Custom, Excise & Service Tax Tribunal
Adinath Veterinary Products Pvt Ltd vs Principal Commissioner, Customs-New ... on 8 July, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH- COURT NO. I
Customs Appeal No. 52138 of 2022
(Arising out of Order-in-Original No. 1/2022-23/Simmi Jain/Principal Commissioner
dated 25.05.2022 passed by the Principal Commissioner of Customs (Import), New
Customs House, New Delhi.)
M/s Adinath Veterinary Products Pvt Ltd ....Appellant
B-10, MIG, Main Road, 101,
Siddhi Vinayak Plaza, Opposite Andhra Bank,
Indore, Madhya Pradesh-452001
Versus
The Commissioner of Customs ....Respondent
ACC (Import),
Room No.-108, 1st Floor, New Custom House,
Near IGI Airport, New Delhi-110037
APPEARANCE:
Mr. Kishore Kunal, Ms. Runjhun Pare and Mr. Govind Gupta, Advocates for
the Appellant
Mr. Girijesh Kumar, Authorised Representative of the Department
CORAM:
HON‟BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON‟BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
DATE OF HEARING/ DECISION: July 08, 2025
FINAL ORDER NO. 51023/2025
JUSTICE DILIP GUPTA
M/s Adinath Veterinary Products Pvt Ltd1 has sought the
quashing of the order dated 25.05.2022 passed by the Principal
Commissioner of Customs2. The operative part of the order is
reproduced below:
"(i) I confirm the demand of differential duty
of Rs. 1,67,55,071/- (Rupees One Crore Sixty
Seven Lakh Fifty Five Thousands Seventy One
Only) against M/s. Adinath Veterinary Products Pvt.
1 the appellant
2 the Principal Commissioner
2
C/52138/2022
Ltd. short paid by them in respect of Bills of Entry
for the period June, 2016 to Jan, 2020 by
invoking the extended period of limitation
under sub-section (4) of Section 28 of the
Customs Act, 1962;
(ii) I confirm the demand of interest on the
said Customs duty, as at (i) above, under the
provisions of Section 28AA of the Customs Act,
1962.
(iii) I hold the goods covered under Bills of
Entry for the period 30.06.2016 to 23.01.2020 to
the Show Cause Notice, having total Assessable
Value of Rs. 6,95,78,774/- liable to confiscation
under Section 111(m) of the Customs Act,
1962. However as the impugned goods are
not physically available for confiscation,
therefore, I refrain from imposing redemption
fine on such goods.
(iv) I impose penalty amounting to Rs.
1,67,55,071/- (Rupees One Crore Sixty Seven
Lakh Fifty Five Thousands Seventy One Only) /
equivalent to the duty demand in (i) above upon
M/s. Adinath Veterinary Products Pvt. Ltd. under
Section 114A of the Customs Act, 1962.
(v) I refrain from imposing any penalty under the
provisions of Section 112 of the Customs Act, 1962
upon M/s. Adinath Veterinary Products Pvt. Ltd. as
penalty under Section 114A of the Customs Act,
1962 has already been imposed upon them."
(emphasis supplied)
2. The appellant is an importer of ELISA test kits and reagents for
food testing. It claimed the benefit provided at serial no. 148 in the
Notification No. 12/2012-Cus dated 17.03.2012 for the period from
30.06.2016 to 30.06.2017 and, thereafter, under serial no. 167 of the
Notification No. 50/2017-Cus dated 30.06.2017 for the period
01.07.2017 to 01.08.2020. Both these notifications shall be referred to
as the Exemption Notification.
3. The relevant extract of the Exemption Notification relating to the
two entries are as follows:
3
C/52138/2022
(i) Notification dated 17.03.2012- Sl. No. 148 at (A)
S.No. Chapter or Description of Standard Additional Condition
Heading or goods rate duty rate No.
sub-
heading or
tariff item
148. 28,29,30 or The following goods, Nil - -
38 namely:-
(A) Lifesaving
drugs/medicines
including their salts
and esters and
diagnostic test kits
specified in List 4
...
The relevant Entry No. 36 of List 4 of the said Notification is:
(36) Enzyme linked Immuno absorbent Assay Kits (ELISA KITS)
(ii) Notification dated 30.06.2017- Sl. No. 167 at (A) S.No. Chapter or Description of Standard Additional Condition Heading or goods rate duty rate No. sub-
heading or tariff item 167 28,29,30 or The following goods, Nil - -
38 namely:-
(A) Lifesaving
drugs/medicines
including their salts
and esters and
diagnostic test kits
specified in List 4
...
