TaxTMI 
TaxTMI 
2007 (10) TMI 52
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Wockardt Biopharm Ltd., the duty demand is Rs.2,52,62,094/- together with interest and penalty of equal amount and penalties of Rs.5,00,000/- and Rs.3,00,000/- respectively on its director and senior vice president (technical), while in the case of other manufacturer, the demand is Rs.7,32,35,075/- together with interest and penalty of equal amount. The additional issue in the Wockardt appeal is as to who is the manufacturer of the disputed product, whether the appellant company or Wockardt Ltd. The additional issue in the Serum Institute case relates to valuation of the product - Rule 8 of the Customs Valuation Rules, 1988, has been adopted by the Commissioner, while it is the assessees' contention that Rule 7A is the appropriate rule. 2. According to the department, the product is a purified protein derivative which is further used to manufacture vaccine in bulk by adding adjuvant and then the formulation is made from such vaccine bulk in the form of Biovac B Vaccine. Reliance is placed on statements of the director and general manager and vice president of Wockardt Ltd. - Shri M.K. Sahib, director, has categorically admitted that the bulk alone cannot be u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ces from Master seed bank of Recombinant Yeast (Hansenuela Polymorpha). (3) Bulk protein produced (4) Bulk vaccine prepared (5) Sale in domestic market after packing in form of vials of specified dosages. 5. The Commissioner relies upon 16th Annual Report for the year ending 31.3.2000 referring to foreign technical collaboration tie-up as a German company for manufacture of Hepatitis-B vaccine, and also on internal batch manufacturing records indicating one of the ingredients for vaccine as Hepatitis-B protein in micro grams. In view of the above, he has held that the company was fully aware that what they were manufacturing was a bulk protein falling under Chapter 35 and yet described the goods as vaccine under Chapter 30 to avoid payment of CV duty. The period covered by the show cause notice dated 2.5.2006 is 2001 to 2004. 6. On valuation, he has applied Rule 8 - residual method and determined value on the basis of selling price in India of the goods produced in India. 7. We have heard both sides. 8. Flowchart given by Wockardt Biopharm Ltd. is as under:- The appellant has filed a booklet containing pictorial depiction of the manner in which the product is o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ltiplied. Slide 9 : Surrogate yeast cells multiply and after multiplication, produce Hepatitis-B Surface Antigen [HBsAg]. Slide 10 : Hepatitis-B Surface Antigen Vaccine is mixed with an adjuvant [Aluminium Hydroxide] to produce Biovac, the potentiated Vaccine. 9. The old method of preparation was as under:- Blood of infected Hepatitis-B patient was obtained, mixed with an anticoagulant, cellular part of the blood was removed by centrifugation, as a result of which the virus got isolated in the plasma (liquid part of blood) - again ultra centrifugation for the purpose of settling down of the virus which was then removed for extraction of surface antigen and the virus portion was extricated by different methods and treated with solvent. When it is shaken and subjected to centrifugation, three layers are obtained. The bottom is phenol layer, the middle is a thin interface and the top layer is an aqueous layer - DNA of the virus. This DNA is removed and purified and the surface antigen gene contained in the DNA is taken out from the DNA and replicated in the given media such as yeast etc. 10. Process chart of Serum ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n site and the improved delivery of antigens to the lymph nodes can produce a stronger antibody response than the antigen alone. Alum adjuvants are also taken up by cells such as macrophages and help these cells better present antigens to lymphocytes. In addition to adjuvants, vaccines may contain antibiotics to prevent bacterial contamination during manufacturing, preservatives to keep multi-dose vials of vaccine sterile after they are opened, or stabilizers to maintain a vaccine's potency at less than optimal temperatures. 12. Vaccines provide artificially acquired immunity and easier and less risky way to become immune. Vaccines teach immune system by mimicking a natural infection, while the aim is to teach immune system and at the same time avoid complications of a disease being contacted. Different types of vaccines have been made to combat diseases. These are:- (a) Attenuated Vaccine [Vaccine which contains a version of the living microbes which is weakened in the lab (weakening of organism is called attenuation) so that it cannot cause diseases]. (b) Inactivated Vaccine [where disease-causing microbes have been inactivated by chemicals, heat ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plete a), elicits cell-mediated immunity (delayed hypersensitivity), as well as humoral antibody formation. Stedman's medical Dictionary (26th Edn.) (1) A substance added to a drug product formulation which affects the action of the active ingredient in a predictable way (2) In immunology, a vehicle used to enhance antigenicity, e.g. a suspension of minerals (alum, aluminum hydroxide or phosphate) on which antigen is adsorbed; or water-in-oil emulsion in which antigen solution is emulsified in mineral oil [Freund's incomplete a.], sometimes with the inclusion of killed mycobacteria [Freund's complete a.], to further enhance antigenicity The Condensed Chemical Dictionary (10th Edn.) A subsidiary ingredient or additive in a mixture (medicine, flavouring, perfume, etc.) which contributes to the effectiveness of the primary ingredient. Webster's New 20th Century Dictionary (a) (1) Helping (2) Assisting (n) (1) An assistant (2) In medicine, a substance added to a drug to aid the operation of the principal ingredient The Shorter Oxford English Dictionary A substance added to a prescription to assist the action of the base Collins English Dictionary 1) Aiding or assisting....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch is employed in vaccination Collins English Dictionary (1) A suspension of dead, attenuated, or otherwise modified microorganisms (viruses, bacteria, or rickettsiae) for inoculation to produce immunity to a disease by stimulating the production of antibodies (2) A preparation of the virus of cowpox taken from infected cows and inoculated in men to produce immunity to smallpox (3) (modifier) of or relating to vaccination or vaccinia McGraw Hill Dictionary of Scientific and Technical Terms A suspension of killed or attenuated bacteria or viruses or fractions thereof, injected to produce active immunity Chambers 20th Century Dictionary (adj.) Of, derived from, the cow; of vaccina: of vaccination. (n) Cowpox virus or lymph containing it: any preparation used to confer immunity to a disease by inoculation The Oxford Reference Dictionary (n) A preparation of cowpox virus introduced into the bloodstream to procure immunity against smallpox (2) Any preparation of an organism or substance causing a disease, specially treated or synthesized and injected or administered orally against an infection The Chambers Dictionary [New Edn.] (1)Any preparation containing dead or atte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....; 3002.00 Antisera and other blood fractions; Vaccines, Toxins, Cultures of Micro-organisms (including Ferments but excluding yeasts) And similar products Nil Heading 35.04 of CETA reads as under :- Chapter 35. Albuminoidal Substances; Modified Starches; Glues; Enzymes Heading No. Sub- heading No. Description of goods Rate of duty 35.04 3504.00 Peptones and their derivatives; other protein substances and their derivatives, not elsewhere specified or included; hide powder, whether or not chromed 16% 18. HSN Chapter Heading 30.02 Note (D) covers "Vaccines, toxins, cultures of micro-organi....