Case Law Details

Case Name : In re Dow Agro Sciences India Pvt. Ltd. (CAAR Mumbai)
Appeal Number : Ruling No. CAAR/Mum/ARC/1/2021
Date of Judgement/Order : 05/03/2021
Related Assessment Year :

In re Dow Agro Sciences India Pvt. Ltd. (CAAR Mumbai)

Import of insecticides/pesticides is subject to the provisions of the Insecticides Act, 1968. As per provisions of section 9 of the said Act, no insecticides are allowed to be imported without a valid certificate of registration or an import permit issued by the Secretary, Central Insecticide Board & Registration Committee under his signature and office seal. Any person desiring to import or manufacture any insecticide may apply to the Registration Committee for the registration of such insecticide and there shall be a separate application for each such insecticide to obtain the certificate of registration. The applicant has submitted a copy of the registration dated 18.03.2016 granted to biological insecticide ‘Spinetoram 11.7% SC’ for import under section 9(3) of the Act, ibid. In view of the same, the fact that manufacturing process of `Spinetoram’ involves chemical/synthetic modification of fermented Saccharopolyspora Spinosa is not sufficient to reject the applicant’s assertion that it is a bio-pesticide.

Thus, the product in question is classifiable under chapter 38; is a bio-pesticide and is based on Saccharopolyspora spinosa.

FULL TEXT OF ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI

M/s. Dow AgroSciences India Pvt Ltd, having IEC No. 0395045771 (the applicant, hereinafter), through their legal representative, Sri Ashwani Kumar Prabhakar, Advocate from the firm M/s. KPS Legal, filed an application for advance ruling dated 17.02.2020 before the Authority for Advance Ruling, New Delhi (AAR, in short). The said application was received in the registry/secretariat of the AAR on 17.02.2020 and a deficiency memo was issued on 03.03.2020 from F. No. AAR/44/CUS-I/04/2020. The applicant submitted their reply vide letter dated 16.03.2020, which was received by the AAR on 11.05.2020. Vide letter F. No. AAR/44/CUS-l/04/2020 dated 18.05.2020, the applicant was advised to file their rectified application in terms of the provisions of section 28-H (3) of the Customs Act, 1962. The applicant removed the defects and re-filed their application vide their communication dated 04.12.2020, which was received by the AAR of 10.12.2020.

2. Subsequent to the appointment of the Customs Authorities for Advance Rulings (CAAR, in short) at New Delhi and Mumbai w.e.f. 04.01.2021, the aforementioned application, based on the postal address of the applicant, has been transferred to the CAAR, Mumbai.

Accordingly, the said application has been treated as having been filed on 10.12.2020 and is being taken up for decision.

3. The issue for which the subject advance ruling has been sought can be summarized as follows: –

“Whether the product, ‘Spinetoram’ is eligible for exemption under the Entry No. 249 of the Notification No. 50/2017-Cus., dated 30.06.2017.”

4. Spinetoram is described by the applicant as a new chemical in the spinosyn class of insecticides developed by Dow AgroSciences LLC. It is derived from the fermentation of Saccharopolyspora spinosa. It is then chemically modified to create unique active ingredients. The active ingredient Spinetoram is composed of two chemical compounds Spinetoram-J and Spinetoram-L. Synthetic modification of these two ingredients confers improved insecticidal activity and residuality to Spinetoram. The usage of Spinetoram, as submitted by the applicant, is summarised as under: –

  • It is used for integrated pest management in conventional and transgenic crops.
  • It provides long-lasting control of insect pests in a variety of crops.
  • It is applied at low rates and has a low impact on most beneficial insects in field conditions.

5. The Commissioner of Customs (Import), Air Cargo Complex, Mumbai (ACC, Mumbai, in short), in his comments dated 19.02.2021, in respect of the applicant’s request, has described the characteristics of bio-pesticides and the product in question and has concluded that Spinetoram is a semi-synthetic insecticide and not a bio-insecticide, and therefore, the benefit of the exemption sought for would not be available to the applicant. ACC, Mumbai has placed considerable reliance on the study ‘Comparison of the Bioinsecticide, Spinosad, the semi-synthetic Insecticide, Spinetoram and Synthetic Insecticides as Soil Drenches for Control of Tephritid Fruit Flies’ by John D. Stark et al. of Washington State University in coming to the conclusion that Spinetoram is a semi-synthetic insecticide and not a biopesticide.

