1. This is a revision application filed before the Government of India (now transferred to the Appellate Tribunal under Section 131-B of the Customs Act, 1962) against the order-appeal No. S/49-326/80-R dated 6-5-1980 passed by the Collector of Customs (Appeals) Bombay.
2. The facts giving rise to this appeal are that the appellants are engaged in the manufacture of Hirudoid products in India. One of these products is Hirudoid Ointment. As per the allegations made by the appellants that for the manufacture of this product 'Hirudoid Ointment' they had imported a consignment of Hirudoid substance vide I.G.M. No.2934/181 and claimed assessment under heading 29.01/45(13) of the Customs Tariff Act, 1975 with the customs duty at 60% + 15% ad valorem.
But the Assistant Collector of Customs, Bombay on the basis of the therapeutic index of the product which the appellants were manufacturing classified this product under heading Heparin (Mucous) in extra pharmacopoeia. According to the Assistant Collector, Heparin is a derivative of natural high polymer and is covered by Chapter 39.06 as is evident from C.C.N. explanatory note.
3. Aggrieved by the said order of the Assistant Collector of Customs, Bombay, the appellants preferred an appeal before the Collector of Customs, (Appeals) Bombay, who also rejected the appeal and confirmed the order passed by the Assistant Collector of Customs, Bombay. The reasons given by the Collector (Appeals) for rejecting the appeal are that the imported goods are what is called Heparinoid i.e. it has the same properties as possessed by Heparin. Chemicaly it is an acid mucopolysaccharide that is a high molecular weight polymer. Heparin is a natural high polymer of animal origin. Natural high polymers are beyond doubt covered by 39.06 of C.C.N. and by 39.01/06 of C.T.A. First Schedule.
4. Not satisfied with the order of the Collector of Customs (Appeals) Bombay, the appellants filed a revision application under Section 131 of the Customs Act, 1962 before the Government of India which now stands transferred to this Tribunal and is treated as an appeal.
5. We have heard Shri J.R. Gagrat, with R.C. Pandey Advocates for the appellants and Shri A.S. Sundar Rajan J.D.R. for the department and have gone through the record.
6. Shri Gagrat the learned counsel for the appellants drew our attention towards the supplier's certificate explaining the process of manufacture of imported substance i.e. Hirudoid substance which reads as under :- "The active substance is isolated from organs of young verterinary controlled cattle. The starting material is subject to the German Food Act. The degreased and dried animal organs are cleaned, deproteinized and esterfied by means of customery chemico-pharmaceutical methods of extraction. The degree of purity desired is obtained by several precipitation and confirmed by analytical controls (standardisation). The substance inhibits enzymes and counteracts exudation and inflammation." 7. As per the supplier's certificate explaining the process of the manufacture of this substance, Heparin substance is chemically not an acid mucopolysaccharide, as observed by the Collector of Customs (Appeals) but it is a standardised extract obtained from the organs of animals prepared for a specific therapeutic use, and incapable of general use and that acid mucopolysaccharide comprises only a small portion of Hirudoid substance i.e. 1% only. He also drew our attention towards a certificate issued by the foreign suppliers on 7-10-1980 mentioning therein that the Hirudoid substance is not generally used but only for specific medicinal topical purposes by Neo-Pharma in their product Hirudoid, which contains 1% Organo heparinoid which is not extractable. A certificate given by the Assistant Collector of Customs (Docks) Bombay was also brought to our notice in which it has been certified by the customs authorities that the "container of Hirudoid substance which was imported by the appellants exhibited the label showing that each gram of Hirudoid substance contains 10 mg. of cutaneously absorbable anticoagulant (Heparinoid) obtained from animal lung tissue." 8. On the basis of these documents Shri Gagrat argued that natural high polymer comprises only a small portion of Hirudoid substance and that too is not extractable and the decision of the lower authorities holding the said substance classifiable under heading No. 39.01/06 of the First Schedule to the C.T.A. 1975 at 100% + 20% ad valorem is highly arbitrary and against law. He pointed out that the appropriate heading for classification of this product is 30.01 C.T.A. which is more specific. According to him, the Collector (Appeals) has failed to appreciate that heading 30.01, apart from "Organo - therapeutic glands or other organs, dried, whether or not powdered", covers "Organo therapeutic extracts of glands or other organs or of their secretions" and "Other animal substances prepared for - therapeutic or prophylactic uses, not elsewhere specified or included," and that the scope of the heading is therefore, sufficiently vide to cover Hirudoid substance, extracted from organs of animals for the reasons that (i) it is specifically prepared for therapeutic or prophylactic use; (ii) it is not a natural high polymer within the meaning of heading 39.01/06 as acid mucopolysaccharide comprises only a small portion of it; (iii) being specifically prepared for a specific use and not for general uses it falls outside the ambit of heading 39.01/06. This Hirudoid substance is appropriately classifiable under heading 30.01 and not under heading No. 39.01/06.
