No Customs Duty exemption on ELISA Kits used only for Food Testing

Ilishan Biotech (P) Ltd. Vs Principal Commissioner of Customs (CESTAT Delhi)

Conclusion: ELISA kits imported by assessee-company were not used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans, and as a result, they were not diagnostic reagent/kits rather they were meant to be used for food testing and, therefore, did not fulfil the criteria to avail the benefit of expression as per the notification.

Held: Assessee was importing ‘ELISA Test Kits and Reagents for food testing’ and claimed exemption under Notification No.12/2012-Cus dated 17.03.2012, subsequently under Notification No.50/2017-Cus dated 30.06.2017. The goods imported were put under preventive check on 19.05.2020 by SIIB, Air Cargo Complex (Import), New Delhi on the allegation that the goods declared as “ELISA kits for diagnostic use‟ in Bills of Entry were actually ‘food testing kits’, and to ascertain the correct description/classification of the goods and their eligibility for exemption under Notification No.50/2017-Cus. (Entries 167 & 249A) read with S.No.32 of List 4 of the notification, and applicability of the IGST under Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017 (Entry 180 of Schedule I & Entry 80 of Schedule-II). Goods imported under the 2 BEs were seized and were later provisionally released on execution of bond with bank guarantee. Statement of Managing Director (MD) of assessee was recorded on 17.09.2020. Adjudicating Authority confirmed the differential duty demand against BEs for the period with interest dropped demand against BEs for the period from 11.05.2015 to 31.03.2018 as being time barred. Adjudicating Authority allowed redemption, imposed penalty under Section 112(a), dropped imposition of penalty under Section 114A, ordered enforcement of bank guarantee towards recovery of dues and imposed penalty on assessee’s Managing Director under Section 114AA. Assessee contended that food testing kits were covered under the definition of the term ‘diagnostic kits’ mentioned in the exemption notifications. The term ‘diagnostic’ was used from 12.06.2019 only. The invoices and contracts show that the goods were used for food testing. They had amplified the description as ‘Elisa Kits for diagnostic use only’ as they were used for diagnosis of adulteration of the Food. Assessee argued that the goods were not mis-declaring the description of the goods. Authority contended that as per HSN Explanatory Notes for CTH 3822, the Diagnostic reagents were used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans that to for vitro purposes. Notification benefit was for “Diagnostic reagents”, which were any organic or inorganic compounds that were added to an analyte or biological specimen, like urine, blood sample, or biopsied human tissue to determine pathogenesis or abnormalities. On the other hand, authority contended that goods were for testing of food and not for diagnostic purposes of human beings (including animals). Main allegation was of importing goods “ELISA Test Kit for food testing” but declaring them as “ELISA Test Kit for diagnostic use only”. It was held that  ELISA kits imported by assessee were not used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans, and as a result, they were not diagnostic reagent/kits rather they were meant to be used for food testing and, therefore, did not fulfil the criteria to avail the benefit of expression as per the notification.

FULL TEXT OF THE CESTAT DELHI ORDER

1. M/s. Ilishan Biotech (P) Limited ¹ has assailed the order-in‑ original no.16/2021-22 dated 31.03.2022 holding that the appellant was importing “ELISA Test Kits for food testing” and was, therefore, not eligible to claim the benefit of exemption notification.

2. The facts leading to the present case are as follows:-

2.1 The appellant is importing ^„ELISA Test Kits and Reagents for food testing^‟ and claimed exemption under Notification No. 12/2012-Cus dated 17.03.20 12, subsequently under Notification No.50/2017-Cus dated 30.06.2017. The goods imported under Bills of Entry ² No.7610516 dated 07.05.2020 and 7615588 dated 08.05.2020 were put under preventive check on 19.05.2020 by SIIB, Air Cargo Complex (Import), New Delhi on the allegation that the goods declared as “ELISA kits for diagnostic use^‟ in Bills of Entry are actually ^„food testing kits “and to ascertain the correct description/classification of the goods and their eligibility for exemption under Notification No.50/2017-Cus. (Entries 167 & 249A) read with S.No.32 of List 4. of the notification, and applicability of the IGST under Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017 (Entry 180 of Schedule I & Entry 80 of Schedule-II) Goods imported under the aforesaid 2 BEs were seized on 19.05.2020 and were later provisionally released on execution of bond with bank guarantee of Rs.22,33,000/-. Statement of Shri Ashish Bhandari, Managing Director (“MD”) of the appellant was recorded on 17.09.2020.

