Marketability and Chapter 30 classification of FDG F-18 prevailed, while extended limitation and valuation were rejected.

Actual third-party sales established marketability despite FDG F-18's short shelf life, and the production process was therefore treated as manufacture of an excisable product. FDG F-18, being a radiopharmaceutical used for medical imaging and as a diagnostic reagent, was held classifiable under Chapter Heading 3006 3000 rather than Chapter Heading 2844 4000. The extended period of limitation was found unsustainable because the assessee acted under bona fide belief without suppression, and the valuation adopted for captive consumption and internal clearances was rejected for not following the proper reference to sales to independent buyers. The demand, penalty, confiscation, redemption fine, and impugned order were set aside.

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Issues: (i) whether the production of FDG F-18 amounted to manufacture and whether the product was marketable so as to attract excise duty; (ii) whether FDG F-18 was correctly classifiable under Chapter Heading 2844 4000 or under Chapter Heading 3006 3000; (iii) whether the extended period of limitation and the valuation adopted in the impugned order were sustainable.

Issue (i): whether the production of FDG F-18 amounted to manufacture and whether the product was marketable so as to attract excise duty.

Analysis: The existence of third-party clearances established that the product had a market. Limited shelf life did not by itself negate marketability when evidence showed actual sale of the product. The process undertaken therefore resulted in manufacture of an excisable product.

Conclusion: This issue is decided against the assessee.

Issue (ii): whether FDG F-18 was correctly classifiable under Chapter Heading 2844 4000 or under Chapter Heading 3006 3000.

Analysis: FDG F-18 was treated as a radiopharmaceutical used in medical imaging and as a diagnostic reagent administered to patients. Such goods fall within Chapter 30 and not within the chapter covering radioactive elements and isotopes relied upon in the impugned order.

Conclusion: The impugned classification under Chapter Heading 2844 4000 is unsustainable and the product is classifiable under Chapter Heading 3006 3000, in favour of the assessee.

Issue (iii): whether the extended period of limitation and the valuation adopted in the impugned order were sustainable.

Analysis: The assessee acted under bona fide belief and there was no suppression warranting invocation of the extended period. The valuation methodology adopted for captive consumption and clearances to own branches and patients was not in accordance with the proper valuation framework, which required reference to the price at which goods were sold to independent buyers.

Conclusion: The extended period and the valuation adopted in the impugned order are unsustainable, in favour of the assessee.

Final Conclusion: The demand, classification, limitation, valuation, penalty, confiscation, and redemption fine did not survive, and the impugned order was set aside.

Ratio Decidendi: Actual third-party sales establish marketability despite a short shelf life, radiopharmaceutical diagnostic reagents are classifiable under Chapter 30, and absence of suppression precludes the extended period where the assessee acts under bona fide belief.

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