MIS. SPAN DIAGNOSTICS LTD. v. COMMISSIONER OF CENTRAL EXCISE, SURAT

A # MIS. SPAN DIAGNOSTICS LTD. v. COMMISSIONER OF CENTRAL EXCISE, SURAT APRIL 30, 2007 [S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.] B ## _Central Excise Tariff Act, I 985:_ _Monoclonal Antibodies-Classificaiton of-Chapter Sub-heading 3002.00 or 3005.90-Assessee was engaged in the manufacture of blood-_ C _grouping reagents and diagnostic and laboratory reagents-These items were called Monoclonal Antibodies-Held: Monoclonal Antibodies (MABs) is a blood-grouping reagent-MABs specifically fall in Chapter Heading 30.02 as a culture of micro-organism-Hence, MABs are classifiable under Chapter Heading 30.02._ D _Beta Visipreg, Visipreg Strip and Pregnancy Test Kits as 'antisera_ '- _Classification of-Chapter Sub-heading 3002.00 or 3822.00-Held: Antisera is used for diagnostic purposes, including in-vitro tests-Pregnancy Test Kits (PTK) is antisera-Antisera falls under Chapter Heading 30.02-/n the circumstances, "antisera'" is covered by Chapter Heading 30.02 and since_ E _it is covered by that Heading, Chapter Heading 38.22 will not apply._ _Reagent for vivo detection of T.B. mycobacteria-"Diagnostic reagent" or a "diagnostic aid'"-Classification of-Chapter Sub-heading 3002.00 or 3005-Since the question whether the product for vivo detection of T.B. mycobacteria is a "diagnostic reagent .. or a "diagnostic aid'" has not been_ F _answered, the matter remitted to Adjudicating Authority._ _"Blood fractions "-Manufactured by coating latex particles with protein-Classification of-Chapter Sub-heading 3002. 00 or 3822. 00Merely, because the medium used is latex (rubber) or paper, will not bring the items under Chapter Heading 38.22-0nce at item is a "Blood fraction'" it falls under Chapter Heading 30.02-Hence, "blood fractions'" are classified under Chapter Heading 30.02 (CSH 3002.00)._ ## C.A. NO. 5322/2002 1015 (2007] 5 S.C.R. 1016 SUPREME COURT REPORTS A B In this appeal, the appellant-assessee was engaged in the manufacture of blood-grouping reagents and diagnostic and laboratory reagents. These items were called Monoclonal Antibodies (MABs). They were classified by the assessee under Chapter Sub-heading 3002.00 (Chapter Heading 30.02) of the Central Excise Tariff Act, 1985 (CETA) whereas the respondentDepartment classified the MABs under CSH 3005.90 (Chapter heading 30.05. The assessee classified MABs as "cultures of microorganisms" whereas the Department classified the said MABs as "pharmaceutical products, not elsewhere specified or included". The Central Excise and Gold (Control) Appellate Tribunal upheld the C classification of MABs under CSH 3005.90 of CET A as claimed by the Department. Hence the appeal ## C.A. Nos. 1953-1954/2003 The following question arose before this Court:- D Whether Beta Visipreg, Visipreg Strip and Pregnancy Test Kits fall as "antisera" under Chapter Heading 30.02 of CET A or whether it falls under Chapter Heading 38.32 of CET A as "diagnostic or laboratory reagent"? ## C.A. Nos. 1076-1080/2002 E The following questions arose before this Court:- I. Whether the reagent for vivo detection of T.B. mycobacteria is a diagnostic reagent or is it in aid of diagnosis? 2. Whether "blood fractions" manufactured by coating latex particles F with protein are classifiable under Chapter 30.02 or 38.22 of the Central Excise Tariff Act, 1985? Disposing of the appeals, the Court - HELD: I.I. There is no dispute that Monoclonal Antibodies (MAB) is - G a blood-grouping reagent. The question is: whether merely because MAB is a blood-grouping reagent, should it be classified under Chapter Heading 30.05 on account of Note No. 3{e} to Chapter 30 of Central Excise and Tariff Act, 1985 (CETA), even though MAB is a "culture of micro-organism" falling under CSH 3002.00 (Chapter Heading 30.02). It is well-settled that the width - H of the Heading under CETA cannot be expanded by reading Note 3{e} to J Q J 7 SPAN DIAGNOSTICS LTD. '· COMMNR. OF CENTRAL EXCISE, SURAT Chapter 30. MAB is a culture of micro-organism". It falls specifically under A Chapter Heading 30.02 of CET A. MAB is not a sera of human or animal origin, it is not a vegetable extract, it is not a plant extract and on the other hand it is obtained by hydridoma technology (cellular fusion). Therefore, it cannot fall under Chapter Heading 30.05 of CET A. Moreover, Chapter Heading 30.05 is residuary. The width of Chapter Heading 30.05 is restricted to products which are mentioned in Note 3(e) to Chapter 30. In other words, not all those B pharma products which could not be classified elsewhere in the tariff would fall under Chapter Heading 30.05, but only those which are specified in Note No. 3 would fall under Chapter Heading 30.05. [Para 14] (1028-F, G, H; 1029-A, BJ 1.2. In the present case, MAB specifically falls in Chapter Heading C 30.02 as a culture of micro-organism. If an item like MAB specifically falls in Chapter Heading 30.02, it cannot be classified under Chapter Heading 30.05 merely on account of Chapter Note '3'. In the present case, the Department seeks to expend the scope of Chapter Heading 30.05, which is residuary, by relying upon Note '3' even when MAB falls under Chapter Heading 30.02 as a 'culture of micro-organism". In the present case, MAB D is not polyclonal, it is monoclonal and, therefore, it is known as MAB. [Para 14] (1029-B, C] -\ _Inter Care Ltd_ v. _CCE,_ (1997) 89 EL T 545 (Tribunal), referred to. 2.1. The Explanatory Note in HSN to Chapter Heading 30.02 which refers to Modified Immunological Products (MIP) conclusively proves that E MAB is a "culture of micro-organisms" and, therefore, it would