Customs, Excise and Gold Tribunal - Delhi
J. Mitra & Co. Ltd. vs Commissioner Of Central Excise, New ... on 1 January, 2002
Equivalent citations: 2002(140)ELT524(TRI-DEL)
JUDGMENT
P.G. Chacko, Member (J).
1. The main dispute in these appeals is on classification of the following products :-
(1) Anti-A Mono Clonal (2) Anti-B Mono Clonal (3) Anti-AB Mono Clonal (4) Anti-D Mono Clonal (5) Anti-D IgM Mono Clonal (6) Anti-D IgG Mono Clonal (7) Beta Visipreg (8) Visipreg Strip (9) Preg Test Card (10) Syphilis RPR(VDRL) (11) Salmonella Antigens
There is also a dispute as to whether the demand of duty is time-barred or not. The Commissioner of Central Excise, by order dated 10-2-2000, held that the products mentioned at Serial Nos. (1) to (6) were classifiable as 'Blood-grouping reagents' under Chapter Sub-Heading 3005.90 of the Schedule to the Central Excise Tariff Act, 1985 [in short, CET Schedule] as claimed by the Department and not as 'cultures of micro-organisms' under CSH 3002.00 of the said Schedule as claimed by M/s. J. Mitra & Co. Ltd. He classified the rest of the products as 'Diagnostic and laboratory reagents' under CSH 3822.00 vis-a-vis the assessee's claim to have them classified as 'Antisera' under CSH 3002.00. The Commissioner confirmed against the assessee-company demand of duty to the extent of Rs. 1,25,85,035/- on the products cleared by them during 1994-95 to August 1999 and imposed on them a penalty of equal amount under Rules 173Q etc. of the Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944. Interest on duty was also demanded from 28-9-1996 under Section 11AB of the Act. The present appeal No. 1644/2000-C was filed by the company against the above order of the Commissioner. Appeal No. E/1645/2000-C was filed by the company's Managing Director, Sh. Lalit Mahajan against the imposition of a penalty of Rs. Two lacs on him under Rule 209A of the Central Excise Rules, 1944 by the Commissioner by the same order.
2. We have perused the records and have particularly examined the grounds of the appeals vis-a-vis the adjudicating authority's findings on the issues involved in the case. We have also heard both sides and considered their submissions. The written submissions filed by the appellants' Counsel and the Departmental Representative subsequent to the personal hearing have also been considered.
3.1. The products mentioned at serial Nos. (1) to (6) in para (1) were admittedly meant for use as blood-grouping reagents. The company's literature on the products represented them as blood-grouping/blood-typing reagents, i.e., reagents for determining A, B, AB, and O groups and Rh factors of human blood. The literature referred to the reagents as Monoclonal Antibodies (in short, MABs) and described them as in-vitro culture supernatant of hybrids obtained by cellular fusion (Hybridoma technology). It, further, prescribed the MABs "for in-vitro use only" as also "for lab use only, not for medicinal use". Relying on these data provided by the assessee and on Note 3(e) to Chapter 30 of the CET Schedule and applying the common parlance test laid down by the Supreme Court, the adjudicating authority held that the MABs were classifiable as 'blood-grouping reagents' under CSH 3005.90.
3.2. Ld. Advocate Sh. V. Lakshmikumaran, for the appellants, has given an account of the method of manufacture of the MABs and has argued for classifying them as "cultures of micro-organisms" under CSH 3002.00. He has submitted that the MABs are produced by the Hybridoma technology in which hybrids obtained by fusion of two cells are allowed to grow in suitable culture medium wherein the hybrids (fused cells) grow by repeated multiplication and, in that process, secrete the antibodies. The products are packed in bottles of appropriate size and marketed. The Counsel has contended that the fused cells are micro-organisms and hence the products are appropriately classifiable as cultures of micro-organisms. In this connection, he has cited the following evidence :-
(i) Certificate dated 23-6-99 of Dr. R.N. Makroo, Sr. Consultant (Transfusion Medicine), Indraprastha Medical Corporation Ltd., New Delhi [page 188 of Paper Book].
(ii) Certificate dated 1-7-99 of Dr. Kabita Chatterjee, All India Institute of Medical Sciences, New Delhi. [Page 189 of Paper Book].
