Custom, Excise & Service Tax Tribunal
M/S Becton Dickinson India Pvt. Ltd vs Cce, Delhi Iii on 2 June, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 08/04/2015. DATE OF DECISION : 02/06/2015. Excise Appeal No. 541, 2786 of 2007, 2652 of 2008 and 488 of 2010 [Arising out of the Order-in-Original No. 13/JM/CE/2007 dated 28/06/2007 passed by The Commissioner of Central Excise, Delhi III, Gurgaon.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Becton Dickinson India Pvt. Ltd. Appellant Versus CCE, Delhi III Respondent
Appearance Shri Ravinder Narain, Advocate for the Appellant.
Shri A.K. Raha, Special Counsel, Authorized Representative (AR) for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) Final Order No. 51750-51753/2015 Dated : 02/06/2015 Per. Rakesh Kumar :-
Appeal No. 2786/2007 is against order-in-original dated 28/06/07 passed by the Commissioner of Central Excise, Delhi III by which he has confirmed duty demand of Rs. 3,49,18,939/- against the appellant covered by three show cause notices show cause notice dated 21/7/06 for the period from March 2003 to July 2004, show cause notice dated 29/5/06 for the period from August 2005 to March, 2006, show cause notice dated 19/1/07 for the period from April 2006 to November 2006.
1.1 Appeal No. E/541/07 is against order-in-original dated 10/11/06 passed by the Commissioner, by which he has confirmed duty demand of Rs. 1,23,36,635/- against the appellant for the period from August 2004 to July 2005. The show cause notice for this demand had been issued on 08/9/05.
1.2 Appeal No. E/2652/08 is against order-in-original dated 18/8/08 passed by the Commissioner by which duty demand of Rs. 1,80,07,091/- has been confirmed against the appellant for the period from December 2006 to October 2007. The show cause notice which had been adjudicated had been issued on 03/12/07.
1.3 Appeal No. E/488/10 is against Commissioners order dated 01/12/09 confirming duty demand of Rs. 1,94,47,533/- for the period from November 2007 to August 2008. The show cause notice for this duty demand has been issued on 27/11/08.
1.4 The facts leading to filing of these appeals are, in brief, as under.
1.4.1 The appellant company manufactures of Intravenous Cannula (IV Cannula) under the brand name Venflon and Neoflon. The period of dispute, as mentioned above, is from March 2003 to August 2008. During the period of dispute, Notification No. 6/03-CE dated 01/3/03 and its Successor Notification No. 6/06-CE dated 01/6/06 exempted from the whole of the Basic Excise Duty and Special Excise Duty, the medical equipment (excluding folley balloon catheters) and other goods specified in list 37 annexed to the Notification 21/02-CUS dated 01/3/02. List 37 of the Notification No. 21/02-CUS among other items covered Disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces. Thus during the period of dispute, in terms of exemption Notification No. 6/03-CE dated 01/3/03 and its successor notification readwith Customs Notification No. 21/02-CUS dated 01/3/02 (list 37) the Disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces were fully exempt from Central Excise duty. The appellant treating the IV Cannula being manufactured by them as covered by this exemption were clearing the same at nil rate of duty. However, sometime in 2004, the Department initiated inquiry to ascertain as to whether the IV Cannula being manufacturing and cleared by the appellant are covered by the expression Disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces. In this regard the Investigating officers recorded the statement of Dr. Prabhu Vinayagam, Assistant Manager (Training) of the appellant company, who in his statement dated 11/3/04 stated that the Venflon brand IV Cannula is used with peripheral blood vessels similar to aorta, vena cavae, that vena cavae is the biggest vein and other veins are smaller in size, that all smaller veins are similar to vena cavae as they carry impure blood to the heart and are similar in structure and function except for size, that while Venflon Cannula can not be used in aorta, vena cavae and intra-corporal spaces directly, it can be used in similar veins like Cephalic veins, Basilic veins and Metacarpel veins etc. for intravenous drug administration, intravenous fluid administration or for infusing blood. However, the Department approached the Directorate General of Health Services (DGHS) and sought its advice on the question as to whether Venflon Cannula can be treated as Disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces. One Dr. P. Ravindran, ADG (M) under his letter dated 08/12/04 opined that the Venflon Cannula being primarily used in peripheral veins and arteries for the purpose of blood sampling, blood transfusion, drug infusion etc. cannot be treated as the Cannula for aorta, vena cavae and similar veins and blood vessels or the Cannula for intra-corporal spaces, as peripheral blood vessels cannot be treated as blood vessels similar to Aorta or vena cavae. It is on this basis that the proceedings were initiated by the show cause notices mentioned above for denying the duty exemption under Notification No. 6/03-CE dated 01/3/03 and its successor notification and for demand of duty which resulted in passing of the adjudication orders, mentioned above, by which the above-mentioned duty demands has been confirmed. Against these orders of the Commissioner, these appeals have been filed.
