements for children consumption containing products matter, carbohydrates, fatty matter, vitamins, minerals and other. Therefore, he submits that it is not food product but supplements and to be taken under advise, hence it is not baby food of 19.01, but a supplements to be correctly classifiable under CTH 21069099.
3. On the other hand Shri, T Viswanathan, Ld counsel for the respondent made following submissions:
As per constituents, Similac-2 contains of non fatty dry milk is 41.89 % loctose 32.5 % and other ingredients. Accordingly, the product is pre-dominantly preparation of milk powder. The milk is undisputedly classifiable under chapter 04.02. Chapter 1901 covers food preparation of goods of heading 04.01 to 04.04 not containing cocoa or contains less than 5% by weight of cocoa calculated on totally defated basis. Chapter heading 1901.10 is meant for preparation for infant use put up for retail sale. The Chapter heading 21.06 covers only those food preparation which is not specified or included elsewhere. Since the product SIMILAC 2 being specifically included under chapter heading 19.01 under the tariff entry namely Preparation for infant use, it can not be classified in residuary tariff entry that is under 21.06. As per Harmonised System Committee of World Custom Organization follow up formula in the form of powder consisting amongst other ingredients, skimmed milk intended to be consumed by the infants are to be classified under 19.01. Regarding instruction on the products such as, the product should be used only on the advise of the health worker, consultation with doctor for advise etc., reference was made to the Infant Milk Substitute, Feeding Bottle and Infant foods (Regulation of Production, Supply and distribution) Act, 1992 according to which the said instructions are mandatory requirement on the infant food product; therefore, such mention is a statutory requirement. Even as per definition of the infant food provided in the Act, 1992 supra, the product in question is nothing but infant food. He also countered the revenues contention, that the product in question is not food as it does not satisfy the hunger of human being, by referring the definition of food given in the Food Safety and Standards Act, 2006.
3.1 Ld. Counsel in support of his arguments also referred to IS 15757 specification under which the subject goods is covered as indicated on the packing. He also refers to HSN for Tariff item 04, 19 and 21. He submits that the very same product SIMILAC is being manufactured in India by M/s Drytech Processes (I) Pvt. Ltd., classification of which is accepted under 19011090 by the revenue as per sample invoice submitted by him. He also submits that product in question conforms to IS specification IS 15757 which is mandatory in terms of General Notes Regarding Import Policy in note 2(A) readwith Appendix III Sl.No.12.
4. We have carefully considered the submissions made by both the sides.
5. The moot question to be decided by us is that whether the product SIMILAC-2 imported by the respondent, merits classification under CTHS 21069099 as a food supplement, as against the claim of the respondent under 19011090 as food preparation for infants. Both the said custom tariff entries are reproduced below:
Tariff Item Description of goods Unit Rate of duty Standard Preferential 1901 1901 10 1901 10 10 1901 10 90 1901 20 00 1901 90 1901 90 10 1901 90 90 Malt extract; food preparations of flour, groats, meal, starch or malt or malt extract, not containing cocoa or containing less than 40% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included
-Preparations for infant use, put up for retail sale:
-Malted milk(including powder).
-Other
-Mixes and doughs for the preparation of bakers wares of heading 1905
-Other:
- Malt extract.
-Other..
kg.
kg.
kg.
kg.
kg.
50% 50% 30% 30% 30% Tariff Item Description of goods Unit Rate of duty 2106 2106 10 00 1206 90 2106 90 11 2106 90 19 2106 90 20 2106 90 30 2106 90 40 2106 90 50 2106 90 60 2106 90 70 2106 90 80 2106 90 91 2106 90 92 2106 90 99 Food Preparations not elsewhere specified or included
-Protein concentrates and textured protein substances.
-Other:
-Soft drink concentrates:
-Sharbat
-Other..
-Pan Masala..
-Betel nut known as supari
-Sugar-syrups containing added flavouring or colouring matter, not elsewhere specified or included; lactose syrup glucose syrup and malto dextrine syrup
-Compound preparations for making non-alcoholic beverage
-Food flavouring material .
-Churna for pan......................
-Custard powder
-Other:
-Diabetic foods..
-Sterlized or pasterised miltone
- Other.
kg.
kg.
kg.
kg.
kg.
kg.
kg.
kg.
kg.
kg.
kg.
kg.
kg.
12% 12% 12% 37.5% 12% 12% 12% 12% 12% 12% 12% 6% 12% From the reading of the above tariff entry of 1901 it is clear that Food preparations of goods of heading 0401 to 0404 is classifiable under 1901 and in particular preparations for infant use falls under 1901.10. From the heading 2106 it can be seen that it covers Food preparations not elsewhere specified or included. On analysis of both the above tariff entries, it is clear that if any food preparation is specifically covered and included in any other tariff heading other than 21.06, the same will not fall under Custom Tariff Head 21.06. The product in question i.e. SIMILAC-2 is admittedly preparation predominantly of milk powder and it is for consumption by an infant. The milk powder is goods falling under 04.02. Thus the product SIMILAC-2 is a food preparation of goods of heading 04.02 and exclusively meant for consumption of infant babies. From the above undisputed facts, it is clearly established that the product SIMILAC-2 is specifically covered under the CTH 19011090. Since SIMILAC-2 is covered under 19011090, the same can not, by any stretch of imagination, be covered under CTH 21.06 for a simple reason that the tariff entry of 21.06 is a residuary entry and only those products, which do not find any place in any specific entry, will get classified under the residuary tariff entry.
