2001 (12) TMI 129 - AT - Central Excise

Antisera - Blood grouping reagents - Assessment whether provisional - Valuation (Central Excise)

Issues Involved:
1. Classification of products under the appropriate headings of the Central Excise Tariff Act (CETA), 1985.
2. Provisional assessment and re-classification of products.
3. Legal arguments regarding the classification and eligibility for benefits under specific notifications.
4. Determination of differential duty and its retrospective application.
5. Admissibility of Modvat credit and classification as bulk drugs.

Detailed Analysis:

1. Classification of Products under Appropriate Headings:

Products in Annexure-A (Sr. Nos. 1 to 34):
The core issue was whether these products, which are antisera used for blood grouping, should be classified under Heading 3002 or 3005. The assessee claimed classification under Heading 3002, arguing that antisera are specific products derived from blood and used for various purposes, including blood grouping. The Revenue supported classification under Heading 3005, asserting that antisera used for blood grouping are blood grouping reagents. The tribunal concluded that antisera used for blood grouping fall under Heading 3005, as they are specifically mentioned as blood-grouping reagents in Chapter Note 3(e) to Chapter 30.

Products in Annexure-A (Sr. Nos. 35 to 37):
These products, being Purified Protein Derivatives (PPD) obtained from tuberculosis bacteria, were initially classified under Heading 30.05 by the Assistant Collector, but the Commissioner (Appeals) reclassified them under Heading 30.02. The tribunal upheld the classification under Heading 3005.90, emphasizing that the products are diagnostic reagents designed to be administered to the patient, satisfying the conditions prescribed in Chapter Note 3(d) to Chapter 30.

Products in Annexure-B (Sr. Nos. 1 to 3 and 5 to 15):
The dispute was whether these products should be classified under Heading 30.02 or 38.22. The Assistant Collector classified them under Heading 38.22, considering them as miscellaneous chemical preparations. The Commissioner (Appeals) reclassified them under Heading 30.02, considering the principal factors in the combination as derivatives of human or animal blood or toxins. The tribunal upheld the classification under Heading 30.02, stating that the products are appropriately covered under this heading as laboratory reagents.

Freunds Adjuvant (Sr. No. 4 of Annexure-B):
The Commissioner (Appeals) classified this product under Heading 38.22 based on the advice of the Dy. Chief Chemist. The tribunal, however, reclassified it under Heading 30.05, applying the logic that the principal elements in the compound are antigen and micro bacteria.

2. Provisional Assessment and Re-classification of Products:
The provisional assessment was initially ordered on 27-8-93, and a show cause notice was issued on 19-8-94, proposing re-classification of the products. The Assistant Commissioner finalized the classification list as proposed in the show cause notice on 13-5-94. The Commissioner (Appeals) modified this classification, leading to further appeals and cross-objections.

3. Legal Arguments Regarding Classification and Eligibility for Benefits:
The assessee argued that the products should benefit from Notification 31/88-C.E., dated 1-3-88, as 'drugs' or 'bulk drugs'. The tribunal noted that the classification of products as bulk drugs should be reconsidered by the Assistant Commissioner, emphasizing the need for a thorough examination of the attendant circumstances.

4. Determination of Differential Duty and Its Retrospective Application:
The differential duty was calculated from 9-3-93, the date of filing the classification list. The Commissioner (Appeals) held that the duty should be calculated only from 27-8-93, the date of provisional assessment. The tribunal directed the Assistant Commissioner to reconsider this issue, taking into account the requisite bonds under Rule 9B and the relevant case law, including the judgment of the Larger Bench in Rajiv Mardia v. Commissioner of Central Excise & Customs, Indore.

5. Admissibility of Modvat Credit and Classification as Bulk Drugs:
The Commissioner (Appeals) accepted the plea for availment of Modvat credit and directed that the price should be treated as inclusive of duty. The tribunal upheld these directions, citing the Larger Bench judgment in Srichakra Tyres Ltd. v. CCE, Madras, which held that where any duty is attracted subsequent to the sale of the goods, the price would become Cum-duty-price.

Conclusion:
The tribunal upheld the classification of products under Heading 3005 for antisera used for blood grouping and PPD, and under Heading 30.02 for products in Annexure-B, except Freunds Adjuvant, which was reclassified under Heading 30.05. The issues regarding differential duty and Modvat credit were remanded to the Assistant Commissioner for reconsideration.

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