(iii) Certificate dated 17-6-99 of Dr. S.K. Chaudhary, Indian Red Cross Society, New Delhi [page 190 of Paper Book]
(iv) Pages 34 and 35 of Dr. R.N. Makroo's book on 'Basic Blood Group Serology' [pages 307-309 of Paper Book] The Counsel has contended that since the MABs are specifically covered as cultures of micro-organisms under Heading 30.02, the same cannot be classified under the residuary Heading 30.05. He has relied on the Supreme Court's judgment in Indian Metals & Ferro Alloys Ltd. v. Collector of Central Excise [1991 (51) E.L.T. 165 (S.C.)]. According to the Counsel, a combined reading of HSN Explanatory Notes to Heading 30.02 and Heading 30.06 (corresponding to Heading 30.05 of CET Schedule) would show that only polyclonal antibodies are covered under Heading 30.05 and MABs are covered only under Heading 30.02 as 'cultures of micro-organisms'.
3.3. Ld. SDR, Dr. D.K. Verma has stated the principle of blood-grouping and has submitted that the MABs were specifically made on such principle and sold to hospitals, nursing homes and laboratories for the purpose of blood-grouping. The products had no therapeutic or prophylactic uses and were described as blood-grouping reagents only. Ld. DR has also contended that, by virtue of the specific provision of Note 3(e) to Chapter 30 of the CET Schedule, the products can only be classified under Heading 30.05 and not under any other Heading. He has urged that the legislative intent behind the said Chapter Note has got to be given effect to while classifying the products. Ld. DR has also contended that, in deciding the Tariff classification of the products, one has to be governed not by the scientific/technical meaning of the term 'Monoclonal Antibodies' but by how the goods are known in common parlance. The MABs were known as blood-grouping reagents to those who used the goods. Therefore, the products would legitimately fall within the coverage of Heading 30.05. The DR has drawn support to this argument from the Supreme Court's decision in Shree Baidyanath Ayurved Bhavan Ltd. v. CCE [1996 (83) E.L.T. 492 (S.C.].
3.4. Having considered the rival submissions on the classification of the MABs, we find strong force in the arguments of the Departmental Representative. The very first rule of the Rules for the Interpretation of the CET Schedule lays down that classification shall be determined according to the terms of the Headings and any relative Section Notes or Chapter Notes. The Revenue's claim is to classify the MABs under CSH 3005.90 of Heading 30.05 which reads as under :-
30.05 Pharmaceutical goods, not elsewhere specified 3005.10 - Chemical contraceptives.
3005.20 - Dental cements and other dental fillings 3005.30 - Oral rehydration salts. 3005.90 - Others.
The rival entry under which the assessee has sought to classify the products reads as follows :-
30.02 3002.00 Antisera and other blood fractions; Vaccines, Toxins, Cultures of micro-organisms (includ-
ing ferments but excluding yeasts) and simi-
lar products.
Chapter Notes (1) and (4) to Chapter 30 of the CET Schedule mention certain goods which are to be excluded from the coverage of that Chapter. Notes (2) and (5) provide definitions of certain terms or expressions employed in or under Heading 30.03. The last of the Chapter Notes viz. Note (6) defines a term used under Heading 30.04. The oft-referred-to Note 3(e) reads as under :-
"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) .....
(b) .....
(c) .....
(d) .....
(e) Blood-grouping reagents;
(f) .....
(g) .....
(h) ....."