6. The applicant was granted an opportunity of being heard in person. A copy of the comments and other literature from the ACC, Mumbai was provided to the representative of the applicant at the time of hearing with an option to file rejoinder/rebuttal, if any, by 26.02.2021. Sri Prabhakar appeared on behalf of the applicant in virtual mode and reiterated the submissions made in their application seeking advance ruling. During the course of the hearing, the learned counsel was asked as to what evidence they can produce to prove that Spinetoram is a biopesticide and also whether chemical analysis is capable of establishing the biogenic origins of the product. The learned counsel promised to submit the requisite documents/information after consulting the applicant. The additional submissions on behalf of the applicant were filed on 24.02.2021. In the said submissions, the applicant has provided some technical and commercial literature explaining the origin of Saccharopolyspora spinosa, discovery of Spingtororitth’grilyAkEtagrams/ characteristics/usage/mode of action etc. w.r.t. the product under consideration. Test reports from AnaZeal Analyticals and Research Pvt. Ltd., C-404, TTC Industrial Area, Opposite JISL, MIDC, Pawane, Navi Mumbai — 400705; tested under requisition from the Insecticide Inspector and Technical Officer, Quality Control, 0/o the Divisional Joint Director of Agriculture, Thane. Registration certificate from CIB & RC in respect of Spinetoram is also a part of the additional submissions filed by the applicant. However, the applicant has not submitted any rejoinder/rebuttal w.r.t. the comments offered by the Jurisdictional Commissioner.

7. I have analysed the materials before me. The Entry No. 249 of the Notification No. 50/2017-Cus., dated 30.06.2017 is re-produced below: –

Sr. Chapter or Description of goods Standard Integrated Condition
No. Heading or
sub—
heading or
tariff item
rate Goods and Services Tax No.
249 38 Bio-pesticides, based on –

i. Bacillus thuringiensis var. kurstaki

ii. Bacillus thuringiensis var. israelensis

iii. Bacillus sphaericus

iv. Saccharopolyspora spinosa

5% – –

A perusal of the above entry reveals that, for the purposes of the present application, three conditions are required to be met for Spinetoram to be eligible for the benefit of the above referred notification: –

  • The product should merit classification under Chapter 38
  • The product should be a bio-pesticide
  • The product should be based on Saccharopolyspora spinosa

8. The product literature supplied by the applicant, submitted by the Commissioner (Import), ACC, Mumbai; and those available on open sources, indicate that ‘Saccharopolyspora spinosa’ is a species of bacteria isolated from a sugar mill rum still. Spinosad is an insecticide based on chemical compounds found in the bacterial species ‘Saccharopolyspora spinosa’, and is said to be a mixture of chemical compounds in the spinosyn family that has a generalized structure consisting of a unique tetracyclic ring system attached to an amino sugar(D-forosamine) and a neutral sugar(tri-O-methyl-L-rhamnose). Spinetoram is described as a new member of the spinosyn class of insect management tools. Like Spinosad, it is also drive from fermentation of Saccharopolyspora spinosa and then chemically modified to create its unique active ingredients. The applicant has stated that Spinetoram is a result of a novel approach to compound optimization, specifically the application of artificial neural networks to understand quantitative structure activity relationships. The information provided by the applicant is validated by Chaoxian Geng et. al., in their article, ‘Target Receptors in the Control of Insect Pests’ published in Advances in Insect Physiology, 2013(Elsevier) which describe the spinosyns as insecticidal natural products originated from Saccharopolyspora spinosa. Spinosad, the first commercial product, is a mixture of two naturally occurring spinosyns (A & D). A second product, spinetoram, is a mixture composed of two synthetically modified spinosyns that, compared to Spinosad, provides improved insecticidal potency and a broader pest insect spectrum. Similar is the findings of Kai Zhang et. al. in ‘Semi-synthesis and insecticidal activity of spinetoram J and its D-forosamine replacement analogues’ published in the Beilstein Journal of Organic Chemistry. In view of the materials placed before me, there appears to be no dispute that Spinetoram is a semi synthetic insecticide and is based on `Saccharopolyspora spinosa.’The United States Environmental Protection Agency also describes Spinetoram as an insecticide and a fermentation product of saccharopolyspora spinosa and an analogue of spinosad a spinosyn.