9. Shri Gagrat also drew our attention towards the chart given by him showing the dis-similarities between Heparin and Heparinoid. According to him though both are high polymers (natural) but there is vast difference between these two products. C.C.C.N. explanatory notes are of no use to classify a product. He cited a decision of this Tribunal in Saurashtra Chemicals, Gujarat v. Collector of Customs, Bombay (1983-E.L.T.-1182) in support of his contention that B.T.N. Explanatory Notes are not conclusive. Explanatory Notes of the B.T.N. can only be taken as guidelines but not conclusively determinative of a matter which has to be decided on a comparative study of the tariff entries contained in the Schedule to the Customs Tariff Act. He also drew our attention towards another decision of the Tribunal in Collector of Customs, Bombay v. Dr. D.D. Thana, Bombay (1983-E.L.T. 1137) in support of his contention that it is the trade usage which has to be taken into account before a product can be classified. This product is meant for the manufacture of Heparinoid Ointment which is a Pharmaceutical product and is not of general use and hence the said substance cannot be classified under heading 39.01/06 as a natural high polymer.
10. Referring to the Rule 3 of the Customs Tariff Working Schedule, Shri Gagrat pointed out that the heading which provides the most specific description shall be preferred to headings providing a more general description. According to him heading 30.01 is a more specific heading and therefore, classifying this substance under heading 39.01/06 which is a general one cannot be said to be justified.
11. Shri Sundar Rajan countered the arguments of Shri Gagrat and pointed out that this substance Hirudoid which was imported by the appellants does not find mention in the British Pharmacopoeia and cannot be said to be a pharmaceutical product under Chapter 30.
According to Shri Sundar Rajan, admittedly, this hirudoid substance is a high polymer (natural) and it is composed of organo-heparinoid of animal origin (acid Micropolysaccharide). The therapeutic Index of the product manufactured by the appellants show that the item Hirudoid substance is composed of Organo-Heparinoid of animal origin. It is Heparin which is a derivative of natural high polymer and is covered by Chapter 39.06. Heparinoid, though is in a small quantity i.e. 1% but it is an active substance and therefore, it is aptly classifiable under Chapter 39.01/06 of C.T.A. 1975. According to Shri Sundar Rajan though there may be difference between Heparin and Heparinoid in some respects but one thing is common that both are high polymers (natural) and therefore, are classifiable under heading 39.01/06.
12. There is no dispute about fact that 'Heparinoid' contained in the imported substance i.e. Hirudoid substance and 'Heparin' are both (natural) high polymers. The only dispute which requires determination is whether this product 'Hirudoid' substance containing 1% heparinoid falls within the heading 39.01/06 or under heading 30.01 of C.T.A.1975. The basis of the decision of the authority below is that "Heparin is a natural high puiymer of animal origin. Natural high polymers are beyond doubt covered by heading 39.06 of C.C.C.N. and by 39.01/06 of C.T.A. First Schedule. The imported goods contaning hepannoid, have the same properties as possessed by Heparin and therefore, they are classified under heading 39.01/06 as natural high polymers".
13. There is no dispute about the legal proposition as has been laid down by Special Bench 'D' of this Tribunal in the case of Saurashtra Chemicals, Gujarat v. Collector of Customs, Bombay (Supra) that Explanatory Notes to B.T.N. (CCCN) can only be taken as guidelines but not conclusively determinative of a matter which has to be decided on a comparative study of the tariff entries given in the Schedule to the Customs Tariff Act.
