2005 (1) TMI 575 - AT - Customs

Summary

Issues:
1. Interpretation of Customs Notification No. 36/96 regarding duty exemption for diagnostic test kits for detection of HIV antibodies.
2. Validity of a license issued by the Drug Controller of India for import purposes.
3. Whether the purpose of use of diagnostic kits affects their eligibility for duty exemption.

Analysis:
1. The case revolves around the interpretation of Customs Notification No. 36/96, which provides a duty exemption for diagnostic test kits for detecting HIV antibodies. The appellant imported such kits from the USA and claimed the exemption. However, the exemption was denied on the grounds that the kits were licensed for research purposes and not for diagnosis. The Licensing Authority had issued a license with a remark stating "For Research Purposes only and not for diagnostic Purposes." Despite this remark, the appellant held a valid license as required by the Customs Notification.

2. The lower appellate authority denied the exemption, citing the remarks on the license as a reason for ineligibility. However, the Tribunal found this reasoning illogical. It emphasized that a diagnostic kit remains a diagnostic kit regardless of whether it is used in a research lab or a Pathological laboratory. The Tribunal also noted that the supplier did not certify the kits as diagnostic kits due to FDA approval status but acknowledged their use as diagnostic kits in Europe. The Tribunal questioned the Licensing Authority's power to specify the use of the kits in the license, stating that the authority's role is to permit or deny import, not dictate the purpose of use. As the importer met the conditions of the Customs Notification, the Tribunal concluded that the benefit of duty exemption should be granted.

3. Ultimately, the Tribunal set aside the Commissioner's order and allowed the appeal, affirming the appellant's entitlement to the duty exemption for the imported diagnostic test kits. The judgment highlights the importance of the actual nature of the product (diagnostic kit) over the intended use specified by the licensing authority, emphasizing compliance with the Customs Notification requirements for duty exemption eligibility.