TMI Blog2016 (5) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... n above. The conclusion that can be reached is that Pharmaceutical Reference Standard cannot be classified as certified Reference Materials and consequently not extending the scope of applicability of notification to products other than covered under Chapter Heading 28 and Chapter 29 is also not applicable. The adjudicating authority has come to a conclusion that Pharmaceutical Reference Standard can be classified under Chapter Heading 38 22 as well but denied the benefit of Notification of reduced rate of duty only on the ground that the appellant has not passed the conditions of Chapter Note 2A and not produced documents required under the said exemption Notification to avail the benefit. As already reproduced by us, the condition of Notification only requires that the certificate of Physician Reference Samples are issued by an organization accepted by the International Standard Organisation. In the documents produced before us, we find that the US Pharmacopoeia convention is recognized by International Standard Organisation in respect of the quality of the goods and the systems which they are following. As there is no dispute that the products imported being classified under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Therefore, the demand for the duty liability is not sustainable and is liable to be set aside. Since we are holding that the duty liability is not sustainable, the question of imposing any penalties on main appellant or other appellants does not arise. - Decided in favour of appellant with consequential relief - Appeal No. C/23377, 23378, 23380 and 23381/2014 - Final Order Nos. : 20357 to 20360/2016 - Dated:- 20-5-2016 - SHRI M.V.RAVINDRAN, JUDICIAL MEMBER AND SHRI ASHOK K. ARYA, TECHNICAL MEMBER For the Appellants : Mr. D.B. Shroff, Sr. Advocate, Ms. Rukamni Menon, Advocate, Mr. Kiran S. Javali, Advocate And Mr. Laxminarayan Advocates For the Respondent : Mr. P. R.V. Ramanan, Special Counsel ORDER PER : M.V.RAVINDRAN All these appeals are directed against Order-in-Original No.BLR-CUSTM-000-COM-024-14-15 dated 30.9.2014. Since all these appeals are challenging the findings arising out of the same Order-in-Original and are interconnected, they are being disposed of by a common order. M/s. LGC Promochem India Pvt. Ltd. (hereinafter referred to as main appellant), is contesting the demand of duty and also the confiscation order by the adjudicating autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d vide the Bills of Entry listed in the said Annexures A1-ACC to A6-ACC and A1-ICD to A6-ICD and confirm the demand of duty short paid amounting to ₹ 10,86,08,470/- (Rupees Ten Crores Eighty Six Lakhs Eight Thousand Four Hundred and Seventy Only) under Section 28(4) /proviso to erstwhile Section 28(1) of the Customs Act, 1962; (c) I confirm the demand of applicable interest on the duty short paid as mentioned in (b) above under Section 28AA/erstwhile Section 28AB of the Customs Act, 1962; (d) I hold the goods valued t ₹ 290,01,56,557/- (Rupees Two Hundred Ninety Crores One Lakh Fifty Six Thousand Five Hundred and Fifty Seven Only) {which are exclusive of the goods seized on 07.01.2014 valued at ₹ 27,27,783/-} imported vide the Bills of Entry listed in the said Annexures A1-ACC to A6-ACC and A1-ICD to A6-ICD liable for confiscation under Section 111(d) and (m) of the Customs Act, 1962; (e) I order confiscation of the goods valued at ₹ 27,27,783/- (Rupees Twenty Seven Lakhs Twenty Seven Thousand Seven Hundred and Eighty Three Only) which were seized on 07.01.2014 from the importers premises under Section 111(d) and (m) of the Customs Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry as Pharmaceutical Reference Standards . It is his submission that the appellant herein had availed the benefit of said Notification for almost 13 years. He would submit that the Customs authorities in 2013 started denying the benefit to the appellant only on the ground that these imported goods are not Pharmaceutical Reference Standards but are Certified Reference Materials and having not complied with the condition of Chapter Note 2(A) and 2(B) of Chapter 38 demanded the differential duty. It is his further submission, after taking us through the packing slip, commercial invoices and bills of entries filed by the main appellant that goods which are imported are nothing but reference standards of pharmaceutical goods. Explaining the issue in detail, he would submit that the pharmaceutical goods manufacturers need to adhere to the standards of Pharmacopoeia either USP or BP or EP or IP and to ascertain whether the products manufactured by them are conforming to the standards or not, they use the reference samples sold by USP, BP, EP and IP convention. He would further submit that the purchasers of these reference standards used these in HPLC (a High Performance Liquid Chr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls. It is his further submission that according to