2. Heard both the sides.
3. Shri Ravinder Narain, Advocate, the learned Counsel for the appellant, pleaded that the issue involved in this case is squarely covered by the decisions of the Tribunal in the cases of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. reported in 2000 (117) E.L.T. 400 (Tri.), and also in the case of Medisphere Marketing P. Ltd. vs. CCE reported in 2001 (131) E.L.T. 608 (Tri.), that the Tribunals judgment in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) was in respect of exemption Notification No. 55/95-CUS (Sl. No. 34) which covered for exemption disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces, which is identical to the entry in list 37 of the exemption Notification No. 21/02-CUS, that the dispute in this case was as to whether top brand scalp vein infusion set imported by the assessee were eligible for the duty exemption under Notification No. 55/95-CUS (Sl. No. 34), that Tribunal in this judgment held that the top brand scalp vein infusion sets can be treated as the Cannula meant for blood vessels and accordingly would be eligible for the exemption, that in this judgment the Tribunals finding is that in Sl. No. 34 of the Notification No. 55/95-CUS, the word blood vessels has to be read independent of the earlier expression disposable and non-disposable Cannula for aorta, vena cavae and similar veins, that the Tribunal in this judgment observed that the term similar veins in Sl. No. 34 of the Notification No. 55/95-CUS refers only to the veins which are similar to aorta and vena cavae and that the Cannula used for aorta and vena cavae and similar veins are different in nature to the Cannula used for blood vessels, that civil appeal filed by the Government was dismissed by the Apex Court after condoning the delay vide order reported in 2000 (121) E.L.T. A174, that same view has been taken by the Tribunal in its judgment in the case of Medisphere Marketing P. Ltd. vs. CCE reported in 2001 (131) E.L.T. 608 (Tri.), wherein reliance has been placed on the Tribunals earlier judgment in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) and SLP filed by the Government against this judgment has also been dismissed by the Apex court vide order dated 07/2/13, that Apex court in the case of Medley Pharmaceuticals Ltd. vs. CCE, Daman reported in 2011 (263) E.L.T. 641 (S.C.) in para 32 of the judgment has held that once the civil appeal filed before the Apex court has been dismissed, even in the absence of detailed reasons or without reasons, such order will entail the application of doctrine of merger, to be followed in subsequent cases, that in the case of V.M. Salgaocar & Bros. (P) Ltd. vs. Commissioner of Income Tax reported in (2000) 5 SCC 373, the Apex court has held that when appeal is dismissed by the Apex court, even if by a non-speaking order, the doctrine of merger applies, that the Apex court in another judgment in the case of Waman Rao vs. Union of India reported in (1981) 2 SCC 362 has held that it is sufficient for invoking the Rule of stare decisis that a certain decision was arrived at on a question which arose or was argued, no matter on what reason the decision rests or what is the basis of the decision, or in another words, for the purpose of applying the Rule of stare decisis, it is unnecessary to inquire or determine as to what was the rationale of the earlier decision which is said to operate as stare decisis, that in view of this, the decision of the Tribunal in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) which has been affirmed by the Apex court by the way of dismissal of the Government civil appeal, becomes a binding precedent, that in view of this, in the expression the disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces the words blood vessels have to be read independent of the preceding expression disposable and non-disposable Cannula for aorta, vena cavae and similar veins or in another words, the word similar before the word veins would not qualify the words blood vessels, and that since the Cannula, in question, are meant for blood vessels, the same are covered by the exemption. Shri Ravinder Narain, also pleaded that the entire case of the Department against the appellant is based on the opinion given by an officer of the DGHS and before acting on the opinion given by the DGHS Officer his cross-examination should have to be allowed and without permitting the cross examination of Dr. P. Ravindran of DGHS, the opinion given by him cannot be acted upon. Shri Narain also referred to the statement of Dr. Prabhu Vinayagam of the appellant company wherein he has stated that the Venflon Cannula being manufactured by the appellant can be used in respect of the veins like Cephalic Veins, Basilic Veins and Metacarpel Veins etc. for intravenous drug administration, intravenous fluids or for infusing blood and these veins are similar to the vena cavae. With regard to the limitation, Shri Ravinder Narain pleaded that since the judgment of the Tribunal in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) is of the period prior to the period of dispute, the appellant had bonafide belief that the goods manufactured by them are eligible for exemption. He also pointed out to the facts narrated in 1st para of the Tribunal judgment in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) from which it appears that earlier, the duty exemption under Notification No. 55/95-CUS (Sl. No. 34) was being extended to the top brand scalp vein infusion being imparted by M/s Saberwal Surgical (P) Ltd. based on the opinion of the DGHS. Shri Narain, therefore, pleaded that in view of these circumstances, there was scope for doubt for the appellant that they were eligible for the exemption and hence in view of Apex court judgment in the case of Continental Foundation Jt. Venture vs. CCE, Chandigarh I reported in 2007 (216) E.L.T. 177 (S.C.), the longer limitation period of 5 years from the relevant date under proviso to Section 11A (1) would not be applicable and for the same reason to the fact that provision of Section 11AC would not be invokable.
