1984 (9) TMI 180 - AT - Customs

Summary

Issues Involved:
1. Classification of Hirudoid substance under the Customs Tariff Act, 1975.
2. Appropriate heading for customs duty assessment.
3. Interpretation of therapeutic index and chemical composition.
4. Applicability of CCCN Explanatory Notes.
5. Specific versus general classification under tariff headings.

Issue-wise Detailed Analysis:

1. Classification of Hirudoid Substance under the Customs Tariff Act, 1975:
The appellants imported Hirudoid substance for manufacturing Hirudoid Ointment and claimed assessment under heading 29.01/45(13) with customs duty at 60% + 15% ad valorem. The Assistant Collector of Customs, Bombay, classified it under heading Heparin (Mucous) in extra pharmacopoeia, considering it a natural high polymer covered by Chapter 39.06. The Collector of Customs (Appeals) confirmed this classification, stating that the imported goods are Heparinoid, an acid mucopolysaccharide, and thus fall under heading 39.06 of C.C.N. and 39.01/06 of C.T.A.

2. Appropriate Heading for Customs Duty Assessment:
The appellants argued that the appropriate heading for Hirudoid substance is 30.01 C.T.A., which covers "Organo-therapeutic extracts of glands or other organs or of their secretions" and "Other animal substances prepared for therapeutic or prophylactic uses, not elsewhere specified or included." They contended that the substance is specifically prepared for therapeutic use and is not a natural high polymer under heading 39.01/06.

3. Interpretation of Therapeutic Index and Chemical Composition:
The appellants presented certificates and documents indicating that Hirudoid substance is a standardized extract from animal organs, primarily used for therapeutic purposes, with only 1% acid mucopolysaccharide. They argued that this small portion does not justify classifying the substance under heading 39.01/06. The Collector (Appeals) did not consider these details adequately, leading to an arbitrary and legally unsound classification.

4. Applicability of CCCN Explanatory Notes:
The Tribunal referenced the case of Saurashtra Chemicals, Gujarat v. Collector of Customs, Bombay, stating that Explanatory Notes to B.T.N. (CCCN) can only serve as guidelines and are not conclusively determinative. The decision must be based on a comparative study of tariff entries in the Customs Tariff Act. The Tribunal noted that heading 39.01/06 does not specifically mention Heparin and should not include products like Hirudoid substance, which are specifically prepared for therapeutic use.

5. Specific Versus General Classification under Tariff Headings:
The Tribunal emphasized that Rule 3 of the Customs Tariff Working Schedule prefers the most specific description over a general one. Heading 30.01 is more specific for Hirudoid substance, which is prepared for therapeutic use and not for general use. Therefore, classifying it under the general heading 39.01/06 is unjustified.

Conclusion:
The Tribunal concluded that Hirudoid substance, being specifically prepared for therapeutic use and containing only a small portion of acid mucopolysaccharide, should be classified under heading 30.01 of C.T.A. 1975. The order of the lower authority was set aside, and the appeal was accepted, with consequential relief to be granted within three months.