Rules of interpretative rules of Customs Tariff, classification has to be determined on the basis of description in the Chapter Heading read with Chapter Notes and in the case in hand, the adjudicating authority has improperly applied the said rule. He would submit that the apex court in the case of United Offset Process Pvt. Ltd. vs. ACC: 1998 (38) E.L.T. 568 (S.C.) and Akbar Badruddin Jaiwani vs. CC: 1990 (47) E.L.T. 161 (S.C.); has settled the law that definition of a particular expression if it is not given it must be understood in its popular or commonsense. He would then take us through the definition of a reference standard and certified reference material as per the training material prepared by European Directorate for Quality of Medicines and submit that both are different and the goods imported by the main appellant are nothing but reference standards. It is his further submission that the adjudicating authority himself had pointed out that on landing of the goods in India, the main appellant has as per the understanding of the product filed the classification. It is his submission that in the matters of classification, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the same as pharmaceutical reference standards classifying the same under CTH 38 22 00 90 claiming the benefit of Notifications for reduced duty liability, which extended and the said imports are not questioned. He would draw our attention to the details furnished by them in respect of clearances that took place in Goa. It is his submission that it is a hostile discretion against the main appellant and relies upon the following decisions. (i) Unipatch Rubber Ltd. vs. Commissioner of Central Excise, Bhopal: 2011 (272) E.L.T. 340 (S.C.) (ii) Damodar J. Malpani vs. Collector: 2002 (146) E.L.T. 483 (S.C.) (iii) Opal Exports Pvt. Ltd. vs. Collector of Customs: 1992 (60) E.L.T. 232 (Cal.) (iv) FitwellFastner (India) Pvt. Ltd. vs. Collector of Customs: 1993 (68) E.L.T. 50 (Cal.) (v) Witco Match Works, Kalugumalai and Anr. vs. Union of India and Anr.: 1983 (12) E.L.T. 345 (Mad.) It is his submission that without prejudice to all the submissions made hereinabove, as an alternative submission, the products which are imported are also classifiable under Chapter No.98 and more specifically 98 02 as these products are used as laboratory chemicals and are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple of interpretation that in order to avail the exemption Notification, the appellant or the importer has to produce all the evidences which are in his support. He refers to Mangalore Chemicals and Fertilizers Ltd. vs. Deputy Commissioner: 1991 (55) E.L.T. 437 (S.C.); Motiram Tolaram vs. UOI: 1999 (112) E.L.T. 749 (S.C.) and Hotel Leela Ventures Ltd. vs. Commissioner of Customs (General), Mumbai: 2009 (234) E.L.T. 389 (S.C.). It is his submission that the main appellant produced certificates only for a six months period and it was not possible to correlate any of the certificates produced with invoices and bills of entry, hence the adjudicating authority has correctly recorded that the main appellant failed to discharge onus cast on them. It is his submission that the adjudicating authority has correctly recorded the finding that the goods imported were CRM as the dockets of the goods imported and cleared showed that the invoices described the goods as CRM whereas in two remaining cases the goods are described as laboratory reagents by the supplier and nowhere the documents mention that these goods are pharmaceutical reference standards; it was not possible to verify it at the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em certified reference material is totally a different item then the reference standard. It is his submission that the United States Pharmacopoeial Convention itself accepts that both the items are different and the absence of any direct reference to pharmaceutical reference standards, the classification should be in accordance with the product under Chapter 28 or 29. He would also rely upon the meaning of the word reagent as given in the Condensed Chemical Dictionary 10th Edition and New Webster Dictionary of the English Language and submit that the reference standards has to be considered as reagent. It is his submission that alternate classification as claimed by the appellant is also incorrect. 6. In rejoinder, it was stated by the counsel for the appellants that the adjudicating authority has not anywhere stated that PRS imported by the appellant is not laboratory reagent; nor held that they are not so; it is the submission that first time the learned counsel is making this contention which is beyond the findings of the Order-in-Original. It is further submitted that Pharmacopoeia like United States Pharmacopoeia, European Pharmacopoeia and British Pharmacopoeia from whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3822 Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not in a backing other than those of heading 3002 or 3006; certified reference materials 3822.00 Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, other than those of heading 3002 or 3006; certified reference materials: For medical diagnosis: 3822.00 11 Pregnancy confirmation reagents 3822 00 12 Reagents for diagnosing AIDS 3822 00 19 Other 3822 00 90 Other Notification No. 21 / 2002-Customs 20. EFFECTIVE RATES OF DUTY FOR GOODS OF VARIOUS CHAPTERS/HEADINGS GENERAL EXEMPTION NO. 107 Exemption and effective rates of basic and additional duty for special goods of Chapters 1 to 99. - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) and in supercession of the notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .... . 