| SooperKanoon Citation | sooperkanoon.com/10215 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Oct-14-1996 |
| Reported in | (1997)LC717Tri(Delhi) |
| Appellant | inter Care Ltd. |
| Respondent | Collector of Customs |
Based on the above, the Department was of the view that the goods were not "Agglutinating Sera" but a pregnancy test kit/Diagnostic reagents for detecting HCG in urine. Trade enquiries revealed that the term "Agglutinating Sera" would not cover the pregnancy test kits as imported. An opinion was sought from National Institute of Immunology, who clarified, vide their letter dated 30-3-1993 that "though the above mentioned kit uses an antibody which is agglutinating in nature, the kit itself does not fall under the category of "Agglutinating Sera".
Therefore, it appeared that the goods are actually composite diagnostic and laboratory reagents other than those of Customs Tariff Heading 30.02 or 30.06, and classifiable under sub-heading 38.22, that the importers had deliberately misdeclared the goods as "Agglutinating Sera" only for the purpose of getting the benefit of Notification No.208/81 and had rendered the goods liable to confiscation and the importers liable to penal action. Show cause notices were issued on 2-4-1993 and on 20-9-1993 proposing recovery of duty at the rate of 65% (basic duty) + 45% (Auxiliary) + 15% (CVD) + 15% (Special Excise Duty) amounting to Rs. 22,31,320/- and Rs. 20,48,332 by denying the benefit of the notification, proposing confiscation of the goods under Section lll(m) and imposition of penalty under Section 112 of the Customs Act.
The adjudicating authority held that the imported consignment was not covered by the expression "Agglutinating Sera" as appearing at SI. No.216 of Schedule A to the Notification No. 208/81, but was a diagnostic reagent for detection of pregnancy and hence confirmed the demand of differential duty; however, he dropped the charge of misdeclaration and dropped confiscation and penalty. Hence this appeal.
2. The basic issue to be decided in this case is whether the imported goods are "agglutinating sera" eligible to the benefit of exemption from duty in terms of Notification No. 208/81-Cus., dated 22-9-1981 under SI. No. 216 thereof. The classification of the goods will also have to be determined.
3.1 Serum is the fluid fraction separated from blood after clotting. In the Hawley's Condensed Chemical Dictionary, 11th Edition, 'serum' is defined as follows: "Serum (1) the continuous phase of a biocolloid after the solid or disperse phase has been removed by centrifugation, coagulation or similar means. In the case of milk, for example, the erum or whey is a true solution of sugars, proteins and mineral compounds in water.
(2) Specifically blood from which corpuscles, platelets, etc., have been removed, especially when prepared with antigenic bacteria for inoculation to effect the cure of a disease." "The yellowish fluid that remains after whole blood or plasma has been allowed to clot. It is free from cells and it will not clot again".
3.2 When an antigen is introduced in an animal, antibodies are produced in the serum. Butterworths Medical Dictionary, Second Edition defines antigen as under: "A substance which, under suitable circumstances, can stimulate a specific immune response (immunogenicity) and can react specifically with the antibody or cells associated with that response (reactivity)".
Thus the animal becomes immunised against that particular antigen.
Butterworths Medical Dictionary defines antibody as under: "Serum protein with the molecular properties of an immunoglobutin.
Antibodies are produced in the body by cells of thelymphoid series, especially plasma cells in response to stimulation by an antigen.
Antibodies are usually referred to according to the method for their demonstration, e.g. precipitating, agglutinating or complement-fixing, and as they react specifically with their corresponding antigens their specifically makes them useful laboratory reagents for the recognition of the latter".
Antibody serum taken from the blood of an immunised animal is called an-tiserum. Dorland's Pocket Dictionary, 2nd Edition (page 50), describes 'antiserum' as : 'A serum antibody(ies) obtained from an animal immunised either by injection of antigen or by infection with micro-organism, containing antigen'. Butterworths Dictionary defines antiserum as under : "A general term for serum (human or animal) containing antibodies, produced naturally or artificially, to pathogenic microbes or their products, e.g. bacterial toxims (antitoxin)." Depending on the antigen which is injected into the animal, the antiserum containing specific antibody will be produced. For example, if HCG as an antigen is injected in the animal, then the antiserum will contain antibody to the HCG. Likewise, if Salmonella is injected, the antiserum will contain antibody to Salmonella. In both cases they are antisera but containing different types of antibodies. Generally, antisera contain aheterogenous mixture of different antibodies of varying specificity and affinity. These antibodies are commonly known as polyclonal antibodies. For testing as well as for other purposes polyclonal antibodies are not able to give specific results and, therefore, it becomes necessary to purify them to obtain monoclonal antibodies which react to specific antigens. Monoclonal antibodies are antibodies produced by a culture derived from a single cell. These antibodies recognise a single determinant or structure of a given antigen.
