TaxTMI 
TaxTMI 
2024 (11) TMI 948
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....est Strip" and "hCG Pregnancy Rapid Test Cassette" imported by Rapid Diagnostics would be eligible for exemption provided at Serial No. 148 of the Notification No. 12/2012-Cus dated 17.03.2012 and Serial No. 167 of Notification No. 50/2017-Cus dated 30.06.2017 [the Commissioner]. Under these two Notifications, exemption from duty of customs is provided to "diagnostics test kits specified in List 4". 3. Rapid Diagnostics is a Private Limited Company engaged in the import and trading of comprehensive range of disposable items, laboratory, patient care, ICU & surgical equipments, and diagnostic test kits (serology kits, biochemistry and rapid test kits) since the year 1995. During the period from 31.08.2016 to 07.07.2021, it claims to have imported "hCG Pregnancy Rapid Test Strip" and "hCG Pregnancy Rapid Test Cassette" through Bills of Entry and classified them under Custom Tariff Heading [CTH] 3002 of the First Schedule to the Customs Tariff Act, 1975 [the Customs Tariff Act]. 4. According to Rapid Diagnostics, the technical nature of the disputed goods, the description, components and the working principle are as follows: (i) The disputed goods are rapid chromatograp....
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....rts from AIIMS Biochemistry Lab were received on 03.04.2021 and 15.04.2021. The Test report from the National Institute of Immunology was received on 14.06.2021. 8. During the investigation, Rapid Diagnostics, also deposited Rs. 70,00,000/- towards duty and interest, without prejudice to its right to contest the proposal of duty. 9. Show cause notices dated 25.11.2021 and 03.09.2021 for the period 31.08.2016 to 07.07.2021 were issued to Rapid Diagnostics alleging that the disputed goods were not "agglutinating sera", but complete pregnancy test kits in ready to use condition and, therefore, the benefit of exemption under the Exemption Notifications would not be available to Rapid Diagnostics. Consequently, it was proposed to reject the exemption claimed by Rapid Diagnostics and a demand for differential duty under section 28(4) of the Customs Act, 1962 [the Customs Act] along with interest under section 28AA of the Customs Act was proposed. Proposal for confiscation under section 111(m) and imposition of penalty under sections 112/114A and 114AA of the Customs Act were also made. Penalty on Bharat Bhushan Jindal, Director of Rapid Diagnostics was also proposed under sections ....
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....ovide longer shelf life and stability to the impugned goods. However, it is observed that the essential component of these goods is agglutinating sera, which is the only active component on which test reaction is based. As such, the same is the only active component of impugned goods and rest are passive components. As such, the impugned goods (pregnancy detection kits) have their essential character defined by agglutinating sera only. The agglutinating sera is essential and inseparable part of the impugned goods is also part of the findings of the test report dated 03.04.2021 issued by Biochemistry Department, AIIMS, New Delhi and test report dated 14.06.2021 issued by the National Institute of Immunology Delhi." (emphasis supplied) 12. After referring to the judgment of the Supreme Court in M/s. Span Diagnostics Ltd. vs. Commissioner of Central Excise [2007 (211) E.L.T. 521 (S.C.)] and the decision of the Tribunal in Inter Care Ltd. vs. Collector of Customs, New Delhi [1997 (89) E.L.T. 545 (Tribunal)], the Commissioner concluded as follows: "4.10. In view of the above, I hold that the impugned goods are diagnostic test kits, which attain their essential character f....
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.... dried form. 16. The submissions advanced by the learned authorized representative appearing for the department and the learned counsel for the respondent Rapid Diagnostics have been considered. 17. The question that arises for consideration in these appeals is as to whether the "hCG Pregnancy Rapid Test Strip" and "hCG Pregnancy Rapid Test Cassette" deserve classification under CTH 3002 and whether basic customs duty @ Nil rate as required to be paid under the Exemption Notifications. The description of goods under CTH 3002 is as follows: Chapter 30 Pharmaceutical Products Tariff Item Description of goods Unit Rate of duty Standard Preferential (1) (2) (3) (4) (5) 3002 Human blood; animal blood prepared for therapeutic, prophylactic or diagnostic uses; antisera, other blood factions and immunological products, whether or not modified or obtained by means of biotechnological processes; vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products 18. The relevant portion of the Exemption Notification dated 17.03.2012 is as follows: ....
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....ndition No. (1) (2) (3) (4) (5) (6) 167. 28, 29, 30 or 38 The following goods, namely:- (A) Lifesaving drugs/medicines including their salts and esters and diagnostic test kits specified in List 4. Nil - - (B) Bulk drugs used in the manufacture of life saving drugs or medicines at (A) Nil - 9 (C) Other life saving drugs or medicines Nil - 16 20. It would be seen that the aforesaid two Exemption Notifications provide exemption to goods contained in Chapter 30 to the following goods specified in List 4 falling in Chapter 28, 29, 30 or 38: (i) Life saving drugs/medicines; (ii) Salts and esters of (i); and (iii) Diagnostic test Kits. 21. The appellant claims that the disputed goods are prepared using agglutinating serum/antisera and the essential character of the kit is provided by monoclonal antibody (hCG antibody). The disputed goods would, therefore, be classifiable under CTH 3002. There is no dispute with regard to the classification of the disputed goods. Therefore, the condition mentioned in Column (2) of Serial No's. 148 and 167 of the Exemption....
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....ied with a special buffer solution and is hence imported in the form of a kit consisting of two components, viz. (a) agglutinating sera in solid form and (b) buffer solution and the two are mixed together for reconversion or reconstitution of agglutinating sera in liquid form for use. Hence the third reason of the adjudicating authority for holding that the imported item is not agglutinating sera also cannot be sustained. 6. We further find that the adjudicating authority has emphasised the point that agglutinating sera are not covered within the ambit of sub-title of the notification which reads as "life saving drugs or medicines", as they are used in pathological laboratories for conducting routine tests of pregnancy detection. This reasoning is not correct for the reason that the title of a notification gives only a broad indication of the goods covered therein and cannot be used as characteristic or a yard-stick for determining the exact scope of the specific entry therein and factually the imported item is life saving in nature it is used for detecting life threatening conditions like Hydatidiform mole, choriocarcinoma, etc. The main stay of early diagnosis of both th....
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....s antibody which is agglutinating in nature, the kit itself does not fall into the category of "agglutinating sera". This letter does not contain any reason or basis for holding that the kit does not fall into the category of agglutinating sera. The Collector has also referred to the opinion dated 29-3-1993 of the Institute of Research in Reproduction which states that "Preg color" cannot be referred as agglutinating sera. The monoclonal 'antibody sera' referred is a diagnostic reagent wherein antibodies (monoclonal) are coated to a gold SOL particles. Sera do cause agglutination in a final reaction but in our opinion it is a value added product and not merely a simple derivative of sera. It is that the product is obtained from sera and has agglutinating properties; however, classification as agglutinating sera has been ruled out apparently because it is in kit form. We have already held earlier that the import of the product is in kit form is not detrimental to the claim of the appellants that what they imported was agglutinating sera. The criterion for value addition is not also relevant for the purpose of this case. On the other hand, the appellants have produced opinion fro....