4. Shri A.K. Raha, Advocate, the learned Counsel for the Revenue, pleaded that the point of dispute in this case is as to whether in the entry disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces, the word similar would quantify the expression blood vessels also or whether the expression blood vessels is to be read independently of the expression disposable and non-disposable for Cannula for aorta, vena cavae and similar veins, that this point has not been examined at all in the Tribunals earlier judgment in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) and conclusion on this point has been arrived at without any discussion, that for this reason only the Tribunal in respect of stay application filed in appeal No. E/2652/2008 filed by this appellant had vide order dated 12/05/09 reported in 2009 (242) E.L.T. 584 (Tri. Del.) ordered 100% pre-deposit and had refused to grant un-conditional waiver and subsequently the High Court had only reduced the pre-deposit to 50% with bank guarantee for the remaining amount, that similar pre-deposit order has been passed by the Tribunal in respect of stay application No. 501/2010 in appeal No. E/488/2010 filed by the appellant, that in the expression similar veins and blood vessels, the term blood vessels cannot be read independently and would be qualified by the word similar, that the expression similar veins and blood vessels has to be construed in ejusdem geneus with the preceding expression disposable and non-disposable Cannula for aorta, vena cavae, that, therefore, this entry would cover only those Cannula which are meant (a) for aorta and vena cavae, (b) for veins and blood vessels similar to aorta and vena cavae and (c) for intra-corporal spaces, that the Venflon IV Cannula, in question, are meant for use only with peripheral veins which are not similar to aorta and vena cavae, that in this regard he places reliance on opinion dated 08/4/04 of Dr. P. Ravindran of DGHS, that in any case, it is well settled law that while interpreting an exemption notification, the benefit of doubt must go to Revenue, that in this regard he relies upon the Apex courts judgment in the case of Liberty Oil Mills (P) Ltd. vs. CCE, Bombay reported in 1995 (75) E.L.T. 13 (S.C.), and Novopan India Ltd. vs. CCE, Hyderabad reported in 1994 (73) E.L.T. 769 (S.C.), that the exemption notifications are to be construed strictly at the stage of determination whether the assessee falls within the purview of the exemption and in the case of doubt, the benefit has to go to the State, that in any case, it is also well settled law [CCE, Indore vs. Parenteral Drugs (I) Ltd. reported in 2009 (236) E.L.T. 625 (S.C.)] that it is for the assessee to produce evidence and proof as to whether he is covered by the exemption notification whose benefit is being claimed by him, that when in the present case, the exemption is confined only to the disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces and when the assessee claims that the IV Cannula manufacture by him is meant for the veins and blood vessels similar to aorta and vena cavae, the evidence in this regard has to be produced by him, while no such evidence has been produced, that the appellant had concealed the relevant facts from the Department and have deliberately availed of the exemption for which they are not eligible and, hence, longer limitation period under proviso to Section 11A (1) has been correctly invoked and penalty under Section 11AC has been correctly imposed, and that cross examination of Dr. P. Ravindran, ADG (M), DGHS was not required as his opinion is not in respect of a particular assessee and, hence, denial of cross examination has not vitiated the proceeding in any manner. With regard to the appellants plea that since the Tribunals judgment in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) stands affirmed by the Apex Court by dismissal of the Government civil appeal and, hence, by virtue of the doctrine of merger, the Tribunals judgment in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) stands merged with the Apex courts judgment order dismissing the civil appeal and, hence, this order of the Apex court is a binding precedent, Shri Raha pointed out to the findings of the Tribunal in its order dated 12/5/09 reported in 2009 (242) E.L.T. 584 (Tri. Del.) in respect of stay application No. 2658/2009 in appeal No. E/2652/2008 EX (BR) and pleaded that this point has been considered by the Tribunal and the Tribunal has observed that the Tribunals decision in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) did not deal with the analysis of the entry No. 34 in the list No. 37 of the Notification No. 21/02-CUS and beside this, the decision in CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) was based on a number