The relevant Entry No. 32 of List 4 is:
(32) Enzyme linked Immuno absorbent Assay Kits (ELISA KITS)
4. The appellant claimed the benefit of the Exemption Notification believing that the diagnostic test kits imported by the appellant were provided for in List 4 of the Exemption Notification.
5. However, a show cause notice was issued to appellant under section 28(4) Customs 19623. The show cause notice invoked the 3 the Customs Act 4 C/52138/2022 extended period of limitation and stated that the appellant had incorrectly claimed the benefit of the Exemption Notification.
6. The appellant claims to have sent a reply to the show cause notice by registered post and email but the impugned order holds that no reply was filed by the appellant.
7. The impugned order has denied the exemption to the appellant for the following reasons:
"27.2 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 in 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 / diagnosis of an ailment through tests. The change in the description by the importer from 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. Further, the noticee has not submitted any reply against the contentions of the department, which shows that noticee has nothing in his defence to contradict the same.
xxx xxx xxx 27.4 In the light of above findings, I hold that the importer has wrongly claimed the benefit under notification No. 12/2012 Cus, Notification no 50/2017-Cus dated 30.06.2017 and S.No 180/1 of Notification no 01/2017-Integrated Tax (Rate) dt 28.6.2017 in respect of their imports of Food Testing Kits and reagents which were not falling within 5 C/52138/2022 the term „diagnostic test kits‟ for the purposes of aforesaid Notifications."
(emphasis supplied)
8. The Principal Commissioner has also upheld the invocation of the extended period of limitation for the following reasons:
"28.1 Having decided the rate of duty applicable on the impugned goods, I now examine whether extended period of limitation was invokable for demand of differential duty. Extended period is invokable where any duty has not been paid or has been short-paid by reason of (a) collusion; or (b) any wilful mis-statement; or (c) suppression of facts. In this context, firstly I find that the noticee has not submitted any reply to the notice challenging the allegations meaning thereby that they have no defence in their favour. It is evident that the importer has mis-declared the description of goods with an intent to misguide the assessing officers that the kits imported were for diagnostic purposes and covered within the purview of exemption notifications as above. It is evident from the manner in which the importer has declared the goods on the Bills of Entry as "ELISA Kits for diagnostic purpose" which showed that the importer was much aware that the goods which are used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans are only eligible for the benefits of above said notifications. The importer did not correctly assess his Customs Duty liability and contravened the provisions of Section 17(1) of the Customs Act, 1962. The noticee himself has admitted in his statement that imported goods are used for food testing purpose only. The importer was well aware that the impugned goods are used in food testing even then he deliberately mis-declared the goods as "Elisa Kits for R&D purpose" or "Elisa Kits for diagnostic purpose" with the sole motive of wrongly availing the benefit of S.No 148A/108 A of notification No. 12/2012-Cus dated 17.03.2012 and S.No. 167 of the notification No. 50/2017-Cus dated 30.06.2017. I thus hold that the extended period of limitation was rightly invoked in the notice and accordingly the differential duty amounting to Rs. 1,67,55,071/-(as summarised in Table-3 below) is liable to be recovered under the provisions of Section 28(4) of the Customs Act."
(emphasis supplied) 6 C/52138/2022
9. The Principal Commissioner also imposed penalty upon the appellant under section 114A of the Customs Act and the relevant portion of the order is reproduced below:
"29.3 It has clearly been brought out in the above discussions and the facts on record by the investigation that the importer has malafidely represented the impugned goods as "Elisa Kits for diagnostic purpose" with the sole motive of availing the benefit of S.No 148A / 108 A of notification No. 12/2012-Cus dated 17.03.2012 and S.No. 167 of the notification No. 50/2017-Cus dated 30.06.2017 which was not available to the impugned goods. The omission was intentional in this case which tantamount to fraud against revenue and the same cannot be exonerated. The legal requirements to invoke penalty provisions under Section 114A are same as those provided for invocation of extended period of limitation under Section 28 (4) of the Customs Act. Therefore, in essence, if the extended period of limitation under Section 28 is attracted, penalty under Section 114A of the Act follows. In view of the fact that the importer has indulged in suppression and mis-statement of vital facts at the time of import by way of mis-declaring the description of their product, I find that the importer is liable for penalty under Section 114A of the Act ibid."
