TaxTMI 
TaxTMI 
2024 (11) TMI 740
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....tly under Notification No. 50/2017-Cus dated 30.06.2017. The goods imported under Bills of Entry [BE] No. 7610516 dated 07.05.2020 and 7615588 dated 08.05.2020 were put under preventive check on 19.05.2020 by SIIB, Air Cargo Complex (Import), New Delhi on the allegation that the goods declared as "ELISA kits for diagnostic use' in Bills of Entry are actually 'food testing kits', and to ascertain the correct description/classification of the goods and their eligibility for exemption under Notification No. 50/2017-Cus. (Entries 167 & 249A) read with S.No. 32 of List 4 of the notification, and applicability of the IGST under Notification No. 1/2017-Integrated Tax (Rate) dated 28.06.2017 (Entry 180 of Schedule I & Entry 80 of Schedule-II). Goods imported under the aforesaid 2 BEs were seized on 19.05.2020 and were later provisionally released on execution of bond with bank guarantee of Rs.22,33,000/-. Statement of Shri Ashish Bhandari, Managing Director ("MD") of the appellant was recorded on 17.09.2020. 2.2 Show cause notice dated 29.09.2020 was issued covering the period from 08.05.2015 to 16.08.2020 on the following allegations:- "(a) that Entry 80 in Schedule II o....
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.... of bank guarantee of Rs. 22,23,000/- towards recovery of dues and imposed penalty of Rs. 5,00,000/- on appellant's Managing Director under Section 114AA. Being aggrieved, separate appeals have been filed by the company and its Managing Director before this Tribunal. 3. Heard Shri G. Vidyadhar Reddy, learned counsel for the appellant and Shri S.K. Rahman, Authorised Representative for the Department. 4. Submissions of the Appellant 4.1 As per importer's understanding, food testing kits are covered under the definition of the term 'diagnostic kits' mentioned in the exemption notifications; that the term 'diagnostic' is used from 12.06.2019 only; that the invoices and contracts show that the goods are used for food testing; that Bes 7610516 dated 07.05.2020 and 7615588 dated 08.05.2020 do not contain the goods description as 'diagnostic test kits' reagents'; that they have amplified the description as 'Elisa Kits for diagnostic use only' as they are used for diagnosis of adulteration of the Food. This is not mis-declaring the description of the goods; it is only the intended use of the goods. Claim of classification and claim of exemption is not mis-declaration of goods. ....
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....is of importing goods "ELISA Test Kit for food testing" but declaring them as "ELISA Test Kit for diagnostic use only". 5.3 The invoice does not mention that these are, 'ELISA strip for diagnostic use'. However, the appellant importer while filing BEs in the description column has added these words. The literature from the foreign supplier M/s. Romer Labs, Singapore website shows that these products are used for "Testing food grains, grain products and peanuts" as they deal in the field of diagnostic solutions for food and feed safety. 5.4 That the impugned goods (viz. kits and reagents are used exclusively for food testing kits only and are not meant for diagnostic purposes of human beings (including animals). In fact, the appellant importer from June, 2019 changed the description of the goods as "diagnostic test kits/reagents" instead of "ELISA test kits for food testing". 5.5 The Serial No. in the referred Notification mentions "Lifesaving drugs/medicines specified in List 4". The reagents and kits imported for food testing are not lifesaving and hence the benefit of notification has been rightly denied. 5.6 The learned Authorised Representative referred to the princ....
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....Diagnostics Reagents (from 20.06.2018 to 05.07.2019) --All goods (from 06.07.2019 till date). S.No.249A was not applicable after 14.06.2019 to the goods originating in USA as provided vide Notification No. 17/2019-Cus dated 15.06.2019. 10% (iii) Notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017, S.No. 180 of Schedule-I (IGST Rate 5%) and S.No.80 of Schedule-II (IGST Rate 12%) reads as under:- S.No./Schedule Chapter or heading or sub-heading or tariff item Description of goods 180/I 30 or any other chapter Drugs or medicines including their salts and esters and diagnostic test kits, specified in List 1 appended to this Schedule. (S.No. 154 of List-1)-Enzyme liked Immuno absorbent Assay kits ELISA KITS 80/II 3822 All diagnostics kits and reagents. As per the contents of the above mentioned notifications, the exemption is available only for the diagnostic test kits and reagents. 8. The admitted position is that the appellant is engaged in import of 'ELISA food testing kits' and other food testing kits for couple of years. The appellant vide BE No.7610516 and 7615588 imported various types of food testing kits, the details thereof ar....
