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TMI Blog2007 (10) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Cultures of micro-organisms (....) and similar products" as claimed by the manufacturers. In both cases, the demands have been confirmed by application of the extended period of limitation. In the case of Wockardt Biopharm Ltd., the duty demand is Rs.2,52,62,094/- together with interest and penalty of equal amount and penalties of Rs.5,00,000/- and Rs.3,00,000/- respectively on its director and senior vice president (technical), while in the case of other manufacturer, the demand is Rs.7,32,35,075/- together with interest and penalty of equal amount. The additional issue in the Wockardt appeal is as to who is the manufacturer of the disputed product, whether the appellant company or Wockardt Ltd. The additional issue in the Serum Institute case relates to valuation of the product - Rule 8 of the Customs Valuation Rules, 1988, has been adopted by the Commissioner, while it is the assessees' contention that Rule 7A is the appropriate rule. 2. According to the department, the product is a purified protein derivative which is further used to manufacture vaccine in bulk by adding adjuvant and then the formulation is made from such vaccine bulk in the form of Biovac B Vaccine. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bulk form used in further manufacture of vaccine in bulk by addition of adjuvant and then formulations made from the vaccine bulk. (2) Process of manufacture commences from Master seed bank of Recombinant Yeast (Hansenuela Polymorpha). (3) Bulk protein produced (4) Bulk vaccine prepared (5) Sale in domestic market after packing in form of vials of specified dosages. 5. The Commissioner relies upon 16th Annual Report for the year ending 31.3.2000 referring to foreign technical collaboration tie-up as a German company for manufacture of Hepatitis-B vaccine, and also on internal batch manufacturing records indicating one of the ingredients for vaccine as Hepatitis-B protein in micro grams. In view of the above, he has held that the company was fully aware that what they were manufacturing was a bulk protein falling under Chapter 35 and yet described the goods as vaccine under Chapter 30 to avoid payment of CV duty. The period covered by the show cause notice dated 2.5.2006 is 2001 to 2004. 6. On valuation, he has applied Rule 8 - residual method and determined value on the basis of selling price in India of the goods produced in India. 7. We have heard both sid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market) where gene is replicated and multiplied. Slide 9 : Surrogate yeast cells multiply and after multiplication, produce Hepatitis-B Surface Antigen [HBsAg]. Slide 10 : Hepatitis-B Surface Antigen Vaccine is mixed with an adjuvant [Aluminium Hydroxide] to produce Biovac, the potentiated Vaccine. 9. The old method of preparation was as under:- Blood of infected Hepatitis-B patient was obtained, mixed with an anticoagulant, cellular part of the blood was removed by centrifugation, as a result of which the virus got isolated in the plasma (liquid part of blood) - again ultra centrifugation for the purpose of settling down of the virus which was then removed for extraction of surface antigen and the virus portion was extricated by different methods and treated with solvent. When it is shaken and subjected to centrifugation, three layers are obtained. The bottom is phenol layer, the middle is a thin interface and the top layer is an aqueous layer - DNA of the virus. This DNA is removed and purified and the surface antigen gene contained in the DNA is taken out from the DNA and replicated in the given media such as yeast etc. 10. Process chart of Serum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved delivery of antigens to the lymph nodes can produce a stronger antibody response than the antigen alone. Alum adjuvants are also taken up by cells such as macrophages and help these cells better present antigens to lymphocytes. In addition to adjuvants, vaccines may contain antibiotics to prevent bacterial contamination during manufacturing, preservatives to keep multi-dose vials of vaccine sterile after they are opened, or stabilizers to maintain a vaccine's potency at less than optimal temperatures. 