"Montanide ISA 206 VG" not Classifiable as Vaccine for Veterinary Medicines: CESTAT deletes Penalty on Bharat Biotech under Customs Act [Read Order]

The Bangalore Bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that the Montanide ISA 206 VG is not classifiable as a vaccine for veterinary medicines and the classification by the Department under CTH 30023000 was incorrect and legally untenable, thereby deleting the imposed penalty on Bharat Biotech under Section 114A of the Customs Act, 1962.

The appellant, Bharat Biotech International Pvt Ltd imported “Montanide ISA 206 VG” via two Bills of Entry on 12.12.2011 and 02.01.2012 and paid customs duty. The appellant classified the imported goods under CTH 38249090 as a residuary entry for chemical products. The department issued a show cause notice proposing to classify the goods under CTH 30023000 as “Vaccine for Veterinary Medicines,” stating that the goods were animal vaccines.

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The Original Authority demanded Rs. 2,16,447 with interest and the penalty was dropped. Aggrieved by this order, the appellant appealed before the Commissioner (Appeals). The Commissioner (Appeals) was against dropping the penalty and confirmed the penalty under section 114A of the Customs Act, 1962. Aggrieved by the Commissioner (Appeals) order, the appellant appealed before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore.

The main dispute is whether the imported goods are classified under CTH 38249090 (chemical products not elsewhere mentioned) or CTH 30023000 (Vaccine for Veterinary Medicines) and whether the penalty imposition was justified.

The Appellant’s Counsel represented by Gayatri Priya contended that the imported goods are “Adjuvants”, not vaccines. Adjuvants are used as raw materials for vaccines, whereas the vaccine is administered for immunity. The appellant’s counsel argues that the classification should be based on their nature at the time of importation, not their end-use. Thus, it cannot be classified as a vaccine.

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The Commissioner (Appeals) counsel represented by K.A. Jathin contended that the goods are classified as adjuvants but acquire the properties of vaccines when mixed with them thus, they should be classified under the heading of vaccines.

The two-member bench comprising P.A. Augustian (Judicial Member) and Pullela Nageswara Rao (Technical Member) heard both side's arguments. The tribunal noted that the imported goods are adjuvants which are substances used to enhance the immune response in vaccines. The tribunal observed that the department’s classification of the adjuvants as vaccines under CTH 30023000 was incorrect and legally not tenable. The tribunal ruled imposition of penalty under section 114A of the Customs Act is also not sustainable.

The tribunal allowed the appellant’s appeal and set aside the impugned order.

To Read the full text of the Order CLICK HERE

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