(emphasis supplied)
10. After having imposed the penalty under section 114A of the Customs Act, the Principal Commissioner refrained from imposing penalty under section 112 of the Customs Act.
11. Shri Kishore Kunal, learned counsel appearing for the appellant assisted by Ms. Runjhun Pare submitted that the Principal Commissioner committed an error in holding that the appellant was not entitled to claim the benefit of the Exemption Notification. Learned counsel pointed out that the appellant had imported diagnostic test kits which were specified at Serial No. 36 of List 4 of the Notification dated 17.03.2012 and Serial No. 32 of List 4 of the Notification dated 30.06.2017. Elaborating this submission, learned counsel pointed out 7 C/52138/2022 that the „diagnostic test kits‟ would include kits for testing of food products and since the test kits imported by the appellant were for testing food products, the appellant would be entitled to the benefit exemption provided under the Exemption Notification. Learned counsel, however, very fairly placed a decision of a division bench of this Tribunal in Ilishan Biotech (P.) Ltd. vs. Principal Commissioner of Customs, New Delhi4 wherein the same product imported by Ilishan Biotech was denied the benefit of the Exemption Notification. Learned counsel, however, pointed out that the Principal Commissioner, while deciding Ilishan Biotech, had in the order dated 31.03.2022 held that the extended period of limitation could not have been invoked and this fact has also been noted by the division bench of the Tribunal in Ilishan Biotech in paragraph 2.3 of the decision. Learned counsel, therefore, pointed out that the Principal Commissioner, while deciding the present matter, committed an error in holding that the extended period of limitation was correctly invoked. Learned counsel, therefore, submitted that if the extended period of limitation could not have been invoked, penalty under section 114A of the Customs Act could also not have been invoked upon the appellant. Learned counsel for the appellant also submitted that apart from importing ELISA test kits for food testing, the appellant also imported ELISA kits for veterinary use which kits would be entitled to exemption, but this issue was not decided in Ilishan Biotech and this fact could also not be pointed out to the Principal Commissioner because the appellant had not appeared for personal hearing. 4 (2025) 26 Centax 166 (Tri.-Del) 8 C/52138/2022
12. Shri Girijesh Kumar, learned authorized representative appearing for the department has, however, supported the impugned order and submitted that since the controversy involved in this appeal stands covered by the decision of the Tribunal in Ilishan Biotech, the appellant is not justified in asserting that the benefit of the Exemption Notification should have been provided to the appellant. Learned authorized representative also submitted that the extended period of limitation was correctly invoked in the facts and circumstances of the case.
13. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered.
14. The first issue that arises for consideration in this appeal is whether the ELISA test kits imported by the appellant for food testing were entitled to the benefit of the Exemption Notification. This issue, as noticed above, was considered by a division bench of this tribunal in Ilishan Biotech and it was held that the ELISA test kits imported for food testing would not be entitled for the benefit of the Exemption Notification. The relevant paragraphs of the decision are reproduced below:
"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 estors and diagnostics test kits as specified in List 4, which at Sl.No.32 provides, "Enzyme Linked Immuno absorbent Assay, ELISA KITS". Therefore, the adjudicating authority rightly interpreted that the expression Enzyme Linked Immuno absorbent Assay, ELISA KITS are preceded by the words in Serial No. 167(A), i.e., life saving drugs, medicines, including their salts and estor 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 9 C/52138/2022 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.
xxx xxx xxx
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 vitra, 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 10 C/52138/2022 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 its signs and symptoms.
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 CMA(PT)1 of 2023 & CMP No.13206 of 2023 & WP No.7666 of 2023 & WMP Nos.7828 & 7832/2023 dt. 12.10.2023 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.
xxx xxx xxx
23. In view of our discussion above, we conclude that ELISA kits imported by the appellant were not used in the evaluation of 11 C/52138/2022 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."
(emphasis supplied)
15. We have carefully perused the aforesaid decision of the Tribunal and see no good reason to take a different view. It has, therefore, to be held that the ELISA test kits imported by the appellant for testing food products would not be entitled to the benefit of the Exemption Notification.
16. Learned counsel for the appellant has also pointed out that apart from importing ELISA test kits for food testing, the appellant had also ELISA test kits for veterinary purposes, and, therefore, this Tribunal should examine whether the ELISA test kits for veterinary purpose would be entitled for exemption or not.