Heading 30.02 includes two distinct categories of goods viz. Antisera and other blood fractions AND Vaccines, Toxins, Cultures of micro-organisms and similar products. The HSN Notes to Heading 30.02 (vide pages 465 and 466) have also represented them as two distinct and mutually exclusive categories of goods vide (C) and (D) below. According to the HSN Notes, Heading 30.02 covers :-
(A) Human Blood (B) Animal Blood prepared for therapeutic, prophylactic or diagnostic uses (C) Antisera and other blood fractions and modified immunological products (D) Vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products. The appellants have pleaded in their memoranda of appeals that the MABs can
be used for blood-grouping as also for therapeutical and prophylactic purposes and that the goods fall under the category of 'modified immunological products'. At the same time, they have also stated that these antibodies are nothing but cultures of micro-organisms classifiable as such. In other words, regardless of the dichotomy between modified immunological products and cultures of micro-organisms, the appellants would like to have their MABs put in a seemingly 'hybrid' category of products which could be considered both as 'modified immunological products' and as 'cultures of micro-organisms'. Such a category has not been specified in Heading 30.02 of the CET Schedule. Therefore, without embarking on an inquiry as to whether the MABs were cultures of micro-organisms or not, we think, we can appropriately conclude that the products are not specifically covered under Heading 30.02 of the CET Schedule. Heading 30.05 (Pharmaceutical goods, not elsewhere specified) and Chapter Note 3(e) are immediately attracted by the products which were represented by the appellants themselves to be blood-grouping reagents only vide product literature. No therapeutic or prophylactic use was prescribed for the goods. On the other hand, the goods were restricted to in-vitro use/lab use and were specifically prescribed as "not for medicinal use". They were known as blood-grouping reagents to the assessee's customers viz. hospitals, clinical laboratories ere. There is no evidence on record to show that the goods were known as '"Monoclonal antibodies" and not as blood-grouping reagents in common parlance. In the absence of evidence to the contrary, it has to be held that the products were known to users thereof only in the way the manufacturer represented the goods to be. It is unrebutted evidence in this case that the product labels and literature issued by the assessee projected the goods as blood-grouping/blood-typing reagents and prescribed the same for such use only. Therefore, irrespective of the biochemical or other technical characteristics of the products, the goods would fall for classification only as blood-grouping reagents according to common parlance and hence would come within the coverage of the specific entry of Heading 30.05 read with Chapter Note 3(e). The Apex Court's ruling in Shree Baidyanath Ayurved Bhavan case (supra) appears to have been appositely relied on by the adjudicating authority. Where (as in the instant case) any product is known to the market by a specific name which finds specific mention under any Tariff Heading either per se or read with any Section/Chapter Note, the product would ipso jure fall under that Heading only. In such a case, the scientific or technical characteristics of the product - whether manufactural, constitutional or functional - are irrelevant to its classification, and so are HSN notes. Therefore, the reliance placed by 1d. Counsel on experts' certificates or on HSN notes will have no persuasive effect on us. We, thus, find that the adjudicating authority has rejected the assessee's claim under Heading 30.02 by a conceivable process of reasoning and correctly classified their MABs as blood-grouping agents under Heading 30.05 of the CET Schedule. The Apex Court's decision in Indian Metals & Ferro Alloys (supra) seems to be inapplicable to the case for the said reason.
4.1. The products mentioned at serial Nps. (7) to (9) in para (1) were cleared by the assessee as 'pregnancy test kits' (in short, PTKs). The memo of appeal (E/1644/2000) has given a brief account of the genesis of the PTKs (vide para : B-2 under Grounds of Appeal) as follows :-
"PTK is a rapid sensitive and accurate immunoassay for the visual qualitative detection of Human Chorionic Gonadotropin (hCG) in the urine of a pregnant lady as an indicator of pregnancy. Normally a pregnant lady secretes hCG which is secreted through urine. To produce the anti body for hCG which could ultimately be used as an indicator in the PTK, hCG which is gly-coprotein hormone is injected in measured doses in rabbits or goats. Because of the immunological systems present in rabbits and goats, anti bodies are produced in the blood of the rabbit or goat. After sufficient period of time, the antibody for hCG is extracted and is used in the PTKs. PTKs themselves may be of different varieties like in the form of liquid, in the form of strip of paper, in the form of antisera or anti body or anti hCG dispersed on membrane as coated or in the form of test kit card where also antisera antibody for hCG is coated. The test line in the strip of paper or on the card is an antisera antibody for hCG."
"Beta Visipreg' (vide serial No. 7 of para 1) is a kit containing B-hCG antibody/antiserum in liquid form along with an hCG agglutinating antigen in liquid form, while 'Visipreg Strip' (serial No. 8) and 'Preg Test Card'(serial No. 9) are anti-hCG antibody /antisera dispersed on membrane. The assessee's literature, supplied along with the products, prescribed the goods for qualitative test/immunoassay for the detection of hCG hormone in urine, as a test for pregnancy. It represented that the products were meant for in-vitro diagnostic use only. The adjudicating authority has relied on the product literature and labels, apart from HSN notes and Interpretative Rule 3(c), to hold that the PTKs are classifiable under CSH 3822.00. That authority also seems to have relied on opinions given by authorities in Central Revenue Control Laboratory, Indian Institute of Immunology and Drug Control Department of Delhi Government. After recording a finding that the products were not crude antisera but only hCG antibodies derived from antisera, 1d. Commissioner ruled out the applicability of Heading 30.02 by taking the view that the term 'antisera' used in that Heading stood for crude antisera only.