2.2 Show cause notice dated 29.09.2020 was issued covering the period from 08.05.2015 to 16.08.2020 on the following allegations:-

“(a) that Entry 80 in Schedule II of Notification No.1/2017-IT (R ) which prescribes 12% rate is applicable only to ^„diagnostic kits^‟ and not ^„reagents^‟; that the contention of there being 2 classes of goods “all diagnostic kits” and “reagents” is not acceptable ; that the word “and” is a word of conjunction and the word “diagnostic” applies to both kits and reagents, stating that the exemption is applicable only for diagnostic kits and diagnostic reagents;

(b) that from June, 2019, the description of goods was changed by the Importer from “ELISA Test Kits for food testing” to “Diagnostic Test Kits/Reagents” only to mislead and to avoid correct payment of duty on merit rate;

(c) that as per HSN Explanatory Notes Chapter Heading 3822, “Diagnostic reagents are used in the evaluation of chemical process and states in animals and humans”; that the ^„imported test kits are for food testing^‟, thus, the imported goods do not appear to be diagnostic kits/reagents;

(d) that importer resorted to wilful mis-statement and suppression of facts with respect to the nature and description of goods;

(e ) that exemption under Notification NO.50/2017- cus (Entries 167 & 249 A) and under Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017 (Entry 180 of Schedule I & Entry 80 of Schedule II) are not available;

(f) that differential duty of Rs.6,25,39,137/- is liable to be paid under Section 28(4) along with applicable interest.

(g) that goods imported valued at Rs.20,98,53,445/- are liable to be confiscated under Section 111(m);

(h) that penalty is leviable on importer under Section 112(a), 114 A and 114AA.”

2.3 The Adjudicating Authority confirmed the differential duty demand of Rs.2,18,88,441/- against BEs for the period from 01.04.2018 to 20.08.2020 with interest dropped demand of Rs.4,06,50,696/- against BEs for the period from 11.05.2015 to 31.03.2018 as being time barred, ordered for confiscation of goods imported against BEs from 12.06.2019 to 20.08.2020 but no fine is imposed since goods are not physically available, ordered for confiscation of goods imported under BE No. 7610516 dated 07.05.2020 and 7615588 dated 08.05.2020 under Section 111(m) and allowed redemption on payment of Rs.10,00,000/-, imposed penalty of Rs.20,00,000/- under Section 112(a), dropped imposition of penalty under Section 114A, ordered enforcement of bank guarantee of Rs.22,23,000/- towards recovery of dues and imposed penalty of Rs.5,00,000/- on appellant’s Managing Director under Section 114AA. Being aggrieved, separate appeals have been filed by the company and its Managing Director before this Tribunal.

3. Heard Shri G. Vidyadhar Reddy, learned counsel for the appellant and Shri S.K. Rahman, Authorised Representative for the Department.

4. Submissions of the Appellant

4.1 As per importer’s understanding, food testing kits are covered under the definition of the term ^„diagnostic kits^‟ mentioned in the exemption notifications; that the term ^„diagnostic^‟ is used from 12.06.2019 only; that the invoices and contracts show that the goods are used for food testing; that Bes 7610516 dated 07.05.2020 and 7615588 dated 08.05.2020 do not contain the goods description as ^„diagnostic test kits^‟ reagents^‟; that they have amplified the description as ^„Elisa Kits for diagnostic use only^‟ as they are used for diagnosis of adulteration of the Food. This is not miss-declaring the description of the goods; it is only the intended use of the goods. Claim of classification and claim of exemption is not miss-declaration of goods.

