TaxTMI 
TaxTMI 
2016 (5) TMI 1113
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....y with an option to redeem the goods on payment of fine, interest on the demand of duty and penalties imposed while other appellants are contesting the penalties imposed on them by the adjudicating authority under the Customs Act, 1962. 2. The relevant facts that arise for consideration, after filtering out unnecessary details are, the main appellant imported chemicals of various descriptions declared them as Pharmaceutical Reference Standards (PRS) classifying the same under Customs Tariff Heading No.38 22 00 90 claiming the benefit of Notification No.21/2002-Cus. dated 1.3.2002 (Sl. No.138, read with Condition No.17) and Notification No.12/2002-Cus. dated 17.3.2012 (Sl. No.164 read with condition No.12). It is the case of the Department that the goods imported for the period prior to the issuance of show-cause notice as well as one of the live consignments are Certified Reference Materials (CRM) and not complying with the Chapter Note 2(A) and 2(B) of Chapter 38. The imported goods are classifiable under respective Chapter Heading Numbers based upon the chemical composition and not under CTH 38 22 as claimed by the main appellant. Investigation was taken up and various stateme....
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....) of the Customs Act, 1962. However, I impose a redemption fine of Rs. 5,00,000/- (Rupees Five Lakhs Only) in lieu of confiscation as the goods were provisionally released to the importer. The Bank Guarantee of Rs. 2,00,000/- executed for provisional release of seized goods is appropriated towards redemption fine. (f) I impose a penalty equivalent to the duty confirmed in (b) above along with interest thereon as in (c) above on M/s. LGC Promochem India Pvt. Ltd., Bangalore under Section 114A of the Customs Act, 1962. (g) I impose a penalty of Rs. 3,00,00,000/- (Rupees Three Crores Only) on M/s. LGC Promochem India Pvt. Ltd., Bangalore under Section 114AA of the Customs Act, 1962. (h) I impose a penalty of Rs. 40,00,000/- (Rupees Forty Lakhs Only) and Rs. 60,00,000/- (Rupees Sixty Lakhs Only) on Shri B. Suryanarayana Rao, Managing Director, M/s. LGC Promochem India Pvt. Ltd., Bangalore under Section 112 and Section 114AA, respectively; (i) I impose a penalty of Rs. 20,00,000/- (Rupees Twenty Lakhs Only) and Rs. 30,00,000/- (Rupees Thirty Lakhs Only) on the CHA M/s. New India Shipping Services, Bangalore under Section 112 an....
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.... (a High Performance Liquid Chromatography) by generating the chromatography of the reference standard and subsequently matching the same with the results of the final products manufactured by them. It is his further submission that the Department had accepted the classification of the imported goods under Chapter Heading 38 22 for so many years and also extended the benefits of Notification. He would then take us through the Chapter Heading 38 22 and submit that the said Chapter Heading squarely covers the products imported. He would submit that the reference to Chapter Note 2(A) of Chapter 38 by the adjudicating authority is incorrect as appellant never claimed the products as certified reference materials. He would then draw our attention to the HSN Explanatory Notes and submit that certified reference material is a different class of goods which requires certificate indicating the values of certified properties, methods used to determine these values and degree of certainty associated with each value and which are suitable for analytical, calibrating or recording purposes. Subsequently, he would take us through the catalogue of the products imported by them as forwarded by USP ....
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.... the matters of classification, if the Department had a different view, it can at the most seek or direct the importer to produce additional documents which in this case was not done so, hence the extended period invoked for the demand of the differential duty is incorrect. It is his further submission that the observation of the adjudicating authority that the certificates were not found in the dockets containing bills of entry and supporting documents is an observation which is out of context as the goods when they were cleared by the importers were produced as per the examination report and was conducted as directed by the seniors and all the documents were given to the authorities. It is his submission that the Customs authorities, after ascertaining the propriety of all the documents produced before them accepted the contentions of the main appellant and cleared the goods by extending the benefit of the Notifications which itself would mean that the documents were there and non-presence of such documents in the dockets is not to the knowledge of the appellant. He would then draw our attention to Final Order No.21420 of 2015 dated 19.6.2015 of this Bench in the case of CHA whos....
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....ically 98 02 as these products are used as laboratory chemicals and are not exceeding the packages of 500 gram or 500 milliliters. He would submit that this submission of alternative classification was not accepted by the adjudicating authority without recording any findings on the same. 4.1 Learned Shri Kiran S. Javali and Shri Laxminarayan, Advocates for M/s. New India Shipping Services, (CHA), while adopting the arguments made by the learned Sr. counsel for the main appellant has specifically stated that there was no mistake on the part of the CHA and had always produced the documents as sought for by the assessing officers. It is the submission that there was no commission or omission on the part of the CHA as the main appellant has been importing these goods for more than 13 years and the classification as claimed by the main appellant during the relevant period was accepted by extending the benefit of Notification. It is the submission that it cannot be said that the appellant CHA had the intention to derive unintended benefit to the main appellant. They would also rely upon the Final Order passed by this Bench in their own case on 19.6.2005 to support their claim that the....