3.3 The general procedure for producing monoclonal antibodies has been described in Kirkothmer Encyclopaedia of Chemical Technology Vol. 23, pages 637 & 638 as follows : "A mouse is immunised with a purified antigen or a mixture of antigens. Spleen cells, which produce antibodies but cannot be cultured in vitro, from the immunised mouse are fused in the presence of poly (ethylene glycol) with mouse myeloma cells deficient in the enzyme hypoxanthine-guanine phos-phoribosyltransferase (HPGRT). These myeloma cells can be cultured in vitro, but die in the presence of a medium containing hypoxanthine - aminopeterin - thymidine (HAT). After the fusion, the cells are distributed into individual cell cultures containing the selective HAT medium and are incubated. Only the cells that have been successfully fused grow. Two to four weeks later, culture medium from the growing cells (the hybrids is examined for the presence of the specific antibody of interest by using a very sensitive method, e.g. solid -phase radio immunoassay or enzyme - linked immunosorbent assay (ELISA). Cultures positive for the desired antibody, which are designated Tiybridomas, are cloned or purified by the limiting dilution method or the soft agar plate method. The clones are stored frozen, grown in large tissue cultures to produce the antibody, or injected into animals to produce myelomas that secrete the antibody. Monoclonal antibody technology provides a practically unlimited supply of uniform highly specific antibodies." The monoclonal antibodies are often freeze-dried for giving them a longer shelf life and easy storage and transportation. The process of freeze-drying is technically called 'lyophilization'. Lyophilization is defined as under: "This is a process by which biologically active substances or their preparations such as blood, plasma, serum, vaccine, enzymes, hormones and other similar substances or their derivatives are rendered in the solid (usually powdery amorphous or crystalline) form from their solution phase by using rapid freezing and high vaccum water evaporation process. It is a very important step in the process of manufacture of biologically active substances because lyophilization provides a far extended shelf life with close to 100% biological inactivity order recommended storage conditions compared to the native form or its purified preparation. The restoration of total biological activity of the lyophilized preparation could be brought about by its reconstitution with distilled, deionized water or by appropriate buffer solution. The shelf life of such re-constituted product is very short from few days to few weeks only especially in connection with the diagnostic kits." "A method used for the preservation of sera, plasma, bacteria, viruses, or tissues by drying them from the frozen state in vacuo." 3.4 When a woman becomes pregnant, the placenta produces high quantity of harmone called 'human chorionic gondotrophin (HCG). This HCG is excreted through the urine. Detection of the presence of HCG in the urine is one of the indications to confirm that a woman is pregnant.
Therefore, when the urine contains HCG and if that is brought into contact with an agglutinating serum which contains antibody to the HCG, it will agglutinate or clump. "Agglutinating" is defined in the Butterworth Medical Dictionary as under: "The clumping together of cells dispersed in a fluid; the action of an ag-glutinant. 2. The phenomenon of aggregation into clumps of homogeneous suspensions of bacteria, or other antigenic particulate substances, under the influence of specific antisera, or solutions of acids, salts or certain dyes. As bacterial agglutination with specific antisera is easily visible, it forms the basis of many serological reactions, e.g. Widal's test. 3. The adhesion of wound edges in the process of nastural healing." In the naked eye, it is impossible to detect the process of agglutination. That is why, to facilitate easy detection of agglutination, "carriers" were chosen on which the specific antibodies could be coated. The carriers could be latex and in that case, it would be described as latex agglutination technique or assay, the carrier could be R.B.C., and in that case it would be called as "Haen - agglutination technique or assay. The carriers could be collodial particles composed of metallic compound like patinum, gold and even rust and in that case it would be called as SOL particle Immuno Assay (SPIA) Technique.
