Holding

Monoclonal antibodies, antisera (including pregnancy test kits), and blood‑fraction products are to be classified under Chapter Heading 30.02 of the Central Excise Tariff Act, 1985, and not under Chapter 30.05 or Chapter 38.22.

Summary

The appellant‑assessee, Mis. Span Diagnostics Ltd., manufactures monoclonal antibodies (MABs), pregnancy test kits, and other diagnostic reagents. The Department classified these products under Chapter 30.05 or Chapter 38.22 of the Central Excise Tariff Act, 1985, while the assessee claimed classification under Chapter 30.02 as cultures of micro‑organisms or blood fractions. The Court examined the nature of MABs, noting they are produced by hybridoma technology and therefore qualify as "cultures of micro‑organisms" falling squarely within CSH 3002.00 (Chapter 30.02). It also held that antisera, including refined antisera such as pregnancy test kits, are covered by Chapter 30.02 and are excluded from Chapter 38.22, and that items described as blood fractions, irrespective of the carrier medium, belong to Chapter 30.02. The question whether certain tuberculin products are diagnostic reagents or diagnostic aids was left unanswered and remitted to the Adjudicating Authority. Consequently, the Court allowed the appeals in favour of the assessee for the classified items and ordered the remand of the unresolved issue.

Issues considered

Whether monoclonal antibodies (MABs) should be classified under Chapter 30.02 or Chapter 30.05 of the Central Excise Tariff Act, 1985.
Whether pregnancy test kits and similar products constitute "antisera" under Chapter 30.02 or "diagnostic or laboratory reagents" under Chapter 38.22.
Whether blood‑fraction products coated on latex or paper fall under Chapter 30.02 or Chapter 38.22.
Whether the tuberculin products for in‑vivo detection of Mycobacterium tuberculosis are "diagnostic reagents" or merely "diagnostic aids".

Legislation cited

Subjects

classificationcentral excisetariffmonoclonal antibodiesblood fractionsantiseradiagnostic reagentsHSNChapter 30Chapter 38biotech productscustoms law

Judgment

MIS. SPAN DIAGNOSTICS LTD. A
v.
COMMISSIONER OF CENTRAL EXCISE, SURAT

APRIL 30, 2007

[S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.] B

Central Excise Tariff Act, I 985:

Monoclonal Antibodies-Classificaiton of-Chapter Sub-heading
3002.00 or 3005.90-Assessee was engaged in the manufacture of blood- C
grouping reagents and diagnostic and laboratory reagents-These items
were called Monoclonal Antibodies-Held: Monoclonal Antibodies (MABs)
is a blood-grouping reagent-MABs specifically fall in Chapter Heading
30.02 as a culture of micro-organism-Hence, MABs are classifiable under
Chapter Heading 30.02. D
Beta Visipreg, Visipreg Strip and Pregnancy Test Kits as 'antisera '-
Classification of-Chapter Sub-heading 3002.00 or 3822.00-Held: Antisera
is used for diagnostic purposes, including in-vitro tests-Pregnancy Test Kits
(PTK) is antisera-Antisera falls under Chapter Heading 30.02-/n the
circumstances, "antisera'" is covered by Chapter Heading 30.02 and since E
it is covered by that Heading, Chapter Heading 38.22 will not apply.

Reagent for vivo detection of T.B. mycobacteria-"Diagnostic reagent"
or a "diagnostic aid'"-Classification of-Chapter Sub-heading 3002.00 or
3005-Since the question whether the product for vivo detection of T.B.
mycobacteria is a "diagnostic reagent .. or a "diagnostic aid'" has not been F
answered, the matter remitted to Adjudicating Authority.

"Blood fractions "-Manufactured by coating latex particles with
protein-Classification of-Chapter Sub-heading 3002. 00 or 3822. 00-
Merely, because the medium used is latex (rubber) or paper, will not bring G
the items under Chapter Heading 38.22-0nce at item is a "Blood fraction'"
it falls under Chapter Heading 30.02-Hence, "blood fractions'" are classified
under Chapter Heading 30.02 (CSH 3002.00).

C.A. NO. 5322/2002
1015
1016 SUPREME COURT REPORTS (2007] 5 S.C.R.

A In this appeal, the appellant-assessee was engaged in the manufacture
of blood-grouping reagents and diagnostic and laboratory reagents. These
items were called Monoclonal Antibodies (MABs). They were classified by
the assessee under Chapter Sub-heading 3002.00 (Chapter Heading 30.02)
of the Central Excise Tariff Act, 1985 (CETA) whereas the respondent-
Department classified the MABs under CSH 3005.90 (Chapter heading 30.05.
B The assessee classified MABs as "cultures of microorganisms" whereas
the Department classified the said MABs as "pharmaceutical products, not
elsewhere specified or included".

The Central Excise and Gold (Control) Appellate Tribunal upheld the
C classification of MABs under CSH 3005.90 of CET A as claimed by the
Department. Hence the appeal

C.A. Nos. 1953-1954/2003

The following question arose before this Court:-
D Whether Beta Visipreg, Visipreg Strip and Pregnancy Test Kits fall
as "antisera" under Chapter Heading 30.02 of CET A or whether it falls
under Chapter Heading 38.32 of CETA as "diagnostic or laboratory reagent"?

C.A. Nos. 1076-1080/2002
E The following questions arose before this Court:-

I. Whether the reagent for vivo detection of T.B. mycobacteria is a
diagnostic reagent or is it in aid of diagnosis?

2. Whether "blood fractions" manufactured by coating latex particles
F with protein are classifiable under Chapter 30.02 or 38.22 of the Central
Excise Tariff Act, 1985?