14. We have to compare the entries as contained in Chapter 39 of the C.T.A. 1975 and Chapter 30 of C.T.A. 1975 to arrive at the correct conclusion as under which Chapter this product 'Hirudoid Substance' falls. Chapter 39 deals with Artificial Resins, Plastic Materials, Cellulose Esters and Ethers and Articles thereof. Under heading No.39.01/06, no doubt, there is a mention of other high polymers falling under this heading but we have to decide whether "Hirudoid Substance" which is the imported product containing heparinoid to the extent of 1% which is a high polymer (natural) can rightly be classified under this heading. No doubt, heparin and heparinoid possesses the same qualities and characteristics and heading 39.06 of the C.C.C.N. Explanatory Notes mentions about Heparin but it will have to be seen whether this fact is sufficient to bring this product under this heading 39.06 of the C.T.A.1975 wherein there is no specific mention of Heparin as it is but it only mentions other high polymers. Heparin has been defined in The Condensed Chemical Dictionary Tenth Edition by Gessner & Hawley at page 522, where it has been shown as U.S.P. Grade i.e. a pharmaceutical product. In Extra Pharmacopea Martinoale 27th Edition at page 718 Heparin has been shown as B.P. grade i.e. a pharmaceutical product. The authority below did not appreciate the fact that according to the Notes at Page 581 of the CCCN Explanatory Notes, product rendered particularly suitable for some types of use rather than for general use are excluded from the scope of the heading 39.06. From the contents of heading 39.01/06 it will be evident that the same does not specifically mention heparin. It mentions some other items like chemical derivatives of natural rubber and other high polymers. Chapter Heading of Chapter 39 only covers the items of Artificial Resins and Plastic Materials, Cellulose Esters and Ethers and articles thereof. From the heading of this Chapter as well as the body of the said heading 39.01/06, it is clear that the same does not cover the item of 'Heparin' in particular though it contains other high polymers and Heparin is also high polymer but Heparinoid a form of Heparin having a specific use as an anti coagulant and activates the dissolution of blood clots and microthrombi by fibrinolysis. It counter act the formation of thrombi and assets in the dissolution of thrombi. From this imported substance Hirudoid substance, Hirudoid ointment has been manufactured by the importers and the active s at stance in Hirudoid ointment is Heparinoid. The thereapeutic index of the manufacturers which has been taken note by the authority below is with respect to the Hirudoid Ointment of which Hirudoid substance containing Heparinoid only to the extent of 1% is one of the ingredients. By no stretch of imagination this imported substance can fall under Chapter 39 of C.T.A. 1975 which is with respect to the Artificial Resins and Plastic Materials. Cellulose Esters and Ethers and Article thereof. The imported substance as per the suppliers formula is a standardised extract obtained from Organs of Animals prepared for a specific and therapeutic use, and incapable of general use and that acid mucopolysaccharide comprise only small portion of Hirudoid Substance. The authority below has failed to appreciate that since acid mucopolysaccharide which is a natural high polymer comprises only a small portion of Hirudoid substance, the said substance cannot be classified under heading No. 39.0/06 as natural high polymer.
15. A perusal of Heading 30.01 of Chapter 30 of C.T.A. 1975, shows that apart from "Organo-Therapeutic Glands or other Organs", dried, whether or not powdered "covers Organo-Therapeutic extracts of Glands or other Organs or of their secretion other animal substances prepared for Therapeutic or Prophylactic uses, not elsewhere specified or included and that the scope of the heading is sufficiently wide to cover Hirudoid substance which is the imported product, extracted from Organs of animals and more particularly when it is specifically prepared for Therapeutic and Prophylactic use. It cannot be treated as a natural high polymer within the meaning of Heading 39.01/06 being specifically prepared for a specific use and not for general use. It falls outside the ambit of Heading 39.01/06. This Hirudoid substance which is said to contain mucopolysaccharide cannot be separated from the imported 'Hirudoid substance' and therefore, this product is appropriately classifiable under Heading 30.01 and not Heading 39.01/06.
16. In view of our findings above, we set aside the order of the authority below and accept the appeal. Consequential relief to follow.
Relief to be granted within 3 months from today.