3.5 The product imported has the brand name 'pregcolor'. It is an agglutinating serum and is obtained by the process described above. For obtaining this agglutinating serum, the antigen used is HCG. The HCG is injected into the mice with the result that the mice gets immunised and produces antiserum containing antibodies to HCG. This antiserum is stored in the spleen of the mice. When it is taken out from the mice, at that stage it contains polyclonal antibodies. It is then subjected to the process described above, which refines polyclonal antibodies and produces monoclonal antibodies specific to the antigen HCG. These monoclonal antibodiesare then freeze-dried and coated on colloidal gold particles known as SOL particles. The SOL particle acts as a carrier for easy visual detection of the agglutinating reaction of agglutinating sera with HCG antigen in the urine of the pregnant woman.
3.6 From the Collector's order, it appears that there is no dispute with regard to facts upto this stage and he seems to consider monoclonal antibodies as agglutinating sera. However, he seems to consider the appellants' product not to be an agglutinating sera for three reasons : (i) that it is in a solid form because of freeze-drying, (ii) that it is coated on a carrier, that is SOL particle, and (iii) that it is in a kit form. The appellants clarify that, if any antiserum is to be used for diagnostic purposes and if it is to be given a longer shelf life for the convenience of transport and storage, it is necessary to freeze-dry it. Secondly, the carrier, that is, the SOL particle is necessary because the agglutinating reaction is not visible to the naked eye unless it is combined with the colour reaction which is produced because of the presence of the carrier, i.e.
SOL particle. Thirdly, since at the time of the use, the antiserum is used in a liquid form only and not in the solid form, therefore, it has to be liquified with a special buffer solution. The product is, therefore, imported in a kit form.
4. The appellants clarified that if any antiserum is to be used for diagnostic purposes and if it is to be given a longer shelf life for the convenience of transport and storage, it is necessary to freeze-dry it. This stand is supported by the recital in paragraph 6 of the show cause notice that the scrutiny of some of the imports of agglutinating sera specifically made by Anand Brothers, New Delhi indicates that the Drug Controller of India has issued Form 10 for import of 21 categories of agglutinating sera which have also been certified by the Head of the Department of Lady Hardinge Medical College, New Delhi and it is clear that these agglutinating sera are in liquid or freeze-dried form and the clarification obtained by the Department from M/s. Modi Biotek (page 113 of the paper book) about the process of lyophilization, which has already been set out earlier in this order. Therefore, the first reason for holding that the imported product is not agglutinating serum is not a valid reason. Regarding coating on carrier, we find that the carrier viz. SOL particle is necessary, as. explained by the appellants and not rebutted by the Department, the ag- glutinating serum reaction is not visible to the naked eye unless it is combined with the colour reaction which is produced because of the presence of carrier. The supplier/manufacturer's literature supports the above view. We find from the literature that the first tests to be developed for determining pregnancy were biological tests which were reliable, but were very time consuming. In 1931, the shorter rabbit test was developed using patient's urine or serum. The major disadvantage of such biological tests in general was that they could not discriminate between the low levels of HCG in earlier pregnancy and those of HLH (human Luteinizing Hormone) in non-pregnant women, since HCG and HLH have the same biological activity and this led to a number of false positive test results. Then came immunological tests which greatly simplified the technique of pregnancy detection. The basic principle based upon the finding that HCG is a protein with antigenic properties, was to produce a substance which could detect this HCG antigen which was realised by the antibody response. The drawback in this method was that there are other substances in the urine which is tested for HCG, which resembles HCG, giving rise to false positive results for pregnancy. In 1975, the method of preparation of monoclonal antibodies was discovered. This consists of cell fusion technique. The pregcolor test is based on modern technique known as SOL particle immuno assay (SPIA) technology in which colloidal particles composed of metallic compounds act as carriers. The size of the colloidal particles vary between 1 to 200 mm which forms a smooth suspension in a liquid. The dispersion of these colloidal particles in water/buffer solution are called SOL particles and in Pregcolor, gold particles are chosen as a carrier. The important property of SPIA technique is the change of original colors of the properly dispersed particle upon agglutination.
From the above, we are satisfied that the agglutinating sera SOL particle is necessary for the purpose of accurate detection of the pregnancy and hence the second reason put forth by the adjudicating authority that the appellants product is not agglutinating sera is also not valid or acceptable.