4.2. Ld. Counsel has submitted that the foreign manufacturers viz. M/s. ABI Applied Bio Tech Company Inc., who supplied the hCG antibody (in liquid form or as coated on sheets of paper) to the assessee, have clarified that the antibody was derived from goat antisera. The appellants only cut the antibody-coated paper sheets into smaller sizes, made the same into kits or strips of paper and sold to various laboratories. Counsel has further pointed out that the Commissioner has accepted the products to be refined antisera. Relying on HSN notes, 1d. advocate has contended that Heading 30.02 covers antisera of all forms as it makes no distinction between crude antisera and refined antisera. The products in question are specifically covered under that Heading and, by virtue of the exclusion clause in Heading 38.22, cannot be classified under the latter Heading. Counsel has particularly relied on HSN explanatory notes to Heading 30.02 at page 465 as also the notes to Heading 38.22 at page 578 to contend that antisera, even when used for diagnostic purposes, would remain classified under Heading 30.02 only as Heading 38.22 is only a residuary heading which covers only those products which are not covered by Chapter 30. He has also challenged the reliance placed by the adjudicating authority on the opinions of the CRCL Director, by submitting that the opinion was given only on the basis of product literature and not on the basis of any test results. Furthermore, according to 1d. Counsel, classification of PTKs has already been settled under Heading 30.02 by the Tribunal in Inter Care Ltd. v. Commissioner of Customs [1997 (89) E.L.T. 545].
4.3. Ld. SDK, has submitted that, although the PTKs are nothing but antisera only and antisera are covered under Heading 30.02, they should be classified as "diagnostic or laboratory reagents" under Heading 38.22 as they were used exclusively in laboratory for diagnostic purposes. According to him, antisera mentioned in Heading 30.02 are principally used for therapeutic and prophylactic purposes only. The products in question were only meant for diagnostic use in laboratory and hence would stand excluded from the coverage of Heading 30.02 and included within the coverage of Heading 38.22. The DR has reiterated other findings of the adjudicating authority also.
4.4. We observe that the appellants have endeavoured to bring the PTKs within the coverage of 'antisera' under Heading 30.02 while the Revenue has sought to have them classified as 'diagnostic or laboratory reagents' under Heading 38.22. It is obvious from the expression "antisera and other blood fractions" [vide text of Heading 30.02 given in para 3.4)] that antiserum is also a blood fraction resulting, necessarily, from some sort of fractionation of blood. There appears to be nothing like 'crude' antisera and therefore, at the outset, we have to reject the adjudicating authority's observation that the term 'antisera' used in Heading 30.02 stands for 'crude' antisera. After examining the HSN explanatory notes to Heading 30.02, we are of the view that the term 'antisera' in Heading 30.02 would also include purified, refined forms of the antiserum fraction of blood. The adjudicating authority has accepted the anti-hCG antibody (used in the PTKs) as purified antisera from goat's blood. This finding is not under challenge. It is also not disputed that the pregnancy test is based on antigen-antibody reaction, the hCG (a glyco-protein hormone produced by the placenta and found in the urine of pregnant women) in urine sample being the antigen. HSN explanatory notes to Heading 30.02 (at page 465) say that antisera are also used for diagnostic purposes, including in vitro tests. The notes to Heading 30.06 (at page 473) say, inter alia, as follows :-
"Diagnostic reagents not designed to be administered to the patient (e.g., those for carrying out tests on blood, urine, etc., samples taken from a patient or for use as laboratory reagents) are excluded : they fall in the headings appropriate to the materials of which they are made (e.g. Chapter 28, Chapter 29 or heading 30.02 or 38.22)."
The anti-hCG antibodies used in the PTKs were derived from goat antisera classifiable under Heading 30.02. It follows that the PTKs, which were prescribed only for in vitro test for pregnancy and were not designed to be administered to the patient, would fall, as 'diagnostic or laboratory reagents', under Heading 30.02, which Heading specifically covers antisera. Diagnostic or laboratory reagents of Chapter 30 have been excluded from the coverage of Heading 38.22, which reads as under :-
38.22 3822.00 Diagnostic or laboratory reagents on a backing and prepared diagnostic or laboratory reagents whether or not on a backing, other than those of Chapter 30.
