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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 ..... based. The other components like membrane sheet, plastic cassette and absorbent are passive components which provide longer shelf life and stability to the kit. As the disputed goods are based on agglutinating sera, the benefit of the Exemption Notifications would be available to Rapid Diagnostics. The decision of the Tribunal in Inter Care [ 1996 (10) TMI 201 - CEGAT, NEW DELHI] , wherein the benefit of the Exemption Notifications was allowed to the pregnancy test kits which were based on agglutinating sera, supports the aforesaid view. The Commissioner, in the impugned order, has dropped the demands proposed in the show cause notices for the reason that the disputed goods are classifiable under CTH 3002 and so basic customs duty would have to be paid at Nil rate of duty. To arrive at this conclusion, the Commissioner held that the disputed goods are based on agglutinating sera which is the chief component of the test kit that produces the result regarding the pregnancy. Thus, as agglutinating sera is the only active component and the rest of the components are passive, the pregnancy detection kits have their essential character defined by agglutinating sera only. Thus, the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly after fertilization. The test utilizes monoclonal antibodies to selectively detect elevated levels of hCG in urine; (ii) The disputed goods are made up of the following components: (a) Agglutinating sera containing monoclonal antibodies for hCG; (b) Membrane Sheet; (c) Plastic Cassette; and (d) Absorbent. (iii) The test uses two lines, C and T to indicate results. The test line (T) is coated with anti hCG antibodies (monoclonal antibodies). The monoclonal antibody is purified agglutinating sera for making the test more reliable and accurate. The control line (C) is coated with antibodies and colloidal gold particles. The assay is conducted by adding urine specimen to the specimen wall of the test device and observing the formation of red colored line(s). The specimen migrates via capillary action along the membrane to react with the antibodies at C and T lines. When positive specimen containing hCG (Antigen) passes through the membrane, it reacts with the anti hCG antibody (Antigen-Antibody reaction) at test line. Positive reaction is made visible by colored conjugate. Absence of this colored line suggests a negative result. 5. At the time of import of the disputed goods, Rapid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ nil rate under the Exemption Notifications. 11. The Commissioner held that the disputed goods deserve classification under CTH 3002 and so basic customs duty would have to paid @ Nil under the Exemption Notifications since the essential character of the disputed goods comes from the agglutinating sera. The demands proposed in the show cause notices were, accordingly, dropped. The relevant portions of the order passed by the Commissioner are reproduced below: 40.2 After going through the case file, I find that there is no dispute regarding the description of the imported goods, namely, HCG Pregnancy Rapid Test Strip and HCG Pregnancy Rapid Test Cassette . It is also not in dispute that the impugned goods are classifiable under Customs Tariff Head No. 3002 of the Customs Tariff Act, 1975, ***** 40.3 Further, there is no dispute regarding the contention of the department that the impugned goods described as HCG Pregnancy Rapid Test Strip and HCG Pregnancy Rapid Test Cassette are complete pregnancy test kits and not Agglutinating Sera per se. ***** 40.4 However, there is equally no dispute that the impugned goods, namely HCG Pregnancy Rapid Test Strip and HCG Pregnancy Rapid Test Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. These appeals have been filed by the Department to assail the order dated 21.11.2022 passed by the Commissioner. 14. Shri S.K. Rahman, learned authorized representative appearing for the Department made the following submissions: (i) The imported hCG pregnancy rapid test strip cassette and agglutinating sera are not same, even though the latter is the main reactive agent or active ingredient of the test kit; (ii) The benefit of the Exemption Notifications is available only to agglutinating sera and not to pregnancy rapid test strip cassette; and (iii) Other manufacturers, namely Medi Force Healthcare, Pvt Ltd having similar product with brand name Prega News import agglutinating sera as a raw material, and rightly claim benefit of the Exemption Notifications. This shows that the products test kit and agglutinating sera are distinct, and the latter is the raw material of the former. Raw material and finished products cannot be equated for availing exemption benefit. 15. Shri B.L. Narasimhan, learned counsel appearing for the Rapid Diagnostics assisted by Shri Anurag Kapur, Shri Shubham Jaiswal ans Shri Kaushal Jaisalmeia, however, made the following submissions: (i) Rapid Diagn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... falling within the Chapter, heading, sub-heading or tariff item of the First Schedule to the said Customs Tariff Act, 1975 (51 of 1975) as are specified in the corresponding entry in column (2) of the said Table, when imported into India,- (a) from so much of the duty of customs leviable thereon under the said First Schedule as is in excess of the amount calculated at the standard rate specified in the corresponding entry in column (4) of the said Table; and (b) from so much of the additional duty leviable thereon under sub-section (1) of section 3 of said Customs Tariff Act, 1975, (51 of 1975) as is in excess of the additional duty rate specified in the corresponding entry in column (5) of the said Table, subject to any of the conditions, specified in the Annexure to this notification, the condition number of which is mentioned in the corresponding entry in column (6) of the said Table: S. No. Chapter or Heading or Sub-heading or tariff item Description of goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 148. 28, 29 , 30 or 38 The following goods, namely:- (A) Life saving drugs/medicines including their salts and esters and diagnostic test kits specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the antibody is the basis of the antigen-antibody reaction that is essential to an immune response. 24. When a woman becomes pregnant, the placenta produces high quantity hCG. This hCG is excreted through the urine. Detection of the presence of hCG in the urine is one of the indications to confirm that a woman is pregnant. Therefore, when urine contains hCG and if that is brought into contact with an agglutinating serum/sera which contains antibody to the hCG, it will agglutinate or clump. 25. It can, therefore, be said that the agglutinating sera used in the preparation of the disputed goods provide the essential character to the disputed goods. Further, agglutinating sera is the most essential and only active component on which test reaction is based. The other components like membrane sheet, plastic cassette and absorbent are passive components which provide longer shelf life and stability to the kit. As the disputed goods are based on agglutinating sera, the benefit of the Exemption Notifications would be available to Rapid Diagnostics. 26. The decision of the Tribunal in Inter Care , wherein the benefit of the Exemption Notifications was allowed to the pregnancy test kits w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Collector of Customs, New Delhi v. Ethnor Ltd. reported in 1996 (86) E.L.T. 558 (Tribunal) = 1996 (16) RLT 166 (CEGAT), pregnancy detection kits bearing trade name of Clear View HCG have been held to be covered by the description Elisa Diagnostic Tests mentioned at Sl. No. 155 of Notification No. 208/81. The list of life saving drugs or medicines stipulated in the notification covers a number of other tests e.g. blood group sera (Sl. No. 215), Enzyme linked Immunoabsorbent Assay Kits Elisa Kits (Sl. No. 186). This clearly indicates that the list appended to the notification covers diagnostic kits also. It is relevant to note at this juncture that the HSN Explanatory Notes to Heading 30.02 states that antisera are used against dysentery, pneumonia, snake bite, allergic diseases, etc. and are also used for diagnostic purposes, including in vitro tests and specific immunoglobulins are purified preparations of antisera. 7. ***** The basic character of the product depends upon the nature of the product and not upon the brand name. If the brand name of agglutinating sera was different, the basic characteristics would still remain the same and even the label 'Preg color is removed, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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