fall under Chapter Heading 30.02. Lastly, even the HSN Explanatory Note to Chapter heading 30.06 corresponding to Chapter Heading 30.05 of CETA, shows that MAB is excluded from Chapter Heading 30.0. That Heading states that bloodgrouping reagents, suitable in blood-grouping, are sera either of human or F animal origin or vegetables' extracts or plants' extracts. In other words, MAB which is not the sera of either human or animal original or vegetable or plant extracts cannot fall under Chapter Heading 30.05, particularly, when MAB is a culture of micro-organism. [Para 14] (1029-D, E, F] 2.2. There is one more aspect which needs to be highlighted. In the HSN, the Chapter Heading refers to human blood; animal blood; antisera and other G blood functions and MIP"; therefore, human blood is one item, animal blood is another item whereas "antisera, blood fraction and MIP" is the third item. Therefore, the third item forms one separate class. In that class MIP includes MAB. Therefore, if one reads the third item as a separate class as "antisera and blood fractions" then abridgement of HSN entires by CETA cannot rule H 1018 SUPREME COURT REPORTS [2007] 5 S.C.R. ~ A out MIP which includes MAB. Therefore, when HSN treats antisera, blood fractions and MIP including MAB as one class then there is no contradiction between Chapter Heading 30.02 of HSN. Therefore, HSN cannot be ruled out. [Para 14) (1029-F, G, H; 1030-A) B Dr. R.N. Makroo: "Compendium of Transfusion of Medicine", referred 3. Accordingly, Anti-A Mono Clona~ Anti-B Mono Clonal, Anti-Decoders Mono Clonal, Anti-Decoders lgM Mono Clonal and Anti-Decoders lgG Mono Clonal are classified under Chapter Heading 30.02 of CET A. [Para 15) (1030-B] c 4. Chapter Heading 30.02 refers to antisera and other blood fractions. According to the Explanatory Note in HSN (Seventh Edition), antisera is obtained from the blood of humans or animals which are immune against diseases. Antisera is used for diagnostic purposes, including in-vitro tests. There is nothing like crude antisera and refined antisera. In the present case, D[even ][according ][to ][the department, Pregnancy Test ][Kits ][(PTK) ][is ][antisera, ] however, according to the Department, PTK is a refined antisera. Antisera falls under Chapter Heading 30.02. In the circumstances, "antisera" is covered by Chapter Heading 30.02 and since it is covered by that Heading, Chapter Heading 38.22 will not apply. If one reads Chapter Heading 38.22, it becomes clear that there could be diagnostic or laboratory reagents which E could fall under Chapter Heading 30.02 and also under Chapter Heading 38.22. However, if a diagnostic or laboratory reagent like antisera falls under Chapter heading 30.02 then it stands excluded from Chapter Heading 38.22. [Para 21) [1031-C, D, El _)_ I 5. On a reading of Chapter Note 3(d) to Chapter 30, it is clear that F preparations for X-ray examinations and diagnostic reagents designed to be administered to the patient, put up in measured doses would fall under Chapter Heading 30.05. However, in this case there is no finding given by any of the Authorities below as to whether the product for vivo detection of T.B. mycobacteria is a diagnostic reagent or not. This question has got to be decided G as the assessee contends that the product for vivo detection of T.B. mycobacteria is not a diagnostic reagent but it is a "diagnostic aid". [Para 33) [1034-D, E] _Ministry of health and Family Welfare (GO!): "Pharmacopoeia of India_ ('fhird Edition)'', and _Dr. David T. Kingsbury and Gerald E. Wagner:_ H _"Microbiology",_ 2nd Edition, referred to. .. SPAN DIAGNOSTICS LTD.'" COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA,!) } Q J 9 \ 6. Since this question has not been answered the matter is remitted to A the Adjudicating Authority to decide whether the product for vivo detection of T.B mycobacteria is a diagnostic reagent or whether it is in aid of diagnosis. (Para 341 (1034-F) 7. Chapter Heading 30.02 refers to "blood fractions". Merely, because the medium used is latex (rubber) or paper, will not bring the items under B Chapter Heading 38.22. Once an item is a "Blood fraction" it falls under Chapter Heading 30.02. The medium is irrelevant. The medium could be paper or rubber. The configuration of the product and the function are important. [Para 36) (1035-F, G) 8. In the circumstances, "blood fractions" are classified under Chapter Heading 30.02 (CSH 3002.00). [Para 37) (1036-A) c CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1076-1080 of 2002. From the final Judgment Order Nos. Cil/3133-37/01 WZB dated 4.12.2001 D passed by the Customs, Excise and Gold (Control) Appellate Tribunal, West Zonal Bench at Mumbai. ## WITH C.A. Nos. 5322 of2002 & 1953-1954 of2003. E V. Lakshmikumaran, Dushyant A. Dave and R. Venkataramani Sr. Adv., Alok Yadav, Rajesh Kumar, M.P. Devnath, Shri Narain (for S. Narain & Co.) Sandeep Narain, Binu Tamta, K.K. Senthilvelan and B.K. Prasad for the appearing parties. F The Judgment of the Court was delivered by KAPADIA, J. 1. From the impugned judgment dated 1.1.2002 delivered by the Customs, Excise and Gold (Control) Appellate Tribunal ('CEGA T', for short), New Delhi, vide Appeal No.E/1644 and 1645 of2000-C, _C.A. No.5322_ G _of 2002_ and _C.A. No.1953-54 of 2003_ have been filed.by the assessees and by the Department respectively. For the sake of convenience and clarity we proceed to decide each of the following civil appeals serially. _C.A.No.5322/2002filed by Mis. J. Mitra & Co.Ltd. (Assessee)_ H SUPREME COURT REPORTS 1020 (2007) 5 S.C.R. A 2. In this civil appeal we are concerned with the classification of biotech products. 