17. It is seen that neither in the reply sent by the appellant to the show cause notice, (even though this reply was not considered by the Principal Commissioner) nor in this appeal, the appellant has stated that it had also imported ELISA test kits for veterinary purpose. In this view of the matter, it would not be appropriate to examine whether the appellant had imported test kits for veterinary purpose which issue has been raised by the learned counsel for the appellant during the course of hearing of the appeal.
18. The issue whether the extended period of limitation could have been invoked and whether penalty could be imposed upon the 12 C/52138/2022 appellant under section 114A of the Customs Act needs to be now examined.
19. It needs to be noted that the Principal Commissioner in the order dated 31.03.2022 against which the Tribunal decided the matter in Ilishan Biotech, held that the extended period of limitation could not have been invoked. The relevant paragraphs of the decision are reproduced below:
"33.3 The noticee has further contested that they have not suppressed any fact as to the nature of the goods imported viz that they had declared the full description of the imported items clearly on the face of the bills of entry that the goods were food testing kits. The noticee also submitted that their goods were examined and were sent for testing in Shri Ram Laboratories in 2012. During that period, they were availing exemption notification no 12/2012 and the department had not raised any query and shipment were allowed as per declaration. The Importer has given an affidavit however details of any Bill of Entry has not been given. I have gone through their submissions and also the Annexure-I to Annexure-VII to the impugned SCN. I find that the notice itself has mentioned that on all the bills of entry, the noticee has mentioned "Elisa Test Kit for Antibiotic Testing in Food" or "Elisa Kit (Diagnostic kit for antibiotic testing in food)" or "Elisa Test Kits for food testing" since the beginning. Under these facts on record, I agree with their contention that they did not misdeclare the true nature of the goods imported. There is no dispute with regard to the classification of the goods either. The dispute is related to incorrect availment of benefit of Exemption Notification but even that claim was not made by the importer based on incorrect description of the impugned goods.
33.7 In the light of the fact that the goods were declared as 'Food testing kit' in all the Bills of Entry and a claim of Exemption Notification will itself not amount to suppression of facts or misrepresentation so to invoke the extended period of limitation under Section 28(4) of the Customs Act 1962. I accordingly set aside the demand of Rs. 4,06,50,696/- (Rs. Four Crores Six Lakhs, Fifty Thousands Six Nine and Six only) for the period 13 C/52138/2022 prior to 31.3.2018 and uphold the demand for the period 01.04.2018 to 20.09.2020 amounting to Rs. 2 customs Act, 1962. 2,18,88,441/- under Section 28(2) of the Customs Act, 1962.
(emphasis supplied)
20. However, in the present appeal a finding has been recorded in paragraph 28.1 of the order reproduced above that the extended period of limitation was correctly invoked.
21. The appellant may not have filed any reply to the show cause notice, but it was obligatory on the part of the Principal Commissioner to have examined whether the averments made in the show cause notice make out a case for invoking the extended period of limitation. The appellant had clearly indicated in the Bills of Entry that the goods were diagnostic kits and in some of the Bills of Entry that these ELISA test kits were for food testing. This aspect was also noticed by the Principal Commissioner in the earlier order passed which was assailed in Ilishan Biotech. The appellant may or may not have been entitled for the benefit of the Exemption Notification, but what was required to be examined was whether the appellant had suppressed material facts with an intent to evade payment of customs duty. Once a finding was recorded on the same set of facts by the Principal Commissioner in the earlier order that the extended period of limitation could not be invoked, there was no reason for the Principal Commissioner to record different in the subsequent order merely because the appellant had not filed any reply to the show cause notice.
22. The Principal Commissioner was, therefore, not justified in holding that the extended period of limitation was correctly invoked.
23. For the same reasons, penalty upon the appellant under section 114A of the Customs Act could not have been invoked since the 14 C/52138/2022 reasons for imposing penalty under section 114A of the Customs Act and the reasons for invoking the extended period of limitation under section 28(4) of the Customs Act are same.
24. The imposition of penalty under section 114A of the Customs Act, therefore, cannot be sustained.
25. Thus for all the reasons stated above, the order dated 25.05.2022 passed by the Principal Commissioner denying the benefit of the Exemption Notification is upheld for the normal period. However, as the extended period of limitation could not have been invoked, the confirmation of duty for the extended period of limitation is set aside. The imposition of penalty under section 114A of the Customs Act is also set aside. The appeal is allowed to the extent indicated above. The Adjudicating authority shall carry out the necessary exercise and inform the appellant of the amount that stands confirmed in the light of the observations made above.
(Order dictated in the Open Court) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Shenaj