Disposing of the appeals, the Court

HELD: I.I. There is no dispute that Monoclonal Antibodies (MAB) is
G a blood-grouping reagent. The question is: whether merely because MAB is
a blood-grouping reagent, should it be classified under Chapter Heading
30.05 on account of Note No. 3{e} to Chapter 30 of Central Excise and Tariff
Act, 1985 (CETA), even though MAB is a "culture of micro-organism" falling
under CSH 3002.00 (Chapter Heading 30.02). It is well-settled that the width
H of the Heading under CETA cannot be expanded by reading Note 3{e} to
SPAN DIAGNOSTICS LTD. '· COMMNR. OF CENTRAL EXCISE, SURAT JQJ7

Chapter 30. MAB is a culture of micro-organism". It falls specifically under A
Chapter Heading 30.02 of CETA. MAB is not a sera of human or animal origin,
it is not a vegetable extract, it is not a plant extract and on the other hand it
is obtained by hydridoma technology (cellular fusion). Therefore, it cannot
fall under Chapter Heading 30.05 of CETA. Moreover, Chapter Heading 30.05
is residuary. The width of Chapter Heading 30.05 is restricted to products
which are mentioned in Note 3(e) to Chapter 30. In other words, not all those B
pharma products which could not be classified elsewhere in the tariff would
fall under Chapter Heading 30.05, but only those which are specified in Note
No. 3 would fall under Chapter Heading 30.05.
[Para 14] (1028-F, G, H; 1029-A, BJ

1.2. In the present case, MAB specifically falls in Chapter Heading C
30.02 as a culture of micro-organism. If an item like MAB specifically falls
in Chapter Heading 30.02, it cannot be classified under Chapter Heading
30.05 merely on account of Chapter Note '3'. In the present case, the
Department seeks to expend the scope of Chapter Heading 30.05, which is
residuary, by relying upon Note '3' even when MAB falls under Chapter
Heading 30.02 as a 'culture of micro-organism". In the present case, MAB D
is not polyclonal, it is monoclonal and, therefore, it is known as MAB.
[Para 14] (1029-B, C]

-\ Inter Care Ltd v. CCE, (1997) 89 EL T 545 (Tribunal), referred to.

2.1. The Explanatory Note in HSN to Chapter Heading 30.02 which
refers to Modified Immunological Products (MIP) conclusively proves that E
MAB is a "culture of micro-organisms" and, therefore, it would fall under
Chapter Heading 30.02. Lastly, even the HSN Explanatory Note to Chapter
heading 30.06 corresponding to Chapter Heading 30.05 of CETA, shows that
MAB is excluded from Chapter Heading 30.0. That Heading states that blood-
grouping reagents, suitable in blood-grouping, are sera either of human or F
animal origin or vegetables' extracts or plants' extracts. In other words, MAB
which is not the sera of either human or animal original or vegetable or plant
extracts cannot fall under Chapter Heading 30.05, particularly, when MAB
is a culture of micro-organism. [Para 14] (1029-D, E, F]

2.2. There is one more aspect which needs to be highlighted. In the HSN,
the Chapter Heading refers to human blood; animal blood; antisera and other G
blood functions and MIP"; therefore, human blood is one item, animal blood
is another item whereas "antisera, blood fraction and MIP" is the third item.
Therefore, the third item forms one separate class. In that class MIP includes
MAB. Therefore, if one reads the third item as a separate class as "antisera
and blood fractions" then abridgement of HSN entires by CETA cannot rule
H
1018 SUPREME COURT REPORTS [2007] 5 S.C.R.

A out MIP which includes MAB. Therefore, when HSN treats antisera, blood
fractions and MIP including MAB as one class then there is no contradiction ~
between Chapter Heading 30.02 of HSN. Therefore, HSN cannot be ruled out.

B
[Para 14) (1029-F, G, H; 1030-A)

Dr. R.N. Makroo: "Compendium of Transfusion of Medicine", referred
-
3. Accordingly, Anti-A Mono Clona~ Anti-B Mono Clonal, Anti-Decoders
Mono Clonal, Anti-Decoders lgM Mono Clonal and Anti-Decoders lgG Mono
Clonal are classified under Chapter Heading 30.02 of CET A.
[Para 15) (1030-B] )

c 4. Chapter Heading 30.02 refers to antisera and other blood fractions.
According to the Explanatory Note in HSN (Seventh Edition), antisera is
obtained from the blood of humans or animals which are immune against
diseases. Antisera is used for diagnostic purposes, including in-vitro tests.
There is nothing like crude antisera and refined antisera. In the present case,
D even according to the department, Pregnancy Test Kits (PTK) is antisera,
however, according to the Department, PTK is a refined antisera. Antisera
falls under Chapter Heading 30.02. In the circumstances, "antisera" is
covered by Chapter Heading 30.02 and since it is covered by that Heading,
I
Chapter Heading 38.22 will not apply. If one reads Chapter Heading 38.22, it
becomes clear that there could be diagnostic or laboratory reagents which
E could fall under Chapter Heading 30.02 and also under Chapter Heading ~
38.22. However, if a diagnostic or laboratory reagent like antisera falls under
Chapter heading 30.02 then it stands excluded from Chapter Heading 38.22.
[Para 21) [1031-C, D, El

5. On a reading of Chapter Note 3(d) to Chapter 30, it is clear that
F preparations for X-ray examinations and diagnostic reagents designed to be
administered to the patient, put up in measured doses would fall under Chapter
Heading 30.05. However, in this case there is no finding given by any of the
Authorities below as to whether the product for vivo detection of T.B.
mycobacteria is a diagnostic reagent or not. This question has got to be decided
G as the assessee contends that the product for vivo detection of T.B.
mycobacteria is not a diagnostic reagent but it is a "diagnostic aid".
[Para 33) [1034-D, E]

Ministry of health and Family Welfare (GO!): "Pharmacopoeia of India
('fhird Edition)'', and Dr. David T. Kingsbury and Gerald E. Wagner:
H "Microbiology", 2nd Edition, referred to.
..
SPAN DIAGNOSTICS LTD.'" COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA,!) 9
} QJ

6. Since this question has not been answered the matter is remitted to A
the Adjudicating Authority to decide whether the product for vivo detection of
T.B mycobacteria is a diagnostic reagent or whether it is in aid of diagnosis.
(Para 341 (1034-F)

7. Chapter Heading 30.02 refers to "blood fractions". Merely, because
the medium used is latex (rubber) or paper, will not bring the items under B
Chapter Heading 38.22. Once an item is a "Blood fraction" it falls under
Chapter Heading 30.02. The medium is irrelevant. The medium could be paper
or rubber. The configuration of the product and the function are important.
[Para 36) (1035-F, G)

8. In the circumstances, "blood fractions" are classified under Chapter c
Heading 30.02 (CSH 3002.00). [Para 37) (1036-A)

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1076-1080 of
2002.