3. The said ass_essee was engaged in the manufacture of blood-grouping reagents and diagnostic and laboratory reagents. It had obtained registration on I 0.9.99 for the manufacture and clearances of the following products: B ## (I) Anti-A Mono Clonal - (2) Anti-8 Mono Clonal c - (3) Anti-Decoders Mono Clonal - (4) Anti-Decoders Mono Clonal _)._ • - (5) Anti-Decoders lgM Mono Clonal - (6) Anti-Decoders lgG Mono Clonal 4. The above six items are called Monoclonal Antibodies (for short, D 'MABs'). They were classified by the assessee under Chapter Sub-heading 3002.00 (Chapter Heading 30.02) of Central Excise Tariff Act (for short, 'CETA ') whereas the Department classified the MABs under CSH 3005.90 (Chapter Heading 30.05) ofCETA. The assessee classified MABs as "cultures of microorganisms" whereas the Department classified the said MABs as "pharmaceutical products, not elsewhere specified or included". E 5. The CEGAT (Tribunal), vide the impugned judgment, upheld the classification of MABs under CSH 3005.90 of CETA as claimed by the Department, hence this civil appeal is filed by the assessee. 6. For the sake of convenience, we quote hereinbelow Chapter Note 3 F in Chapter 30 of the CETA concerning pharmaceutical products which reads as under: "CHAPTER 30 PHARMACEUTICAL PRODUCT'S _Notes:_ G - I. and 2. _m m_ = H 3. Heading No.30.05 applies only to the following, which are to be classified in that heading and in no other heading of this Schedule:- - (a) to (d) xxx xxx xxx - '· SPAN DIAGNOSTICS LTD. _v._ COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA, lJ } 02 J A _(e) Blood grouping reagents;_ (t) to (h) xxx xxx xxx" 7. We quote hereinbelow Chapter Heading 30.02 and CSH 3002.00 of CETA which read as under: ## "CHAPTER30 PHARMACEUTICALPRODUCfS B Notes : |l.<br>to_5_.<br>xxx.<br>J®'<br>J®'|l.<br>to_5_.<br>xxx.<br>J®'<br>J®'|l.<br>to_5_.<br>xxx.<br>J®'<br>J®'|| |---|---|---|---| |Heading<br>Sub-heading<br>Descriptionofgoods<br>No.<br>No.<br>(l)<br>(2)<br>(3)<br>30.02<br>3002.00<br>Antiseraandotherbloodfractions;<br>Vaccines,Toxins,Culturesofmicro-<br>organisms(includingfermentsbut<br>excludingyeasts)andsimilar<br>products|||Rateof<br>duty| ||(2)|(3)|(4)| ||3002.00|Antiseraandotherbloodfractions;<br>Vaccines,Toxins,Culturesofmicro-<br>organisms(includingfermentsbut<br>excludingyeasts)andsimilar<br>products|Nil| c 8. We quote hereinbelow Chapter Heading 30.05 in entirety of CETA which reads as under: E "CHAPTER30 ## PHARMACEUTICAL PRODUCfS |Notes :|Notes :l.<br>to_5._<br>J®'<br>xxx.<br>_m_|Notes :l.<br>to_5._<br>J®'<br>xxx.<br>_m_|Notes :l.<br>to_5._<br>J®'<br>xxx.<br>_m_| |---|---|---|---| |Heading<br>No.|Sub-heading<br>Descriptionofgoods<br>No.<br>Rateof<br>duty||| |(1)|(2)|(3)|(4)| |30.05||Pharmaceuticalgoods,not elsewhere<br>specified|| ||3005.IO|Chemicalcontraceptives|Nil| ||300520|Dentalcementsandother dental<br>fillings|15%| |3005.90||Others|15%| (2007] 5 S.C.R. SUPREME COURT REPORTS 1022 A 9. We also quote hereinbelow relevant extracts of Chapter Note No.2 in Chapter 30 of HSN (Second Edition) which read as follows: ## **"CHAPTER30 PHARMACEUTICAL PRODUCTS** _Chapter Notes._ **B** ## C 2. For the purposes of heading No.30.02, the expression "modified immunological products" applies only to monoclonal antibodies (MABs), antibody fragments, antibody conjugates and antibody fragment conjugates." 10. We also quote hereinbelow Chapter Heading 30.02 in entirety from the said HSN which reads as under: - _"30.02 HUMAN BLOOD; ANIMAL BLOOD PREPARED FOR THERAPEUTIC, PROPHYLACTIC OR DIAGNOSTIC USES; ANTISERA_ - **D** _AND OTHER BLOOD FRCTIONS AND MODIFIED IMUNOLOGICAL PRODUCTS, WHETHER OR NOT OBTAINED BY MEANS OF BIOTECHNOLOGICAL PROCESSES; VACCINES, TOXINS, CULTURES OF MICRO-ORGANISMS (EXCLUDING YEASTS) AND SIMILAR PRODUCTS._ E - 3002.10 - Antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnclogical processes - 3002.20 - Vaccines for human medicine F - 3002.30 - Vaccines for veterinary medicine - 3002.90 - Other - This heading covers: - _{A) Human blood_ (e.g., human blood in sealed ampoules). G - _(B) Animal blood prepared f or therapeutic, prophylactic or diagnostic uses_ - Animal blood not prepared for such uses falls in heading 05 .11. **H** - _(C) Antisera and other blood fractions and modified immunological products._ 1023 SPAN DIAGNOSTICS LTD."· COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA. J) A F These products include: ## ·(!) Antisera and other blood fractions. Sera are the fluid fractions separated from blood after clotting. The heading covers, _inter alia,_ the following products derived from blood: "nonnal" sera, human nonnal immunoglobulin, plasma, B fibrinogen, fibrin, blood globulins, serum globulins and haemoglobin. The heading also includes blood albumin (e.g., human albumin obtained by fractionating the plasma of whole human blood), prepared for therapeutic or prophylactic uses. Antisera are obtained from the blood of humans or of animals c which are immune or have been immunized against diseases or ailments, whether these are caused by pathogenic bacteria and viruses, toxins or allergic phenomena, etc. Antisera are used against diphtheria, dysentery, gangrene, meningitis, pneumonia, tetanus, staphylococcal or streptococcal infections, snake bite, vegetable poisoning, allergic diseases, etc. Antisera are also used D for diagnostic purposes, including in vitro tests. Specific immunoglobulins are purified preparations of antisera. The heading _does not cover_ blood albumin not prepared for therapeutic or prophylactic uses _(heading 35. 