"Visipreg Strip" and "Preg Test Card", being anti-hCG antibody (from antisera) dispersed on membrane, will fit in with the description "diagnostic or laboratory reagents on a backing" while "Beta Visipreg" can ap-
propriately be described as prepared diagnostic or laboratory reagents whether or not on a backing". Though these descriptions literally exist in Heading 38.22 only, products of either of these descriptions can possibly belong to Chapter 30 as well, which is obvious from the language of Heading 38.22 itself. Going by the terms of Heading 38.22, we find that only those diagnostic/laboratory reagents (whether or not on a backing) which cannot appropriately be classified under Heading 30.02 can fall under Heading 38.22. The above three products having been found to be appropriately classifiable under Heading 30.02 in Chapter 30 will ipso facto remain outside the coverage of the residuary Heading 38.22. Interpretative Rule 3(c) has no application to such a situation in which one of two competing entries is residual to the other. The adjudicating authority's observations on this aspect are patently erroneous.
4.5. We have also examined the applicability of this Tribunal's decision in Inter Care Ltd. (supra) to the issue on hand. In that case, an 'agglutinating serum' imported under "Preg Colour" brand name was found to be pregnancy test kit based on antigen - antibody reaction (as in the instant case) and held to be classifiable under Customs Tariff sub-heading 3002.10 (antis-era and other blood fractions). We find that "Beta Visipreg" in the present case works on the same principle as "Preg Colour" did in the above case. CET sub-heading 3002.00 and Customs Tariff sub-heading 3002.10 identically cover the description "antisera and other blood fractions". In the cited case, this Tribunal has settled the classification of "Preg Colour" under CTSH 3002.10 after elaborately examining the constitutional and functional features of the goods in the light of scientific literature etc. and having due regard to HSN Explanatory notes to Heading 30.02. We are persuaded by that decision to classify "Beta Visipreg" under CETSH 3002.00.
5. The remaining items in the list of products given in the opening paragraph of this order are Syphilis RPR (VDRL) and Salmonella Antigens. All that the appellants have claimed in relation to these products is that the items are specifically covered as 'blood fraction' and 'cultures of microorganism' respectively, under Heading 30.02. We find that this claim is not supported by any evidence. As correctly noticed by the Commissioner, the assessee's own product labels and literature did not contain anything to support the claim. In their labels/literature, the assessee prescribed the products "for lab use only, not for medicinal use". While Syphilis RPR was prescribed as a quick test for reagin in serum or plasma, Salmonella Antigens were offered as a rapid test for specific antibodies in serum. Thus, both the products were meant for testing blood fractions. The antigen (toxin) used in the Syphilis RPR test kit was stated to be a modification of VDRL antigen (toxin). This antigen has not been shown to have been derived from any blood fraction. Counsel has submitted that Syphilis RPR contains lecithin in buffer solution and is ipso facto a blood fraction as lecithin (according to him) is extracted from blood. But he has not cited or produced any evidence whatsoever in support of this plea. Similarly, his submission that Salmonella Antigens are obtained by culturing micro-organisms also has not been substantiated. Syphilis RPR was a repacking from imported bulk product and, in respect of most of such bulk imports, the assessee had claimed clearance of the goods under Customs Tariff Heading 38.22 as evidenced by Bills of Entry. The appellants have not rebutted this adverse evidence. Thus we have no reason to interfere in the adjudicating authority's findings in relation to classification of the two products, which will remain appropriately classified under CET Heading 38.22.
6.1. Two show cause notices (SCNs) had been issued to the appellants. The SCN dated 20-8-99 invoked the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act and demanded duty of Rs. 2,14,69,156/- on the eleven products and certain other products cleared during 1994-95 to 1998-99. The second SCN dated 30-9-99, which was issued within the normal period of limitation of six months, demanded Rs. 18,36,026/- towards duty on the goods cleared during April-August 1999. The classification proposed in the SCNs for all the products except the eleven considered in these appeals was accepted by the assessee. The Commissioner decided the classification of the said eleven products and confirmed demand of duty to the extent of Rs. 1,25,85,035/- including the entire amount of duty demanded in SCN dated 30-9-99. In respect of the demand of duty in SCN dated 20-8-99, the adjudicating authority dropped the demand on PTKs for the period prior to February 1999, accepting the assessee's plea that the demand on PTKs for the extended period was not maintainable. It confirmed the rest of the demand on PTKs for the normal period of six months. The entire demand of duty on the other products (blood-grouping reagents under Heading 30.05 and non-PTK diagnostic/laboratory reagents under Heading 38.22) was also confirmed. In these appeals, both sides have addressed the time-bar issue in respect of the demand of duty confirmed on these products for the extended period of five years.