12. Vaccines provide artificially acquired immunity and easier and less risky way to become immune. Vaccines teach immune system by mimicking a natural infection, while the aim is to teach immune system and at the same time avoid complications of a disease being contacted. Different types of vaccines have been made to combat diseases. These are:- (a) Attenuated Vaccine [Vaccine which contains a version of the living microbes which is weakened in the lab (weakening of organism is called attenuation) so that it cannot cause diseases]. (b) Inactivated Vaccine [where disease-causing microbes have been inactivated by chemicals, heat or radiation]. (c) Subunit Vac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its cell-mediated immunity (delayed hypersensitivity), as well as humoral antibody formation. Stedman's medical Dictionary (26th Edn.) (1) A substance added to a drug product formulation which affects the action of the active ingredient in a predictable way (2) In immunology, a vehicle used to enhance antigenicity, e.g. a suspension of minerals (alum, aluminum hydroxide or phosphate) on which antigen is adsorbed; or water-in-oil emulsion in which antigen solution is emulsified in mineral oil [Freund's incomplete a.], sometimes with the inclusion of killed mycobacteria [Freund's complete a.], to further enhance antigenicity The Condensed Chemical Dictionary (10th Edn.) A subsidiary ingredient or additive in a mixture (medicine, flavouring, perfume, etc.) which contributes to the effectiveness of the primary ingredient. Webster's New 20th Century Dictionary (a) (1) Helping (2) Assisting (n) (1) An assistant (2) In medicine, a substance added to a drug to aid the operation of the principal ingredient The Shorter Oxford English Dictionary A substance added to a prescription to assist the action of the base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictionary A preparation of some virus used for the purpose of inoculation (1)Virus of cowpox used in vaccination (2) The characteristic virus of cow-pox (obtained directly or from human subjects) which is employed in vaccination Collins English Dictionary (1) A suspension of dead, attenuated, or otherwise modified microorganisms (viruses, bacteria, or rickettsiae) for inoculation to produce immunity to a disease by stimulating the production of antibodies (2) A preparation of the virus of cowpox taken from infected cows and inoculated in men to produce immunity to smallpox (3) (modifier) of or relating to vaccination or vaccinia McGraw Hill Dictionary of Scientific and Technical Terms A suspension of killed or attenuated bacteria or viruses or fractions thereof, injected to produce active immunity Chambers 20th Century Dictionary (adj.) Of, derived from, the cow; of vaccina: of vaccination. (n) Cowpox virus or lymph containing it: any preparation used to confer immunity to a disease by inoculation The Oxford Reference Dictionary (n) A preparation of cowpox virus introduced into the bloodstream t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading 30.02 of CETA reads as under:- Chapter 30. Pharmaceutical Products. Heading No. Sub-heading No. Description of goods Rate of duty 30.02 3002.00 Antisera and other blood fractions; Vaccines, Toxins, Cultures of Micro-organisms (including Ferments but excluding yeasts) And similar products Nil Heading 35.04 of CETA reads as under :- Chapter 35. Albuminoidal Substances; Modified Starches; Glues; Enzymes Heading No. Sub- heading No. Description of goods Rate of duty 35.04 3504.00 Peptones and their derivatives; other protein substances and their derivatives, not elsewhere specified or included; hide powder, whether or not chromed 16% 18. HSN Chapter Heading 30.02 Note (D) covers "Vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products" which include vaccines which are preparations of microbial origin containing either viruses or bacteria suspended in saline solutions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to record any finding on the pleas raised by both the appellants on limitation and the plea of Wockardt Biopharm Ltd. that they are not the manufacturers of Biovac. 21. As regards valuation of the vaccine produced by Serum Institute of India Ltd., we see substance in the plea of the appellant that the adoption of the price of identical product of Wockardt is contrary to the principles laid down in Rule 8 of the Customs Valuation Rules, which provides inter alia that no value shall be determined under the provisions of this rule on the basis of the selling price in India of the goods produced in India, as the price of Wockardt is the selling price of goods manufactured in India. We accept the contention of Serum Institute that their determination of assessable value on the basis of manufacturing cost + profit in terms of the provisions of Section 14 of the Customs Act, 1962 read with Rule 7A of the Customs Valuation Rules, 1988 is the correct method of valuation. 22. Penalties on Shri D.G. Modi and Shri M.K. Sahib are set aside in the light of our above findings. 23. To sum up, we hold as under:- (1) The products in dispute, viz. Biovac-B and Genevac-B vaccines fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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