2024 (11) TMI 740 - AT - Customs

Correct description/classification of the goods - Import of ELISA Test Kits for food testing - Appellant had classified their products under 3822 00 90 as the goods were food testing kits and reagents - eligibility of exemption under Notification No. 12/2012-Cus dated 17.03.2012, subsequently under Notification No. 50/2017-Cus dated 30.06.2017 - Main allegation is of importing goods ELISA Test Kit for food testing but declaring them as ELISA Test Kit for diagnostic use only Whether the imports made by the appellant of ELISA kits for food testing can be treated as ELISA test kits for diagnostic use so as to be eligible to claim the benefit of S.No. 167 (A) of Notification No. 50/2017-Cus dated 30.06.2017 specifying BCD at Nil? - HELD THAT - It is a settled principle of law that explanatory notes to HSN is a safe guide to determine the classification of goods and in order to determine the true scope of the tariff heading, the relevant Explanatory Notes of HSN pertaining to CTH 3822 as says such reagents are used in the evaluation of physical, biological or biochemical processes and states in animals and humans, of the nature of prepared diagnostic reagents that are to be administered to patients in vivo applications. In other words, the reagents or kits which are for the purpose other than for diagnostic purposes on human and animals are not covered within the meaning of diagnostic kits or diagnostic reagents on a backing, i.e, kits. The contention of appellant that the diagnostic purpose can be for food testing also is unsustainable in the context of the exemption notification which has to be construed and interpreted in the light of the words/expressions used therein. Referring to the various decisions of the Supreme Court, the learned Authorised Representative reiterated the principle that the exemption notification has to be construed strictly and therefore, no benefit can be granted to the appellant under the exemption notifications as they do not fulfil the criteria specified therein. Appellant has failed to discharge the burden that ELISA kits imported by the appellant falls within the parameters of the exemption notification. Moreover, as discussed above, the expression used in the Notification is limited to medicines/drugs, etc. and diagnostics kits specified in List 4 which are basically for medical purposes. The intent of the notification is to extend the exemption to products related to medical treatment. No ambiguity in the contents of the notification which are plain and simple and even, if there is any, the benefit of such ambiguity cannot be claimed by the appellant and hence we interpret the same in favour of the Revenue. The term food testing can neither be implied nor added to the expression diagnostic kits as provided in the notification. Thus we conclude that ELISA kits imported by the appellant were not used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans, and as a result, they were not diagnostic reagent/kits rather they were meant to be used for food testing and, therefore, did not fulfil the criteria to avail the benefit of expression as per the notification.

Issues Involved:

1. Eligibility for exemption under Notification No. 50/2017-Cus and Notification No. 01/2017-Integrated Tax (Rate) for imported "ELISA Test Kits for food testing."
2. Classification of goods as "diagnostic kits" or "food testing kits."
3. Alleged mis-declaration and suppression of facts by the importer.
4. Imposition of differential duty, confiscation of goods, and penalties under various sections of the Customs Act.

Detailed Analysis:

1. Eligibility for Exemption:

The primary issue revolves around whether the imported "ELISA Test Kits for food testing" qualify for exemption under Notification No. 50/2017-Cus and Notification No. 01/2017-Integrated Tax (Rate). The exemption is available for diagnostic test kits specified in List 4, which includes "Enzyme Linked Immuno absorbent Assay, ELISA Kits." The Tribunal concluded that the exemption is intended for medical diagnostic kits related to life-saving drugs or medicines, not for food testing kits. The emphasis on "life-saving" in the notification indicates that the exemption is meant for items used in medical diagnosis, thus excluding food testing kits from its scope.

2. Classification of Goods:

The classification of the imported goods is crucial to determining eligibility for exemption. The appellant argued that the term "diagnostic" is not limited to medical use and includes food testing. However, the Tribunal found that the goods were classified under CTH 3822 00 90, which pertains to non-medical diagnostic reagents. The Tribunal emphasized that the diagnostic kits mentioned in the exemption notification are for medical purposes, and the imported kits, being for food testing, do not qualify as diagnostic kits under the notification.

3. Alleged Mis-declaration and Suppression of Facts:

The Tribunal addressed allegations of mis-declaration and suppression of facts by the importer. It was noted that the appellant initially declared the goods as food testing kits but later changed the description to "diagnostic use" to claim exemption. The Managing Director admitted that the kits were used for food testing, not for diagnosing illnesses in humans or animals. This change in description was seen as an attempt to mislead and avoid the correct payment of duty, supporting the allegations of mis-declaration.

4. Imposition of Differential Duty, Confiscation, and Penalties:

The Adjudicating Authority confirmed the demand for differential duty and ordered the confiscation of goods, with penalties imposed under Sections 112(a), 114A, and 114AA of the Customs Act. The Tribunal upheld these findings, emphasizing the appellant's failure to prove that the imported goods fell within the exemption parameters. The Tribunal also affirmed the penalty on the Managing Director for his role in the mis-declaration, finding no reason to interfere with the Adjudicating Authority's order.

Conclusion:

The Tribunal dismissed the appeals, affirming the Adjudicating Authority's order. It concluded that the imported ELISA kits were not used for medical diagnostic purposes and thus did not qualify for exemption under the relevant notifications. The Tribunal reiterated the principle that exemption notifications must be interpreted strictly, and the burden of proof lies with the assessee to demonstrate eligibility. The appellant's failure to meet this burden resulted in the dismissal of the appeal and the imposition of penalties.

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