4.2 That the term ^„diagnostic^‟ is not limited to treatment of diseased in human beings and animals; that explanatory notes for Chapter 38.22 state “Prepared diagnostic reagents of this heading may be similar in functions to those designed to be administered to patients (sub-heading 3006.30) with the exception that they are used for in vitro rather that for in vivo”; that Elisa test kits are capable of being used to diagnose drug residue in foods prepared from animals also. The Customs Tariff under CTH 3822 has distinguished ^„For medical diagnosis^‟ and ^„other^‟. This itself show that there is ^„diagnosis which is non­medical^‟ as a separate category under classification. This means there can be non-medical diagnostic kits too as envisaged in the tariff. With this perspective, items imported ^„ELISA kits for verification of adulteration in food testing^‟ is also a non-medical diagnostic kit, nevertheless a diagnostic kit. Hence, a diagnostic kit, specified in List 4 at S.No.32 is fully covered in the exemption. Nowhere is the criteria envisaged in the exemption notification that it has to be essentially for life saving. Appellant produced sources to show that the word “diagnostic” is not limited to kits used in evaluation of physical, biophysical or biochemical processes and states in animals and humans as interpreted.

4.3 It is wrong to say that exemption applies to only life-saving drugs. Life-saving drugs do not merit classification under Chapter 38. If exemption is limited to life-saving drugs, then notification would be rendered superfluous. The learned counsel relied on the decision in M.J. Pharmaceuticals Vs. Commissioner of Customs, New Delhi ³ .

5. Submissions of Revenue

5.1 Shri S.K. Rahman, the learned Authorised Representative submitted that as per HSN Explanatory Notes for CTH 3822, the Diagnostic reagents are used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans that to for vitro purposes. Notification benefit is for “Diagnostic reagents”, which are any organic or inorganic compounds that are added to an analyte or biological specimen, like urine, blood sample, or biopsied human tissue to determine pathogenesis or abnormalities.

5.2 The impugned goods are for testing of food and not for diagnostic purposes of human beings (including animals). Main allegation is of importing goods “ELISA Test Kit for food testing” but declaring them as “ELISA Test Kit for diagnostic use only”.

5.3 The invoice does not mention that these are, ^„ELISA strip for diagnostic use^‟. However, the appellant importer while filing BEs in the description column has added these words. The literature from the foreign supplier M/s. Romer Labs, Singapore website shows that these products are used for “Testing food grains, grain products and peanuts” as they deal in the field of diagnostic solutions for food and feed safety.

5.4 That the impugned goods (viz. kits and reagents are used exclusively for food testing kits only and are not meant for diagnostic purposes of human beings (including animals). In fact, the appellant importer from June, 2019 changed the description of the goods as “diagnostic test kits/reagents” instead of “ELISA test kits for food testing”.

5.5 The Serial No. in the referred Notification mentions “Lifesaving drugs/medicines specified in List 4”. The reagents and kits imported for food testing are not lifesaving and hence the benefit of notification has been rightly denied.

5.6 The learned Authorised Representative referred to the principle that exemption notifications are to be interpreted strictly and in this regard, the following case laws are relied upon :-

1. Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar & Company ⁴

2. Commissioner of Central Excise , New Delhi Vs. Hari Chand Shri Gopal ⁵

3. Novopan India Ltd. Collector of Central Excise & Customs, Hyderabad⁶

4. Hemraj Gordhandas H.H. Dave, Asstt. Collector of Central Excise & Customs ⁷

5.7 Reference was invited to the statement of Shri Ashish Bhandari, where he admitted that impugned goods are used for food testing only.

6. The substantive question involved is whether the imports made by the appellant of “ELISA kits for food testing” can be treated as “ELISA test kits for diagnostic use” so as to be eligible to claim the benefit of S.No.167 (A) of Notification No.50/2017- Cus dated 30.06.2017 specifying BCD at Nil and S.No.180 of IGST Schedule I at 15% of Notification No.01/2017 ^–Integrated Tax (Rate) 28.06.2017 in respect of some items and S.No.249 A of Notification No.50/2017 dated 30.06.2017 specifying BCD at 10% and Sl.No.80 of IGST Schedule II at 12% of Notification No.01/2017 dated 28.06.2017 in respect of other items.

7. To examine the issue, we need to appreciate the contents of the exemption notifications mentioned below:-

Further, S.No.249A inserted vide amendment notification No.49/2018-Cus dated 20.06.2018 in Notification No.50/2017-Cus dated 30.06.2017 and further amended vide notification no.25/2019 dated 06.07.2019 reads as under:-

(iii) Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017, S.No. 180 of Schedule-I (IGST Rate 5%) and S.No.80 of Schedule-II (IGST Rate 12%) reads as under:-

As per the contents of the above mentioned notifications, the exemption is available only for the diagnostic test kits and reagents.