02)_ or globulins (other than blood globulins and serum globulins) _(heading 35.04)._[E ] The heading also _excludes_ medicaments which are not separated from the blood but which in some countries are described as "sera" or "artificial sera"; they include isotonic solutions based on sodium chloride or other chemicals and suspensi~ms of pollen which are used against allergic diseases. _1_ ~ , - (2) _Modified immunological products, whether or not obtained by means of biotechnological processes._ Products whose antigen-antibody reaction corresponds to natural antisera and which are used for diagnostic or therapeutic purposes and for immunological tests are to be regarded as falling within G this product group. They can be defined as follows: - (a) _Monoclonal antibodies (MABs)_ specific immunoglobulins from selected and cloned hybridoma cells cultured in a culture medium or ascites. H ||1024|||SUPREMECOURTREPORTS<br>(2007]_5_S.C.R.||| |---|---|---|---|---|---|---| |A||(b)|(b)|_Antibodyfragments_partsofanantibodyproteinobtainedby|..(_|..| |||||meansofspecificenzymaticsplitting.||| |||(c)|,|,_Antibody and antibody fragment conjugates_- enzymes(e.g.,||| |||||alkalinephosphatase,peroxidaseorbetagalactosidase)ordyes||| |||||(fluorescin)covalentlyboundtotheproteinstructureareused||| |B||||forstraightforwarddetectionreactions.||| |||(D)|(D)|_Vaccines,toxins,culturesofmicro-organisms(excludingyeasts)_||| |||||_andsimilarproducts._||| |||||Theseproductsinclude:|)_|-| |c|c|(1)||_Vaccines_preparationsofmicrobialorigincontainingeitherviruses||| |||||orbacteriasuspendedinsalinesolutions,oil(lipovaccines)or||| |||||othermedia.Thesepreparationshaveusuallybeentreatedto||| |||||reduce their toxicity without destroying their immunising||| |||||properties.||| |D||||Theheadingalsocoversmixtures(suchasDiphtheria,Tetanus||| |||||anuPertussis(DPT)vaccine)consisting ofvaccinesandtoxoids.||| |||(2)||_Toxins_(poisonssecretedbybacteria),toxoids,crypto-toxinsand||| |||||anti-toxins,ofmicrobialorigin.||| |||(3)||_Culturesofmicro-organisms(excludingyeasts)._Theseinclude||| |E||||fermentssuchaslacticfermentsusedinthepreparations ofmilk||| |||||derivatives(kephir,yogurt,lacticacid)andaceticfermentsfor||| |||||makingvinegar;mouldsforthemanufactureofpenicillinand||| |||||otherantibiotics;andculturesofmicro-organismsfortechnical||| |||||purposes(e.g.,foraidingplantgrowth).||| |F||||Milkorwheycontainingsmallquantitiesoflacticfermentsis<br>classifiablein_Chapter4._|t|...| |||(4)||Virus,human,animalandvegetableandanti-virus.||| |||(5)||Bacteriophage.||| |G||||Theheadingalsoincludesdiagnosticreagentsofmicrobialorigin,||| |||||_otherthan_thoseprovidedforinNote4 (d)tothisChaptersee||| |||||_heading30.06._It_doesnot_coverenzymes(rennet,amylase,etc.)|~|-| |||||evenif ofmicrobialorigin(streptokinase, streptodomase,etc.)||| |||||_(heading35.07)nordead_single-cellmicro-organisms(otherthan||| |H||||vaccines)_(heading21.02)._||| H SPAN DIAGNOSTICS LTD."· COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA. J.] 1025 The products of this heading remain classified here whether or not in A measured doses or put up for retail sale and whether in bulk or in small packings." 11. We also quote hereinbelow Chapter Heading 30.06 of HSN which is equal to Chapter Heading 30.05 in CET A and which reads as under: B ## "30.06 PHARMACEUTICAL GOODS SPECIFIED IN NOTE 4 TO THIS CHAPTER. |3006.10|Sterilesurgicalcatgut,similarsterilesuturematerialsandsterile<br>tissueadhesivesforsurgicalwoundclosure;sterilelaminaria<br>andsterilelaminariatents;sterileabsorbablesurgicalordental<br>haemostatics| |---|---| |300620|Blood-groupingreagents| |3006.30|OpacifyingpreparationsforX-rayexaminations; diagnostic<br>reagentsdesignedtobeadministeredtothepatient| |3006.40|Dentalcementsandotherdentalfillings;bonereconstruction<br>cements| |3006.50|First-aidboxesandkits| |3006.60|Chemicalcontraceptive preparationsbasedonhormonesor<br>spermicides| - (I) _Sterile surgical catgut, similar sterile suture materials and sterile tissue adhesives for surgical wound closure._ ..,. + This item covers all kinds of ligatures for surgical sutures, provided they are sterile. These ligatures are usually put up in F antiseptic solutions or in sealed sterile containers . The materials used for such ligatures include: - (a) catgut (processed collagen from the intestines of cattle, sheep or othP.r animals); G (b) natural fibres (cotton, silk, linen); (c) synthetic polymer fibres, such as polyamides (nylons), polyesters; ( d) metals (stainless steel, tantalum, silver, bronze). The item also covers tissue adhesives such as those consisting H [2007] 5 S.C.R. 1026 SUPREME COURT REPORTS A B c of butyl cyanoacrylate and a dye; after application, the monomer polymerises and the product is therefore used in place of conventional suture materials for closing internal for closing internal or external wounds of the human body. The heading _excludes_ non-sterile suture materials. These are classified according to their nature e.g. catgut _(heading 42. 06),_ silkworm put, textile yams, etc. _(Section XI),_ metal were _(Chapter_ 7 _lor Section XV)._ - (2) _Sterile laminaria and sterile laminaria tents._ This item is restricted to _sterile_ laminaria and _sterile_ laminaria tents (small lengths of algae, sometimes brown and with a rough grooved surface). They swell considerably on contact with moist substances and become smooth and flexible. ~ ,, .