TaxTMI 
TaxTMI 
2024 (12) TMI 365
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....03.2012 [Sl. No. 148] and Sl. No. 167 r/w. entry No. 63 of List 4 of Notification No. 50/2017 - Cus. dated 30.06.2017, for the said goods. 2.2 It appears one consignment of insulin declared as monocomponent insulin vide Bill of Entry dated October 26, 2016 was intercepted by the SIIB, Custom House, Chennai. Respondent-assessee appears to have self-assessed the goods under Customs Tariff Item 3004 3110 to 'NIL' duty by way of claiming the above exemptions. Basis the investigation, the Respondent-assessee was issued with a SCN dated February 23, 2018 wherein the main allegation was that the goods imported by the them did not qualify to be "monocomponent insulins". A demand of Rs. 1,67,43,49,227 was thus proposed for the period November 2014 to September 2017 invoking the extended period of limitation under the provisions of Section 28 of the Customs Act, 1962, as the benefit of Notification/s claimed by the respondent was allegedly not available to them. 2.3.1 It appears that the respondent filed its detailed reply, inter alia highlighting that; i. Insulin analogues imported by them are insulins and are "Monocomponent insulins". "Monocomponent insulins" are eligible fo....
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....at has been purified using Chromatographic techniques to reduce PRO-insulin. For this, he has placed reliance on the Oxford Dictionary of Biochemistry and Molecular Biology (1997 Edition), Gelanics of Insulin and European Pharmacopoeia. ii. Insulin from animal source and r-DNA source could be differentiated based on material, process of manufacture/purification and nature of precursor; and only the insulin obtained from animal source could be considered as 'monocomponent insulin'. iii. There is no specific 'monocomponent' in the insulin manufactured using r-DNA technology, the very phrase mono-component has not been used uniformly in all countries by the respondent wherever their products were supplied, whereas the same was specifically indicated in the packaging of goods sold only in India, which only indicates that the mentioning of such an expression was merely to avail the benefit from payment of customs duty. Further, the said phrase was intended to cover insulin which had a single component, which would necessarily refer to purified porcine and bovine insulin and not to insulin manufactured using r-DNA technology. iv. On perusal of HSN Explanatory N....
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.... c. Commissioner of Customs, Central Excise and Service Tax, Patna Vs. M/s. Shapoorji Pallanji and Company Pvt. Ltd. & Ors. [2023 LiveLaw (SC) 885] xi. The European Medicines Agency, which is the Regulatory Authority for marketing of insulin products in the European countries, in its CHMA assessment report and European Pharmacopoeia has not described the product under consideration as 'monocomponent insulin'. xii. Apart from the above, the information mentioned in the patient Leaflet information indicates that the goods in question are not marked as 'mono-component insulin'. 4.2 He would thus request for setting aside the findings of the impugned order. 5.1 Per contra, Sri Shivadass, Ld. Senior Advocate appearing for the Respondent-Assessee submitted that the Respondent imports Insulin products from NNAS, Denmark by claiming Customs duty exemption. Details of the Insulin products imported along with the classification of products are provided in the table below: - Nature Products HSN Classification Human Insulin (whether in the form of vials, PENFILL(r) or FlexPen(r)) Insulatard(r) 3004 3110 Mixtard(r) 3004 3110 Actrapid(r)....
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....hat the product under consideration is nothing but a 'mono-component insulin': - a. Expert opinion by Professor Utpal Tatu of the Indian Institute of Science (Page No. 1150, Volume 2) who, after testing the insulin products of the respondent, had opined that "......all the insulins being dealt by Novo Nordisk India Pvt Ltd are r-DNA technology based and the purity was tested by using highly sensitive mass spectroscopy method at Department of biological sciences, IISC under my supervision which re-confirms the purity; thereby insulin products listed below are mono-component in nature." b. Article titled "which insulin to use? Human or animal?" Authored by Dr. V. Mohan, wherein, (Page No. 1153, Volume 2) while discussing the purity of insulin, placing reliance on clinical studies Dr. Mohan observed that "human insulin was shown to be indistinguishable from porcine insulin of comparable purity." Based on numerous studies, he has concluded that there were no differences in ability to transport glucose between recombinant human insulin and porcine insulin and neither insulin is less reactive than the other insulin with antibodies. c. Clarification on the artic....
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....ent of Biotechnology, IIT Madras; and ii. opinion of Dr. V Mohan, Chairman and chief diabetologist of Madras diabetes, research foundation, Chennai (Page No. 61, paras 79 & 80, OIO). 7. After hearing the rival contentions at length and after perusing the documents placed on record, we find that the only issue to be decided by us is, "whether goods imported by the respondent which are impugned in the present appeal, could be considered as mono-component insulin, and thus are eligible for exemption from payment of customs duty?" 8. We find that both the parties have referred to various scientific literature, wherein the definition of 'monocomponent insulin' are given as under: - SL No. Source Definition 1. Oxford Dictionary of Biochemistry and Molecular Biology (1997 edition) "a commercial preparation of natural insulin that has been highly purified by chromatography and is thus made essentially free of pro-insulin, intermediates in the conversion of pro-insulin to insulin, and breakdown products of insulin as well as any unrelated contaminants. " 2. Gelanics of Insulin Jens Brange in his litera....