3. . .... . .. 138. 38.22 Reference Standard, imported by the Central Drug Laboratory, Kolkata 5% Nil 17 17. If the importer produces a certificate of the Reference Standard copies of documents to substantiate that the organization or institute from where the Reference Standard has been imported is approved the World Health Organisation or International Organisation for Standards. Notification No. 26/2003 - Customs dated 1st March, 2003 (Relevant Extracts) G.S.R. (E) - In exercise of the power conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the erstwhile Ministry of Finance (Department of Revenue) No. 21/2002-Customs, dated the 1st March, 2002, published in the Gazette of India vide number G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unless the bulk drugs conform to the specification given inthe Pharmacopoeia thereof and manufacturer of such bulk drugs, the same could not have been marketed by the clients of main appellant. In order to facilitate and in the interest of common man, the Govt. of India though it fit to reduce the customs duty on the Reference Standard of bulk drugs imported by Central Drug Laboratory, Kolkata. Subsequently, it seems that Govt. of India thought the Reference Standard need not to be only imported by the Central Drug Laboratory, Kolkata but can be imported by any other person. Hence by a Notification No.26/03 amended the entry at Sl.138 and brought Pharmaceutical Reference Standard which would mean that any importer can import Pharmaceutical Reference Standards. To our mind the intention of the Govt. of India for reducing the import duty of Pharmaceutical Reference Standards was very obvious; to facilitate and encourage the use of standard bulk drugs in the medicines that are manufactured. 7.7 In our considered view, the Pharmaceutical Reference Standard are required for analytical measurement which depend on many variable to provide data needed to make informed decisions. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 80/CDTL-M/2004-05/1469 dated 13.08.2004 clarified as under:- GOVERNMENT OF INDIA (Ministry of Health Family Welfare) CENTRAL DRUGS TESTING LABORATORY - MUMBAI 4th Floor, ESIS Hospital Bldg., Road No.33, Wagle Estate, Thane - 400604 Ref. No.: 80/CDTL-M/2004-05/1469 Date: August 13, 2004 To, The Drugs Controller General (I), DGHS, Nirman Bhavan, New Delhi - 110 011 Subject: Clarification Regarding Reference Standards to be considered drug or not. Reference : Dte. Letter No. F.No. X.19014/10/04-D dated 22.07.2004 with copies of relevant literature on reference standards. Sir, With reference to the above letter as the subject mentioned, given below is the clarification sought on Reference Standards based on the enclosed literature. Reference Standards are substances of known purity which are intended to be used exclusively for a specified analytical, calibrating or referencing purpose and not to be used as Drugs, which may be clearly stated on the label and / or accompanying certificate or literature. Yours faithfully, Sd/- (Dr. K.V. Jogi) Director CDTL - Mumbai 7.9 Plai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to avail the benefit. As already reproduced by us, the condition of Notification only requires that the certificate of Physician Reference Samples are issued by an organization accepted by the International Standard Organisation. In the documents produced before us, we find that the US Pharmacopoeia convention is recognized by International Standard Organisation in respect of the quality of the goods and the systems which they are following. As there is no dispute that the products imported being classified under Chapter Heading 3822, Revenue having not filed any appeal against the adjudicating authoritys order by holding that the product imported are classifiable under Chapter Heading 3822, we have to draw adverse inference that Revenue has accepted that the Pharmaceutical Reference Samples are classifiable under 38 22. In our considered view, if the products are classifiable under Chapter Heading 38 22, benefit of exemption Notification cannot be denied to the appellant as per the facts in this case, and it is accepted that the goods which are imported are nothing but Pharmaceutical Reference Standard. 7.12 In yet another angle, World Health Organisation has defined the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