From the final Judgment Order Nos. Cil/3133-37/01 WZB dated 4.12.2001 D
passed by the Customs, Excise and Gold (Control) Appellate Tribunal, West
Zonal Bench at Mumbai.
\

WITH

C.A. Nos. 5322 of2002 & 1953-1954 of2003. E

V. Lakshmikumaran, Dushyant A. Dave and R. Venkataramani Sr. Adv.,
Alok Yadav, Rajesh Kumar, M.P. Devnath, Shri Narain (for S. Narain & Co.)
Sandeep Narain, Binu Tamta, K.K. Senthilvelan and B.K. Prasad for the
appearing parties. F
The Judgment of the Court was delivered by

KAPADIA, J. 1. From the impugned judgment dated 1.1.2002 delivered
by the Customs, Excise and Gold (Control) Appellate Tribunal ('CEGA T', for
short), New Delhi, vide Appeal No.E/1644 and 1645 of2000-C, C.A. No.5322 G
of 2002 and C.A. No.1953-54 of 2003 have been filed.by the assessees and
by the Department respectively. For the sake of convenience and clarity we
proceed to decide each of the following civil appeals serially.

C.A.No.5322/2002filed by Mis. J. Mitra & Co.Ltd. (Assessee)
H
1020 SUPREME COURT REPORTS (2007) 5 S.C.R.

A 2. In this civil appeal we are concerned with the classification of biotech
products.

3. The said ass_essee was engaged in the manufacture of blood-grouping
reagents and diagnostic and laboratory reagents. It had obtained registration
on I 0.9.99 for the manufacture and clearances of the following products:
B
(I) Anti-A Mono Clonal
(2) Anti-8 Mono Clonal
(3) Anti-Decoders Mono Clonal ). •
c (4) Anti-Decoders Mono Clonal
(5) Anti-Decoders lgM Mono Clonal
(6) Anti-Decoders lgG Mono Clonal

4. The above six items are called Monoclonal Antibodies (for short,
D 'MABs'). They were classified by the assessee under Chapter Sub-heading
3002.00 (Chapter Heading 30.02) of Central Excise Tariff Act (for short, 'CETA ')
whereas the Department classified the MABs under CSH 3005.90 (Chapter
Heading 30.05) ofCETA. The assessee classified MABs as "cultures of micro-
organisms" whereas the Department classified the said MABs as
"pharmaceutical products, not elsewhere specified or included".
E
5. The CEGAT (Tribunal), vide the impugned judgment, upheld the
classification of MABs under CSH 3005.90 of CETA as claimed by the
Department, hence this civil appeal is filed by the assessee.

6. For the sake of convenience, we quote hereinbelow Chapter Note 3
F in Chapter 30 of the CETA concerning pharmaceutical products which reads
as under:
"CHAPTER 30
PHARMACEUTICAL PRODUCT'S

Notes:
G
I. and 2. m m =
'· -
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) to (d) xxx xxx xxx
H
SPAN DIAGNOSTICS LTD. v. COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA, lJ }02 J

(e) Blood grouping reagents; A
(t) to (h) xxx xxx xxx"

7. We quote hereinbelow Chapter Heading 30.02 and CSH 3002.00 of
CETA which read as under:
"CHAPTER30 B
PHARMACEUTICALPRODUCfS

Notes :

l. to 5. xxx. J®' J®'
c
Heading Sub-heading Description of goods Rate of
No. No. duty
(l) (2) (3) (4)
30.02 3002.00 Antisera and other blood fractions; Nil
Vaccines, Toxins, Cultures of micro- D
organisms (including ferments but
excluding yeasts) and similar
products
8. We quote hereinbelow Chapter Heading 30.05 in entirety of CETA
which reads as under: E
"CHAPTER30

PHARMACEUTICAL PRODUCfS

Notes : l. to 5. J®' xxx. m
F
Heading Sub-heading Description of goods Rate of
No. No. duty
(1) (2) (3) (4)
30.05 Pharmaceutical goods, not elsewhere
specified G
3005.IO Chemical contraceptives Nil
300520 Dental cements and other dental
fillings 15%
3005.90 Others 15%
H
1022 SUPREME COURT REPORTS (2007] 5 S.C.R.

A 9. We also quote hereinbelow relevant extracts of Chapter Note No.2 in
Chapter 30 of HSN (Second Edition) which read as follows:
"CHAPTER30
PHARMACEUTICAL PRODUCTS
Chapter Notes.
B

2. For the purposes of heading No.30.02, the expression "modified
immunological products" applies only to monoclonal antibodies
(MABs), antibody fragments, antibody conjugates and antibody
C fragment conjugates."

