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TMI Blog2024 (12) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... ulin analogue of biosynthetic origin could be referred to as mono-component insulin , in response to which the IIT through Shri N Manoj, Department of Biotechnology, per mail dated 05.12.2019 opined that Biphasic Isophane Insulin sold by the respondent was a two-component mixture of biosynthetic human insulin and protamine treated biosynthetic insulin. Protamine, a small protein/peptide is present as a second component and the two components together could not therefore be called as mono-component mixture. Insofar as the interpretation of notification is concerned, mono component insulin would undoubtedly cover the insulin developed using r-DNA technology, which position has been accepted by the authority, namely DCGI, who is the Statutory authority approving the license for sale of insulin. The classification of the impugned goods as mono-component insulin is a content based classification and certainly not a source based classification, as in the case of porcine and bovine insulin and hence, insulin manufactured using r-DNA technology would qualify as a mono component insulin, and hence, was entitled to the benefit of exemption under the Notification/s in question. The impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce rule. iii. The opinion rendered by technically qualified persons should not be neglected. iv. The goods are correctly classified under chapter heading 3004 31 10. and thereby justifying its claim for exemption. Their claim appears to be supported by documentary evidences like opinion of the experts in the field, Scientific/Technical literatures on the subject, etc. 2.3.2 The Ld. Adjudicating Authority at Para 72(J) of page 50 of the Order-in-Original has concluded that there is no definition for Monocomponent either in HSN Explanatory Notes, Customs Tariff, or the Notification. As per expert opinion, the Impugned Goods are mono-component insulin and are hence, classifiable under tariff entry 30043110. The assessee has rightly availed benefit under Sl.No. 114 of Notification No. 12/2012-CE dated 17.03.2012. The products imported by assessee are developed using r-DNA technology and hence devoid of High Molecular Weight Protein (HMWP). The non-mention of the term Mono-component in the product label or marketing literature in Nordic countries do not conclusively prove the case of the department and at Para 72(KK) of page 56 of the order, he concludes that the declaration contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered as mono-component insulin as opined by National Institute of Pharmaceutical Education and Research [NIPER]. They have indicated that insulin analogues cannot be considered as a substitute for insulin due to structural differences. vi. Expert opinions relied upon by the Respondent to establish their goods to be classified under as mono-component insulin are hence liable to be rejected as the same have not categorically held the goods as mono component insulin. vii. Moreover, the report of National Institute of Biologicals also cannot be relied upon since they had approached the respondent and sought clarification on the product. So also, the report of Dr V Mohan is of no help since he has not commented on anything concerning the products under examination. For this reason, the same lacks evidentiary value to support the claim of the respondent that the imported goods are mono-component insulin . viii. Conclusion drawn by the Commissioner that mono-component nature of modern insulin products is implicit based on the RP HPLC chromatograms and that insulin analogues are also a mono-component insulins, they are introduced with better kinetic profiles and better stability to mimic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the structure of the molecules is not relevant. The entry monocomponent insulin would therefore cover all types of insulin which satisfies the definition of mono-component insulin respective of the sources. An insulin made from yeast culture using r DNA technology after repeated process of purification would thus be covered under this entry. The entry in the Exemption Notification is product oriented and not process oriented, as held by coordinate Mumbai bench in the case of MJ Pharmaceuticals -Vs- Commissioner of Customs [2001 (6) TMI 490]. iii. In fact, the case of the Revenue is based only on the inferences drawn from the books or articles, which are having no evidentiary value at all and hence, the same are not conclusive proof of evidence. iv. The entries under the Notification must be read in line with the technological advancements and hence, the development of mono-component insulin from yeast through the process of r DNA technology and of Insulin Analogues is which has resulted in ensuring a selectively increased action of regulating blood sugar levels in the human body would not exclude them from being covered under the head mono-component Insulins as listed in the Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states that analogue has a structure akin to the parent compound and are not considered derivatives. 5.3 Products sold in different countries are homogenous and of the same high-quality. The only difference is in nomenclature and packaging which is specific and in the instant case, the respondent has received approval from Drugs Controller General of India DCGI for its insulin, which is the Expert Statutory Authority to assess and grant approvals. 6.1 Submissions of both the Ld. Counsels are taken on record. Before we delve into the submissions made by the rival parties, it would be relevant to list out the evidences relied upon by both the parties. The revenue has referred to the following evidences in the SCN : i. expert opinion from National Institute of Biologicals (letter dated 28.12.2016 Page No. 245, Volume 1) ; ii. expert opinion from NIPER ( letter dated 20.11.2012 Page No. 467, Volume 1 letter dated 13.10.2017 Page No. 71, Para No. 90, finding at No.7 of OIO) ; and iii. expert opinion from DCGI ( letter dated 11.07.2017 Page No. 1117-1148, Volume 2 ). 6.2 The Respondent, on another hand has relied upon the following evidences in support: i. expert opinion of Indian Instit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. 