> ._.._ They are therefore used in surgery as a means of dilation. D Non-sterile products are excluded (heading 12.12) - (3) _Sterile absorbable surgical or dental haemostatics._ E This item covers sterile products used in surgery or dentistry to stop bleeding and having the property of being absorbed by the body fluids. It includes oxidized cellulose, generally in the form of gauze of fibres ("wool"), in pads, pledgets or strip, gelatin sponge or foam; calcium alginate gauze, "wool" or "film". - (4) _Blood-grouping reagents._ F G H The reagents under this heading must be suitable for direct use in blood-grouping. They are either sera of human or animal origin, or vegetable extracts of seeds or other parts of plants (phytagglutinins). These reagents are used in the determination of blood-groups by reference to the characteristics of the blood corpuscles or of the blood serum. In addition to the active principle(s), they may contain substances to strengthen their activity or stabilize them (antiseptics, antibiotics, etc.). - A. The following are to be regarded as reagents for determining blood-group by reference to the _characteristics of blood corpuscles:_ - (i) Preparations for determining the A, B, 0 and AB groups. Al and A2 sub-groups and Factor H. t .... , SPAN DIAGNOSTICS LTD.'" COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA, J.] j 027 - (ii) Preparations for detennining the M, N, Sand P groups and other A groups such as Lu, K and Le. - (tiO Preparations for detennining the Rh groups and C, F, V, etc. subgroups. - (iv) Preparations for detennining the blood-groups of animals. - B - B. The preparations to be regarded as reagents for determining the _characteristics of sera_ are those used to detennine: - (i) charncteristics of Gm, Km, etc., systems; - (ii) serum groups Ge, Ag, etc. - c. Anti-human globulin serum (Coombs serum), which is essential in certain blood-grouping techniques, is also to be regarded as a reagent of this heading." - c - D. lOOi. 5. to 8. D 12. According to the assessee, MAB is produced by hybridoma technology in which hybrids (fused cells) are allowed to grow by multiplication in culture medium and in that process they secrete the antibodies. According to the assessee, these hybrids (fused cells) are micro-organisms and as they grow in culture medium, therefore, they are classifiable under CSH 3002.00 as E "cultures of micro-organisms". In this connection, reliance is place on "Compendium of Transfusion of Medicine" by Dr. R. N. Makroo. In his book Dr. R.N. Makroo has stated that with advancement in biotechnology, hybridoma technology has made available a new source of reagents; that before the introduction of hybridoma technology, the A.B.0 grouping reagents were F derived from human donors with or without immunization. According to Dr. Makroo, the main reagent used in blood-bank laboratory is antisera (which is an antibody). Essentially MAB, according to Dr. Makroo, is obtained from cell culture. It helps in blood-grouping. The development of MAB obtained from cell culture secreting antibodies called hybridoma, has made available a new source of blood-grouping reagents. According to the assessee, Chapter G Heading 30.05 ofCETA is the same as Chapter Heading 30.06 of HSN. Under Chapter Heading 30.06, there is an Explanatory Note in HSN which states that "blood-grouping reagents" (which term also finds place in Chapter Note '3' to Chapter 30 of CETA} are either the sera of human or animal origin, or vegetable extracts of seeds or other parts of plants and, therefore, such H [2007] 5 S.C.R. SUPREME COURT REPORTS 1028 _L_ A[reagents ][fall ][under ][Chapter ][Heading ][30.05 ][of ][CETA. ][However, ][according ][to ] the assessee, MAB is not the sera of human or animal origin or vegetable extracts or plant extracts and, therefore, it cannot fall under Chapter Heading 30.05 of CETA and consequently it has. to fall under Chapter Heading 30.02 of CETA. According to the assessee, only polyclonal antibodies are covered under Chapter Heading 30.05 whereas MABs are covered under Chapter B Heading 30.02 as "culture of micro-organism". 13. According to the Department, on the other hand, MAB is a "bloodgrouping reagent" which is used in hospitals for blood-grouping. These reagents, according to the Department, are used in the determination of c[blood-groups ][by ][reference ][to ][the ][characteristics ][of ][blood ][corpuscles ][of ][blood-] serum and, therefore, the said MAB falls under Chapter Heading 30.05. According to the Department, the said MAB has no therapeutic or prophylactic value; that they are merely blood-grouping reagents and, therefore, they fall in Chapter Note '3' which states that all "blood-grouping reagents" fall under Chapter Heading 30.05. On behalf of the Department, it is further argued that D on account of Note 3( e) to Chapter 30 .of CETA, MAB can only be classified under Chapter Heading 30.05 of CETA. According to the Department, even in common parlance MAB is known as "blood-grouping reagent" and, therefore, it falls under Chapter Heading 30.05 ofCETA. On behalf o(the Department, it is argued that in the present case we should not go by HSN. According E[to ][the ][Department, ][HSN ][deals ][with ][human ][blood, ][animal ][blood ][prepared ][for ] diagnostic uses; antisera and other blood fractions and Modified Immunological Products (for short, 'MIP'), whether or not obtained by means of biotechnological process; vaccine, toxin, cultures of micro-organisms and similar products whereas Chapter Heading 30.02 ofCETA does not deal with items like human blood and MIP which items are dealt with by HSN and, F[therefore, ][according ][to ][the ][Department, ][in ][the ][present ][case, ][one ][should ][not ] rely upon the Explanatory Note to HSN. 14. We find merit in the arguments advanced on behalf of the assessee. There is no dispute that MAB is a blood-grouping reagent. The question is : whether merely because MAB is a blood-grouping reagent, should it be G classified under Chapter Heading 30.05 on account ofNote No.3(e) to Chapter 30 ofCETA, even though MAB is a "culture of micro-organism" falling under CSH 3002.00 (Chapter Heading 30.02). It is well-settled that the width of the Heading under CETA cannot be expanded by reading Note 3(e) to Chapter 30. In our view, MAB is a "culture of micro-organism". It falls specifically H[under ][Chapter ][Heading ][30.02 ][of ][CETA. ][MAB ][·is ][not ][a ][sera ][of ][human ][or ][animal ] "' ~ j- ..... ... ~ j Q29 SPAN DIAGNOSTICS LTD.'· COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA, J.j + "' origin, it is not a vegetable extract, it is not a plant extract and on the other A hand it is obtained by hybridoma technology (cellular fusion). Therefore, it cannot fall under Chapter Heading 30.05 of CET A. Moreover, Chapter Heading 30.05 is residuary. The width of Chapter Heading 30.05 is restriCted to products which are mentioned in Note 3(e) to Chapter 30. In other words, not all those pharma products which could not be classified elsewhere in the tariff would B fall under Chapter Heading 30.05, but only those which are specified in Note No.3 would fall under Chapter Heading 30.05. In the present case, MAB specifically falls in Chapter Heading 30.02 as culture of micro-organism. If an item like MAB is specifically falling in Chapter Heading 30.02, it cannot be classified under Chapter Heading 30.05 merely on account of Chapter Note '3 '. In the present case, the Department seeks to expand the scope of Chapter C Heading 30.05, which is residuary, by relying upon Note '3' even when MAB falls under Chapter Heading 30.02 as "culture of micro-organism". In the present case MAB is not polyclonal, it is monoclonal and, therefore, it is known as MAB. In the case of _Inter Care Ltd_ v. _Collector of Customs, New Delhi_ (1997) 89 EL T 545 _(Tribunal)_ it has been held that polyclonal product D would fall under Chapter Heading 30.05. However, in the present case, MAB is not polyclonal, it is monoclonal and it is obtained by culture of microorganism and, therefore, it would fall under Chapter Heading 30.02 (CSH 3002.00). Our view is also supported by the Explanatory Note in HSN to Chapter Heading 30.02 which refers to MIP. The said Note conclusively proves that MAB is a "culture of micro-organism" and, therefore, it would fall E under Chapter Heading 30.02. Lastly, even the HSN Explanatory Note to Chapter Heading 30.06 corresponding to Chapter Heading 30.05 of CETA, shows that MAB is excluded from Chapter Heading 30.05. That Heading states that blood-grouping reagents, suitable in blood-grouping, are sera either of human or animal origin or vegetables' extracts or plants' extracts. In F other words, MAB which is not the sera of either human or animal origin or vegetable or plant extracts, cannot fall under Chapter Heading 30.05, particularly, when MAB is a culture of micro-organism. There is one more aspect which needs to be highlighted. In the HSN, we have Chapter Heading 30.02 which refers to human blood; animal blood; "antisera and other blood G fractions and MIP"; therefore, human blood is one item, animal blood is another item whereas "antisera, blood fraction and MIP" is the third item. Therefore, the third item forms one separate class. In that class we have MIP which includes MAB. Therefore, if one reads the third item as a separate class as "antisera and blood fractions" then abridgement of HSN entries by CET A cannot rule out MIP which includes MAB. Therefore, when HSN treats H SUPREME COURT REPORTS [2007] _5_ S.C.R. 1030 ....._ A[antisera, ][blood ][fractions ][and ][MIP ][including ][MAB ][as ][one ][class ][then ][there ][is ] no contradiction between Chapter Heading 30.02 ofCETA and Chapter Heading 30.02 of HSN. Therefore, taking any view of the matter, HSN cannot be ruled out. 15. For the above reasons, we find merit in the civil appeal filed by the B assessee (Civil Appeal No.5322 of 2002) and, accordingly, we classify the above six items under Chapter Heading 30.02 of CET A. c 16. Accordingly, the said civil appeal is answered in favour of the assessee and against the Department. _C.A.Nos. /953-/954/2003jiled by the Department_ }- 17. The short question which needs to be decided in these civil appeals is : Whether Beta Visipreg, Visipreg Strip, Pregnancy Test Card fall as "antisera" under Chapter Heading 30.02 ofCETA (according to the assessee) or whether it falls under Chapter Heading 38.22 of CET A as "diagnostic or laboratory D reagent" (as contended by the Department). 18. The above three products were cleared by the assessee as Pregnancy Test Kits (PTK). According to the assessee the above three products are for the detection of hCG hormones in urine, as a test for pregnancy. The three E[products ][are ][meant ][for ][in-vitro ][diagnostic ][use ][only. ][According ][to ][the ][assessee, ] Chapter Heading 30.02 covers antisera of all forms. I 9. On the other hand, it was argued on behalf of the Department that although PTK was an antisera, the above three products were classifiable as diagnostic or laboratory reagents under Chapter Heading 38.22 as they were F[used ][exclusively ][in ][laboratory ][for ][diagnostic ][purposes. ][According ][to ][the ] Adjudicating Authority, Chapter Heading 30.02 applied only to crude antisera and since the above three products were refined antisera, they did not fall under Chapter Heading 30.02. t 20. At the outset, we quote hereinbelow Chapter Heading 38.22 (CSH G[3822.00) ][which ][reads ][as ][under: ] .._ , j Q 3 j SPAN DIAGNOSTICS LTD. '· COMMNR OF CENTRAL EXCISE, SURAT [KAPADIA, I.] A I ## "CHAPTER38 ## MISCELLANEOUS CHEMICAL PRODUCTS ## Notes: |Heading<br>No.