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.... categorically admitted that the imported items are not used for testing on animals and humans but are used only for food testing. 12. Another relevant factor is that the overseas supplier of the appellant M/s Romer Labs, Singapore PTE Ltd. is a manufacturer of food testing kits and reagents. The information given by them on their website - https://www.romerlabs.com is as under:- "i. Founded in Washington, MO, in 1982, we became over the years a leading provider of diagnostic solutions for the agricultural food and feed industry. ii. Romer Labs is a leading global supplier of diagnostic solutions for food and feed safety. We offer a broad range of innovative testing solutions and services covering mycotoxins, food pathogens, food allergens, glutin, GMO, veterinary drug residues, and other food contaminants. iii. Today, Romer Labs offers a broad range of innovative diagnostic solutions covering mycotoxins, food pathogens, food allergens, gluten, GMO, veterinary drug residues, and other food contaminants. Our portfolio includes: . ELISA test kits -AgraQuant . Lateral flow devices - AgraStrip and Rapidchek . Reference m....
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....er life saving drugs or medicines. The emphasis/intent while granting duty exemption is that the drugs/medicines/their salts and estors/bulk drugs/diagnostic test kits should be for life saving meaning thereby that the diagnostic tests should also be relating to diagnosis of illness in humans and animals. A perusal of the list 4 shows that it contains such life saving drugs/medicines/their salts and esters and diagnostics test kits which are for saving lives/related to medical diagnosis. The term 'diagnostic' used with test kits in the main body of the Notification gives a specification to all the items listed in the List 4 that they are for saving the lives. The S.No. of the List which the importer claims that their food testing kits falls into is an absurd interpretation of the aforesaid Notification as such kits are not meant for diagnosing illness in living beings. The food testing kit is not meant for diagnostic purposes within the meaning of Heading 3822 as per the Explanatory Notes of HSN and also the purpose and intent of aforesaid Notifications. The change in the description by the importer fro ELISA kit for food testing to ELISA kit for diagnostic purposes amply shows tha....
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....0 11 .....Pregnancy confirmation reagent. 3822 00 12 .....Reagent for diagnosing AIDS 382200 19 .....Other 3822 00 90 ....Other 16.1 The main heading of CTH 3822 provides diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents, whether or not on a backing, other than those of heading 30.02 or 30.06 and thereafter, it uses the expression "For medical diagnosis" which implies that medical diagnosis is a separate category under CTH 3822 00 11, 3822 00 12 and 3822 00 19 and at the same time reagents, which are used for purposes, other than for diagnostic are classified under 3822 00 90. It is an admitted position that the appellant had classified their products under 3822 00 90 as the goods were food testing kits and reagents. 17. It is a settled principle of law that explanatory notes to HSN is a safe guide to determine the classification of goods and in order to determine the true scope of the tariff heading, the relevant Explanatory Notes of HSN pertaining to CTH 3822 are quoted here under:- "38.22 -diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a back....
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....nd states in animals and humans for detection of illness." The contention of the learned counsel for the appellant that the diagnostic purpose can be for food testing also is unsustainable in the context of the exemption notification which has to be construed and interpreted in the light of the words/expressions used therein. 19. The learned Authorised Representative has referred to the decision of the Madras High Court in The Chinese University of Hong Kong v Diagnostic Understanding CMA(PT) 1 of 2023 & CMP No. 13206 of 2023 & WP No.7666 of 2023 & WMP Nos.7828 & 7832/2023 dt.12.10.2023 on interpretation of the term 'diagnostic', which was in reference to the grant of patent under the Patent Act,1970. In the generic sense, the Court observed that in the context of medical science, diagnosis is a method of identifying the existence or non-existence of a disease or disorder or condition and /or the site, extent, severity or other aspects thereof. While viewing the term diagnosis in association with forms of treatment, the Court concluded that the word "diagnostic" should be limited to diagnostic processes that disclose pathology for the treatment of human beings. The observatio....
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.... "20. A taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court in CST v. Modi Sugar Mills Ltd. wherein this Court at AIR para 11 has observed as follows : "11. .....In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency." Applying the golden rule of interpretation that words should be read in their ordinary & natural meaning, the Apex Court in Jeyaram Educational Trust vs. A.G. Syed Mohideen 2010 2 SCC 513 held:- "11. It is now well settled that a provision of a statute should have to be read as it is, in a natural manner, plain and straight, without adding, substituting or omit....
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.... and considering the principles laid down by the Apex Court there can be no other interpretation of the exemption clause. We have consciously arrived at the conclusion that the appellant is not entitled to the benefit of the exemption notification in respect of the kits imported by him for food testing in terms of the expression used in the notification and also keeping in view the intention under which the notification has been issued, i.e., to grant exemption to the goods related to medical treatment and diagnosis. 23. In view of our discussion above, we conclude that ELISA kits imported by the appellant were not used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans, and as a result, they were not diagnostic reagent/kits rather they were meant to be used for food testing and, therefore, did not fulfil the criteria to avail the benefit of expression as per the notification. 24. There is no reason to interfere with the impugned order and the same is hereby affirmed. Consequently, we do not find any merits in the present appeal, and hence the same is dismissed. Appeal No. 52044 of 2022 25. The appellant, Shri Ashish Bha....