10. At this juncture, we find it is useful to refer briefly to the evolution of insulin as could be gathered from various literature provided by both the parties. a. Porcine and Bovine insulin Insulin was initially supplied by extraction from pancreas of bovine and porcine insulin. These contained impurities which caused undesirable side-effects. b. Porcine and Bovine Insulin with modified amino acid sequence After finding increased immunogenicity in humans while administering porcine and bovine insulin due to the difference between amino acid sequence in porcine/bovine insulin compared to the natural human insulin sequence, a method was developed to convert insulin into human insulin by modifying the amino acid which is different in the porcine insulin to be of the same as that of human insulin sequence. c. r DNA technology insulin With the advent of recombinant DNA technology (technology to produce human insulin by cloning), wherein the DNA sequence encoding human insulin (human insulin gene) was inserted into yeast to produce the human insulin peptide. One difference, however, was that the yeast cells could not make human proinsulin because the long C peptide in insul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired as the products were of r-DNA origin. iv. In response to the final parameter, which was to ascertain the molecular weight and structure, the NIB responded that the same was not required for finished drug product of insulin as per Indian Pharmacopoeia, 2014. 14. Not satisfied with the above opinion, the Revenue appears to have approached NIPER with a letter dated 25.07.2017 seeking opinion from the said authority on correctness of Human insulins of r-DNA origin being claimed as mono-component insulin , along with supporting technical/scientific evidences. In its reply, the said authority through its director vide its letter dated 13.10.2017 has stated that mono-component insulin is traditionally referred to as purified from natural source and mono component is used in the sense of single component, regardless of origin, and, in this regard the said authority has a relied upon the discussion made by European Medical Agency and an Order of National Pharmaceutical Pricing Authority NPPA - in F.NO.8(1)/2006/DP/NPPA Div II dated 29.03.2006 and NPPA s statement dated 09.07.2003. 15. Not satisfied again, it appears that the revenue approached the DCGI per letter dated 18.05.2017, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Dr. V. Mohan to his above article, while confirming that the opinion dated 25.12.2002 was issued by him (Page No. 61, para 80, OIO), clarified that: mixture of biosynthetic human/analogue insulin and protamine can be treated as monocomponent insulin and insulin analogues manufactured through the recombinant DNA technology are Monocomponent Insulin. Dr. V. Mohan s opinion confirmed that mixture of biosynthetic human/analogue insulin and protamine could be treated as monocomponent insulin and insulin analogues manufactured through the recombinant DNA technology are monocomponent insulin. 18. In the adjudication, the commissioner after considering various documents/evidences/experts opinion made available/placed on record, has found as under: 6. From the above facts, it appears that the Term Mono-component is a misnomer for the Bio-synthesized Human Insulins (in single form /in combination) as well as Insulin Analogues (in Single form and Mixture ). It appeared that the importer deliberately prefixed the term Mono- component to the Description of the goods in the import documents and also got the word Mono-component printed at some place on retail packing of the product, in underst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not exclude them from being covered under the head Monocomponent insulins as listed in the exemption notification. In this regard, reliance has been placed on the decisions of the CESTAT in Collector of Customs, New Delhi versus Ethnor Ltd. 1996 (86) E.L.T. 558 (Tribunal)] which was later on affirmed by the Apex court in Collector v. Ethnor Ltd. [1997 (96) E.L.T. A157 (S.C)] . 20.2 Further, new process of production of highly purified human insulin directly from the DNA of the human insulin gene cannot be stifled by an over-rigid interpretation ignoring the development of r-DNA technology. In this regard, reliance is placed on the decision of the Hon ble Supreme Court Collector of Customs Central Ex. v. Lekhraj Jessumal Sons [1996 (82) E.L.T. 162 (S.C.)] , wherein it was observed that static interpretation cannot be given ignoring the advancement of technology. Relevant extract is reproduced below: - 3. The High Court in the impugned order noted that the stand of the Customs authorities was that the words switches, miniaturised as component parts of hearing aids should be understood to mean only those types of switches which were generally used in the manufacture of hearing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cognizant of such an impact on the consumer's understanding of any good or trade. [Emphasis added by us] 21. The binding ratio of the above judgements clearly is that interpretation is required to be drawn keeping in mind the development in the technology. 22. Insofar as the non-consideration of the opinion of the authority, namely DGCI is concerned, reliance on the decision of Bombay chemicals, Pvt Ltd. is very apt. Hon ble High Court of Bombay in the case of Bombay Chemicals Pvt. Ltd. v. Appellate Collector of Customs [1975 (6) TMI 16], has held as follows: - What is urged on behalf of the Respondents is that on a proper interpretation of Exh. A to the Petition, the exemption is only granted where such chemicals are used for what is termed in the affidavit in reply dated 10th July 1970 as chemical intermediates for manufacture of insecticides, pesticides and fungicides, and that the certificates issued by the Director General of Technical Development, Government of India, are not conclusive. This argument on behalf of the Respondents is only to be sought to be rejected for the simple reason that the exemption Notification dated 1st March 1968, being Exh. A to the Petition, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the structure replaced by others . 26. Sub-heading Note 1 of the HSN commentary volume 2, Sixth Edition (2017) for chapter 29 also states that the derivatives of a chemical compound are to be classified in the residuary entry. The relevant note reads thus: - Within any on heading of this Chapter derivatives of a chemical compound (or group of chemical compounds) are to be classified in the same subheading as that compound (or group of compounds) provided that they are not more specifically covered by any other subheading and that there is no residual subheading named other in the series of subheadings concerned . 27. The aforesaid view is in sync with the opinion expressed by Dr V Mohan who had indicated that a mixture of biosynthetic human/analogue insulin and protamine could be treated as Mano component insulin. Therefore, Insulin would be classified under CTH 30043110. On the same basis, Insulin analogues would fall under CTH 30043110 as well. 28. In view of the above discussion and upon consideration of the evidences placed on record, including the opinion expressed by the experts in the field, we are of the view that the classification of the impugned goods as mono-componen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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