2018 (9) TMI 640 - AT - Central Excise

Classification of goods - Diagnostics Kits - whether it is classifiable under chapter head 3822.00 or 3002.00 of first schedule to the Central Excise Tariff Act, 1985? Held that;- This Tribunal has considered the same issue in the appellant s own case M/S. RECKON DIAGNOSTICS VERSUS COMMISSIONER OF CENTRAL EXCISE, VADODARA 2011 (10) TMI 93 - CESTAT, AHMEDABAD and decided that the product in question is classifiable under chapter heading 3002.00 and not under 3822.00 - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of Diagnostic Kits under chapter heading 3822.00 or 3002.00.
2. Classification of "Pure Water" under chapter heading 2201.19 or 2201.11.
3. Determination of whether the repacking of "Pure Water" constitutes manufacture.
4. Applicability of extended period for demand and interest under Section 11A and 11AB of the Central Excise Act, 1944.

Detailed Analysis:

1. Classification of Diagnostic Kits:
The primary issue was whether Diagnostic Kits, specifically "SALMONELLA ANTIGENS," should be classified under chapter heading 3822.00 or 3002.00 of the Central Excise Tariff Act, 1985. The appellant procured "SALMONELLA ANTIGENS" classified under 3002.00 and repacked them without declaring to the department or paying Central Excise duty. The Tribunal noted that in the appellant's previous case, it had been decided that such products are classifiable under heading 3002.00, as they are meant for diagnostic use and not for medicinal use. The Tribunal referred to the Supreme Court's decision in Span Diagnostics Limited, which held that diagnostic kits fall under chapter heading 30.02 when they involve agglutination, a common reaction in diagnostic tests. Consequently, the Tribunal upheld that "WIDAL-SALMONELLA ANTIGENS KIT" should be classified under chapter heading 30.02.

2. Classification of "Pure Water":
The second issue was whether "Pure Water," repacked from bulk into 5-liter jars, should be classified under chapter heading 2201.19 or 2201.11. The appellant argued that "Pure Water" is not a brand name but a product name, and thus should not attract excise duty. The Tribunal referenced the Supreme Court's decision in Tata Tea Limited, which clarified that product names like "Instant Tea" are not brand names but descriptive of the product itself. The Tribunal concluded that "Pure Water," similarly, is not a brand name and should be classified under chapter heading 2201.11, attracting a nil rate of duty.

3. Determination of Manufacture:
The Tribunal examined whether the repacking of "Pure Water" from bulk into smaller jars constituted manufacture. The lower authorities had held that this process amounted to manufacture under Chapter Note 3 of Chapter 22, as it involved labeling and repacking, making the product marketable. However, the Tribunal disagreed, stating that repacking did not change the essential character of the product, which remained "Pure Water." The Tribunal found no evidence that "Pure Water" was a registered brand name, and thus, the process did not constitute manufacture.

4. Applicability of Extended Period for Demand and Interest:
The Tribunal addressed the applicability of the extended period for demand and interest under Section 11A and 11AB of the Central Excise Act, 1944. The lower authorities had invoked the extended period, citing suppression of facts by the appellant. However, the Tribunal found that the classification of "Pure Water" under chapter heading 2201.11 was correct, and thus, the demand for duty and interest was not sustainable. The Tribunal set aside the impugned orders and allowed the appeals with consequential relief.

Conclusion:
The Tribunal concluded that the Diagnostic Kits should be classified under chapter heading 3002.00, and "Pure Water" should be classified under chapter heading 2201.11. The repacking of "Pure Water" did not constitute manufacture, and the extended period for demand and interest was not applicable. The appeals were allowed, and the impugned orders were set aside.