10. We also quote hereinbelow Chapter Heading 30.02 in entirety from
the said HSN which reads as under:

"30.02 HUMAN BLOOD; ANIMAL BLOOD PREPARED FOR
THERAPEUTIC, PROPHYLACTIC OR DIAGNOSTIC USES; ANTISERA
D AND OTHER BLOOD FRCTIONS AND MODIFIED IMUNOLOGICAL
PRODUCTS, WHETHER OR NOT OBTAINED BY MEANS OF
BIOTECHNOLOGICAL PROCESSES; VACCINES, TOXINS,
CULTURES OF MICRO-ORGANISMS (EXCLUDING YEASTS) AND
SIMILAR PRODUCTS.
E 3002.10 - Antisera and other blood fractions and modified
immunological products, whether or not obtained by
means of biotechnclogical processes
3002.20 - Vaccines for human medicine

F 3002.30 - Vaccines for veterinary medicine
3002.90 - Other
This heading covers:
{A) Human blood (e.g., human blood in sealed ampoules).
G (B) Animal blood prepared f or therapeutic, prophylactic or
diagnostic uses
Animal blood not prepared for such uses falls in heading 05 .11.
(C) Antisera and other blood fractions and modified immunological
H products.
SPAN DIAGNOSTICS LTD."· COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA. J) 1023

These products include: A
·(!) Antisera and other blood fractions.
Sera are the fluid fractions separated from blood after clotting.
The heading covers, inter alia, the following products derived
from blood: "nonnal" sera, human nonnal immunoglobulin, plasma, B
fibrinogen, fibrin, blood globulins, serum globulins and
haemoglobin. The heading also includes blood albumin (e.g.,
human albumin obtained by fractionating the plasma of whole
human blood), prepared for therapeutic or prophylactic uses.
Antisera are obtained from the blood of humans or of animals c
which are immune or have been immunized against diseases or
ailments, whether these are caused by pathogenic bacteria and
viruses, toxins or allergic phenomena, etc. Antisera are used
against diphtheria, dysentery, gangrene, meningitis, pneumonia,
tetanus, staphylococcal or streptococcal infections, snake bite,
vegetable poisoning, allergic diseases, etc. Antisera are also used D
for diagnostic purposes, including in vitro tests. Specific
immunoglobulins are purified preparations of antisera.
The heading does not cover blood albumin not prepared for
therapeutic or prophylactic uses (heading 35. 02) or globulins
(other than blood globulins and serum globulins) (heading 35.04). E
The heading also excludes medicaments which are not separated
from the blood but which in some countries are described as
"sera" or "artificial sera"; they include isotonic solutions based
on sodium chloride or other chemicals and suspensi~ms of pollen
which are used against allergic diseases.
F
1 (2) Modified immunological products, whether or not obtained by
means of biotechnological processes.

Products whose antigen-antibody reaction corresponds to natural
antisera and which are used for diagnostic or therapeutic purposes
and for immunological tests are to be regarded as falling within G
~ , this product group. They can be defined as follows:
(a) Monoclonal antibodies (MABs) specific immunoglobulins from
selected and cloned hybridoma cells cultured in a culture medium
or ascites.
H
A
1024
(b)
SUPREME COURT REPORTS (2007] 5 S.C.R.

Antibody fragments parts of an antibody protein obtained by
means of specific enzymatic splitting.
(c) , Antibody and antibody fragment conjugates - enzymes (e.g.,
..(_ .
alkaline phosphatase, peroxidase or betagalactosidase) or dyes
(fluorescin) covalently bound to the protein structure are used
B for straightforward detection reactions.
(D) Vaccines, toxins, cultures of micro-organisms (excluding yeasts)

c (1)
and similar products.
These products include:
Vaccines preparations of microbial origin containing either viruses
)_
-
or bacteria suspended in saline solutions, oil (lipovaccines) or
other media. These preparations have usually been treated to
reduce their toxicity without destroying their immunising
properties.
The heading also covers mixtures (such as Diphtheria, Tetanus
D
anu Pertussis (DPT) vaccine) consisting of vaccines and toxoids.
(2) Toxins (poisons secreted by bacteria), toxoids, crypto-toxins and
anti-toxins, of microbial origin.
(3) Cultures of micro-organisms (excluding yeasts). These include
E ferments such as lactic ferments used in the preparations of milk
derivatives (kephir, yogurt, lactic acid) and acetic ferments for
making vinegar; moulds for the manufacture of penicillin and
other antibiotics; and cultures of micro-organisms for technical
purposes (e.g., for aiding plant growth).

F Milk or whey containing small quantities of lactic ferments is
t ...
classifiable in Chapter 4.
(4) Virus, human, animal and vegetable and anti-virus.
(5) Bacteriophage.

G The heading also includes diagnostic reagents of microbial origin,
other than those provided for in Note 4 (d) to this Chapter see
heading 30.06. It does not cover enzymes (rennet, amylase, etc.)
~
-
even if of microbial origin (streptokinase, streptodomase, etc.)
(heading 35. 07) nor dead single-cell micro-organisms (other than
vaccines) (heading 21.02).
H
SPAN DIAGNOSTICS LTD."· COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA. J.] 1025

The products of this heading remain classified here whether or not in A
measured doses or put up for retail sale and whether in bulk or in
small packings."

11. We also quote hereinbelow Chapter Heading 30.06 of HSN which is
equal to Chapter Heading 30.05 in CETA and which reads as under:
B
"30.06 PHARMACEUTICAL GOODS SPECIFIED IN NOTE 4 TO THIS
CHAPTER.
3006.10 Sterile surgical catgut, similar sterile suture materials and sterile
tissue adhesives for surgical wound closure; sterile laminaria
and sterile laminaria tents; sterile absorbable surgical or dental
haemostatics
c
300620 Blood-grouping reagents
3006.30 Opacifying preparations for X-ray examinations; diagnostic
reagents designed to be administered to the patient
3006.40 Dental cements and other dental fillings; bone reconstruction D
cements
3006.50 First-aid boxes and kits
3006.60 Chemical contraceptive preparations based on hormones or
spermicides
This heading covers only the following goods: E
(I) Sterile surgical catgut, similar sterile suture materials and sterile
tissue adhesives for surgical wound closure.
This item covers all kinds of ligatures for surgical sutures,
provided they are sterile. These ligatures are usually put up in F
. ,. + antiseptic solutions or in sealed sterile containers.
The materials used for such ligatures include:
(a) catgut (processed collagen from the intestines of cattle, sheep
or othP.r animals);
(b) natural fibres (cotton, silk, linen); G
(c) synthetic polymer fibres, such as polyamides (nylons),
polyesters;
(d) metals (stainless steel, tantalum, silver, bronze).
The item also covers tissue adhesives such as those consisting H
1026 SUPREME COURT REPORTS [2007] 5 S.C.R.