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....s. It was therefore necessary to modify the human insulin gene so that it was more conducive for production in yeast and hence, the long C-peptide was replaced by a short, synthetic C-peptide to give a molecule called 'mini-insulin'. Thereafter, a helper protein called 'Alpha-factor' including a pre-pro-peptide was attached to the mini-insulin molecule to allow it to enter into the endoplasmic reticulum in the yeast for proper processing. This was referred to as pre-pro-mini-insulin, which was similar to pre-pro-insulin found in the pancreatic beta cells. 12. With the above short background, it would now be necessary for us to examine the issue in the light of the scientific literature/opinions/sources relied upon during the course of arguments before us. 13.1 During investigation, the Revenue sent a letter dated 29.11.2016 to the NIB wherein certain parameters were requested to be tested to ascertain the eligibility of the goods imported by the Respondent for the benefit of duty exemption. NIB was also asked to provide reasons in case they were unable to perform the test indicated in the letter. Vide another letter, the revenue also requested the NIB to test the samples of M....
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.... by the Respondent from the year 2010 till that date, along with copies of documents furnished by the respondent-importer for obtaining approvals of labels for the products specified in the said letter. In response, that the DCGI per its letter dated 11.07.2017 furnished copy of Form 10 licenses along with the copy of application issued to the respondent for insulin products wherein it was indicated that the products imported were mono-component insulin. Strangely, however, all the above opinions/communications appear to be disregarded in the SCN itself. 16. In the expert opinion issued by the IISC, the following is the excerpt of the same - "all the insulin being dealt by Novo Nordisk India Pvt. Ltd. are r-DNA technology based and the purity was tested by using highly sensitive mass spectroscopy method at Department of biological sciences, IISC under my supervision which re-confirms the purity; thereby insulin products listed below are mono-component in nature". Further, in the article of Dr. V. Mohan which is also relied upon by the respondent, the observation of the said Dr. V. Mohan are "....human insulin was shown to be indistinguishable from porcine insulin of comparable p....
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....pany, in order to avail duty exemption under Customs Notification No. 12/2012-Sl No 148(A) List 4 Sl. No 71." 19. At this juncture, we find it relevant to refer to the order of MJ Pharmaceuticals (supra) relied upon by respondent. The coordinate bench has held that Monocomponent insulin in Serial 84 of Part A of schedule to the Notification 208/81 would include insulin in any form. Relevant extract is reproduced below: - "The words used in the heading of schedule are "life saving drugs and medicines." We think it is erroneous to conclude that merely from the heading of the said schedule only finished medicaments are exempted in the list and not goods out of which these medicaments could be made. Heading itself is misleading. The list includes many goods which are obviously not drugs or medicaments at all - for example 'immunoassay kit for blood fibrinogen degradation product for direct estimation for diagnostic test in D.I.C.'- Entry 57, 'cesium tubes'-Entry 150, 'Elisa diagnostic tests'- Entry 155. These are neither drugs nor medicines but diagnostic chemicals. Even among the medicaments the list contains number of goods without specifying their form- Cyclosporine (Ent....
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....ufacture of hearing aids at the time of publication of the Import Policy for the relevant year, namely 1977, and that these words could not be said to include any other type of switch even if such other type of switch could be used in the manufacture of hearing aids. The Division Bench observed, in our view, very rightly, that such an interpretation overlooked that industry was not static and that there was continuous technical progress therein. New processes and new methods developed from time to time and new material and components or types of components superseded others. It was unreasonable to give a static interpretation to words used in a tariff schedule ignoring the rapid march of technology. Having regard to the technical opinion that reed switches would improve the performance of hearing aids, the High Court held that reed switches were covered by the tariff entry. The High Court also noted that it was not the case of the Customs authorities that the respondent was trying to divert the imported reed switches from the manufacture of hearing aids to another purpose. 4. We do not think that we can put it better. Progress cannot be stifled by an over-rigid interpretat....
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....tification dated 1st March 1968, being Exh. A to the Petition, itself mentions the conditions upon which exemption is to be granted. Those conditions are mandatory and it cannot therefore be argued that when the mandatory conditions are complied with they are not to be conclusive in so far as the granting of exemption is concerned or that the Customs authorities have a right to sit in Judgment over the certificates which are obligatory to be furnished to the Customs authorities for the purpose of obtaining the exemption. In my view, the Customs authorities have no jurisdiction whatsoever to sit in appeal over the certificates which have been granted by the Director General of Technical Development or the Director of Industries, as the case may be and come to their own conclusion. These certificates are binding and conclusive upon the Customs authorities save and except, when it can be contended that these certificates have been obtained by fraud or under some mistake. In the present case, it is not the case of the Respondents that the certificates which have been obtained by the Petitioners and copies of which are annexed to the Petition and to the affidavit in rejoinder, have been....