Combi pack classification under Heading 3002 upheld where vaccine and sterile water were complementary goods used together.

Sterile water cleared in a combi pack with vaccine powder, syringe and needle was treated as part of a complementary set intended for use together; applying Note 3 of Section VI, the goods were classified by the product obtained and fell under Heading 3002, supporting nil duty treatment. The later finding that the product was captively consumed and outside the exemption could not be sustained because it travelled beyond the basis of the show cause notice, which had proceeded only on dutiability as a bulk drug. The duty demand was therefore held unsustainable and the assessee's position prevailed.

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Issues: (i) Whether sterile water cleared along with the vaccine in a combi pack was correctly classifiable under Heading 3002 of the Central Excise Tariff Act, 1985 and eligible for nil rate of duty. (ii) Whether the revenue's review and the appellate finding that the product was captively consumed and therefore outside the exemption were beyond the scope of the show cause notice.

Issue (i): Whether sterile water cleared along with the vaccine in a combi pack was correctly classifiable under Heading 3002 of the Central Excise Tariff Act, 1985 and eligible for nil rate of duty.

Analysis: The combi pack consisted of the vaccine powder, sterile water for injection, and syringe and needle, all meant to be used together for administering the vaccine. Applying Note 3 of Section VI of the Central Excise Tariff Act, 1985, goods put up in sets of separate but complementary constituents intended to be mixed together are classified according to the product obtained. Since the vaccine could not be administered without sterile water, the entire combi pack was treated as a vaccine product falling under Heading 3002.

Conclusion: The sterile water in the combi pack was classifiable with the vaccine under Heading 3002 and the demand was not sustainable; this issue was decided in favour of the assessee.

Issue (ii): Whether the revenue's review and the appellate finding that the product was captively consumed and therefore outside the exemption were beyond the scope of the show cause notice.

Analysis: The show cause notice proceeded on a different basis, namely that the sterile water cleared in the combi pack was dutiable as a bulk drug. The later reasoning that the product was used captively and that Notification No. 67/95-CE was inapplicable introduced a new case not found in the notice. On that ground, the appellate view could not be sustained. In any event, the product was also covered by the exemption regime referred to for the relevant period.

Conclusion: The review and appellate findings were beyond the scope of the show cause notice and could not stand; this issue was decided in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal succeeded, with the duty demand held unsustainable.

Ratio Decidendi: A product cleared as a combined set of complementary constituents intended to be used together is classified by the nature of the final product, and an adjudication cannot be sustained on a ground that travels beyond the case made out in the show cause notice.

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