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TMI Blog2007 (4) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 30-4-2007 - S.H. Kapadia and B. Sudershan Reddy, JJ. Shri V. Lakshmikumaran, Dushyant A. Dave and R. Venkataramani, Sr. Advocates, Alok Yadav, Rajesh Kumar, M.P. Devnath, Shri Narain (for M/s. S. Narain Co.), Sandeep Narain, Ms. Binu Tamta, K.K. Senthilvelan and B.K. Prasad, Advocates with them, for the Appearing Parties. JUDGMENT From the impugned judgment dated 1-1-2002 delivered by the Customs, Excise and Gold (Control) Appellate Tribunal CEGAT , for short), New Delhi, vide Appeal Nos. E/1644 and 1645 of 2000-C, C.A. No. 5322 of 2002 and C.A. Nos. 1953-54 of 2003 have been filed by the assessees and by the Department respectively. For the sake of convenience and clarity we proceed to decide each of the following civil appeals serially. C.A .No. 5322/2002-filed by M/s. J. Mitra Co. Ltd. (Assessee) 2. In this civil appeal we are concerned with the classification of biotech products. 3. The said assessee was engaged in the manufacture of blood-grouping reagents and diagnostic and laboratory reagents. It had obtained registration on 10-9-99 for the manufacture and clearances of the following products : (1) Anti-A Mono Clonal (2) Anti-B Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l cements and other dental fillings 15% 3005.90 Others 15% 9. We also quote herein below relevant extracts of Chapter Note No. 2 in Chapter 30 of HSN (Second Edition) which read as follows : CHAPTER 30 PHARMACEUTICAL PRODUCTS Chapter Notes. 1. xxx xxx xxx 2. For the purposes of Heading No.30.02, the expression modified immunological products applies only to monoclonal antibodies (MABs), antibody fragments, antibody conjugates and antibody fragment conjugates. 10. We also quote herein below Chapter Heading 30.02 in entirety from the said HSN which reads as under : 30.02 - HUMAN BLOOD; ANIMAL BLOOD PREPARED FOR THERAPEUTIC, PROPHYLACTIC OR DIAGNOSTIC USES; ANTISERA AND OTHER BLOOD FRACTIONS AND MODIFIED IMMUNOLOGICAL PRODUCTS, WHETHER OR NOT OBTAINED BY MEANS OF BIOTECHNOLOGICAL PROCESSES; VACCINES, TOXINS, CULTURES OF MICRO-ORGANISMS (EXCLUDING YEASTS) AND SIMILAR PRODUCTS. 3002.10 - Antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes 3002.20 - Vaccines for human medicine 3002.30 - Vaccines for veteri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a culture medium or ascites. (b) Antibody fragments - parts of an antibody protein obtained by means of specific enzymatic splitting. (c) Antibody and antibody fragment conjugates - enzymes (e.g., alkaline phosphatase, peroxidase or betagalactosidase) or dyes (fluorescin) covalently bound to the protein structure are used for straightforward detection reactions. (D) Vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products. These products include : (1) Vaccines - preparations of microbial origin containing either viruses or bacteria suspended in saline solutions, oil (lipovaccines) or other media. These preparations have usually been treated to reduce their toxicity without destroying their immunising properties. The heading also covers mixtures (such as Diphtheria, Tetanus and Pertussis (DPT) vaccine) consisting of vaccines and toxoids. (2) Toxins (poisons secreted by bacteria), toxoids, crypto-toxins and anti-toxins, of microbial origin. (3) Cultures of micro-organisms (excluding yeasts). These include ferments such as lactic ferments used in the preparations of milk derivatives (kephir, yogurt, lactic acid) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) metals (stainless steel, tantalum, silver, bronze). The item also covers tissue adhesives such as those consisting of butyl cyanoacrylate and a dye; after application, the monomer polymerises and the product is therefore used in place of conventional suture materials for closing internal for closing internal or external wounds of the human body. The heading excludes non-sterile suture materials. These are classified according to their nature e.g. catgut (heading 42.06), silkworm put, textile yarns, etc. (Section XI), metal were (Chapter 71 or Section XV). (2) Sterile laminaria and sterile laminaria tents. This item is restricted to sterile laminaria and sterile laminaria tents (small lengths of algae, sometimes brown and with a rough grooved surface). They swell considerably on contact with moist substances and become smooth and flexible. They are therefore used in surgery as a means of dilation. Non-sterile products are excluded (Heading 12.12) (3) Sterile absorbable surgical or dental haemostatics. This item covers sterile products used in surgery or dentistry to stop bleeding and having the property of being absorbed by the body fluids. It incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that before the introduction of hybridoma technology, the A.B.O. grouping reagents were derived from human donors with or without immunization. According to Dr. Makroo, the main reagent used in blood-bank laboratory is antisera (which is an antibody). Essentially MAB, according to Dr. Makroo, is obtained from cell culture. It helps in blood-grouping. The development of MAB obtained from cell culture secreting antibodies called hybridoma, has made available a new source of blood-grouping reagents. According to the assessee, Chapter Heading 30.05 of CETA is the same as Chapter Heading 30.06 of HSN. Under Chapter Heading 30.06, there is an Explanatory Note in HSN which states that blood-grouping reagents (which term also finds place in Chapter Note 3 to Chapter 30 of CETA) are either the sera of human or animal origin, or vegetable extracts of seeds or other parts of plants and, therefore, such reagents fall under Chapter Heading 30.05 of CETA. However, according to the assessee, MAB is not the sera of human or animal origin or vegetable extracts or plant extracts and, therefore, it cannot fall under