9. The applicant contends that ‘Spinetoram’ classifiable under sub-heading 38089910 of the customs tariff. For the sake of clarity, the relevant tariff entries and the notes are reproduced below: –

“Chapter 38: Miscellaneous chemical products

NOTE 1: This Chapter does not cover: (a) separate chemically defined elements or compounds with the exception of the following: (1) artificial graphite (heading 3801); (2) insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products, put up as described in heading 3808; …

HS Code 3808: INSECTICIDES, RODENTICIDES, FUNGICIDES, HERBICIDES, ANTI-SPROUTING PRODUCTS, AND PLANT-GROWTH REGULATORS, DISINFECTANTS AND SIMILAR PRODUCTS, PUT UP IN FORMS OR PACKINGS FOR RETAIL SALE OR AS PREPARATIONS OR ARTICLES (FOR EXAMPLE, SULPHUR-TREATED BANDS, WICKS AND CANDLES, AND FLY-PAPERS)”

9.1 After going through the manufacturing process, features, usage, and mode of action of ‘Spinetoram’ there appears to be no dispute that it merits classification under HS code 3808. The spinetoram is also put up in such form that there can be no doubt that they are meant for retail supply.

9.2 Customs database indicates that it is currently being classified under sub-heading 38089199. It is seen that under the tariff classification scheme of UK, `Spinetoram’ is classified under tariff item 3808919060 [Insecticides – others — Spinetoram (ISO) (CAS RN 935545-74­7), preparation of two spinosyn components (3′-ethoxy-5,6-dihydro spinosyn J) and (3′-ethoxy- spinosyn L)]. Since„the„44Apose of the present proceedings is not to provide a ruling on the classification of ‘Spinetoram’, it is sufficient to conclude that ‘Spinetoram’ is classifiable under Chapter 38 of Indian Customs Tariff, so long as it is continued to be imported in a form which is in conformity with the conditions laid down in the tariff.

10. Insecticides are a type of pesticide that is used to specifically target and kill insects. The features, usage, and mode of action of Spinetoram indicate that the product is an insecticide, targeting harmful insects. A pesticide is defined as any substance or mixture of substances, intended for preventing, destroying or controlling any pest including vectors of human or animal diseases, unwanted species of plants and animals. Pesticides are classified according to their use and kinds of applications as insecticides, fungicides, herbicides and, other pesticides. Therefore, it is safe to conclude that insecticide is a sub-set of pesticide. Spinetoram is derived from the fermentation of Saccharopolyspora spinosa and it is then chemically modified to create unique active ingredients. Its manufacturing involves some degree of synthetic modification. This is the reason why the Commissioner of Customs (Import), ACC, Mumbai is of the view that it is not a biogenic product.

11. Import of insecticides/pesticides is subject to the provisions of the Insecticides Act, 1968. As per provisions of section 9 of the said Act, no insecticides are allowed to be imported without a valid certificate of registration or an import permit issued by the Secretary, Central Insecticide Board & Registration Committee under his signature and office seal. Any person desiring to import or manufacture any insecticide may apply to the Registration Committee for the registration of such insecticide and there shall be a separate application for each such insecticide to obtain the certificate of registration. The applicant has submitted a copy of the registration dated 18.03.2016 granted to biological insecticide ‘Spinetoram 11.7% SC’ for import under section 9(3) of the Act, ibid. In view of the same, the fact that manufacturing process of `Spinetoram’ involves chemical/synthetic modification of fermented Saccharopolyspora Spinosa is not sufficient to reject the applicant’s assertion that it is a bio-pesticide.

12. Thus, the product in question is classifiable under chapter 38; is a bio-pesticide and is based on Saccharopolyspora spinosa.

13. In view of the aforesaid findings, I rule that `Spinetoram’ is eligible for the benefit provided under Entry No. 249 of the Notification No. 50/2017-Cus., dated 30.06.2017, as amended.

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