1998 (8) TMI 194 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the product 7 ADCA (7 Amino de-acetoxy cephalosporonic acid).
2. Eligibility for exemption under Notification 122/86-C.E.
3. Determination of whether 7 ADCA is an "amine function compound" or an "anti-biotic."

Issue-wise Detailed Analysis:

1. Classification of the Product 7 ADCA:
The primary issue is whether 7 ADCA should be classified under CET sub-heading 2921.00 as an "amine function compound" or under CET sub-heading 2941.90 as "other anti-biotics." The Revenue argues for classification under CET sub-heading 2921.00, while the assessees claim classification under CET sub-heading 2941.90.

The process of manufacturing 7 ADCA involves multiple steps and intermediate products, including peracetic acid, sulfoxide, BSU, and 7 APDCA. The Chemical Examiner opined that 7 ADCA belongs to the B-Lactum anti-biotics group under the class of Cephalosporins. It was noted that certain amine function compounds, such as Amoxycillin and Cephalexin, are also anti-biotics. Therefore, the fact that 7 ADCA is an amine function compound does not solely determine its classification.

2. Eligibility for Exemption under Notification 122/86-C.E.:
The Department contended that the benefit of exemption under Notification 122/86-C.E. was not available to 7 ADCA as it did not figure in the annexure appended to the notification. Consequently, a show cause notice was issued demanding duty and proposing confiscation of seized 7 ADCA. However, the Additional Commissioner of Central Excise, Vadodara, accepted the assessees' claim for classification under CET sub-heading 2941.90 as anti-biotics, which were leviable to nil rate of duty at the relevant time. This order was appealed by the Revenue.

3. Determination of Whether 7 ADCA is an "Amine Function Compound" or an "Anti-biotic":
The definition of "anti-biotic" is crucial for deciding the classification. The Condensed Chemical Dictionary and HSN Explanatory Notes describe anti-biotics as substances produced by micro-organisms that inhibit the growth of other micro-organisms or destroy them. The respondents provided microbiological tests showing that 7 ADCA has anti-microbial properties comparable to anti-biotics like Cephalexin and Ampicillin. Expert testimony from Dr. Tipnis supported the claim that 7 ADCA is an anti-biotic itself and can be used as an intermediate for other anti-biotics.

The Revenue's contention that 7 ADCA is not an anti-biotic was based on its classification as an amine function compound, the opinion of the Chemical Examiner, and a certificate from the Food and Drugs Control Administration. However, both the Chemical Examiner and the Assistant Commissioner, Food and Drugs Control Administration, stated in cross-examination that they had not conducted tests to determine if 7 ADCA had anti-microbial properties. The burden of proving that 7 ADCA is excluded from classification as an anti-biotic under Heading 29.41 lies with the Revenue, which was not discharged.

Conclusion:
The Tribunal held that 7 ADCA falls for classification as an anti-biotic under CET sub-heading 2941.90. Consequently, the appeal filed by the Revenue (E/4941/92-C) was rejected, and the appeal filed by the assessees (E/1903/93-C) was allowed. The appeals were disposed of accordingly.