Back
2026 Supreme(Online)(CESTAT) 1579
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
P.A. Augustian, Judicial Member, Pullela Nageswara Rao, Technical Member
Health Care Global Enterprises Ltd. – Appellant
Versus
Commissioner of Central Excise – Respondent
Central Excise Appeal No. 20038 of 2016 | Central Excise Appeal No. 20039 of 2016
For the Appellants/Petitioners: S. Annamalai
For the Respondents: Vinod Kumar Garhwal
A product with a short shelf life is still 'marketable' and 'excisable' if it is actually sold commercially to third parties. Furthermore, diagnostic reagents like FDG F-18 are correctly classifiable under Chapter 30 as pharmaceutical goods rather than Chapter 28 as radioactive isotopes.
Headnote:(A) Central Excise Act, 1944 - S.2(f), S.4(1)(a) - Manufacture - Excisable goods - Marketability - Product FDG F-18 has a short shelf life due to radioactive decay but is sold to third parties, hence deemed marketable and excisable goods. (Paras 15, 16)
(B) Classification - Chapter Heading 2844 vs 3006 - Radiopharmaceutical FDG F-18 is a diagnostic reagent for medical imaging, thus classifiable under Chapter 3006 30 00 rather than 2844 40 00. (Para 16)
(C) Limitation and Valuation - Extended period of limitation not applicable due to bona fide belief - Valuation for captive consumption must follow Section 4(1)(a) based on price of goods sold to independent buyers rather than residuary Rule 11. (Para 17)
Facts of the case:
The appellant manufactures FDG F-18, a radioactive product used for PET scans. The adjudicating authority demanded excise duty, classifying it under Heading 2844 40 00. The appellant challenged the classification, marketability, valuation method, and extended period of limitation.
Findings of Court:
Product is deemed marketable as third-party sales occur. However, classification under 2844 40 00 is set aside in favor of 3006 30 00. Extended period of limitation is rejected for lack of suppression. Valuation method under Rule 11 is rejected in favor of Section 4(1)(a).
Issues: Whether FDG F-18 is marketable, whether it is classifiable under Chapter 28 or 30, and the validity of the valuation/limitation period.
Ratio Decidendi: An unstable, short-lived product remains marketable if third-party sales exist; pharmaceutical products should be classified under Chapter 30 diagnostic reagents; valuation for captive consumption must prioritize concurrent sales price to independent buyers.
Result: Appeals allowed.
| Table of Content |
|---|
| 1. overview of the excise manufacturing and classification dispute. (Para 1 , 2 , 3) |
| 2. marketability of short shelf-life radioactive goods. (Para 4 , 5 , 6 , 15) |
| 3. classification of radiopharmaceuticals under chapter 30. (Para 7 , 8 , 9 , 16) |
| 4. limitation period, bona fide belief, and valuation methods. (Para 10 , 11 , 17) |
| 5. setting aside the impugned demand order. (Para 18 , 19) |
PER: P.A. AUGUSTIAN
The issue in the present appeals is whether the activities carried out by the Appellant amounts to manufacture and whether the goods manufactured by the Appellant are classifiable under the Chapter Heading 28444000 as alleged by the Adjudication Authority.
2. The Appellant (formerly known as M/s. Health Care Global Advances Isotopes Pvt. Ltd.,) are engaged in manufacture and clearance of excisable goods viz., Radio Isotopes 'FDG F-18' (Fluoro-2-deoxy-D-Glucose) (FDG F-18' or 'FDG' for short), falling under Chapter 28444000 of CETA, 1985. M/s. Health Care Global Advances Isotopes Pvt. Ltd., which was incorporated on 30.05.2005, was amalgamated with the holding company M/s. Banashankari Medical and Oncology Research Centre Ltd., from 03.02.2011 vide Order OLR No.2/2011 in Company Petitions Nos.148 & 149 of 2010, of the Hon'ble High Court of Karnataka. Further, M/s. Banashankari Medical and Oncology Research Centre Ltd., was amalgamated with M/s. Health Care Global Enterprises Pvt. Ltd., on 16.03.2011 vide order in Company Petition Nos.148 & 149 of 2010.
3. The brief facts are alleging that the Appellant had evaded excise duty on the goods manufactured by them, proceedings were initiated and show cause notice dated 30.10.2014 was issued demanding excise duty for the period from 01.11.2009 to 31.03.2014 and thereafter Adjudication authority as per the impugned order confirmed the demand with interest and imposed penalty. The Adjudication authority also confiscated the goods manufactured and cleared by the Appellant during the relevant period and imposed redemption fine of Rs. 6,00,000/- under Section 34 of the Central Excise Act, 1944. Aggrieved by said order, present appeal is filed.
4. When the appeal came up for hearing, the Learned Counsel for the Appellant submits that the impugned order is prima facie unsustainable, since there is no provision of law to issue notice in respect of the activities carried out by the amalgamating company, similar to that of Section 170(2) of the Income Tax, 1961 . In this regard the Learned Counsel relied on the following decisions: -
(i) United Telecom Ltd Vs. CCE., Hyderabad - 2011 (21) STR 234 (Tri-Bang)
(ii) CIT Vs. Manjunatha Cotton and Ginning Factory - (2013) 359 ITR 565 (Kar).
(iii) State of Punjab Vs. Jullundur Vegetables Syndicate - 1966 (17) STC 326 (SC),
(iv) Additional Tahsildar, Raipur and Others Vs. Gendalal - (1968) 21 STC 263 (SC)
(v) D. Matai Vs. CCE, Mumbai - 2000 (126) ELT 1264 (Tri)
5. Learned Counsel further submits that the activity carried out by the Appellant is not amounting to manufacture as per Rule 2(f) of the Central Excise Act, 1944 and thus there is no need for them to obtain registration from the Department and to pay duty. Appellant is engaged in the business of diagnosis and treatment of all type of Cancers which is carried out through CT-Scan, MRI and PET CT-scan. For carrying out the said activity, the appellant uses a product called 'FDG F-18' (Fluoro-2-deoxy-D-Glucose), which is administered primarily to cancer patients before they undergo PET-CT scanning. The process undertaken by the appellant in production of FDG F-18 is, proton bombardment of Heavy Water (Deuterium Oxide) and mixing the same with glucose using an equipment called 'Cyclotron'. The appellant had installed this equipment 'Cyclotron' in their premises during 2007. This process of production of FDG F-18, which involves a series of process, takes about 2 hours to complete. To examine whether the above said activity amounts to manufacture in terms of Central Excise Law, Learned Co