6.2. Referring to the SCN allegation that they had suppressed information and misdeclared facts before the Department, the appellants have pleaded that they had obtained SSI registration in 1991 and commenced production shortly thereafter, that they believed bona fide that their products were chargeable to NIL duty under Heading 30.02, that right from the beginning they had been filing declarations wi'th the Department claiming exemption from registration and that the Department was fully 'in the know of things' and did not raise any doubt or dispute at any point of time prior to the SCN. According to the appellants, there can be no suppression of facts by one party when both parties are aware of the facts. They have relied on the Supreme Court's judgments in the cases of Padmini Products Ltd. v. CCE [1989 (43) E.L.T. 195 (S.C.)] and Pushpam Pharmaceuticals Ltd. v. CCE [1995 (78) E.L.T. 401 (S.C.)]. The appellants have also contended that it was a departmental change of opinion on classification of the products that led to the SCN and, in such SCN, suppression could not have been raised as a valid allegation. Ld. advocate has reiterated all these contentions and has submitted that there is no evidence on record to prove that the appellants had suppressed or misdeclared anything with intent to evade payment of duty. He has urged to hold that the demand of duty confirmed on MABs and the non-PTK diagnostic/laboratory reagents for the extended period is time-barred. Ld. SDR has vehemently opposed these arguments by reiterating the adjudicating authority's findings on the point.
6.3. We have considered the submissions. During the entire period in question, it was admittedly only on one occasion that the assessee resorted to the registered-post-despatch mode of filing declaration and obtained a Code Number allotted by the Department. The appellants claimed to have sent declarations at other times during the said period to the Department under certificates of posting (UCP). The Commissioner has not accepted the certificates as conclusive proof of filing of declarations. For this purpose, the Commissioner has relied on the decision of this Tribunal in the case of Debes Industries v. CCE [1994 (71) E.L.T. 943 (Tribunal)] wherein, following an earlier decision rendered in the case of Haresh Chimanlal Vora and Ors. v. CC, Cochin [1988 (35) E.L.T. 182 (Tribunal)], the Tribunal held that there could be no presumption from certificate of posting that the postal article was received by the Department. In Haresh Chimanlal Vora, this Tribunal had ruled out such a presumption after examining the relevant provisions of the General Clauses Act and the Indian Post Offices Act. We endorse the view taken in Haresh Chimanlal Vora and Debes Industries (supra) and agree with the finding recorded by the Commissioner (in the present case) with regard to the assessee's claim that they had filed declarations by sending them under certificate of posting to the Department. To our mind, the said claim of the assessee is only an ipse dixit. Even in the declaration which the assessee had sent by registered post to the Department, they had not declared the products as 'blood-grouping reagents' or as 'diagnostic/laboratory reagents'. Instead they declared the products as 'antisera'. They also did not disclose the complete process of manufacture of the products. These findings of the Commissioner have not been successfully contested in these appeals. Therefore, it has to be inferred that the products were not duly declared to the Department and the relevant information about the manufactural, compositional and functional aspects of the products, which would have enlightened the Department about the classification of the goods, was suppressed by the assessee. Though the declaration was filed by the assessee claiming exemption from the requirement of registration, they did not mention the value of clearances of the goods. We find no reason to interfere with these findings of the Commissioner. It was only after the visit by the Central Excise officers to the assessee's factory premises on 8-2-99 that the assessee filed a proper detailed declaration in respect of the products. None of these findings of the Commissioner has been successfully contested before us. Therefore, we find that the allegation of suppression and misdeclaration has been substantiated against the appellants in respect of MABs and non-PTK diagnostic/laboratory reagents and that their intent to evade payment of duty on these products has been clearly brought out by the evidence on record. Accordingly, we hold that the extended period of limitation was correctly invoked for demanding and confirming duty on the MABs (blood-grouping reagents) and nbn-PTK diagnostic/laboratory reagents for the period 1994-95 to 31-1-99. We have not accepted the appellant's plea that the Department was aware of all the necessary facts. The Department became aware of all the necessary facts only from the declaration which the assessee filed on 11-3-99. In the circumstances, in our view, the Supreme Court's decisions in Padmini Products (supra) and Pushpam Pharmaceuticals (supra) cannot be applied to the facts of this case.