A of butyl cyanoacrylate and a dye; after application, the monomer
~
polymerises and the product is therefore used in place of ~

-
conventional suture materials for closing internal for closing
internal or external wounds of the human body.
The heading excludes non-sterile suture materials. These are
B classified according to their nature e.g. catgut (heading 42. 06),
silkworm put, textile yams, etc. (Section XI), metal were (Chapter
7lor Section XV).

(2) Sterile laminaria and sterile laminaria tents. ,,._.._
.>
This item is restricted to sterile laminaria and sterile laminaria
c tents (small lengths of algae, sometimes brown and with a rough
grooved surface). They swell considerably on contact with moist
substances and become smooth and flexible. ~

They are therefore used in surgery as a means of dilation.
Non-sterile products are excluded (heading 12.12)
D
(3) Sterile absorbable surgical or dental haemostatics.
This item covers sterile products used in surgery or dentistry to
stop bleeding and having the property of being absorbed by the
body fluids. It includes oxidized cellulose, generally in the form
E of gauze of fibres ("wool"), in pads, pledgets or strip, gelatin
sponge or foam; calcium alginate gauze, "wool" or "film".
(4) Blood-grouping reagents.

The reagents under this heading must be suitable for direct use
in blood-grouping. They are either sera of human or animal origin,
F or vegetable extracts of seeds or other parts of plants
t
(phytagglutinins). These reagents are used in the determination
of blood-groups by reference to the characteristics of the blood
corpuscles or of the blood serum. In addition to the active
principle(s), they may contain substances to strengthen their
G activity or stabilize them (antiseptics, antibiotics, etc.).
A. The following are to be regarded as reagents for determining ,
....
blood-group by reference to the characteristics of blood
corpuscles:
(i) Preparations for determining the A, B, 0 and AB groups. Al and
H A2 sub-groups and Factor H.
SPAN DIAGNOSTICS LTD.'" COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA, J.] j 027

(ii) Preparations for detennining the M, N, Sand P groups and other A
groups such as Lu, K and Le.
(tiO Preparations for detennining the Rh groups and C, F, V, etc. sub-
groups.
(iv) Preparations for detennining the blood-groups of animals.
B
B. The preparations to be regarded as reagents for determining the
characteristics of sera are those used to detennine:

(i) charncteristics of Gm, Km, etc., systems;
(ii) serum groups Ge, Ag, etc.

c. Anti-human globulin serum (Coombs serum), which is essential
c
in certain blood-grouping techniques, is also to be regarded as
a reagent of this heading."
D. lOOi.

5. to 8. D
12. According to the assessee, MAB is produced by hybridoma
technology in which hybrids (fused cells) are allowed to grow by multiplication
in culture medium and in that process they secrete the antibodies. According
to the assessee, these hybrids (fused cells) are micro-organisms and as they
grow in culture medium, therefore, they are classifiable under CSH 3002.00 as E
"cultures of micro-organisms". In this connection, reliance is place on
"Compendium of Transfusion of Medicine" by Dr. R. N. Makroo. In his book
Dr. R.N. Makroo has stated that with advancement in biotechnology, hybridoma
technology has made available a new source of reagents; that before the
introduction of hybridoma technology, the A.B.0 grouping reagents were F
derived from human donors with or without immunization. According to Dr.
Makroo, the main reagent used in blood-bank laboratory is antisera (which
is an antibody). Essentially MAB, according to Dr. Makroo, is obtained from
cell culture. It helps in blood-grouping. The development of MAB obtained
from cell culture secreting antibodies called hybridoma, has made available a
new source of blood-grouping reagents. According to the assessee, Chapter G
Heading 30.05 ofCETA is the same as Chapter Heading 30.06 of HSN. Under
Chapter Heading 30.06, there is an Explanatory Note in HSN which states that
"blood-grouping reagents" (which term also finds place in Chapter Note '3'
to Chapter 30 of CETA} are either the sera of human or animal origin, or
vegetable extracts of seeds or other parts of plants and, therefore, such
H
1028 SUPREME COURT REPORTS [2007] 5 S.C.R.

A reagents fall under Chapter Heading 30.05 of CETA. However, according to L
the assessee, MAB is not the sera of human or animal origin or vegetable
extracts or plant extracts and, therefore, it cannot fall under Chapter Heading
"'
30.05 of CETA and consequently it has. to fall under Chapter Heading 30.02
of CETA. According to the assessee, only polyclonal antibodies are covered
under Chapter Heading 30.05 whereas MABs are covered under Chapter
B Heading 30.02 as "culture of micro-organism".