8. The admitted position is that the appellant is engaged in import of ^„ELISA food testing kits^‟ and other food testing kits for couple of years. The appellant vide BE No.7610516 and 7615588 imported various types of food testing kits, the details thereof are as under:-

(B.E.No.7615588 dated 08.05.2020) (B.E.No.7610516 dated 07.05.2020)

9. The aforesaid list of articles are actually the food testing kits and not ELISA kits for diagnostic purposes as is evident from the invoices, which do not mention that the ELISA kits are for diagnostic use though the same has been mentioned in the two B/Es, which are annexed with the appeal paper book and specifically uses the expression as under:-

Bill of Entry No.7615588 dated 08.05.2020

“38220090 AGRASTRIP AEATOXIN, 20 PPB (ELISA STRIP FOR DIAGNOSTIC USE ONLY”

Bill of Entry No.7610516 dated 07.05.2020 “38220090 13 C EUMONISINS (FOR DISGNOSTIC USE ONLY)”

10. Another glaring fact, which needs to be taken note of is that the appellant had been declaring the imported goods as testing kits for food until May, 2019. Later i.e.. June, 2019 onwards the appellants changed the description by adding the words “for diagnostic use only”. The obvious reason is that the appellant was aware that the testing kits for food are not eligible for exemption and it is only the kits, which are used for diagnostic purposes fall within the exemption notifications.

11. The statement of Shri Ashish Bhandari, Managing Director of the appellant company was recorded under Section 108 of the Act, which has been quoted in extensor in the impugned order, shows that he categorically admitted that ^„ELISA diagnostic kits^‟ imported by them are used for detection of various anti-biotic and allergies in various types of foods and categorically admitted that the imported items are not used for testing on animals and humans but are used only for food testing.

12. Another relevant factor is that the overseas supplier of the appellant M/s Roomer Labs, Singapore PTE Ltd. is a manufacturer of food testing kits and reagents. The information given by them on their website – https://www.romerlabs.com is as under:-

“i. Founded in Washington, MO, in 1982, we became over the years a leading provider of diagnostic solutions for the agricultural food and feed industry.

ii. Roomer Labs is a leading global supplier of diagnostic solutions for food and feed safety. We offer a broad range of innovative testing solutions and services covering mycotoxins, food pathogens, food allergens, gluten, GMO, veterinary drug residues, and other food contaminants.

iii. Today, Roomer Labs offers a broad range of innovative diagnostic solutions covering mycotoxins, food pathogens, food allergens, gluten, GMO, veterinary drug residues, and other food Our portfolio includes:

• • ELISA test kits ^–Agra Quant
  • Lateral flow devices – Agra Strip and Rapidchek
  • Reference materials – Bio pure
  • Cleanup columns ^–Mycoses, MultiSep,MycoSpin, Stalinism
  • Sampling mills.

iv. Furthermore, we operate 4 accredited, full-service laboratories in Austria, UK. US and Singapore, using cutting-edge technology in the fields of chromatography and immunological analysis, our labs offer services for the analysis of mycotoxins, food allergens, meat speciation, VDR and GMO.

v. Roomer Labs offers the most complete portfolio of allergen test kits for the qualitative Agra Strip and quantitative Agra Quant analysis of food allergens. These tests can be used for different applications, and cover all steps in the food production process.”

The above information on the website, clearly connects M/s Roomer as supplier of Food testing kits and reagents and, therefore, logically the conclusion is that the goods imported by the appellant were food testing kits. Even the literature produced by the appellant in that regard establishes that the kits imported were exclusively food testing kits only and were not meant for diagnosis purposes on human and animals.

