2002 (1) TMI 103 - AT - Central Excise

Summary

Issues Involved:
1. Classification of various products.
2. Whether the demand of duty is time-barred.
3. Determination of duty and penalties.

Summary:

1. Classification of Products:

Blood-grouping Reagents:
The main dispute involved the classification of products (1) to (6) as blood-grouping reagents. The Commissioner classified these products under CSH 3005.90 of the CET Schedule, relying on the product literature and Note 3(e) to Chapter 30. The appellants argued for classification u/s 3002.00 as "cultures of micro-organisms," citing the Hybridoma technology used in their production. However, the Tribunal upheld the classification under CSH 3005.90, emphasizing that the products were known in common parlance as blood-grouping reagents and not as monoclonal antibodies.

Pregnancy Test Kits (PTKs):
Products (7) to (9) were classified by the Commissioner under CSH 3822.00 as 'Diagnostic and laboratory reagents.' The appellants contended that these should be classified as 'Antisera' under CSH 3002.00, arguing that the PTKs were derived from goat antisera. The Tribunal agreed with the appellants, noting that the products were appropriately classifiable under Heading 30.02 as antisera, thereby excluding them from Heading 38.22.

Syphilis RPR and Salmonella Antigens:
For products (10) and (11), the Commissioner classified them under CET Heading 38.22. The Tribunal upheld this classification, finding no evidence to support the claim that these products were 'blood fractions' or 'cultures of micro-organisms' under Heading 30.02.

2. Time-bar Issue:
The SCNs invoked the extended period of limitation u/s 11A(1) of the Central Excise Act. The appellants argued that there was no suppression of facts as they had been filing declarations and the Department was aware of their activities. The Tribunal, however, found that the declarations were not properly filed and that there was suppression and misdeclaration with intent to evade duty. Thus, the extended period was correctly invoked.

3. Determination of Duty and Penalties:
The Tribunal directed the adjudicating authority to re-quantify the duty for products (1) to (6), (10), and (11), considering whether Modvat credit and abatement of duty from the sale price could be allowed. The penalty of Rs. 1,25,85,035/- imposed on the assessee was set aside, with instructions to redetermine the penalty in accordance with law. The demand for interest u/s 11AB on the duty payable w.e.f. 28-9-96 was sustained. The penalty imposed on the company's Managing Director was set aside due to lack of evidence of mens rea.

Conclusion:
The Tribunal upheld the classification of blood-grouping reagents and non-PTK diagnostic/laboratory reagents under CET Heading 38.22 but reclassified PTKs under Heading 30.02. The extended period for duty demand was upheld, and the adjudicating authority was directed to re-quantify duty and penalties in accordance with the Tribunal's observations.