13. According to the Department, on the other hand, MAB is a "blood-
grouping reagent" which is used in hospitals for blood-grouping. These
~
reagents, according to the Department, are used in the determination of
blood-groups by reference to the characteristics of blood corpuscles of blood-
c serum and, therefore, the said MAB falls under Chapter Heading 30.05.
According to the Department, the said MAB has no therapeutic or prophylactic
value; that they are merely blood-grouping reagents and, therefore, they fall
in Chapter Note '3' which states that all "blood-grouping reagents" fall under
Chapter Heading 30.05. On behalf of the Department, it is further argued that
D on account of Note 3(e) to Chapter 30 .of CETA, MAB can only be classified
under Chapter Heading 30.05 of CETA. According to the Department, even
in common parlance MAB is known as "blood-grouping reagent" and, therefore,
it falls under Chapter Heading 30.05 ofCETA. On behalf o(the Department,
it is argued that in the present case we should not go by HSN. According
to the Department, HSN deals with human blood, animal blood prepared for
E diagnostic uses; antisera and other blood fractions and Modified Immunological
Products (for short, 'MIP'), whether or not obtained by means of
biotechnological process; vaccine, toxin, cultures of micro-organisms and
similar products whereas Chapter Heading 30.02 ofCETA does not deal with
items like human blood and MIP which items are dealt with by HSN and,
F therefore, according to the Department, in the present case, one should not j-
.....
rely upon the Explanatory Note to HSN.

14. We find merit in the arguments advanced on behalf of the assessee.
There is no dispute that MAB is a blood-grouping reagent. The question is
: whether merely because MAB is a blood-grouping reagent, should it be
G classified under Chapter Heading 30.05 on account ofNote No.3(e) to Chapter
30 ofCETA, even though MAB is a "culture of micro-organism" falling under ... ~

CSH 3002.00 (Chapter Heading 30.02). It is well-settled that the width of the
Heading under CETA cannot be expanded by reading Note 3(e) to Chapter
30. In our view, MAB is a "culture of micro-organism". It falls specifically
under Chapter Heading 30.02 of CETA. MAB ·is not a sera of human or animal
H
SPAN DIAGNOSTICS LTD.'· COMMNR. OF CENTRAL EXCISE, SURAT [KAPADIA, J.j j Q29

origin, it is not a vegetable extract, it is not a plant extract and on the other A
hand it is obtained by hybridoma technology (cellular fusion). Therefore, it
cannot fall under Chapter Heading 30.05 of CETA. Moreover, Chapter Heading
30.05 is residuary. The width of Chapter Heading 30.05 is restriCted to products
which are mentioned in Note 3(e) to Chapter 30. In other words, not all those
pharma products which could not be classified elsewhere in the tariff would B
fall under Chapter Heading 30.05, but only those which are specified in Note
No.3 would fall under Chapter Heading 30.05. In the present case, MAB
specifically falls in Chapter Heading 30.02 as culture of micro-organism. If an
item like MAB is specifically falling in Chapter Heading 30.02, it cannot be
classified under Chapter Heading 30.05 merely on account of Chapter Note
'3 '. In the present case, the Department seeks to expand the scope of Chapter C
Heading 30.05, which is residuary, by relying upon Note '3' even when MAB
falls under Chapter Heading 30.02 as "culture of micro-organism". In the
present case MAB is not polyclonal, it is monoclonal and, therefore, it is
known as MAB. In the case of Inter Care Ltd v. Collector of Customs, New
Delhi (1997) 89 ELT 545 (Tribunal) it has been held that polyclonal product D
would fall under Chapter Heading 30.05. However, in the present case, MAB
is not polyclonal, it is monoclonal and it is obtained by culture of micro-
organism and, therefore, it would fall under Chapter Heading 30.02 (CSH
3002.00). Our view is also supported by the Explanatory Note in HSN to
Chapter Heading 30.02 which refers to MIP. The said Note conclusively
proves that MAB is a "culture of micro-organism" and, therefore, it would fall E
under Chapter Heading 30.02. Lastly, even the HSN Explanatory Note to
Chapter Heading 30.06 corresponding to Chapter Heading 30.05 of CETA,
shows that MAB is excluded from Chapter Heading 30.05. That Heading
states that blood-grouping reagents, suitable in blood-grouping, are sera
either of human or animal origin or vegetables' extracts or plants' extracts. In F
other words, MAB which is not the sera of either human or animal origin or
+ vegetable or plant extracts, cannot fall under Chapter Heading 30.05,
particularly, when MAB is a culture of micro-organism. There is one more
aspect which needs to be highlighted. In the HSN, we have Chapter Heading
30.02 which refers to human blood; animal blood; "antisera and other blood G
fractions and MIP"; therefore, human blood is one item, animal blood is
another item whereas "antisera, blood fraction and MIP" is the third item.
' "' Therefore, the third item forms one separate class. In that class we have MIP
which includes MAB. Therefore, if one reads the third item as a separate class
as "antisera and blood fractions" then abridgement of HSN entries by CETA
cannot rule out MIP which includes MAB. Therefore, when HSN treats H
1030 SUPREME COURT REPORTS [2007] 5 S.C.R.

A antisera, blood fractions and MIP including MAB as one class then there is ....._ ~

no contradiction between Chapter Heading 30.02 ofCETA and Chapter Heading
30.02 of HSN. Therefore, taking any view of the matter, HSN cannot be ruled
out.

15. For the above reasons, we find merit in the civil appeal filed by the
B assessee (Civil Appeal No.5322 of 2002) and, accordingly, we classify the
above six items under Chapter Heading 30.02 of CETA.

16. Accordingly, the said civil appeal is answered in favour of the
assessee and against the Department. }-

c C.A.Nos. /953-/954/2003jiled by the Department

17. The short question which needs to be decided in these civil appeals
is : Whether Beta Visipreg, Visipreg Strip, Pregnancy Test Card fall as "antisera"
under Chapter Heading 30.02 ofCETA (according to the assessee) or whether
it falls under Chapter Heading 38.22 of CETA as "diagnostic or laboratory
D reagent" (as contended by the Department).

18. The above three products were cleared by the assessee as Pregnancy
Test Kits (PTK). According to the assessee the above three products are for
the detection of hCG hormones in urine, as a test for pregnancy. The three
products are meant for in-vitro diagnostic use only. According to the assessee,
E Chapter Heading 30.02 covers antisera of all forms.

