2025 (12) TMI 687 - AAR - Customs

Diagnostic kits classified as CTH 38221990 u/r 1, exemption denied as Notification 45/2025 covers isolated Bovine Albumin

The authority held that the imported diagnostic kits are laboratory reagents in kit form, correctly classifiable under CTH 38221990 as 'other kit' by ... Classification of imported diagnosis kits - classifiable under CTH 38221990 or not - eligibility for exemption from Basic Customs duty under Entry 167(A) of N/N. 50/2017-Customs dated 30.06.2017 read with S. No. 16 of List 4 of same notification, available to 'Diagnostic Kits' containing BSA. Classification of imported diagnosis kits - classifiable under CTH 38221990 or not - HELD THAT:- As per Rule 1 of the GI Rules, goods under consideration should be classified in accordance with the 'terms' of the heading or the relevant Section or Chapter Notes. It further states that in the event, the goods cannot be classified solely on the basis of said Rule 1, and if the headings and legal notes do not otherwise require, the remaining Rules 2 to 6 may then be applied in sequential order. It is found that 'the subject goods' are laboratory reagents in form of kit which is aptly classifiable under CTH 38221990 as other Kit. As the product is aptly classified by application of Rule 1 itself; there is no need to go in further details - So far as previous classification of subject goods as 'Other reference material' under CTI 38229090 is concerned, it is observed that the applicant has considered this as their bonafide error and has requested to change classification. CTI 38229090 is a generic heading for other reference material. As discussed above CTH 38221990 is more specific classification of the product which should be preferred over generic classification in view of various decision of Apex court in various cases. The documents as submitted by the applicant do not have any data for 'degree of certainty' associated with material which shows that it is not a 'certified reference material'. Hence, it is agreed with contention of the applicant (which is agreed by the department also) that they were wrongly classifying these goods as 'other reference material'. Thus, it is held that the 'the subject goods' as these are laboratory reagents, are rightly classifiable under Tariff Item 38221990 of the Customs Tariff Act, 1975. Eligibility for exemption under Entry 102 of Notification No. 45/2025-Cus dated 24.10.2025 read with Entry No. 9 of List 3 - HELD THAT:- The applicant's argument that their diagnostic kits qualify for exemption merely due to the presence of Bovine Albumin is devoid of legal merit. Entry 9 of List 3 provides exemption solely to Bovine Albumin imported in its isolated form, not to composite laboratory reagents or kits in which Bovine Albumin is merely an ingredient. Consequently, the diagnostic kits proposed to be imported by the applicant do not fall within the scope of Entry 102 read with List 3 of Notification No. 45/2025-Customs and are not eligible for exemption from customs duty. Further, the Applicant has placed reliance upon the decision of the Hon'ble CESTAT, New Delhi, in the case of Inter Care v. Commissioner of Customs [1996 (10) TMI 201 - CEGAT, NEW DELHI], wherein the Hon'ble Tribunal had occasion to examine the issue relating to the admissibility of exemption in respect of 'Agglutinating Sera' used in pregnancy test kits. The Hon'ble Tribunal, while allowing the exemption benefit, had noted that the active and principal ingredient of the kit was 'Agglutinating Sera' itself, and that the other component merely served as a diluent or medium for reconstitution - In the present case, however, the facts stand on a different footing. It appears from the documents and submissions on record that the diagnostic kits proposed to be imported by the Applicant contain Bovine Serum Albumin along with other reagents and constituents. Thus, the composition and essential nature of the impugned goods are materially distinct from those examined in Inter Care case - Accordingly, the ratio decidendi of the Inter Care decision cannot be extended to the present matter, as the same was rendered in the context of goods consisting solely of 'Agglutinating Sera' as the active ingredient, whereas the instant product is a composite diagnostic kit comprising multiple reagents. Therefore, the said precedent is not applicable to the facts of the present case. The kits imported by the Applicant are not eligible for exemption from Basic Customs duty under Entry 102 of Notification No. 45/2025-Customs dated 24.10.25 read with S. No. 9 of List 3 of same notification Application disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the imported miRCURY LNA SYBR Green PCR Kits (200 and 600) are classifiable as 'diagnostic or laboratory reagents in kit form' under Tariff Item 38221990, or as 'other reference materials' under Tariff Item 38229090 of Heading 3822. 