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TMI Blog2024 (11) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... der Bills of Entry [BE] No. 7610516 dated 07.05.2020 and 7615588 dated 08.05.2020 were put under preventive check on 19.05.2020 by SIIB, Air Cargo Complex (Import), New Delhi on the allegation that the goods declared as "ELISA kits for diagnostic use' in Bills of Entry are actually 'food testing kits', and to ascertain the correct description/classification of the goods and their eligibility for exemption under Notification No. 50/2017-Cus. (Entries 167 & 249A) read with S.No. 32 of List 4 of the notification, and applicability of the IGST under Notification No. 1/2017-Integrated Tax (Rate) dated 28.06.2017 (Entry 180 of Schedule I & Entry 80 of Schedule-II). Goods imported under the aforesaid 2 BEs were seized on 19.05.2020 and were later provisionally released on execution of bond with bank guarantee of Rs.22,33,000/-. Statement of Shri Ashish Bhandari, Managing Director ("MD") of the appellant was recorded on 17.09.2020. 2.2 Show cause notice dated 29.09.2020 was issued covering the period from 08.05.2015 to 16.08.2020 on the following allegations:- "(a) that Entry 80 in Schedule II of Notification No. 1/2017-IT (R ) which prescribes 12% rate is applicable only to 'diag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 114AA. Being aggrieved, separate appeals have been filed by the company and its Managing Director before this Tribunal. 3. Heard Shri G. Vidyadhar Reddy, learned counsel for the appellant and Shri S.K. Rahman, Authorised Representative for the Department. 4. Submissions of the Appellant 4.1 As per importer's understanding, food testing kits are covered under the definition of the term 'diagnostic kits' mentioned in the exemption notifications; that the term 'diagnostic' is used from 12.06.2019 only; that the invoices and contracts show that the goods are used for food testing; that Bes 7610516 dated 07.05.2020 and 7615588 dated 08.05.2020 do not contain the goods description as 'diagnostic test kits' reagents'; that they have amplified the description as 'Elisa Kits for diagnostic use only' as they are used for diagnosis of adulteration of the Food. This is not mis-declaring the description of the goods; it is only the intended use of the goods. Claim of classification and claim of exemption is not mis-declaration of goods. 4.2 That the term 'diagnostic' is not limited to treatment of diseased in human beings and animals; that explanatory notes for Chapter 38.22 state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these are, 'ELISA strip for diagnostic use'. However, the appellant importer while filing BEs in the description column has added these words. The literature from the foreign supplier M/s. Romer Labs, Singapore website shows that these products are used for "Testing food grains, grain products and peanuts" as they deal in the field of diagnostic solutions for food and feed safety. 5.4 That the impugned goods (viz. kits and reagents are used exclusively for food testing kits only and are not meant for diagnostic purposes of human beings (including animals). In fact, the appellant importer from June, 2019 changed the description of the goods as "diagnostic test kits/reagents" instead of "ELISA test kits for food testing". 5.5 The Serial No. in the referred Notification mentions "Lifesaving drugs/medicines specified in List 4". The reagents and kits imported for food testing are not lifesaving and hence the benefit of notification has been rightly denied. 5.6 The learned Authorised Representative referred to the principle that exemption notifications are to be interpreted strictly and in this regard, the following case laws are relied upon :- 1. Commissioner of Customs (Impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017, S.No. 180 of Schedule-I (IGST Rate 5%) and S.No.80 of Schedule-II (IGST Rate 12%) reads as under:- S.No./Schedule Chapter or heading or sub-heading or tariff item Description of goods 180/I 30 or any other chapter Drugs or medicines including their salts and esters and diagnostic test kits, specified in List 1 appended to this Schedule. (S.No. 154 of List-1)-Enzyme liked Immuno absorbent Assay kits ELISA KITS 80/II 3822 All diagnostics kits and reagents. As per the contents of the above mentioned notifications, the exemption is available only for the diagnostic test kits and reagents. 8. The admitted position is that the appellant is engaged in import of 'ELISA food testing kits' and other food testing kits for couple of years. The appellant vide BE No.7610516 and 7615588 imported various types of food testing kits, the details thereof are as under:- (B.E.No.7615588 dated 08.05.2020) (B.E.No.7610516 dated 07.05.2020) SNo Description Description 1. Agrstrip Aflatoxin 13 C Fumonisins 2. Agrastrip Qualitative Soy Comb Bulk Grain-Traitchek 13 C Aflatoxin 3. Agraquant Nitrofurn (SEM) (96 wells) Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "i. Founded in Washington, MO, in 1982, we became over the years a leading provider of diagnostic solutions for the agricultural food and feed industry. ii. Romer Labs is a leading global supplier of diagnostic solutions for food and feed safety. We offer a broad range of innovative testing solutions and services covering mycotoxins, food pathogens, food allergens, glutin, GMO, veterinary drug residues, and other food contaminants. iii. Today, Romer Labs offers a broad range of innovative diagnostic solutions covering mycotoxins, food pathogens, food allergens, gluten, GMO, veterinary drug residues, and other food contaminants. Our portfolio includes: . ELISA test kits -AgraQuant . Lateral flow devices - AgraStrip and Rapidchek . Reference materials - Biopure . Cleanup columns -MycoSep, MultiSep,MycoSpin, StarLineTM . Sampling mills iv. Furthermore, we operate 4 accredited, full-service laboratories in Austria, UK. US and Singapore, using cutting-edge technology in the fields of chromatography and immunological analysis, our labs offer services for the analysis of mycotoxins, food allergens, meat speciation, VDR and GMO. v. Romer Labs offers the most complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l diagnosis. The term 'diagnostic' used with test kits in the main body of the Notification gives a specification to all the items listed in the List 4 that they are for saving the lives. The S.No. of the List which the importer claims that their food testing kits falls into is an absurd interpretation of the aforesaid Notification as such kits are not meant for diagnosing illness in living beings. The food testing kit is not meant for diagnostic purposes within the meaning of Heading 3822 as per the Explanatory Notes of HSN and also the purpose and intent of aforesaid Notifications. The change in the description by the importer fro ELISA kit for food testing to ELISA kit for diagnostic purposes amply shows that the importer also knew that their goods do not fall within the purview of the Notification being food testing kits only." 14. Further, Serial No. 167 (A) with which we are concerned here, embraces not only the drugs or medicines, but also includes their salts and estors and diagnostics test kits as specified in List 4, which at Sl. No. 32 provides, "Enzyme Linked Immuno absorbent Assay, ELISA KITS". Therefore, the adjudicating authority rightly interpreted that the express ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 12 and 3822 00 19 and at the same time reagents, which are used for purposes, other than for diagnostic are classified under 3822 00 90. It is an admitted position that the appellant had classified their products under 3822 00 90 as the goods were food testing kits and reagents. 17. 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 are quoted here under:- "38.22 -diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, other than those of heading 30.02 or 30.06; certified reference materials. This heading covers diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents, other than diagnostic reagents of heading 30.02 or diagnostic reagents designed to be administered to the patient and blood grouping reagents of heading 30.06. It also covers certified reference materials. Diagnostic reagents are used in the evaluation of physical, biophysical or biochemical processes and states in animals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P No.7666 of 2023 & WMP Nos.7828 & 7832/2023 dt.12.10.2023 on interpretation of the term 'diagnostic', which was in reference to the grant of patent under the Patent Act,1970. In the generic sense, the Court observed that in the context of medical science, diagnosis is a method of identifying the existence or non-existence of a disease or disorder or condition and /or the site, extent, severity or other aspects thereof. While viewing the term diagnosis in association with forms of treatment, the Court concluded that the word "diagnostic" should be limited to diagnostic processes that disclose pathology for the treatment of human beings. The observations made are relevant to interpret the expression used in the notification and distinguishing the goods, which are meant for food testing. 20. 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. Without multiplying too many decisions, we would like to refer the conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency." Applying the golden rule of interpretation that words should be read in their ordinary & natural meaning, the Apex Court in Jeyaram Educational Trust vs. A.G. Syed Mohideen 2010 2 SCC 513 held:- "11. It is now well settled that a provision of a statute should have to be read as it is, in a natural manner, plain and straight, without adding, substituting or omitting any words. While doing so, the words used in the provision should be assigned and ascribed their natural, ordinary or popular meaning. Only when such plain and straight reading, or ascribing the natural and normal meaning to the words on such reading, leads to ambiguity, vagueness, uncertainty, or absurdity which were not obviously intended by the legislature or the lawmaker, a court should open its interpretation toolkit containing the settled rules of construction and interpretation, to arrive at the true meaning of the provision. While using the tools of interpretation, the court s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 24. There is no reason to interfere with the impugned order and the same is hereby affirmed. Consequently, we do not find any merits in the present appeal, and hence the same is dismissed. Appeal No. 52044 of 2022 25. The appellant, Shri Ashish Bhandari, Managing Director of M/s Ilishan Biotech India Pvt Ltd has assailed the impugned order in so far as it imposes penalty of Rs. 5,00,000/- under Section 114AA of the Act. The Adjudicating Authority recorded finding that Shri Ashish Bhandari is the key person in the day-to-day affairs of the company and his role is evident in misdeclaration resorted from June 2019, whereby the description of the goods imported were changed from 'ELISA kit for food testing' to 'ELISA kit for diagnostic use only'. The role played by the appellant resulted in short payment of duty, and, therefore, he is liable to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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