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....harmaceutical reference standards; it was not possible to verify it at the stage of adjudication, correct description of the goods with reference to the PRS, thus the importers contention that the goods were PRS is unsubstantiated. It is his submission that in few cases, the supplier has described the goods as laboratory reagents, in that case the benefit of exemption would not be available as the Notification benefits which are being claimed by the main appellant are in respect of pharmaceutical reference standards. It is his submission that the question as to whether the imported goods are CRM or PRS is not satisfactorily answered as the goods are identical then why in some cases certificates were apparently available and in some cases it was not so. He would then submit that the meaning of the word Certified Reference Materials and Pharmaceutical Reference Standards as per Wikipedia are different. It is his further submission that there is no specific entry for PRS in the Customs Tariff and Heading 38 22 does not cover PRS by direct reference, hence PRS has to be either laboratory reagent or CRM. He would submit that the goods which are in question are in the nature of re....
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....es Pharmacopoeia, European Pharmacopoeia and British Pharmacopoeia from whom PRS are imported are part of regulation set up by the respective Governments who regulate the quality of exports or imports of pharmaceutical goods in their respective countries and the PRS which are imported by the main appellant are the standards which need to be complied with for import or export of the said pharmaceutical goods. 7. We have considered the submissions made at length by both sides and perused the records. 7.1 The undisputed facts are that the main appellant had imported various Pharmaceutical Reference Standards which are sold by them to Pharmaceutical Companies; discharged the duty liability after availing the benefit of Customs Notification No.21/2002 dated 01.03.2002 (Sl. 138 read with Condition No.17) and Notification No.12/12 dated 17.03.2012 (Sl.164 read with Condition No.12) (herein after referred to as Notification) declaring to the Customs department that the products are classifiable under Chapter Heading 38 22. It is also undisputed that the consignments were cleared by Customs Department after final assessment and the period involved is 01.03.2009 to 2.1.2014 while the s....
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....ated the 1st March, 2001], the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods of the description specified in column (3) of the Table below or column (3) of the said Table read with the relevant List appended hereto, as the case may be, and falling within the Chapter, heading or sub-heading of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as are specified in the corresponding entry in column (2) of the said Table, when imported into India,- (a) from so much of the duty of customs leviable thereon under the said First Schedule as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table; (b) from so much of the additional duty leviable thereon under sub-section (1) of section 3 of the said Customs Tariff Act, as is in excess of the rate specified in the corresponding entry in column (5) of the said Table, subject to any of the conditions, specified in the Annexure to this notification, the condition No. of which is mentioned in the corresponding entry in column (6) of the said Table: Provided that nothing contained....
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....2. (A) For the purpose of heading 3822, the expression certified reference materials means reference materials which are accompanied by a certificate which indicates the value of the certified properties, the methods used to determine these values and the degree of certainty associated with each value and which are suitable for analytical, calibrating or referencing purposes. (B) With the exception of the products of Chapter 28 or 29, for the classification of certified reference materials, heading 3822 shall take precedence over any other heading in the Schedule." 7.5 The products which were imported by the appellants and claimed them as per Pharmaceutical Reference Standard are various standard bulk drugs. Few of them, on reference to the invoices, we find Ampicillin, zidovudine, Amlodipine, Famotidine etc. In our considered view, the samples as indicated herein above and various other samples which are imported by the main appellant, are nothing but Reference Standard samples of various bulk drugs which are used for testing the parameters of either the raw materials or the finished goods of the main appellants clients. 7.6 On going through the history of reduce....
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....Reference Standards or otherwise. The phrase Reference Standards is not defined or described in Customs Act, 1962 or Customs Tariff Act that appeared to establish appropriate product description as early as in the year 2004, a particular reference seeking clarification on the description of Pharmaceutical Reference Standards was made to appropriate and competent authority in this matter i.e. Drugs Controller General (India) under Directorate General of Health Services (Drug Division) who vide his letter reference No. X19014/10/04-D dated 17.11.2004 stated as under:- Nirman Bhawan, New Delhi' 17th November, 2004 To M/s. LGC Promochem India Pvt. Ltd. P.O. Box 8.061, .' # 142m 3rd Floor, 5th Cross, RMV Extn., Bangalore,-560 080. Sir, Please refer to your letter dated 12th June, 2004 on the subject above. The Director, Central Drug Testing Laboratory, Mumbai who was consulted in the matter has opined \hatRe#erel-keSta11d~rds ate substances of known purity which are intended to be used exclusively for a specified analytical calibrating or referencing purpose and not to....
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....d label and certificate of analysis from United State Pharmacopoeia convention indicating that Pharmaceutical Reference Standards is as per the standard laid down by them. It has to be noted that Pharmaceutical Reference Standards which are accompanied by the certificate issued by US Pharmacopoeia are distinctive product and gets classified under laboratory chemical or under Chapter Heading 3822 read with Chapter Notes of Chapter 38 as reproduced herein above. The conclusion that can be reached is that Pharmaceutical Reference Standard cannot be classified as certified Reference Materials and consequently not extending the scope of applicability of notification to products other than covered under Chapter Heading 28 and Chapter 29 is also not applicable. 7.11 Further we find that the adjudicating authority in the impugned order-in-original in paragraph 36.8 has observed and held as under:- "While observing as above, I am conscious of the fact that the exemption notification issued by the Government specifically covers PRS with classification under heading 2852 and 3822. Therefore, undoubtedly the PRS can be classified under heading 3822 as well. Preceding discussion onl....