Saccharomyces Boulardii is classifiable as Yeast: CESTAT confirms differential Duty Demand [Read Order]

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The Chennai Bench of the Customs, Excise and ServiceTax Appellate Tribunal (CESTAT), confirmed the differential duty demand and observed that Saccharomyces Boulardii is classifiable as Yeast.

The appellant, Dr. Reddy’s Laboratories Ltd, imported a consignment of ‘Saccharomyces Boulardii’ in bulk under Duty Entitlement Pass Book (DEPB) Scheme. The appellant had declared the classification as CTH 29183090 and duty was debited by the system accordingly. During post clearance audit, it was noticed from the analytical certificate dated 26.02.2009 issued by the supplier, that the goods imported are mentioned as ‘Lyophilized Saccharomyces Boulardii’.

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 redetermine the classification of the goods and for demand of differential duty along with interest.

On behalf of the appellant the Counsel P.R. Renganath appeared and argued. It was submitted that the goods imported are ‘Lyophilized Saccharomyces Boulardii’ which is Saccharomyces Boulardii cells and 13% of lactose and that the authorities below erred in observing that the test report issued by supplier did not mention the presence of any other ingredient.

The Counsel adverted to Chapter Note 1(f) of Chapter 21 and pointed out that this chapter note categorically states that ‘yeast put up as a medicament or other products of heading 3003 or 3004” are excluded from Chapter 21. Lyophilized Saccharomyces Boulardii contains 13% lactose and was imported in bulk. Therefore, being a medicament cannot be classified under Chapter 21.

The Authorized Representative (AR), G. Anandalakshmi Ganeshram supported the findings in the impugned order. 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 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 Chapter 21.

In the case of M/s. Zymonutrients Pvt. Ltd. Vs. Commissioner of Customs, the Tribunal followed the decision in the case of Kasturi Foods and Chemicals to hold that the goods imported are to be classified under Chapter 21 as determined by the Department.

The Coram comprising Sulekha Beevi CS, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that “The impugned goods are to be classified under Chapter 21 as determined by the Department.”

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