Tariff classification of recombinant erythropoietin and limitation for duty demand failed amid bona fide interpretational confusion.

Recombinant erythropoietin was examined for classification under the Central Excise Tariff, with the dispute turning on whether it fell within the tariff notion of a hormone or a blood fraction. The record showed a biotechnologically cloned product expressed outside the human body, not a constituent fraction of human blood, and the evidence was insufficient to establish hormone classification in tariff terms. The classification adopted below was therefore unsustainable. On limitation, the product's novel and medically complex nature, together with bona fide confusion in the field and no proof of deliberate suppression or intent to evade duty, meant the extended period could not be invoked. The demand, interest and penalties were set aside.

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Issues: (i) Whether recombinant erythropoietin was correctly classifiable as a hormone under Heading 2937 00 of the First Schedule to the Central Excise Tariff Act, 1985 or as a blood fraction under Heading 3002 00; (ii) Whether the extended period of limitation could be invoked for recovery of duty, interest and penalty.

Issue (i): Whether recombinant erythropoietin was correctly classifiable as a hormone under Heading 2937 00 of the First Schedule to the Central Excise Tariff Act, 1985 or as a blood fraction under Heading 3002 00.

Analysis: The product was a recombinant, biotechnologically cloned preparation expressed outside the human body, not a constituent fraction of human blood. The record and scientific material did not establish that erythropoietin was unambiguously a hormone in the tariff sense. A blood fraction is a component of human blood obtained by disaggregation and not artificially created, whereas the impugned product was manufactured by cloning. The authorities below classified it as a hormone on insufficient evidence.

Conclusion: The product was not classifiable as a blood fraction, and it was also not established to be a hormone; the classification adopted below was unsustainable and was set aside.

Issue (ii): Whether the extended period of limitation could be invoked for recovery of duty, interest and penalty.

Analysis: The goods were of a nascent and medically complex nature, with no clear precedent available for classification. The Central Government itself had treated the goods as falling under chapter 30 for customs purposes, which showed scope for bona fide confusion. On these facts, no deliberate suppression or intent to evade duty was established.

Conclusion: The extended period of limitation was not invocable.

Final Conclusion: The demand, interest and penalties could not be sustained and the appeal succeeded in full.

Ratio Decidendi: Where the evidence does not clearly establish the tariff identity of a newly developed biotechnology product, and the surrounding facts show bona fide interpretational confusion rather than deliberate evasion, classification and limitation findings based on insufficient proof cannot be sustained.

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