13. Now we may consider whether the food testing kits imported by the appellant can be treated as diagnostic kits in terms of the exemption notification. The emphasis in the description used in Notification No.50/2017 is on the words “life saving“ as each of the clauses (A, B, C) of serial no.167 uses the expression ^„life saving drugs or medicines^‟, which means that it can only be related to animal or human and not to food items. The intent behind using the expression ^„life saving^‟ is basically to exempt the medicines/drugs which are meant to be used for saving the life of human beings or animals. To put it differently, the concept of ^„life saving^‟ can only be attributed to human/animal. In so far as food items or food articles are concerned, they cannot be termed as life saving though they are the basic necessities of life. The findings of the Adjudicating Authority on the interpretation of the Entry in the Notification are quoted for reference as under:-

“31.2 From a complete reading of above mentioned entry in the Notification, I find that it provides exemption for Life saving drugs/medicines including their salts and esters and diagnostics test kits specified List 4, Bulk drugs used in the manufacture of life saving drugs or medicines at and other life saving drugs or medicines. The emphasis/intent while granting duty exemption is that the drugs/medicines/their salts and esters/bulk drugs/diagnostic test kits should be for life saving meaning thereby that the diagnostic tests should also be relating to diagnosis of illness in humans and animals. A perusal of the list 4 shows that it contains such life saving drugs/medicines/their salts and esters and diagnostics test kits which are for saving lives/related to medical diagnosis. The term ^„diagnostic^‟ used with test kits in the main body of the Notification gives a specification to all the items listed in the List 4 that they are for saving the lives. The S.No.of the List which the importer claims that their food testing kits falls into is an absurd interpretation of the aforesaid Notification as such kits are not meant for diagnosing illness in living beings. The food testing kit is not meant for diagnostic purposes within the meaning of Heading 3822 as per the Explanatory Notes of HSN and also the purpose and intent of aforesaid Notifications. The change in the description by the importer fro ELISA kit for food testing to ELISA kit for diagnostic purposes amply shows that the importer also knew that their goods do not fall within the purview of the Notification being food testing kits only.”

14. Further, Serial No.167(A) with which we are concerned here, embraces not only the drugs or medicines, but also includes their salts and esters and diagnostics test kits as specified in List 4, which at Sl.No.32 provides, “Enzyme Linked Immune absorbent Assay, ELISA KITS”. Therefore, the adjudicating authority rightly interpreted that the expression Enzyme Linked Immune absorbent Assay, ELISA KITS are preceded by the words in Serial No. 167(A), i e., life saving drugs, medicines, including their salts and ester and diagnostics test kits. In simple words the notification at Sl.No.167 intends to exempt goods meant for medical purpose such as medicines/drugs and diagnosis kits. The term ^„diagnosis kits^‟ cannot be read in a manner to include for ^„food, testing^‟ which would be contrary to the main intendment of the notification. Consequently, the goods in question, ^„ALISA Food Testing Kits^‟ which have been imported by the appellant not being for diagnostics use does not fall within the four corners of the exemption notification.

15. The List 4 referred to in Sl. No.167(A) sets out a detailed list of items, which are all basically connected with the medical diagnosis or treatment as the basic purpose of Serial No.167 of the notification is to provide exemption in respect of medical treatment in the form of drugs, medicines, diagnostics etc. It is in this context that the objection raised by the appellant with regard to Cesium Tubes specified at Serial No. 20 of List 4 of the notification was rejected by the Adjudicating Authority observing that Cesium is used in treatment of certain malignancies and as such, it is a diagnostic kit for medical purposes.

16. Before proceeding further, CTH 3822 of Customs Tariff which covers miscellaneous chemical products is set out below:

16.1 The main heading of CTH 3822 provides diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents, whether or not on a backing, other than those of heading 30.02 or 30.06 and thereafter, it uses the expression “For medical diagnosis” which implies that medical diagnosis is a separate category under CTH 3822 00 11, 3822 00 12 and 3822 00 19 and at the same time reagents, which are used for purposes, other than for diagnostic are classified under 3822 00 90. It is an admitted position that the appellant had classified their products under 3822 00 90 as the goods were food testing kits and reagents.

17. It is a settled principle of law that explanatory notes to HSN is a safe guide to determine the classification of goods and in order to determine the true scope of the tariff heading, the relevant Explanatory Notes of HSN pertaining to CTH 3822 are quoted here under:-

“38.22 –diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, other than those of heading 30.02 or 30.06; certified reference materials.