Chapter Heading 30.05 of CETA and consequently it has to fall under Chapter Head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Heading 30.02 of CETA. MAB is not a sera of human or animal origin, it is not a vegetable extract, it is not a plant extract and on the other hand it is obtained by hybridoma technology (cellular fusion). Therefore, it cannot fall under Chapter Heading 30.05 of CETA. Moreover, Chapter Heading 30.05 is residuary. The width of Chapter Heading 30.05 is restricted to products which are mentioned in Note 3(e) to Chapter 30. In other words, not all those pharma products which could not be classified elsewhere in the tariff would fall under Chapter Heading 30.05, but only those which are specified in Note No. 3 would fall under Chapter Heading 30.05. In the present case, MAB specifically falls in Chapter Heading 30.02 as culture of micro-organism. If an item like MAB is specifically falling in Chapter Heading 30.02, it cannot be classified under Chapter Heading 30.05 merely on account of Chapter Note 3 . In the present case, the Department seeks to expand the scope of Chapter Heading 30.05, which is residuary, by relying upon Note 3 even when MAB falls under Chapter Heading 30.02 as culture of micro-organism . In the present case MAB is not polyclonal, it is monoclonal and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich needs to be decided in these civil appeals is : Whether Beta Visipreg, Visipreg Strip, Pregnancy Test Card fall as antisera under Chapter Heading 30.02 of CETA (according to the assessee) or whether it falls under Chapter Heading 38.22 of CETA as diagnostic or laboratory reagent (as contended by the Department). 18. The above three products were cleared by the assessee as Pregnancy Test Kits (PTK). According to the assessee the above three products are for the detection of hCG hormones in urine, as a test for pregnancy. The three products are meant for in-vitro diagnostic use only. According to the assessee, Chapter Heading 30.02 covers antisera of all forms. 19. On the other hand, it was argued on behalf of the Department that although PTK was an antisera, the above three products were classifiable as diagnostic or laboratory reagents under Chapter Heading 38.22 as they were used exclusively in laboratory for diagnostic purposes. According to the Adjudicating Authority, Chapter Heading 30.02 applied only to crude antisera and since the above three products were refined antisera, they did not fall under Chapter Heading 30.02. 20. At the outset, we quote herein below C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee) under Section 35(L) of the Central Excise Act, 1944, against the decision of the CEGAT (for short, Tribunal dated 4-12-2001. 26. In these civil appeals we are concerned with Item Nos. 21 to 32, referred to in Annexure A to the paper book (at pages 27-28), Item Nos. 35, 36 and 37 in Annexure A to the paper book (at pages 27-28) and Item Nos. 1 to 15 in Annexure B to the paper book (at page 29). 27. At the outset we quote herein below Item Nos. 21 to 32 of Annexure A which read as under : ANNEXURE- A Name of the products which will fall under chapter sub-heading 3005.90 Sr. No. Code No. Item Pkg. 21. 11127A Anti-A (Monoclonal) 5 ML 22. 11127B Anti-A (Monoclonal) 10 ML 23. 11127C Anti-A (Monoclonal) 3x5 ML 24. 11128A Anti-B (Monoclonal) 5 ML 25. 11128B Anti-B (Monoclonal) 10 ML 26. 11128C Anti-D (Monoclonal 1gG + 1gM) 3x5 ML 27. 11129A Anti-D (Monoclonal IgM) 5 ML 28. 11129B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. xxx xxx xxx 3. Heading No.30.05 applies only to the following, which are to be classified in that heading and in no other heading of this Schedule : - (a) to (c) xxx xxx xxx (e) Opacifying preparations for X-ray examinations and diagnostic reagents designed to be administered to the patient, being unmixed products put up in measured doses or products consisting of two or more ingredients which have been mixed together for such uses; (f) to (h) xxx xxx xxx (emphasis supplied) 33. On reading Chapter Note 3(d) it is clear that preparations for X-ray examinations and diagnostic reagents designed to be administered to the patient, put up in measured doses would fall under Chapter Heading 30.05. However, in this case there is no finding given by any of the Authorities below as to whether Item Nos. 35, 36 and 37, quoted above, are diagnostic reagents. This question has got to be decided as the assessee contends that the above three products are not diagnostic reagents, they are diagnostic aid . In this connectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her it came under Chapter Heading 38.22 or whether it came under Chapter Heading 30.02. In M/s. Mitra s case (which we have decided hereinabove vide C.A.No. 5322 of 2002), we have taken the view that blood fractions fall under Chapter Heading 30.02. Chapter Heading 30.02 refers to blood fractions . Merely because the medium used is latex (rubber) or paper, will not bring the items under Chapter Heading 38.22. Once an item is a Blood Fraction it falls under Chapter Heading 30.02. The medium is irrelevant. The medium could be paper or rubber. The configuration of the product and the function are important. In our opinion, Item Nos. 1 to 15 are Blood Fractions . They are Blood Fractions even according to the Department. 37. In the circumstances, we classify Item Nos. 1 to 15 of Annexure B to the paper book under Chapter Heading 30.02 (CSH 3002.00). 38. Accordingly, except for Item Nos. 35, 36 and 37 of Annexure A, the assessee - M/s. Span Diagnostics Ltd. succeeds in C.A. Nos. 1076-1080 of 2002. However, with regard to Item Nos. 35, 36 and 37 of Annexure A, the matter shall stand remitted to the Adjudicating Authority for fresh decision in accordance with law. Consequently ..... X X X X Extracts X X X X X X X X Extracts X X X X
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