2024 (8) TMI 1000 - AT - Customs

Classification of imported goods - Montanide ISA 206 VG - to be classified under CTH 38249090 or CTH 30023000? - importer has claimed classification under CTH 38249090, whereas department has proposed and classification under CTH 30023000 as Vaccine for veterinary medicine - HELD THAT - The adjuvants are to be classified as per the material composition in the respective Tariff heading. The appellant imports different Adjuvants , based on their composition, they are being classified, accordingly. It is found that the item imported is Immunological Adjuvant used in the preparation of vaccines for human and animals. Immunological Adjuvant was classified by the Department under Tariff Item 30023000 as Vaccine for veterinary medicine as against the appellants declaration under Tariff Item 38249090 as chemical products not elsewhere mentioned even though the imported goods are injectable mineral oil and emulsifier obtained from mannitol and purified oleic acid of vegetable origin. The Adjuvants are of different types and they are used for the purpose of enhancing the immune response in the Immunological vaccines administered for humans and animals. It is found that to classify Adjuvant as a vaccine by the Department is incorrect and not legally tenable. Therefore, the confirmation of demand with interest is legally not sustainable, hence it needs to be set aside - it is also found that the imposition of penalty under Section 114A of the Customs Act. 1962 is also not sustainable as there is no misdeclaration or suppression of facts as all the details are submitted at the time of filing the bill of entry. The appeal is allowed.

Summary

Issues:
Classification of imported goods under CTH 38249090 or CTH 30023000 as "Vaccine for Veterinary Medicines"; imposition of penalty under Section 114A of the Customs Act, 1962.

Detailed Analysis:

Issue 1: Classification of Imported Goods
The appellant imported "Montanide ISA 206 VG" and paid Customs duty, classifying it under CTH 38249090 as a chemical product. The Respondent issued a Show Cause Notice proposing classification under CTH 30023000 as "Vaccine for Veterinary Medicines." The dispute arose as the imported goods were Adjuvants, not vaccines. The Adjudicating Authority held that when mixed with a vaccine, the Adjuvant acquires vaccine-like qualities. The appellant argued that the imported goods were raw materials for vaccines, not vaccines themselves, and should not be classified as such. The Commissioner (Appeals) classified the goods as vaccines based on functional parameters, which the appellant contended was erroneous. The Tribunal found the Department's classification as a vaccine to be incorrect and unsustainable in law. The appeal was allowed, setting aside the demand for classification under CTH 30023000.

Issue 2: Imposition of Penalty
The Department imposed a penalty under Section 114A of the Customs Act, 1962. The appellant argued that there was no misdeclaration or suppression of facts, as all details were provided during the bill of entry filing. The Tribunal held that the penalty was not warranted in a classification dispute where no wilful misstatement or suppression existed. Citing relevant case laws, the Tribunal found the imposition of the penalty to be unsustainable. Consequently, the penalty under Section 114A was set aside.

In conclusion, the Tribunal allowed the appeal, setting aside the classification under CTH 30023000 and the penalty under Section 114A of the Customs Act, 1962. The classification of the imported goods as vaccines was deemed incorrect, and no evidence of misdeclaration or suppression of facts was found. The decision was pronounced in open court on 16.07.2024.