1.2 Whether the said kits, which contain Bovine Serum Albumin/Bovine Albumin (BSA), are eligible for exemption from basic customs duty under Entry 102 of Notification No. 45/2025-Customs dated 24.10.2025 read with Entry 9 of List 3 (earlier Entry 167(A) read with List 4 of Notification No. 50/2017-Customs). 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Classification of miRCURY LNA SYBR Green PCR Kits Legal framework 2.1 The Court applied Rule 1 of the General Rules for the Interpretation of the Harmonized System, under which classification is determined according to the terms of the headings and any relevant Section or Chapter Notes, and only if needed by recourse to the subsequent Rules. 2.2 Heading 3822 covers 'Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, whether or not put up in the form of kits, other than those of heading 3006; certified reference materials.' Within this: * Tariff Item 38221990 covers 'Other' diagnostic or laboratory reagents in kit form. * Tariff Item 38229010 covers 'Certified reference material' and 38229090 is the residuary 'Other' under the 'Other' subheading 382290. 2.3 The Court noted the settled principle that residuary entries such as 38229090 can be resorted to only where, even on liberal construction, a specific entry does not cover the goods, and that goods should not be classified under such residual headings if they can be appropriately covered under a more specific item. Interpretation and reasoning 2.4 The subject goods are described as kits containing a high-performance PCR master mix reagent designed for use with miRNA PCR systems, featuring reagents, controls, and additives enabling quantitative real-time PCR amplification; they are put up in kit form and are laboratory diagnostic reagents used in vitro. 2.5 On these facts, the Court held that the goods squarely satisfy the description of 'diagnostic or laboratory reagents ... whether or not put up in the form of kits' under Heading 3822, and more specifically under the 'Other' diagnostic kits subheading 38221990. 2.6 With respect to the earlier classification declared by the applicant under 38229090 as 'other reference material', the Court found: * The goods are not 'certified reference materials', as they are not accompanied by a certificate specifying the value of certified properties, the method used to determine these values, and the degree of certainty associated with each value. * In the absence of such certification, they cannot fall under 'certified reference material' (38229010), and the generic 'other' category (38229090) is a residuary heading which cannot be invoked when the goods fit a more specific diagnostic kit entry. 2.7 The Court accepted that the earlier classification was a bona fide error by the applicant based on a wrong interpretation of the tariff and held that: * A correct, more specific classification under 38221990 is legally preferable to the earlier residuary classification. * There is no estoppel in tax classification; a fresh, correct interpretation of a tariff heading can justify change of existing classification, subject to the change operating prospectively. Conclusions 2.8 The Court concluded that the miRCURY LNA SYBR Green PCR Kits (200 and 600) are laboratory diagnostic reagents in kit form and are rightly classifiable under Tariff Item 38221990 of the Customs Tariff Act, 1975. 2.9 The prior classification under 38229090 as 'other reference material' was erroneous, can be corrected, and the revised classification under 38221990 will apply prospectively. Issue 2 - Eligibility for exemption under Entry 102 of Notification No. 45/2025-Customs (Bovine Albumin) Legal framework 2.10 The applicant originally claimed exemption under Entry 167(A) of Notification No. 50/2017-Customs read with List 4. That scheme was subsequently omitted and replaced; the governing provision at the time of ruling is Entry 102 of Notification No. 45/2025-Customs dated 24.10.2025, read with List 3. 2.11 Entry 102 of Notification No. 45/2025-Customs grants full exemption from basic customs duty to: * Lifesaving drugs/medicines including their salts and esters; and * Diagnostic test kits; provided that they are specifically specified in List 3 and fall under Chapter 28, 29, 30 or 38. 