I9. On the other hand, it was argued on behalf of the Department that
although PTK was an antisera, the above three products were classifiable as
diagnostic or laboratory reagents under Chapter Heading 38.22 as they were
F used exclusively in laboratory for diagnostic purposes. According to the
Adjudicating Authority, Chapter Heading 30.02 applied only to crude antisera
and since the above three products were refined antisera, they did not fall t •
under Chapter Heading 30.02.

20. At the outset, we quote hereinbelow Chapter Heading 38.22 (CSH
G 3822.00) which reads as under:

.._ ,
SPAN DIAGNOSTICS LTD. '· COMMNR OF CENTRAL EXCISE, SURAT [KAPADIA, I.] j Q3 j

"CHAPTER38 A
MISCELLANEOUS CHEMICAL PRODUCTS

Notes:
L to 3.X\X X\X X\X
B
Heading Sub-heading Description of goods Rate of
No. No. duty
(!) (2) (3) (4)
38.22 3822.00 Composite diagnostic or laboratory 20"/o
reagents, other than those of c
Chapter 30
21. As stated above, Chapter Heading 30.02 refers to antisera and other
blood fractions. According to the Explanatory Note in HSN (Seventh Edition),
antisera is obtained from the blood of humans or animals which are immune
against diseases. Antisera is used for diagnostic purposes, including in-vitro D
tests. There is nothing like crude antisera and refined antisera. In the present
case, even according to the Department, PTK is an antisera, however, according
to the Department, PTK is a refined antisera. As stated, antisera falls under
Chapter Heading 30.02. In the circumstances, "antisera" is covered by Chapter
Heading 30.02 and since it is covered by that Heading, Chapter Heading 38.22 E
will not apply. If one reads Chapter Heading 38.22, it becomes clear that there
could be diagnostic or laboratory reagents which could fall under Chapter
Heading 30.02 and also under Chapter Heading 38.22. However, if a diagnostic
or laboratory reagent like antisera falls under Chapter Heading 30.02 then it
stands excluded from Chapter Heading 38.22.
F
I 22. Before concluding we may record the statement made on behalfof
Mis. J. Mitra & Co. Ltd. that they have closed down their business in
producing the following two items, namely, Syphilis RPR (VDRL) and
Salmonella Antigens. Hence, they do not seek to press the classification issue
concerning the said two items. G
23. Hence we answer C.A. No.1953-54 of2003, filed by the Department,
in favour of the assessee and against the Department.

24, For the above reasons, the assessee succeeds on Item Nos. I to 9,
mentioned at page No.5 of the paper book in C.A.Nos.1953-54/2003 and, H
1032 SUPREME COURT REPORTS [2007] 5 S.C.R.

A therefore, the Department was not entitled to invoke the extended period of
limitation under Section I IA of the Central Excise Act, 1944.

CA.Nos. 1076-108012002 filed by Mis. Span Diagnostics Ltd. (assessee)

25. These civil appeals are filed by M/s. Span Diagnostics Ltd.
B (assessee) under Section 35(L) of the Central Excise Act, 1944, against the
decision of the CEGAT (for short, 'Tribunal') dated 4.12.2001.

26. In these civil appeals we are concerned with Item Nos.21 to 32,
referred to in Annexure A to the paper book (at pages 27-28), Item Nos.35, }
36 and 37 in Annexure A to the paper book (at pages 27-28) and Item Nos.I
c to 15 in Annexure B to the paper book (at page 29).

27. At the outset we quote hereinbelow Item Nos.21 to 32 of Annexure
A which read as under:

"ANNEXTURE- 'A'
D
Name of the products which will fall under chapter sub-heading 3005.90

Sr. Code No. Item Pkg.
No.
E 21. l 1127A Anti-A (Monoclonal) 5ML
22. l 1127B Anti-A (Monoclonal) IOML
23. lll27C Anti-A (Monoclonal) 3x5ML
24. 11128A Anti-B (Monoclonal) 5ML
F 25. 11128B Anti-B (Monoclonal) IOML
26. 11128C Anti-D (Monoclonal lgG+lgM) 3x5ML ..
27. 11129A Anti-D (Monoclonal IgM) 5ML
28. l 1129B Anti-D (Monoclonal IgM) IOML
29. l 1129C Anti-D (Monoclonal IgM) 3x5ML
G
30. l l 130A Anti-D (Monoclonal lgG + IgM) 5ML
31. l l 130C Anti-D (Monoclonal IgG + IgM) 3x5ML
~ ~

32. 11131A Anti-A, B & D (Mono. lgM) 3x5ML
28. It is not in dispute that above Hem Nos.21 to 32 are identical to Item
H Nos. I to 6 in C.A. No.5322 of2002 - filed by Mis. J. Mitra and Co. (assessee).
SPAN DIAGNOSTICS LTD.'· COMMNR. OF CENTRAL EXCISE, SURAT (KAPADIA, J I JQJ 3

J. 29. In the circumstances, we hold for the above reasons that Item A
Nos.2 I to 32 would fall under Chapter Heading 30.02 of CETA. Accordingly,
the assessee succeeds in this regard.

30. As regards Item Nos.35, 36 and 37 of Annexure A is concerned, we
quote hereinbelow the exact description of the said three items which read as
under: B
· "ANNEXTURE- 'A'

Name of the products which will fall under chapter sub-heading 3005.90

Sr. Code No. Item Pkg. c
No.