This heading covers diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents, other than diagnostic reagents of heading 30.02 or diagnostic reagents designed to be administered to the patient and blood grouping reagents of heading 30.06. It also covers certified reference materials. Diagnostic reagents are used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans; their functions based upon a measurable or observable change in the biological or chemical substances constituting the reagents. Prepared diagnostic reagents of this heading may be similar in function to those designed to be administered to patients (sub­heading 3006.30) with the exception that they are used for in vitric , rather than for in vivo, applications. Prepared laboratory reagents include not only diagnostic reagents but also other analytical reagents used for purposes other than detection or diagnosis. Prepared diagnostic and laboratory reagents may be used in medical, veterinary, scientific or industrial laboratories, in hospitals, in industry, in the field or, in some cases, in the home.”

17.1 What appears from the above Notes is that such reagents are used in the evaluation of physical, biological or biochemical processes and states in animals and humans, of the nature of prepared diagnostic reagents that are to be administered to patients in vivo applications. In other words, the reagents or kits which are for the purpose other than for diagnostic purposes on human and animals are not covered within the meaning of diagnostic kits or diagnostic reagents on a backing, i.e., kits.

18. Lastly, we may consider the definition of the term ^„Diagnostic^‟, relied on by the Adjudicating Authority as:-

“29.5 Further, I observe that the term ^„diagnostic^‟ in the Oxford dictionary is defined as ^„connected with finding out exactly what a problem is and what caused it, especially an illness^‟. Further in Merriam Webster dictionary, it is defined as ^„of, relating to, or used in diagnosis^‟. The term ^„diagnosis^‟ is defined as ^„the art or act of identifying a disease from it s signs and symptoms. This also strengthens the above view that diagnostic means related to evaluation ofphysical biophysical or biochemical processes and states in animals and humans for detection of illness.”

The contention of the learned counsel for the appellant that the diagnostic purpose can be for food testing also is unsustainable in the context of the exemption notification which has to be construed and interpreted in the light of the words/expressions used therein.

19. The learned Authorised Representative has referred to the decision of the Madras High Court in The Chinese University of Hong Kong v Diagnostic Understanding ⁸ on interpretation of the term ^„diagnostic^‟, which was in reference to the grant of patent under the Patent Act,1970. In the generic sense, the Court observed that in the context of medical science, diagnosis is a method of identifying the existence or non existence of a disease or disorder or condition and /or the site, extent, severity or other aspects thereof. While viewing the term diagnosis in association with forms of treatment, the Court concluded that the word “diagnostic” should be limited to diagnostic processes that disclose pathology for the treatment of human beings. The observations made are relevant to interpret the expression used in the notification and distinguishing the goods, which are meant for food testing.

20. Referring to the various decisions of the Supreme Court, the learned Authorised Representative reiterated the principle that the exemption notification has to be construed strictly and therefore, no benefit can be granted to the appellant under the exemption notifications as they do not fulfil the criteria specified therein. Without multiplying too many decisions, we would like to refer the conclusion drawn by the Constitution Bench of the Apex Court in the case of Dilip Kumar & Company (supra), as under:-

“52. To sum up, we answer the reference holding as under –

(1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.

(2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue.

(3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled.”

Following the aforesaid principles, we find that the appellant has failed to discharge the burden that ELISA kits imported by the appellant falls within the parameters of the exemption notification. Moreover, as discussed above, the expression used in the Notification is limited to medicines/drugs, etc. and diagnostics kits specified in List 4 which are basically for medical purposes. The intent of the notification is to extend the exemption to products related to medical treatment. We do not find any ambiguity in the contents of the notification which are plain and simple and even, if there is any, the benefit of such ambiguity cannot be claimed by the appellant and hence we interpret the same in favour of the Revenue. The term food testing can neither be implied nor added to the expression diagnostic kits as provided in the notification. The Apex Court had categorically opined that implied meaning cannot be given and the observations in Union of India Vs. Ind-Swift Laboratories Ltd. ⁹ in this regard are as under:-

“20. A taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court in CST v. Mode Sugar Mills Ltd. wherein this Court at AIR para 11 has observed as follows :

“11. …..In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency.”