2.12 Entry 9 of List 3 specifies 'Bovine Albumin'. Other entries in List 3 include (i) specific named drugs/medicines and (ii) fully identified diagnostic kits expressly mentioned by name. 2.13 The Court applied the principles that: (i) exemption entries are to be construed strictly; (ii) the benefit cannot be extended by implication beyond the clear words used; and (iii) the specific enumeration of certain items in an exemption list is indicative of an exhaustive legislative intent with respect to those categories. Interpretation and reasoning 2.14 The applicant argued that: * All subject kits contain Bovine Serum Albumin/Bovine Albumin (BSA) as an active constituent critical to test performance. * Entry 9 of List 3 refers to 'Bovine Albumin' and, therefore, any diagnostic kit containing BSA should be considered a 'diagnostic test kit specified in List 3' for purposes of the exemption. 2.15 The Court rejected this contention for the following reasons: a) Scheme and structure of List 3 - List 3 is structured to cover: * Identified lifesaving drugs/medicines (including salts and esters), and * Diagnostic test kits that are individually and expressly listed by name. Some diagnostic kits are explicitly mentioned (e.g. named immunoassay kits, specific IF kits), demonstrating that only those kits which are specifically enumerated in List 3 are intended to enjoy the exemption. b) Entry 9 applies only to Bovine Albumin as an independent product - Entry 9 lists 'Bovine Albumin' simpliciter. It does not refer to diagnostic kits, reagents, or composite formulations containing Bovine Albumin. * On a strict reading, the exemption attaches to Bovine Albumin imported as such, in its individual, identifiable form. * There is nothing in the notification to support the view that any product containing Bovine Albumin as one of several ingredients is thereby transformed into a 'specified diagnostic kit' within the meaning of Entry 102 read with List 3. c) No ingredient-based extension of exemption - The notification contains no provision allowing the exemption for Bovine Albumin to be claimed indirectly through composite goods (such as multi-reagent kits) that merely incorporate Bovine Albumin. * If the legislature intended to exempt all diagnostic kits or reagents containing Bovine Albumin, this would have been expressly specified. * A general ingredient-based claim would defeat the specific, itemised structure of List 3. d) Explicit listing of diagnostic kits is exhaustive - The express inclusion of certain diagnostic kits by name implies, by necessary exclusion, that unlisted kits are not intended to be covered. * The applicant's kits do not appear anywhere in List 3. * The interpretive maxim that the express mention of some items excludes others applies; therefore, diagnostic kits not specifically named are outside the exemption. 2.16 The applicant relied on a Tribunal decision where exemption for 'Agglutinating Sera' was allowed in respect of a pregnancy diagnostic kit containing agglutinating sera and a buffer solution, on the basis that the active and principal ingredient was the exempted sera. 2.17 The Court distinguished that decision on facts and scope: * In the earlier case, the kit effectively consisted of agglutinating sera in two forms (solid and its reconstituted liquid), with the other component acting merely as a diluent; the principal and essential goods were the exempted sera itself. * In the present case, the subject kits are composite diagnostic reagents comprising several different reagents, with Bovine Serum Albumin being only one of multiple constituents; the kits are not simply Bovine Albumin in different forms. * Accordingly, the factual and legal basis for extending the exemption in that precedent is not present here, and its ratio cannot be imported to treat these composite kits as 'Bovine Albumin' for exemption purposes. Conclusions 2.18 Entry 9 of List 3 to Notification No. 45/2025-Customs exempts only Bovine Albumin imported as a standalone product; it does not extend to diagnostic kits or laboratory reagents which merely contain Bovine Albumin as an ingredient. 2.19 The applicant's miRCURY LNA SYBR Green PCR Kits (200 and 600) are not specifically enumerated diagnostic kits in List 3, and cannot be treated as 'Bovine Albumin' for purposes of Entry 9. 2.20 The diagnostic kits in question are therefore not eligible for exemption from basic customs duty under Entry 102 of Notification No. 45/2025-Customs dated 24.10.2025 read with Entry 9 of List 3 (nor under the corresponding earlier provisions in Notification No. 50/2017-Customs).