TaxTMI 
TaxTMI 
2018 (6) TMI 778
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....urangabad which dismissed their challenge to the order of original authority classifying the 'recombinant erythropoietin (r-EPO)', manufactured for supply to M/s Gland Pharma, under heading no. 2937 00 of the First Schedule of the Central Excise Tariff Act, 1985 as 'hormones' instead of the claimed classification as 'other blood fractions' under heading no. 3002 00 of the Schedule. Denial of claimed classification was followed with order for recovery of Rs. 36,61,204 under section 11A of Central Excise Act, 1944, along with interest thereon under section 11AB of Central Excise Act, 1944, and imposition of penalty of like amount under section 11AC of Central Excise Act, 1994 besides imposition of personal penalty of Rs. 5000 on Dr MK Sahib, ....
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....as designed. Indeed, the first appellate authority has exposed his disinclination to even ponder on the complexities of hormone production; we would go so as far as to describe his order as an example of shirking of the high responsibilities vested in the first appellate authority. The casual disposal of the appeal with a brief finding - the whole of which are reproduced here for the record - '5. I have carefully gone through the records of this appeal, the written as well as oral submissions of the Appellants made in their appeal memorandums and in course of personal hearing and I find that the subject demand notice was served on the appellants following investigations initiated by the DGCEI. During the course of investigations, i....
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....rse, we would have remanded the matter back to the first appellate authority for taking the appeal to its logical conclusion. We would then be adding to the disinclination on the part of the hierarchy to venture into the complexities. It, therefore, behoves to us to step in and restore the credibility of the appellate structure in indirect taxation. 6. A pre-requisite for re-determination of classification of any goods is, undoubtedly, the discarding of the claimed classification. The resolution is, thereafter, to be consummated by ascertaining the alternate classification based on governing principles and after having placed the manufacturer on notice. The central excise authorities sought to discard the claim of the appellant for class....
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....ch more whim than wisdom in the impugned order: that with the fount of expertise, in the form of Dr MK Sahib, having designated the product as a hormone in his statement recorded during the investigation proceedings and with the various commercial literature issued by the appellant describing the product as hormone there was no reason to elaborate any further, or to apply the principles of classification within the framework of the show cause notice, on the feasibility of categorizing 'erythropoietin' as 'hormone'. 9. The classification sought by the appellant does not appear to be tenable. A blood fraction is a constituent of human blood that has been subject to a process of disaggregation with intention to introduce in the body of the ....
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....l development of human beings and by the liver at the pre-natal stage; current research posits that these are produced in the brain too. This runs counter to the general understanding of 'hormone'. We are, therefore, of the considered opinion that the lower authorities had incorrectly, and based on insufficient evidence, held 'erythropoietin' to be 'hormones' and if these, surely, are not, the cloned version cannot also be. 11. The impugned product is not a 'blood fraction'. Neither is it a hormone. In the absence of a valid and acceptable alternative after discarding its classification as a 'blood fraction', the consequent recovery ordered by original authority, and upheld by the first appellate authority, fails to meet the test of law ....