From the product literature of SIMILAC-2, it is seen that the product is a follow up formula for infants between the age of 6 months and 2 years and the same is used as a substitute for mothers milk. SIMILAC-2 is also recommended as a weaning food. We find that since the product complements the mothers milk, it is a complementary food for infant. The manufacture and sale of the infant food is subject to the observance of the provision of the following Acts and Regulations:
i. Food Safety and Standards Act, 2007 ii. Infant milk substitutes, feeding bottles and infant foods (Regulation of Production, Supply and Distrubution) Act, 1992 iii. Regulation 2.3.14 (4) of the Food Safety and Standards (Prohibition and Restriction on Sales) Regulations, 2011 iv. Bureau of Indian Standards Act, 1986 v. Indian Specification IS 15757:2007 vi. Foreign Trade Policy and ITC-HS Classification of Import and Export Items.
From the facts and literature of the product, it is found that the compliance of the above acts and rules were made, for this reason also, there is no hesitation in holding that the product in question can be termed as Infant Food.
5.1 The submission of the revenue that since there is mention on the product that the same should be used on the advise of the health worker, it is not a food but it is medicine, is not at all acceptable for the reason that in terms of the Section 6(b) of the Infant Food Act, the Respondent made a statement on the product Infant milk substitute or infant food should be used only on the advice of a health worker as to the need for its use and the proper method of its use. This statement is statutory requirement to ensure that premature babies and infants are not affected by any adverse reaction to infant food and not because it is a medicinal product as assumed by the revenue.
The Food Safety and Standards Act, 2006 in Section 3(j) defines food as under:
any substance e, whether processed, partially processed or unprocessed, which is intended for human consumption and includes primary food to the extent defined in clause (zk), genetically modified or engineered food or food containing such ingredients, infant food, packaged drinking water, alcoholic drink, chewing gum, and any substance, including water used into the food during its manufacture, preparation or treatment but does not include any animal feed, live animals unless they are prepared or processed for placing o the market for human consumption, plants, prior to harvesting, drugs and medicinal products, cosmetics, narcotic or psychotropic substances. From the above statutory definition of the food it can be seen that the definition of food is very vide and it specifically includes infant food; therefore the contention of the revenue that only goods which satisfies the hunger of the human being is food, is absolutely contrary to the above definition.
Regulation 2.3.14 (4) of the Food Safety and Standards (Prohibition and Restriction on Sales) Regulations, 2011 mandates that infant foods, follow up formula etc. can not be manufactured, sold without the BIS certification mark. In the present case the package of the product clearly bears the BIS certification and the product conforms IS 15757:2007. This specification is meant for infant food. This also goes to establish that the product is nothing else other than infant food.
The HS committee in World Customs Organisation (WCO) has also classified the product- Follow up formula, for infants above the age of 6 months based on whey and skimmed milk, and containing vitamins and minerals under sub heading 1901.10. The Delhi High Court in Manisha Pharma Plasto Pvt. Ltd. Vs. UOI, 1999 (112) E.L.T. 22(Del.) has held that the opinion of WCO can be looked into for deciding the classification, since the Excise Tariff/ Customs Tariff are based on HSN. This decision has been affirmed by the Supreme Court in Commissioner Vs. Mistair Home Products, 2007 (217) E.L.T. A142 (S.C.). In the present case also the product SIMILAC-2 is undoubtedly a Follow up formula for infants between the age of 6 months and 2 years; therefore it is correctly classifiable under CTH 1901.10 as decided by the World Custom Organisation.
5.2 As per Note 2A of the General Notes Regarding Import Policy to ITC-HS goods imported into India have to comply with the mandatory Indian Standards which are applicable to goods manufactured in India. Sl. No. 12 of Appendix III to ITC-HS covers goods covered by IS 15757:2007 titled Follow up formula-Complementary Foods-Specification. On the package of SIMILAC-2, the said IS specification is mentioned. The description of the goods amongst others, mentioned on the product is FOLOW-UP FORMULA- COMPLEMENTARY FOOD, .Similac-2 is spray dried stage 2 follow-up formula designed for infants from 6 months onward as part of a healthy diet during and after waning. From this fact, it is clear that the certification given under IS 15757:2007 itself endorses the nature of the product that it is a FOLLOW-UP FORMULA and infant food complementary to mothers milk. Therefore there is no doubt in our mind that the product SIMILAC-2 is an infant food and correctly classifiable under CTH 1901.10 and not under 21.06.
6. In view of the above discussions, we are of the considered view that the impugned order of the Ld. Lower appellate authority is absolutely legal and proper, which must be upheld and we do so. The appeal of the revenue is dismissed accordingly.
(Operative part of the order pronounced in the Court) P.R. Chandrasekharan Member (Technical) Ramesh Nair Member (Judicial) sk 12