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TMI Blog2024 (11) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... sette" imported by Rapid Diagnostics would be eligible for exemption provided at Serial No. 148 of the Notification No. 12/2012-Cus dated 17.03.2012 and Serial No. 167 of Notification No. 50/2017-Cus dated 30.06.2017 [the Commissioner]. Under these two Notifications, exemption from duty of customs is provided to "diagnostics test kits specified in List 4". 3. Rapid Diagnostics is a Private Limited Company engaged in the import and trading of comprehensive range of disposable items, laboratory, patient care, ICU & surgical equipments, and diagnostic test kits (serology kits, biochemistry and rapid test kits) since the year 1995. During the period from 31.08.2016 to 07.07.2021, it claims to have imported "hCG Pregnancy Rapid Test Strip" and "hCG Pregnancy Rapid Test Cassette" through Bills of Entry and classified them under Custom Tariff Heading [CTH] 3002 of the First Schedule to the Customs Tariff Act, 1975 [the Customs Tariff Act]. 4. According to Rapid Diagnostics, the technical nature of the disputed goods, the description, components and the working principle are as follows: (i) The disputed goods are rapid chromatographic immunoassays for detection of Human Chorionic Gonad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Institute of Immunology was received on 14.06.2021. 8. During the investigation, Rapid Diagnostics, also deposited Rs. 70,00,000/- towards duty and interest, without prejudice to its right to contest the proposal of duty. 9. Show cause notices dated 25.11.2021 and 03.09.2021 for the period 31.08.2016 to 07.07.2021 were issued to Rapid Diagnostics alleging that the disputed goods were not "agglutinating sera", but complete pregnancy test kits in ready to use condition and, therefore, the benefit of exemption under the Exemption Notifications would not be available to Rapid Diagnostics. Consequently, it was proposed to reject the exemption claimed by Rapid Diagnostics and a demand for differential duty under section 28(4) of the Customs Act, 1962 [the Customs Act] along with interest under section 28AA of the Customs Act was proposed. Proposal for confiscation under section 111(m) and imposition of penalty under sections 112/114A and 114AA of the Customs Act were also made. Penalty on Bharat Bhushan Jindal, Director of Rapid Diagnostics was also proposed under sections 112 and 114AA of the Customs Act. 10. Rapid Diagnostics filed a detailed reply dated 09.11.2022 and submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sera, which is the only active component on which test reaction is based. As such, the same is the only active component of impugned goods and rest are passive components. As such, the impugned goods (pregnancy detection kits) have their essential character defined by agglutinating sera only. The agglutinating sera is essential and inseparable part of the impugned goods is also part of the findings of the test report dated 03.04.2021 issued by Biochemistry Department, AIIMS, New Delhi and test report dated 14.06.2021 issued by the National Institute of Immunology Delhi." (emphasis supplied) 12. After referring to the judgment of the Supreme Court in M/s. Span Diagnostics Ltd. vs. Commissioner of Central Excise [2007 (211) E.L.T. 521 (S.C.)] and the decision of the Tribunal in Inter Care Ltd. vs. Collector of Customs, New Delhi [1997 (89) E.L.T. 545 (Tribunal)], the Commissioner concluded as follows: "4.10. In view of the above, I hold that the impugned goods are diagnostic test kits, which attain their essential character from 'agglutinating sera' and, therefore, the same are squarely covered under S. No. 148 (S.No. 4 of list 4) of Notification number 12/2012 dated 17.03.2012 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that arises for consideration in these appeals is as to whether the "hCG Pregnancy Rapid Test Strip" and "hCG Pregnancy Rapid Test Cassette" deserve classification under CTH 3002 and whether basic customs duty @ Nil rate as required to be paid under the Exemption Notifications. The description of goods under CTH 3002 is as follows: Chapter 30 Pharmaceutical Products Tariff Item Description of goods Unit Rate of duty Standard Preferential (1) (2) (3) (4) (5) 3002 Human blood; animal blood prepared for therapeutic, prophylactic or diagnostic uses; antisera, other blood factions and immunological products, whether or not modified or obtained by means of biotechnological processes; vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products 18. The relevant portion of the Exemption Notification dated 17.03.2012 is as follows: 19. EFFECTIVE RATES OF DUTY FOR GOODS OF VARIOUS CHAPTERS/HEADINGS Exemption and Effective rates of basic and additional duty for specified goods of Chapters 1 to 98. - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs or medicines Nil - 16 20. It would be seen that the aforesaid two Exemption Notifications provide exemption to goods contained in Chapter 30 to the following goods specified in List 4 falling in Chapter 28, 29, 30 or 38: (i) Life saving drugs/medicines; (ii) Salts and esters of (i); and (iii) Diagnostic test Kits. 21. The appellant claims that the disputed goods are prepared using agglutinating serum/antisera and the essential character of the kit is provided by monoclonal antibody (hCG antibody). The disputed goods would, therefore, be classifiable under CTH 3002. There is no dispute with regard to the classification of the disputed goods. Therefore, the condition mentioned in Column (2) of Serial No's. 148 and 167 of the Exemption Notifications stands satisfied. 22. According to Rapid Diagnostics, the disputed goods are rapid chromatographic immunoassay for detection of hCG in urine to aid in the early detection of pregnancy. hCG is glycoprotein hormone produced by the developing placenta shortly after fertilization. The test utilizes monoclonal antibodies to selectively detect elevated levels of hCG in urine. There is no dispute that the disputed goods are prepare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating authority has emphasised the point that agglutinating sera are not covered within the ambit of sub-title of the notification which reads as "life saving drugs or medicines", as they are used in pathological laboratories for conducting routine tests of pregnancy detection. This reasoning is not correct for the reason that the title of a notification gives only a broad indication of the goods covered therein and cannot be used as characteristic or a yard-stick for determining the exact scope of the specific entry therein and factually the imported item is life saving in nature it is used for detecting life threatening conditions like Hydatidiform mole, choriocarcinoma, etc. The main stay of early diagnosis of both the above diseases is ultrasonic examination supported by serum HCG estimation. Further, when early detection of pregnancy is necessary to carry out medical termination of pregnancy, agglutinating sera which detects the presence of HCG in urine is certainly life saving. Moreover, it is medically recognised that, before the insertion of Intra Uterine Devices or before prescribing oral contraceptives, it is necessary to rule out pregnancy, otherwise if the woman is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stic reagent wherein antibodies (monoclonal) are coated to a gold SOL particles. Sera do cause agglutination in a final reaction but in our opinion it is a value added product and not merely a simple derivative of sera. It is that the product is obtained from sera and has agglutinating properties; however, classification as agglutinating sera has been ruled out apparently because it is in kit form. We have already held earlier that the import of the product is in kit form is not detrimental to the claim of the appellants that what they imported was agglutinating sera. The criterion for value addition is not also relevant for the purpose of this case. On the other hand, the appellants have produced opinion from the Department of Biotechnology, Ministry of Science and Technology, which is the administrative department to give technical clarification on pharmaceuticals diagnostic based on bio-technology techniques. In this letter dated 23-8-1993 (page 196 of the paper book) it is certified that the item Preg color as presently marked is agglutinating sera." 27. The aforesaid decision was subsequently followed by the Tribunal in Inter Care Ltd. decided on 24.11.2000. 28. The Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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