[Order per : C.N.B. Nair, Member (T)]. - Dr. Reddy’s Laboratories Ltd., Hyderabad imported during 1994 to 1996 some consignments and cleared them without payment of duty as “Enzyme linked immunoabsorbent Assay Kits (ELISA KITS)” which were exempt under Notifications Nos. 208/81, dated 22-9-81, 13/95, dated 16-3-95 and No. 36/96, dated 23-7-96. Subsequently, a show cause notice dated 23-9-99 was issued alleging that the imported consignments were raw-materials/components required for the manufacture of ELISA KITS which were liable to duty at 25% and that by misdeclaring the goods which were liable to duty as exempt goods, they had evaded customs duty. The notice, therefore, proposed recovery of the duty evaded under proviso to Section 28(1) of the Customs Act, demand of interest under Section 28AB of the Customs Act, confiscation of the imported goods under Section 111(m) of the Customs Act and imposition of penalty under Section 112/114A. In the adjudication proceedings the charges were upheld by the Commissioner of Customs and Central Excise Hyderabad under his order-in-original No. 11/2000-Adjn. Cus., dated 10-1-2001. Consequently, the Commissioner demanded a duty of over Rs. 14 Lakhs and imposed a penalty of Rs. 1 Lakh on the appellants. The present appeal challenges that order.

2. The finding of the Commissioner is that the imported consignments “consisted” of all the ingredients and components, in bulk quantity, (microtitre wells and reagents) meant for making ELISA kits. The Commissioner held that “consignments in bulk imported were sufficient for conducting 25,000 tests. He noted that the bulk ingredients were taken to the factory of the importer, the liquid reagents were filled into vials and microtitre wells and was individually packed into smaller packs of 48 tests. The Commissioner has noted as under :-

“The supplier has himself referred to the consignment as bulk reagent shipment. The supplier has also very clearly indicated that kits are to be packed by the importer (buyer) under their own labelling and design. Therefore, I have no doubt that the consignments under import cannot be treated as ELISA kits. Obviously there is no market for users who need a bulky consignment with which 25,000 tests could be performed. Convenient size for the users obviously happens to be 48 tests and the ingredients put together for enabling 48 tests represents a true ELISA kit. The other reasons and arguments given by the importer to establish that the bulk consignment was also ELISA kit, is totally unacceptable. Therefore describing and referring the goods under import as ELISA kits was incorrect and inappropriate. The supplier did not do so in his documents. Hence the impugned goods were truly not entitled to full exemption under the relevant notifications already referred to above as and when they were imported.”

3. The contention of the appellant all through is that what they had undertaken was bulk imports of ELISA kits. These bulk kits were thereafter re-packed into 48 test kits for sale to Path Labs for use in pregnancy tests. During the hearing of the case learned Counsel for the appellants took us through the invoice and other import documents and emphasized that what was ordered and supplied were certain number of test kits and not any ingredients or raw material for the manufacture of the test kits. He, therefore, submitted that the finding reached in the impugned order is grossly erroneous.

4. We have perused the records and considered the submission made by both sides. The dispute is about the eligibility of the imported goods for exemption. The goods exempted under different notifications issued from year to year are “enzyme linked Immunoabsorbent Assay Kits (ELISA KITS)”. The contention of the Revenue authorities is that goods in question were not test kits but ingredients/raw-materials for the manufacture of kits. The ingredients for the manufacture of ELISA kits as noted in the proceedings are Colour A, Colour B, Enzyme conjugate, Positive control, Negative control etc. Sl. No. 50 to exemption Notification No. 36/96-Cus., dated 23-7-96, which covers raw materials for the manufacture of ELISA KITS, lists the following items.

(i)         “Plastic ELISA plates :

(ii)        Deactivated positive control sera against human and animal diseases :

(iii)       Enzyme horse raddish peroxidase;

(iv)       Enzyme Alkaline phosphatase;

(v)        Enzyme glucose oxidase;

(vi)       Animal anti-human immunoglobins;

(vii)      Protein A or Protein A Gold conjugates;

(viii)     Polystyrene latex beads;

(ix)       Deactivated enzyme labelled human anti HIV reagent.”

In view of the above, the question for determination is whether the imported consignments were these ingredients/raw materials or whether they were test kits. Sample purchase order dated 20-12-1995 states as under :-

“[We are pleased to accept your above cited quotation to the extent shown below. The Terms & Conditions mentioned overleaf from part of the contract. Please supply the following :

(emphasis supplied)”

Similarly, invoices dated 17th April, 96 and 17th December, 96 etc. describe the goods under sale are as under :

From the above purchase and import documents, it is clear that what has been ordered and supplied are a certain quantity of “tests” like 12500 tests, 25000 tests etc. Similarly, the goods under supply are also described as test kits consisting of “combination of microwell plates of 48”. “Unit price” is also shown as “USD 0.19”. These documents make no mention of any of the ingredients, the price of each of the ingredients or quantity of the ingredients. Thus, the buying and selling is undisputably in terms of certain number of “tests”. From these documents covering the purchase and sale, it is clear that what was transacted between the parties were certain number of tests or test kits and not ingredients/raw materials for preparing tests. It is only that the orders were for bulk supply of tests, and that they were accordingly packed. The buyer in turn was to repack the bulk packs into more convenient packs of 48 tests for supply to Path Labs. It is also clear that the test kits in question do not come as a single test kit for performing one individual test. It comes as combination of microwell plates of 48 tests, and before carrying out a test, the test laboratory separates out one plate and serves the required quantity of reagent into the plate and carries out the test. This is the commercial practice. The notification when it used the words ‘test kit’ it should be taken to mean test kit as understood and transacted in trade and commerce and not as individual test kits, so packed by the manufacturer, as held by the Commissioner. If the vialing of reagent and re-packing of kits is the standard practice in trade and commerce before sale to Path Labs, Revenue authorities would not be justified in holding that, unless the re-agents are packed into individual test kits, the imports will not come within the wording “test kits” used in the notification. For, it is well settled that tax authorities should take words of the statute to have the same meaning as they have in everyday trade and commerce so words have in trade and commerce. Viewed in accordance with this well understood principle of statutory construction, there could be no dispute that the appellant in the present case was importing certain number of ELISA kits and not ingredients or raw-materials for the kits.

5. The appellants have contested the demand on the ground of limitation also. We find merit in this contention. The imports took place during the period 1994 to 1996 and the show cause notice was issued only on 23-9-1999. Easily three years after the last of the imports. The purported short levy is sought to be recovered by availing of the extended period allowed under proviso to Section 28(1) of the Customs Act. That proviso is available to the Revenue only in cases “where any duty has not been levied …………… by reason of collusion or any wilful misstatement or suppression of facts by the importer …………” In the present case, the appellants had declared and described the goods in the import documents the same way as the goods were being transacted, i.e. as so many tests. The description of the goods was fully in accordance with the commercial transaction. Therefore, there could be no allegation that the appellants had made any misdeclaration or suppression of any facts or committed any fraud. The proviso was, therefore, clearly not available to the Revenue for recovery of duty, even if, there was a short payment.

6. In the view we have taken above, we hold in favour of the assessee both on merits and on the issue of limitation. Accordingly, the appeal is allowed, with consequential relief, if any, to the appellant, after setting aside the impugned order.