|Sub-heading<br>No.|Descriptionofgoods|Rateof<br>duty| |---|---|---|---| |(!)|(2)|(3)|(4)| |38.22|3822.00|Compositediagnosticorlaboratory<br>reagents,otherthanthoseof<br>Chapter30|20"/o| 21. As stated above, Chapter Heading 30.02 refers to antisera and other blood fractions. According to the Explanatory Note in HSN (Seventh Edition), antisera is obtained from the blood of humans or animals which are immune against diseases. Antisera is used for diagnostic purposes, including in-vitro D tests. There is nothing like crude antisera and refined antisera. In the present case, even according to the Department, PTK is an antisera, however, according to the Department, PTK is a refined antisera. As stated, antisera falls under Chapter Heading 30.02. In the circumstances, "antisera" is covered by Chapter Heading 30.02 and since it is covered by that Heading, Chapter Heading 38.22 E will not apply. If one reads Chapter Heading 38.22, it becomes clear that there could be diagnostic or laboratory reagents which could fall under Chapter Heading 30.02 and also under Chapter Heading 38.22. However, if a diagnostic or laboratory reagent like antisera falls under Chapter Heading 30.02 then it stands excluded from Chapter Heading 38.22. F 22. Before concluding we may record the statement made on behalfof _Mis._ J. Mitra & Co. Ltd. that they have closed down their business in producing the following two items, namely, Syphilis RPR (VDRL) and Salmonella Antigens. Hence, they do not seek to press the classification issue concerning the said two items. G 23. Hence we answer C.A. No.1953-54 of2003, filed by the Department, in favour of the assessee and against the Department. 24, For the above reasons, the assessee succeeds on Item Nos. I to 9, mentioned at page No.5 of the paper book in C.A.Nos.1953-54/2003 and, H SUPREME COURT REPORTS [2007] _5_ S.C.R. 1032 A[therefore, ][the ][Department ][was ][not ][entitled ][to ][invoke ][the ][extended ][period ][of ] limitation under Section I IA of the Central Excise Act, 1944. _CA.Nos. 1076-108012002 filed by Mis. Span Diagnostics Ltd. (assessee)_ 25. These civil appeals are filed by M/s. Span Diagnostics Ltd. B (assessee) under Section 35(L) of the Central Excise Act, 1944, against the decision of the CEGAT (for short, 'Tribunal') dated 4.12.2001. 26. In these civil appeals we are concerned with Item Nos.21 to 32, referred to in Annexure A to the paper book (at pages 27-28), Item Nos.35, 36 and 37 in Annexure A to the paper book (at pages 27-28) and Item Nos.I c to 15 in Annexure B to the paper book (at page 29). } 27. At the outset we quote hereinbelow Item Nos.21 to 32 of Annexure A which read as under: ## "ANNEXTURE- 'A' D Name of the products which will fall under chapter sub-heading 3005.90 ||Sr.|CodeNo.|Item|Pkg.|||| |---|---|---|---|---|---|---|---| ||No.||||||| |E|21.|l1127A|Anti-A(Monoclonal)|5ML|||| ||22.|l1127B|Anti-A(Monoclonal)|IOML|||| ||23.|lll27C|Anti-A(Monoclonal)|3x5ML|||| ||24.|11128A|Anti-B(Monoclonal)|5ML|||| |F|25.|11128B|Anti-B(Monoclonal)|IOML|||| ||26.|11128C|Anti-D(MonoclonallgG+lgM)|3x5ML|||..| ||27.|11129A|Anti-D(MonoclonalIgM)|5ML|||| ||28.|l1129B|Anti-D(MonoclonalIgM)|IOML|||| |G|29.<br>30.|l1129C<br>l l130A|Anti-D(MonoclonalIgM)<br>Anti-D(MonoclonallgG+IgM)|3x5ML<br>5ML|||| ||31.|l l130C|Anti-D(MonoclonalIgG+IgM)|3x5ML|||| ||||||~|~|~| ||32.|11131A|Anti-A,B&D(Mono.lgM)|3x5ML|||| .. 28. It is not in dispute that above Hem Nos.21 to 32 are identical to Item H Nos. I to 6 in C.A. No.5322 of2002 - filed by _Mis._ J. Mitra and Co. (assessee). J QJ 3 SPAN DIAGNOSTICS LTD.'· COMMNR. OF CENTRAL EXCISE, SURAT (KAPADIA, J I J. F 29. In the circumstances, we hold for the above reasons that Item Nos.2 I to 32 would fall under Chapter Heading 30.02 of CET A. Accordingly, the assessee succeeds in this regard. 30. As regards Item Nos.35, 36 and 37 of Annexure A is concerned, we quote hereinbelow the exact description of the said three items which read as under: B ## · "ANNEXTURE- 'A' Name of the products which will fall under chapter sub-heading 3005.90 |Sr.|CodeNo.|Item|Pkg.|c| |---|---|---|---|---| |No.||||| |35.|18411|P.P.D.STU/0.1ML|5ML|| |36.|18411A|P.P.D.IOTU/0.1ML|5ML|| |37.|18412A|TuberculinP.P.D.||D| |||LyophilizedIOTU/0.1ML|500TU|| 31. On this point we may state that the Adjudicating Authority had referred the matter for opinion to Dy. Chief Chemist who opined that the three E items were "cultures of micro-organisms" and, therefore, they came under Chapter Heading 30.02 and not under Chapter Heading 30.05. Apart from the question as to whether the Dy. Chief Chemist was or was not entitled to classify, the fact remains that the question as to whether the above produces are "diagnostic reagents" was not referred. . 