1990(07)LCX0086

BEFORE THE CEGAT, SPECIAL BENCH ‘C’, NEW DELHI

S/Shri K.S. Venkataramani, Member (T) and GA. Brahma Deva, Member (J)

COLLECTOR OF C. EX.

Versus

FINE CHEM LABORATORIES

Order No. 826 & 827/90-C, dated 26-7-1990 in A. No. E/1719/90-C with E/Cross/179/90-C and A. No. E/1720/90-C with E/Cross/178/90-C

CASE CITED

PRAKASH MATCH & PLYWOOD v. ASSTT. COLLECTOR - 1979 (4) ELT J653 .                .[PARA 4]

Advocated By : Shri L. Narasimha Murthy, J.D.R., for the Appellant.

Shri V.K. Dorai Raj, Advocate, for the Respondent.

[Order per : K.S. Venkataramani, Member (T)]. - Collector of Central Excise, Hyderabad has preferred these two appeals against orders No. 200/89(H) and 201/89(H) both dated 4-12-1989 passed by the Collector of Central Excise (Appeals), Madras in favour of the two respondents herein.

2. The facts in brief are that the respondents manufacture ‘Liver Extract’ viz. Liver concentrate (paste and powder) proteolysed lever paste and powder, liver injection crude and liver fraction. The respondents filed classification list claiming assessment under Heading 30.03 CETA, 1985 which covers ‘Medicaments’ (including veterinary medicaments). The Asstt. Collector in his orders in original dated 2-3-1989 classified the goods under Heading 30.01 CETA which covers “glands or other organs..... not elsewhere specified or included.” On appeal the Collector (Appeals) in the two impugned orders held that liver extract is classifiable under sub-heading 3003.20 covering “Medicaments (other than patent or proprietary).... systems,” on the ground that such classification was in consonance with Chapter Note 1(i) to Chapter 30 laying down what ‘medicaments’ means for purposes of Heading 30.03, and the Collector (Appeals) also found that the product is approved by Drug Controller and it is included in the Schedule to Drugs Price (Control) Order, 1979.

3. Appearing for the appellant Collector Shri Narasimha Murthy, learned D.R. referred to the grounds of appeal and emphasised that the product predominantly consists of solid content of liver and it is sold in bulk to other manufacturers. The product does not fulfil the criteria for medicament under Heading 30.03 as laid down in Chapter Note 2(i) of Chapter 30 and that further the product more appropriately answers the description under Heading 30.01 CETA which would cover glands and other organs of animal origin prepared for therapeutic or prophylactic uses. The learned D.R. further urged that when classifying goods under CETA, regard should be had to the Tariff Headings, the related Chapter Notes and Section Notes, and in such a context, reliance on classification of the product by the Drug Controller under another enactment was misplaced.

4. Shri Dorai Raj, learned Consultant appearing for respondents, however, emphasised that product had been approved by the Drug Controller as bulk drugs and urged that end use is not relevant for classification as held in case law reported in 1979 (4) ELT 653 J. He further contended that it is for the department to prove their case for classification under Heading 30.01 which they have failed to do and on the other hand the Hyderabad Central Excise Collectorate had issued a Trade Notice 17/90 dated 7-5-1990 saying that heparin injection is a medicament classifiable under 30.03 CETA and not under Heading 30.01.

5. We have carefully considered the submissions made by the learned D.R. and learned consultant and on a perusal of the competing Heading 30.01 and sub-headings 3003.20 read with Chapter Note 2(i) defining medicaments for purposes of Heading 30.03, we are inclined to agree with the appellants that liver extract in this case is prepared from ox liver and is sold in bulk to various pharmaceutical factories who use it in the manufacture of drugs. It is an admitted position that the product is an unmixed product. Then, as per Chapter Note 2(i) (b) to Chapter 30 such products should be for therapeutic or Prophylactic uses, and should be put up in measured dozes or in packings for retail sales or for use in hospitals. In the present case the product is supplied as bulk drug and not in measured doses or in retail packings. The labels of their products indicate “For manufacturers use only,” and are supplied to drug manufacturers and are not cleared for use in hospitals. In the circumstances, the product clearly falls outside Heading 30.03 and in such a view of the matter, the fact that the product is approved as bulk drug by Drugs Controller will not materially affect the classification of the goods. There is no copy of Trade Notice 17/90 on record regarding classification of heparin but from what was read out by learned consultant before us, we note that in that case it was observed that heparin is supplied in vials which prima facie would appear to satisfy the criterion under Chapter Note 2(i) referred to supra and hence appears to us distinguishable from the present. In the result, we uphold the classification for the impugned product under Heading 30.01 CETA. The Orders of the Collector (Appeals) are set aside. The Department’s appeals are allowed.

6. The cross-objections being merely supportive of the impugned orders, are misconceived, and are accordingly dismissed.

Equivalent 1990 (50) ELT 591 (Tribunal)