Applying the golden rule of interpretation that words should be read in their ordinary & natural meaning, the Apex Court in Jeyaram Educational Trust vs. A.G. Syed Mohideen¹⁰ held:-

“11. It is now well settled that a provision of a statute should have to be read as it is, in a natural manner, plain and straight, without adding, substituting or omitting any words. While doing so, the words used in the provision should be assigned and ascribed their natural, ordinary or popular meaning. Only when such plain and straight reading, or ascribing the natural and normal meaning to the words on such reading, leads to ambiguity, vagueness, uncertainty, or absurdity which were not obviously intended by the legislature or the lawmaker, a court should open its interpretation toolkit containing the settled rules of construction and interpretation, to arrive at the true meaning of the provision. While using the tools of interpretation, the court should remember that it is not the author of the statute who is empowered to amend, substitute or delete, so as to change the structure and contents. A court as an interpreter cannot alter or amend the law. It can only interpret the provision, to make it meaningful and workable so as to achieve the legislative object, when there is vagueness, ambiguity or absurdity. The purpose of interpretation is not to make a provision what the Judge thinks it should be, but to make it what the legislature intended it to be.”

21. The learned Counsel for the appellant has relied on the decision of this Tribunal in J. Pharmaceuticals (supra), however, we find that the said decision does not supports the case of the appellant. The issue was whether zinc insulin crystals and insulin beef seed suspension would be entitled to the benefit in terms of Entry 84 of the list, which specifies mono component insulin and the view taken was that the exemption cannot be limited only to finished medicaments but also to goods out of which these medicaments could be made. It was, therefore concluded that not only drugs and medicines, but also diagnostic chemicals are entitled to the benefit of exemption under the notification. The ratio of the said decision in no manner supports the case of the appellant that the goods imported by them for food testing would also fall under the expression “diagnostic kits”.

22. The learned Counsel for the appellant has referred to the Order in Appeal No.64/2012 (G-II)Cus dated 24.08.2012 passed by the Commissioner (Appeals), Hyderabad, where in ELISA kits for use in plant pathology were granted benefit under Sl No.148A of the Notification No.12/2012-Cus. Though the copy of the said order has not been placed on record, however, the said order is not binding on us and considering the principles laid down by the Apex Court there can be no other interpretation of the exemption We have consciously arrived at the conclusion that the appellant is not entitled to the benefit of the exemption notification in respect of the kits imported by him for food testing in terms of the expression used in the notification and also keeping in view the intention under which the notification has been issued, i.e., to grant exemption to the goods related to medical treatment and diagnosis.

23. In view of our discussion above, we conclude that ELISA kits imported by the appellant were not used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans, and as a result, they were not diagnostic reagent/kits rather they were meant to be used for food testing and, therefore, did not fulfil the criteria to avail the benefit of expression as per the notification.

24. There is no reason to interfere with the impugned order and the same is hereby affirmed. Consequently, we do not find any merits in the present appeal, and hence the same is dismissed.

Appeal No. 52044 of 2022

25. The appellant, Shri Ashish Bhandari, Managing Director of M/s Ilesha Biotech India Pvt Ltd has assailed the impugned order in so far as it imposes penalty of Rs.5,00,000/- under Section 114AA of the Act. The Adjudicating Authority recorded finding that Shri Ashish Bhandari is the key person in the day-to-day affairs of the company and his role is evident in misdeclaration resorted from June 2019, whereby the description of the goods imported were changed from ^„ELISA kit for food testing^‟ to ^„ELISA kit for diagnostic use only^‟. The role played by the appellant resulted in short payment of duty, and, therefore, he is liable to be penalized. We have no hesitation in agreeing with the conclusion arrived at by the Adjudicating Authority. We would like to take note of the statement made by Shri Ashish Bhandari under Section 108 of the Act whereby his effort was to further mislead and dilute the stand that the testing kits for food and diagnostic test kits are one and the same thing. Hence we do not find any reason to interfere with the impugned order. Accordingly, the appeal stands dismissed.

[Order pronounced on 29^th October, 2024]

Notes:

1 The Appellant

2 BE

3 2001(136) ELT 195 (Tri-Mumba9)

4 2018(361) ELI 577 (SC) [30-07-2018]

5 2010 (260 ) ELI 3 (SC) [18-11-2020]

6 1994 (73) ELI 769 (SC) [14.09.1994]

7 1978(2) ELI J 350 (SC)

8 CMA(PT)1 of 2023 & CMP No.13206 of 2023 & WP No.7666 of 2023 & WMP Nos.7828 & 7832/2023
dt.12.10.2023

9 2011 (265) ELT 3 (SC)

10 2010 2 SCC 513