35. 18411 P.P.D. STU/0.1 ML 5ML

36. 18411A P.P.D. IOTU/0.1 ML 5ML

37. 18412A Tuberculin P.P.D. D

Lyophilized IOTU/0.1 ML 500TU

31. On this point we may state that the Adjudicating Authority had
referred the matter for opinion to Dy. Chief Chemist who opined that the three E
items were "cultures of micro-organisms" and, therefore, they came under
Chapter Heading 30.02 and not under Chapter Heading 30.05. Apart from the
question as to whether the Dy. Chief Chemist was or was not entitled to
classify, the fact remains that the question as to whether the above produces
are "diagnostic reagents" was not referred.
F
. 32. In this case we are concerned with classification of diagnostic
reagent for vivo detection of T.B. mycobacteria. According to the Adjudicating
Authority, these reagents are of mycobacterium origin but they are injected
intradermally into the patient and, therefore, they are classifiable under Chapter
Heading 30.05 (CSH 3005.90). According to the Department, the above three G
items are put up by the assessee for sale in measured doses and, therefore,
they were classifiable under Chapter Heading 30.05. In this connection, reliance
is placed on Chapter Note 3(d) to Chapter 30 which reads as under:

H
1034 SUPREME COURT REPORTS (2007] 5 S.C.R.

A "CHAPTER 30
PHARMACEUTICAL PRODUCTS
Notes:
)
I. to 2.X\X xxx xxx

B 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) to (c) X\X X\X X\X

(e) Opacifying preparations for X-ray examinations and diagnostic
reagents designed to be administered to the patient, being
c unmixed products put up in measured doses or products consisting
of two or more ingredients which have been mixed together for
such uses;
(f) to (h) xxx xxx xxx"

D (emphasis supplied)

33. On reading Chapter Note 3(d) it is clear that preparations for X-ray
examinations and diagnostic reagents designed to be administered to the
patient, put up in measured doses would fall under Chapter Heading 30.05.
However, in this case there is no finding given by any of the Authorities
E below as to whether Item Nos.35, 36 and 37, quoted above, are diagnostic
reagents. This question has got to be decided as the assessee contends that
the above three products are not diagnostic reagents, they are "diagnostic
aid". In this connection, reliance is placed on Pharmacopoeia of India (Third
Edition) by Ministry of Health and Family Welfare (GOI) and also on The
F National Medical Series for Independent Study (Microbiology - 2nd Edition)
by Dr. David T. Kingsbury and Gerald E. Wagner.

34. Since this question has not been answered we remit the matter to
the Adjudicating Authority to decide whether Item Nos.35, 36 and 37, quoted
hereinabove, are diagnostic reagents or whether they are in aid of diagnosis.
G
35. Now, coming to Item Nos. I to 15 of Annexure B, we quote
...
hereinbelow the said items which read as under:

"ANNEXTURE- 'B'

H Name of the products which will fall under chapter sub-heading 3822
SPAN DIAGNOSTICS LTD. '- COMMNR. OF CENlRAL EXCISE, SURAT (KAPADIA. J J 1035

Sr. Code No. Item Pkg. A
No.
I. 17401A Anti Sheep Hemolysin 5 ML
2 19404 Chem. Control (Assayed) 5x3ML
3. 19404A Chem. Control (Unassayed) 5x3ML
B
4. 17405 Fraund's Adjuvant (Com) IOML
5. 17406 Guinea pig (Complement) 5xl ML
6. 19408 Kahn VDRL +Va control 5 ML
7. 19409 Kahn VDRL - Va control 5ML
8.
9.
19444
19444A
Chem. Control Assayed Normal 5x3ML
Chem. Control Assayed Abnormal 5x3ML
c
10. 25907 R.A. Test (Latax Test) JOT
11. 25907A R.A. Test (Latax Test) 20 T
12. 25934 C.R.P. (Latax Test) 20 T
13. 25947 ASO (Latax Test) 20 T D
14. 259468 Austragen (Latax Test) 25 T
15. 25946C Austragen (Latax Test) 50 T
t
36. According to the assessee, the above 15 items fall under Chapter
Heading 30.02 as they are "blood fractions". This is not disputed by the
Department. However, according to the Department, since Item Nos. I to 15 E
are manufactured by coating latex particles with protein, they fall under
Chapter Heading 38.22 of CETA. However, according to the Tribunal, the said
items fall under Chapter Heading 30.05 of CETA. At this stage we may note
that according to the Department, the said 15 items came under Chapter
Heading 38.22 whereas, according to the assessee, they came under Chapter
F
Heading 30.02. The only question before the Tribunal was whether it came
under Chapter Heading 38.22 or whether it came under Chapter Heading 30.02.
In Mis. Mitra's case (which we have decided hereinabove vide C.A.No.5322
of 2002), we have taken the view that "blood fractions" fall under Chapter
Heading 30.02. Chapter Heading 30.02 refers to "blood fractions". Merely
because the medium used is latex (rubber) or paper, will not bring the items G
A
under Chapter Heading 38.22. Once an item is a "Blood Fraction" it falls under
~

Chapter Heading 30.02. The medium is irrelevant. The medium could be paper
or rubber. The configuration of the product and the function are important.
In our opinion, Item Nos.I to 15 are "Blood Fractions". They are "Blood
Fractions" even according to the Department.
H
1036 SUPREME COURT REPORTS [2007] 5 S.C.R.

A 37. In the circumstances, we classify Item Nos.I to 15 of Annexure B
to the paper book under Chapter Heading 30.02 (CSH 3002.00).

38. Accordingly, except for Item Nos.35, 36 and 37 of Annexure A, the
assessee Mis. Span Diagnostics Ltd. succeeds in C.A. Nos.1076-1080 of2002.
However, with regard to Item Nos.35, 36 and 37 of Annexure A, the matter
B shall stand remitted to the Adjudicating Authority for fresh decision in
accordance with law. Consequently the question oflimitation will remain open
only with regard to Item Nos.35, 36 and 37 of Annexure A in C.A. Nos.1076-
1080 of2002.

C 39. Accordingly, the above C.A. No.5322 of 2002, C.A. Nos.1953-54 of
2003 and C.A. Nos.1076-1080 of 2002 stand disposed of with no order as
to costs.

v.s.s. Appeals disposed of.

-