The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that diabetes insulin manufactured using r-DNA Technology would qualify as a mono component insulin, eligible for customs duty exemption.
The bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) has observed that a mixture of biosynthetic human/analogue insulin and protamine could be treated as Mano component insulin. Therefore, Insulin would be classified under CTH 30043110. On the same basis, Insulin analogues would fall under CTH 30043110 as well.
Table of Contents – Diabetes Insulin
Background
The respondent/assessee has been importing the products viz., Insulatard, Mixtard and Actrapid which are human insulin and Novomix, NovoRapid, Levemir, Ryzodeg and Tresiba which are insulin analogues by classifying the same under HSN 30043110.
The respondent has been filing Bills of Entry claiming exemption from payment of customs duty and CVD with SAD/IGST under Notification No. 12/2012 – Cus. dated 17.03.2012 [Sl. No. 148] and Sl. No. 167 r/w. entry No. 63 of List 4 of Notification No. 50/2017 – Cus. dated 30.06.2017, for the goods.
One consignment of insulin declared as monocomponent insulin vide Bill of Entry dated October 26, 2016 was intercepted by the SIIB, Custom House, Chennai.
The assessee appears to have self-assessed the goods under Customs Tariff Item 3004 3110 to ‘NIL’ duty by way of claiming the above exemptions. Basis the investigation, the Respondent-assessee was issued with a SCN dated February 23, 2018 wherein the main allegation was that the goods imported by the them did not qualify to be “monocomponent insulins”.
A demand of Rs. 1,67,43,49,227 was thus proposed for the period November 2014 to September 2017 invoking the extended period of limitation under the provisions of Section 28 of the Customs Act, 1962, as the benefit of Notification/s claimed by the respondent was allegedly not available to them.
The Adjudicating Authority concluded that there is no definition for “Monocomponent” either in HSN Explanatory Notes, Customs Tariff, or the Notification. As per expert opinion, the Goods are mono-component insulin and are hence, classifiable under tariff entry 30043110. The assessee has rightly availed benefit under Sl.No. 114 of Notification No. 12/2012-CE dated 17.03.2012. The products imported by assessee are developed using r-DNA technology and hence devoid of High Molecular Weight Protein (HMWP).
The non-mention of the term Mono-component in the product label or marketing literature in Nordic countries do not conclusively prove the case of the department. It was concludes that the declaration contained in the bill of entry, packages and leaflets is correct.
Arguments
The department argued that the term ‘monocomponent insulin’ refers to insulin extracted from animal pancreas that has been purified using Chromatographic techniques to reduce PRO–insulin. Insulin from animal source and r–DNA source could be differentiated based on material, process of manufacture/purification and nature of precursor; and only the insulin obtained from animal source could be considered as ‘monocomponent insulin’.
The assessee contended that the assessee imports Insulin products from NNAS, Denmark by claiming Customs duty exemption.
Conclusion
The tribunal while dismissing the appeal of the department upheld the order of the authority stating that the classification of the impugned goods as ‘mono-component insulin’ is a content based classification and certainly not a source based classification, as in the case of porcine and bovine insulin and hence, insulin manufactured using r-DNA technology would qualify as a mono component insulin, and hence, was entitled to the benefit of exemption under the Notification/s in question.
Case Details
Case Title: Commissioner of Customs Versus M/s. Novo Nordisk India Pvt. Ltd.
Case No.: Customs Appeal No. 40367 of 2020
Date: 22.11.2024
Counsel For Appellant: S. Subramanian
Counsel For Respondent: G. Shivadass