6.4. The appellants have a further case (without prejudice to their submissions on the substantive issues) that, in the event of demand of duty on any of the products being confirmed as per the Department's classification, Modvat credit should be allowed on the inputs used in the manufacture of such products. Learned advocate has pressed this case before us. He has also pleaded for treating the sale price of the goods as cum-duty price and for abatement of duty from the sale price in computing the assessable value of the goods in terms of Section 4(4)(d)(ii) of the Central Excise Act and the Larger Bench decision of the Tribunal in Srichakra Tyres Ltd. and Ors. v. CCE, Madras [1999 (108) E.L.T. 361 (T) = 1999 (32) RLT 1]. These claims have not been seriously contested by the DR. These claims, however, were not before the adjudicating authority.
6.5. The Commissioner has confirmed the demand of duty to the total extent of Rs. 1,25,85,035/- against the assessee for the period from 1994-95 to August 1999 and imposed a penalty of equal amount on them under Central Excise Rules read with Section 11 AC of the Central Excise Act. He has ordered recovery of interest on duty under Section 11AB also. According to the appellants themselves, Sections 11AC and 11AB can be invoked for imposing mandatory penalty and charging interest on duty, respectively, where duty demand is confirmed for extended period on the basis of a finding of suppression. Therefore, the Commissioner's finding of suppression of facts against the assessee having been upheld, we have to sustain the invocation of Sections 11AC and 11AB against them but only w.e.f. 28-9-96. As rightly pointed out by 1d. Advocate, Sections 11AC and 11AB of the Act came into force only on 28-9-96. Therefore, no penalty equal to duty for any period prior to 28-9-96 could have been validly imposed on the assessee. As regards interest on duty, there can be no grievance in this case as the Commissioner appears to have charged interest only on the duty for the period from 28-9-96. We further observe that a penalty of Rs. 2 Lakhs has been imposed on Shri Lalit Mahajan under Rule 209A of the Central Excise Rules, 1944, This penalty appears to be based on a finding that the declaration filed by the assessee was signed by Shri Lalit Mahajan and that, being in over all charge of the affairs of the company, he indulged in activities prejudicial to the express provisions of law and in removing and transporting excisable goods, about which he had reason to believe that the same were liable to confiscation. We, however, do not find any record of evidence in the impugned order to show that Shri Lalit Mahajan did anything with mens rea against the Revenue or that he had personally entertained a belief that the goods were liable to confiscation under the Central Excise law. In the absence of such evidence, we have to exonerate Shri Lalit Mahajan from the alleged offence under Rule 209A.
7. In the result, our order will be as follows :-
(a) The classification of items (1) to (6) of the list of products given in the opening paragraph of this order, as blood-grouping reagents under CET Heading 30.05 is upheld; the classification of items (7) to (9) of the said list under CET Heading 38.22 is set aside and the said items are held to be classifiable as antisera under CET Heading 30.02; the classification of items (10) and (11) of the list under CET Heading 38.22 is upheld and these items will remain classified under the Heading as "prepared diagnostic or laboratory reagents whether or not on a backing, other than those of Chapter 30".
(b) The duty demand on items (7) to (9) is set aside. (c) The adjudicating authority's decision on the question of limitation in relation to demand of duty on items (1) to (6), (10) and (11) is upheld. (d) The quantum of duty on items (1) to (6), (10) and (11), demanded in the impugned order, is set aside. The adjudicating authority is directed to re-quantify the duty in accordance with law after duly examining (in the light of any binding case law) the question whether Modvat credit of the duty paid on the inputs used in the manufacture of the products viz. the aforesaid items (1) to (6), (10) and (11) could be allowed to the assessee as also the question whether the benefit of abatement of duty from sale price for the purpose of determination of assessable value could be granted to them. The amount of Rs. 22 lacs already deposited by them can be appropriated towards duty on the products. (e) The penalty of Rs. 1,25,85,035/- imposed on the assessee is set aside. The adjudicating authority shall redetermine the quantum of penalty in accordance with law and in terms of our relevant observations recorded in para 6.5. (f) The demand for interest under Section 11AB on the duty payable w.e.f. 28-9-96 is sustained. (g) A reasonable opportunity of being heard shall be given to the assessee by the adjudicating authority before taking decision in terms of (d) and (e) above. (h) Appeal No. E/1644/2000-C is disposed of in the above terms. (i) Appeal No. E/1645/2000-C is allowed by setting aside the penalty imposed on the appellant.