TaxTMI 
TaxTMI 
2024 (12) TMI 365
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....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 for exemption under Notification No. 12/2012 Customs dat....
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....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 Notes, the insulin and insulin Analogue injections have different classifications; Insulin injections are covered un....
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....nes 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) 3004 3110 Insulin analogues (whether in the form of vials, PENFILL(r), FlexPen(r) or FlexTouch(r)) NovoMix(r) 3004 3110 NovoRapidTM 3004 3110 Levemir(r) 3004 3110 RyzodegTM 3004 31....
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....rdisk 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 article by Dr V Mohan (Page No. 1157, Volume 2), "recombinant insulins synthesized by the recombinant technology are highly pure which are free from proinsulin, thereby resulting in more than 99% pure form of insulin" and "it is rightly said that the term "Monocomponent Insulin refers to the purity of the insulin irrespective of it....
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....re 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 literature on "Physio Chemical and Pharmaceutical Aspects of Insulin and Insulin Preparations" has described mono-component insulin as animal insulin purified by chromatography to reduce pro-insulin content to less than 1 ppm. 3. Mosby's dictionary of medicine, nursing & health professions "Any highly purified insulin with less than 10 ppm of proinsulin. " 4. Taber's cyclopaedic medical dictionary "Highly purified insulin that conta....
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....in 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 Mixtard 30 HM Penfill, NovoRapid Penfill, NovoMix, 30 Penfill and Actrapid HM Penfill imported by the respondent to ascertain (i) nature of compositions, (ii) source, (iii) presence of pro insulin as a percentage of weight or parts per million, (iv) presence of other non-insulin pancreatic hormones; and (v) molecular weight of the samples. 13.2 The NIB thereafter appears to have answered the queries of the Revenue per its letter dated 28.12.2016 indicating that as per the product pack insert: - i. the nature of composit....
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.... 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 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 antibiotics. 17. During the adjudication proceedings, it is a fact borne on record that the Commissioner independently requested the Indian Institute of Technology, Chennai vide letter dated 29.11.2019 to examine whether human insulins and insulin analogue of biosynthetic origin could be referred to as 'mono-component insul....
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....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 (Entry 137); Diphtheria anti-toxin serum (Entry 149); Lopamido (Entry 134); Pilacaprine (Entry 138); Bovine albumin (Entry 154); Flutamide (Entry 184) etc., are all examples of this. Therefore, Monocomponent insulin specified in Serial 84 would include insulin in any form. There was no basis for denial of exemption contained in Notification 208/80." [Emphasis added by us] 20.1 It is also very useful to consider the other arguments advanced by the respondent namely that the interpretation of Notification must be made keeping in mind the technological development and that the DCGI being th....
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....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 interpretation of Import Policy or Customs Tariff. Both must be read as they stand on the date of importation and whatever is reasonably covered thereby must be allowed to be imported regardless of the fact that it was not in existence or even contemplated when the policy or tariff was formulated." 20.3 Also, in the case of Hewlett Packard India Sales Pvt. Ltd. Versus Commissioner of Customs (Import), Nhava Sheva [(2023) 2 Centax 236 (S.C.)] Apex Court highlighted the impact of technological advancement on law. Relevant portion of the decision is reproduced below: - "21. Furthermore, we must also use this opportu....
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....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 obtained by fraud or under a mistake. 23. On an overall appreciation of facts and the binding ratio in the decisions referred to supra insofar as the interpretation of notification is concerned, mono component insulin would undoubtedly cover the insulin developed using r-DNA technology, which position has been accepted by the authority, namely DCGI, who is the Statutory authority approving the license for sale of insulin. 24. We also find that the Commissioner has also not laboured to even consider the common Parlance test and the observations of the original Authority at para 7 of the Order-in-Original which are quite rele....