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TMI Blog2002 (1) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... T Schedule] as claimed by the Department and not as 'cultures of micro-organisms' under CSH 3002.00 of the said Schedule as claimed by M/s. J. Mitra Co. Ltd. He classified the rest of the products as 'Diagnostic and laboratory reagents' under CSH 3822.00 vis-a-vis the assessee's claim to have them classified as 'Antisera' under CSH 3002.00. The Commissioner confirmed against the assessee-company demand of duty to the extent of Rs. 1,25,85,035/- on the products cleared by them during 1994-95 to August 1999 and imposed on them a penalty of equal amount under Rules 173Q etc. of the Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944. Interest on duty was also demanded from 28-9-1996 under Section 11AB of the Act. The present appeal No. 1644/2000-C was filed by the company against the above order of the Commissioner. Appeal No. E/1645/2000-C was filed by the company's Managing Director, Sh. Lalit Mahajan against the imposition of a penalty of Rs. Two lacs on him under Rule 209A of the Central Excise Rules, 1944 by the Commissioner by the same order. 2.We have perused the records and have particularly examined the grounds of the appeals vis-a-vis the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pages 34 and 35 of Dr. R.N. Makroo's book on 'Basic Blood Group Serology' [pages 307-309 of Paper Book] The Counsel has contended that since the MABs are specifically covered as cultures of micro-organisms under Heading 30.02, the same cannot be classified under the residuary Heading 30.05. He has relied on the Supreme Court's judgment in Indian Metals Ferro Alloys Ltd. v. Collector of Central Excise [1991 (51) E.L.T. 165 (S.C.)]. According to the Counsel, a combined reading of HSN Explanatory Notes to Heading 30.02 and Heading 30.06 (corresponding to Heading 30.05 of CET Schedule) would show that only polyclonal antibodies are covered under Heading 30.05 and MABs are covered only under Heading 30.02 as 'cultures of micro-organisms'. 3.3.Ld. SDR, Dr. D.K. Verma has stated the principle of blood-grouping and has submitted that the MABs were specifically made on such principle and sold to hospitals, nursing homes and laboratories for the purpose of blood-grouping. The products had no therapeutic or prophylactic uses and were described as blood-grouping reagents only. Ld. DR has also contended that, by virtue of the specific provision of Note 3(e) to Chapter 30 of the CET ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ....... . (d) ........ (e) Blood-grouping reagents; (f) ....... . (g) ....... . (h) ....... ." Heading 30.02 includes two distinct categories of goods viz. Antisera and other blood fractions AND Vaccines, Toxins, Cultures of micro-organisms and similar products. The HSN Notes to Heading 30.02 (vide pages 465 and 466) have also represented them as two distinct and mutually exclusive categories of goods vide (C) and (D) below. According to the HSN Notes, Heading 30.02 covers :- (A) Human Blood (B) Animal Blood prepared for therapeutic, prophylactic or diagnostic uses (C) Antisera and other blood fractions and modified immunological products (D) Vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products. The appellants have pleaded in their memoranda of appeals that the MABs can be used for blood-grouping as also for therapeutical and prophylactic purposes and that the goods fall under the category of 'modified immunological products'. At the same time, they have also stated that these antibodies are nothing but cultures of micro-organisms classifiable as such. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such a case, the scientific or technical characteristics of the product - whether manufactural, constitutional or functional - are irrelevant to its classification, and so are HSN notes. Therefore, the reliance placed by ld. Counsel on experts' certificates or on HSN notes will have no persuasive effect on us. We, thus, find that the adjudicating authority has rejected the assessee's claim under Heading 30.02 by a conceivable process of reasoning and correctly classified their MABs as blood-grouping agents under Heading 30.05 of the CET Schedule. The Apex Court's decision in Indian Metals Ferro Alloys (supra) seems to be inapplicable to the case for the said reason. 4.1.The products mentioned at serial Nos. (7) to (9) in para (1) were cleared by the assessee as 'pregnancy test kits' (in short, PTKs). The memo of appeal (E/1644/2000) has given a brief account of the genesis of the PTKs (vide para : B-2 under Grounds of Appeal) as follows :- "PTK is a rapid sensitive and accurate immunoassay for the visual qualitative detection of Human Chorionic Gonadotropin (hCG) in the urine of a pregnant lady as an indicator of pregnancy. Normally a pregnant lady secretes hCG which is sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel has further pointed out that the Commissioner has accepted the products to be refined antisera. Relying on HSN notes, ld. advocate has contended that Heading 30.02 covers antisera of all forms as it makes no distinction between crude antisera and refined antisera. The products in question are specifically covered under that Heading and, by virtue of the exclusion clause in Heading 38.22, cannot be classified under the latter Heading. Counsel has particularly relied on HSN explanatory notes to Heading 30.02 at page 465 as also the notes to Heading 38.22 at page 578 to contend that antisera, even when used for diagnostic purposes, would remain classified under Heading 30.02 only as Heading 38.22 is only a residuary heading which covers only those products which are not covered by Chapter 30. He has also challenged the reliance placed by the adjudicating authority on the opinions of the CRCL Director, by submitting that the opinion was given only on the basis of product literature and not on the basis of any test results. Furthermore, according to ld. Counsel, classification of PTKs has already been settled under Heading 30.02 by the Tribunal in Inter Care Ltd. v. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appropriate to the materials of which they are made (e.g. Chapter 28, Chapter 29 or heading 30.02 or 38.22)." The anti-hCG antibodies used in the PTKs were derived from goat antisera classifiable under Heading 30.02. It follows that the PTKs, which were prescribed only for in vitro test for pregnancy and were not designed to be administered to the patient, would fall, as 'diagnostic or laboratory reagents', under Heading 30.02, which Heading specifically covers antisera. Diagnostic or laboratory reagents of Chapter 30 have been excluded from the coverage of Heading 38.22, which reads as under :- 38.22 3822.00 Diagnostic or laboratory reagents on a backing and prepared diagnostic or laboratory reagents whether or not on a backing, other than those of Chapter 30. "Visipreg Strip" and "Preg Test Card", being anti-hCG antibody (from antisera) dispersed on membrane, will fit in with the description "diagnostic or laboratory reagents on a backing" while "Beta Visipreg" can appropriately be described as "prepared diagnostic or laboratory reagents whether or not on a backing". Though these descriptions literally exist in Heading 38.22 only, products of eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icinal use". While Syphilis RPR was prescribed as a quick test for reagin in serum or plasma, Salmonella Antigens were offered as a rapid test for specific antibodies in serum. Thus, both the products were meant for testing blood fractions. The antigen (toxin) used in the Syphilis RPR test kit was stated to be a modification of VDRL antigen (toxin). This antigen has not been shown to have been derived from any blood fraction. Counsel has submitted that Syphilis RPR contains lecithin in buffer solution and is ipso facto a blood fraction as lecithin (according to him) is extracted from blood. But he has not cited or produced any evidence whatsoever in support of this plea. Similarly, his submission that Salmonella Antigens are obtained by culturing micro-organisms also has not been substantiated. Syphilis RPR was a repacking from imported bulk product and, in respect of most of such bulk imports, the assessee had claimed clearance of the goods under Customs Tariff Heading 38.22 as evidenced by Bills of Entry. The appellants have not rebutted this adverse evidence. Thus we have no reason to interfere in the adjudicating authority's findings in relation to classification of the two pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CE [1989 (43) E.L.T. 195 (S.C.)] and Pushpam Pharmaceuticals Ltd. v. CCE [1995 (78) E.L.T. 401 (S.C.)]. The appellants have also contended that it was a departmental change of opinion on classification of the products that led to the SCN and, in such SCN, suppression could not have been raised as a valid allegation. Ld. advocate has reiterated all these contentions and has submitted that there is no evidence on record to prove that the appellants had suppressed or misdeclared anything with intent to evade payment of duty. He has urged to hold that the demand of duty confirmed on MABs and the non-PTK diagnostic/laboratory reagents for the extended period is time-barred. Ld. SDR has vehemently opposed these arguments by reiterating the adjudicating authority's findings on the point. 6.3.We have considered the submissions. During the entire period in question, it was admittedly only on one occasion that the assessee resorted to the registered-post-despatch mode of filing declaration and obtained a Code Number allotted by the Department. The appellants claimed to have sent declarations at other times during the said period to the Department under certificates of posting (UCP). The Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants in respect of MABs and non-PTK diagnostic/laboratory reagents and that their intent to evade payment of duty on these products has been clearly brought out by the evidence on record. Accordingly, we hold that the extended period of limitation was correctly invoked for demanding and confirming duty on the MABs (blood-grouping reagents) and non-PTK diagnostic/laboratory reagents for the period 1994-95 to 31-1-99. We have not accepted the appellant's plea that the Department was aware of all the necessary facts. The Department became aware of all the necessary facts only from the declaration which the assessee filed on 11-3-99. In the circumstances, in our view, the Supreme Court's decisions in Padmini Products (supra) and Pushpam Pharmaceuticals (supra) cannot be applied to the facts of this case. 6.4.The appellants have a further case (without prejudice to their submissions on the substantive issues) that, in the event of demand of duty on any of the products being confirmed as per the Department's classification, Modvat credit should be allowed on the inputs used in the manufacture of such products. Learned advocate has pressed this case before us. He has also pleade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods were liable to confiscation under the Central Excise law. In the absence of such evidence, we have to exonerate Shri Lalit Mahajan from the alleged offence under Rule 209A. 7.In the result, our order will be as follows :- (a) The classification of items (1) to (6) of the list of products given in the opening paragraph of this order, as blood-grouping reagents under CET Heading 30.05 is upheld; the classification of items (7) to (9) of the said list under CET Heading 38.22 is set aside and the said items are held to be classifiable as antisera under CET Heading 30.02; the classification of items (10) and (11) of the list under CET Heading 38.22 is upheld and these items will remain classified under the Heading as "prepared diagnostic or laboratory reagents whether or not on a backing, other than those of Chapter 30". (b) The duty demand on items (7) to (9) is set aside. (c) The adjudicating authority's decision on the question of limitation in relation to demand of duty on items (1) to (6), (10) and (11) is upheld. (d) The quantum of duty on items (1) to (6), (10) and (11), demanded in the impugned order, is set aside. The adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X
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