32. In this case we are concerned with classification of diagnostic reagent for vivo detection of T.B. mycobacteria. According to the Adjudicating Authority, these reagents are of mycobacterium origin but they are injected intradermally into the patient and, therefore, they are classifiable under Chapter Heading 30.05 (CSH 3005.90). According to the Department, the above three G items are put up by the assessee for sale in measured doses and, therefore, they were classifiable under Chapter Heading 30.05. In this connection, reliance is placed on Chapter Note 3( d) to Chapter 30 which reads as under: H 1034 SUPREME COURT REPORTS (2007] _5_ S.C.R. ) A ## **"CHAPTER 30 PHARMACEUTICAL PRODUCTS** Notes: - I. to 2.X\X _xxx xxx_ **B** 3. Heading No.30.05 applies only to the following, which are to be classified in that heading and in no other heading of this Schedule:- - (a) to (c) X\X X\X X\X c - (e) Opacifying preparations for X-ray examinations and _diagnostic reagents_ designed to be _administered to the patient,_ being unmixed products _put up in measured doses_ or products consisting of two or more ingredients which have been mixed together for such uses; - (f) to (h) _xxx xxx_ xxx" **D** (emphasis supplied) 33. On reading Chapter Note 3(d) it is clear that preparations for X-ray examinations and diagnostic reagents designed to be administered to the patient, put up in measured doses would fall under Chapter Heading 30.05. However, in this case there is no finding given by any of the Authorities E below as to whether Item Nos.35, 36 and 37, quoted above, are diagnostic reagents. This question has got to be decided as the assessee contends that the above three products are not diagnostic reagents, they are "diagnostic aid". In this connection, reliance is placed on _Pharmacopoeia of India_ (Third Edition) by Ministry of Health and Family Welfare (GOI) and also on _The_ F _National Medical Series for Independent Study_ (Microbiology - 2nd Edition) by Dr. David T. Kingsbury and Gerald E. Wagner. G 34. Since this question has not been answered we remit the matter to the Adjudicating Authority to decide whether Item Nos.35, 36 and 37, quoted hereinabove, are diagnostic reagents or whether they are in aid of diagnosis. 35. Now, coming to Item Nos. I to 15 of Annexure B, we quote hereinbelow the said items which read as under: ... ## "ANNEXTURE- 'B' H Name of the products which will fall under chapter sub-heading 3822 SPAN DIAGNOSTICS LTD. '- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J J 1035 A ~ ||SPAN DIAGNOSTICS LTD. '- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J JDIAGNOSTICS LTD. '- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J J|SPAN DIAGNOSTICS LTD. '- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J JDIAGNOSTICS LTD. '- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J JLTD. '- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J J'- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J JCOMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J JOF CENlRAL EXCISE, SURAT (KAPADIA. J JCENlRAL EXCISE, SURAT (KAPADIA. J JEXCISE, SURAT (KAPADIA. J JSURAT (KAPADIA. J J(KAPADIA. J J|SPAN DIAGNOSTICS LTD. '- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J JDIAGNOSTICS LTD. '- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J JLTD. '- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J J'- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J JCOMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J JOF CENlRAL EXCISE, SURAT (KAPADIA. J JCENlRAL EXCISE, SURAT (KAPADIA. J JEXCISE, SURAT (KAPADIA. J JSURAT (KAPADIA. J J(KAPADIA. J JJ JJ<br>1035|1035| |---|---|---|---|---| |Sr.|CodeNo.|Item|Pkg.|A| |No.||||| |I.|17401A|AntiSheepHemolysin|5ML|| |2|19404|Chem.Control(Assayed)|5x3ML|| |3.<br>4.|19404A<br>17405|Chem.Control(Unassayed)<br>Fraund'sAdjuvant(Com)|5x3ML<br>IOML|B| |5.|17406|Guineapig(Complement)|5xlML|| |6.|19408|KahnVDRL+Vacontrol|5ML|| |7.|19409|KahnVDRL-Vacontrol|5ML|| |8.|19444|Chem.ControlAssayedNormal|5x3ML|c| |9.|19444A|Chem.ControlAssayedAbnormal|5x3ML|| |10.|25907|R.A.Test(LataxTest)|JOT|| |11.|25907A|R.A.Test(LataxTest)|20T|| |12.|25934|C.R.P.(LataxTest)|20T|| |13.|25947|ASO(LataxTest)|20T|D| |14.|259468|Austragen(LataxTest)|25T|| |15.|25946C|Austragen(LataxTest)|50T|| t 36. According to the assessee, the above 15 items fall under Chapter Heading 30.02 as they are "blood fractions". This is not disputed by the Department. However, according to the Department, since Item Nos. I to 15 E are manufactured by coating latex particles with protein, they fall under Chapter Heading 38.22 of CETA. However, according to the Tribunal, the said items fall under Chapter Heading 30.05 of CETA. At this stage we may note that according to the Department, the said 15 items came under Chapter Heading 38.22 whereas, according to the assessee, they came under Chapter F Heading 30.02. The only question before the Tribunal was whether it came under Chapter Heading 38.22 or whether it came under Chapter Heading 30.02. In _Mis. Mitra's case_ (which we have decided hereinabove vide C.A.No.5322 of 2002), we have taken the view that "blood fractions" fall under Chapter Heading 30.02. Chapter Heading 30.02 refers to "blood fractions". Merely because the medium used is latex (rubber) or paper, will not bring the items G under Chapter Heading 38.22. Once an item is a "Blood Fraction" it falls under Chapter Heading 30.02. The medium is irrelevant. The medium could be paper or rubber. The configuration of the product and the function are important. In our opinion, Item Nos.I to 15 are "Blood Fractions". They are "Blood Fractions" even according to the Department. H 1036 [2007] _5_ S.C.R. ## SUPREME COURT REPORTS A 37. In the circumstances, we classify Item Nos.I to 15 of Annexure B to the paper book under Chapter Heading 30.02 (CSH 3002.00). 38. Accordingly, except for Item Nos.35, 36 and 37 of Annexure A, the assessee _Mis._ Span Diagnostics Ltd. succeeds in C.A. Nos.1076-1080 of2002. However, with regard to Item Nos.35, 36 and 37 of Annexure A, the matter B shall stand remitted to the Adjudicating Authority for fresh decision in accordance with law. Consequently the question oflimitation will remain open only with regard to Item Nos.35, 36 and 37 of Annexure A in C.A. Nos.10761080 of2002. C 39. Accordingly, the above _C.A. No.5322 of 2002, C.A. Nos.1953-54 of 2003_ and _C.A. Nos.1076-1080 of 2002_ stand disposed of with no order as to costs. v.s.s. Appeals disposed of. -