Excise | Dietary Supplements Not Pharma Products, CESTAT Delhi Orders Recovery Of ₹1.63 Crore And Personal Penalty On Plant Head

The Delhi Bench, Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Dietary Supplements were not food products, not pharmaceuticals, hence not eligible for area-based excise exemption. A Bench comprising Smt. Binu Tamta (Judicial Member) and Shri. P.V. Subba Rao (Technical Member), dismissed the appeal filed by Pharmaceutical Company by upholding demand of ₹1.63 crore duty with interest as well as penalty equal to duty on the Company and personal penalty on Plant Head. During July, 2011 to March, 2015, Appellant manufactured Dietary Supplements and cleared them without paying excise duty from its manufacturing unit at Uttrakhand. They classified the Dietary Foods Supplements under Central Excise Tariff Heading (CETH) 30031000/30032000. However, the Excise Department alleged misclassification on the premise that classifiable under CETH 21069099 and ineligible for Area-Based Exemption for pharma products. A Show Cause Notice was issued denying exemption together with a recovery of ₹1.63 crore duty, interest and penalties. Upon adjudication, the demand came to be confirmed, and equal penalty was imposed on company, as also a ₹5 lakh penalty on Plant Head which was later reduced to ₹2 lakh. Appellant contended that it was eligible for Area-Based Exemption under Notification 49/2003 as Dietary Supplements were nutritional preparations, not excluded by Chapter Note 1(a) of Chapter 30. As for duty amount it was submitted that same should be based on MRP. Contrarily, the Department supported misclassification claim and submitted that Dietary supplements stood excluded by Chapter Note 1(a) of Chapter 30 (Pharmaceutical products). On a perusal of the relevant Chapter Note relating to Pharmaceutical products, CESTAT Delhi observed that Appellant had the intention to evade which is why it declared 'Dietary Supplements' as 'Pharmaceutical products' despite knowing that the same would not fall under CETH 30.04. It was also opined that Appellant did not declare the Dietary Supplements in the form of tablets, capsules, syrups and drops manufactured by it. As for the contention of Appellant that duty calculation should be on MRP on each wrapper., CESTAT points out that what was the correct amount of duty that should have been was not mentioned by it. Thus, CESTAT Delhi confirmed the demand, interest as well as penalty on the company, Plant Head as Appellant had mis-declared the nature of goods by not declaring the Dietary Supplements which it was manufacturing. Accordingly, the appeal was dismissed by holding in favour of Revenue. Case Detail: Orchid Bio-Tech Pvt. Ltd. vs. Commissioner, CGST, Dehradun For Respondent: Mr. Bhagwat Dayal (Authorized Representative) Click Here To Read/Download Order

Excise | Dietary Supplements Not Pharma Products, CESTAT Delhi Orders Recovery Of ₹1.63 Crore And Personal Penalty On Plant Head

Parul Bose

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