5._ Regarding import in kit form, we are satisfied from what has been narrated above that, since at the time of use, antiserum is used in liquid form only, it has to be liquified 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, choriocar-cinoma, etc. The main stay of early diagnosis of both the above diseases is ultrasonic examination supported by serum HCG estimation. Further, when early detection of pregnancy is necessary to carry out medical termination of pregnancy, agglutinating sera which detects the presence of HCG in urine is certainly life saving. Moreover, it is medically recognised that, before the insertion of Intra Uterine Devices or before prescribing oral contraceptives, it is necessary to rule out pregnancy, otherwise if the woman is already pregnant and by mistake the IUD is inserted or any oral contraceptive is prescribed it could prove highly detrimental to the woman and the unborn foetus. The notification also covers certain diagnostic tests e.g. SI. No. 155 of Notification No. 208/81 covers Elisa Diagnostic Tests and this is a test that can be used for detecting pregnancy by determining HCG levels. In a recent decision of the Tribunal in the case of Collector of Customs, New Delhi v. Ethnor Ltd. reported in (16) RLT 166 (CEGAT), pregnancy detection kits bearing trade name of "Clear View HCG" have been held to be covered by the description "Elisa Diagnostic Tests" mentioned at SI. No. 155 of Notification No. 208/81. The list of life saving drugs or medicines stipulated in the notification covers a number of other tests e.g.
blood group sera (SI. No. 215), Enzyme linked Immunoabsorbent Assay Kits Elisa Kits (SI. No. 186). This clearly indicates that the list appended to the notification covers diagnostic kits also. It is relevant to note at this juncture that the HSN Explanatory Notes to Heading 30.02 states that antisera are used against dysentery, pneumonia, snake bite, allergic diseases, etc. and are also used for diagnostic purposes, including in vitro tests and specific immunoglobulins are purified preparations of antisera.
7. The stand of the appellants that the imported item is agglutinating sera is further fortified by opinions furnished by leading Doctors attached to Government and Private hospitals from all over India, e.g.
from the Associate Professor of Institute of Pathology (1) Dr. M.Chandra, ICMR, Safdarjung Hospital, New Delhi, Associate Professor of Department of Pathology, AIIMS, New Delhi (2) Dr. S.K. Panda, (3) Dr.
Sunithi Solomon, Additional Professor, Institute of Microbiology, Madras Medical College, Madras and (4) Dr. Mahendra N. Parikh, Obstetrician and Gynaecological Society, Bombay, etc. The adjudicating authority has observed that the 17 opinions given by different types of users reveal that each one of them describes the item in question as Preg color or Preg Color Reagent. He has failed to appreciate that this was necessary because Preg color is the brand name of a particular product and does not cover all kinds of agglutinating sera and identification of a product by the brand name does not reflect change in character of the product for e.g. Dr. Panda, AI IMS, has clearly stated that the product is agglutinating sera against HCG, and Dr.
Sunithi Solomon has also stated that the Preg color is agglutinating sera for detection of HCG in urine. The basic character of the product depends upon the nature of the product and not upon the brand name. If the brand name of agglutinating sera was different, the basic characteristics would still remain the same and even the label 'Preg color' is removed, the product would still remain agglutinating sera.
7.1 The Collector has relied upon two letters dated 30-3-1993 and 23-11-1993 of the National Institute of Immunology, New Delhi. The letter of March 30, 1993 states that although Preg color - pregnancy detection diagnostic kit used as 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 from the Department of Biotechnology, Ministry of Science and Technology, which is the administrative department to give technical clarification on pharmaceuticals diagnostic based on bio-technology techniques. In this letter dated 23-8-1993 (page 196 of the paper book) it is certified that the item Preg color as presently marked is agglutinating sera.
8. In the light of the above, we hold that the imported item is ag-glutinating sera, covered by the description in SI. No. 216 of the Schedule appended to the Notification No. 208/81.
9. Lastly, even though there is no finding on classification of the imported product - the appellants had filed a Bill of Entry claiming classification under 3002.90, while the show cause notice proposed classification under Heading 3822.00 as "composite diagnostic or laboratory reagents other than those of Heading 30.02 or 30.06." We hold that the imported goods are correctly classifiable under Heading 3002.10 which covers "anti sera and other blood fractions", having regard to the finding in the earlier paragraphs that the item is antisera and further having regard to the HSN Explanatory Notes to Heading 30.02 which states that antisera is also used for diagnostic purposes including in vitro tests. In the result, we hold that "Preg Color" imported by the appellants is 'agglutinating sera' classifiable under sub-heading 3002.10 of the Customs Tariff and eligible to the benefit of total exemption from duty in terms of SI. No. 216 of Schedule A to Notification No. 208/81-Cus. The impugned order is, therefore, set aside and the appeal allowed with consequential relief, if any, due to the appellants.