of certificates of experts produced by the assessee in relation to the product, in question, in the said case, while in the case in hand, undisputedly, the Department has produced a certificate from DGHS, while there is no independent evidence brought on record on behalf of the appellant, that in the stay order, the Tribunal also observed that a decision cannot be read like a statute and is to be understood with reference to what has been decided in a matter and not what may fallow from it, and hence the affirmation by the Apex court of the Tribunals order in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) is not a binding precedent, as that decision did not deal with the entry No. 34 of the list 37 of Notification No. 21/02-CUS. Shri Raha emphasised that IV Cannula being manufactured by the appellant are used only for peripheral blood vessels and not with great arteries or the great veins which are similar to aorta and vena cavae. Shri Raha, therefore, pleaded that there is no infirmity in the impugned order.
5. We have considered the submissions from both the sides and perused the records.
6. The appellant manufacture IV Cannula (Intravenous Cannula) of different gauges which are sold under the brand name Venflon. The point of dispute is as to whether these Cannula are eligible for full duty exemption under Notification No. 6/03-CE dated 01/3/03 and its successor exemption notifications. All these exemption notifications have an entry medical equipment (excluding folley balloon catheters) of Chapter 90 or any other Chapter, specified in list 37 appended to the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 21/02-CUS dated 01/3/02. The list 37 of the Notification No. 21/02-CUS dated 01/3/02, as amended from time to time, covers among other items, disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces. The point of dispute is as to whether the IV Cannula being manufactured by the appellant are covered by the above entry in list 37 of Notification No. 21/02-CUS. The Departments contention is that this entry covers only the three types of Cannula (a) disposable and non-disposable Cannula for aorta and vena cavae; (b) disposable and non-disposable for Cannula for veins and blood vessels similar to aorta and vena cavae and (c) Cannula for intra-corporal spaces. According to the Department, in view of the opinion of Dr. P. Ravindran dated 08/12/04, ADG, Directorate General of Health Services, the Cannula being manufactured by the appellant are not the Cannula meant either for aorta and vena cavae or for similar veins and blood vessels. Thus according to the Department the IV Cannula being manufactured by the appellant are not covered in the list 37 of the exemption Notification No. 21/02-CUS and, hence, are not eligible for exemption under Notification No. 6/02-CE and its successor notifications.
7. The appellants plea, on the other hand, is that the entry in list 37 of Notification No. 21/02-CUS covers (a) disposable and non-disposable Cannula for aorta and vena cavae; (b) disposable and non-disposable Cannula for veins similar to vena cavae (c) disposable and non-disposable Cannula for blood vessels and (d) Cannula for intra-corporal spaces. Thus, according to the appellant the word similar used in the above-mentioned entry in list 37 of Notification No. 21/02-CUS qualifies only the word veins and does not quality the expression blood vessels. Thus according to the appellant the above-mentioned entry in the list 37 of the Notification No. 21/02-CUS also covers the Cannula for any blood vessel. In this regard, the appellant rely upon the judgment of the Tribunal in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra), the civil appeal against which has been dismissed by the Apex court vide judgment reported in 2000 (121) E.L.T. A74 (S.C.). In the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) the Tribunal in para 7 of its judgment while interpreting an identical entry No. 34 in the exemption Notification No. 55/95-CUS had held that the term similar vein in Sl. No. 34 of the notification appears earlier to the term blood vessels and refers only to the term aorta and vena cavae and, therefore, the Cannula used for aorta and vena cavae and for similar veins are different from the Cannula used for blood vessels and that since the Cannula, in question, as per the expert opinion, can be used for blood vessels, the same would be eligible for exemption. Thus, in this judgment the Tribunal has held that the word similar in the entry disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces, qualifies only the word veins and does not qualify the word blood vessels and thus the expression blood vessels has to be read independent of the preceding expression Cannula for aorta, vena cavae and similar veins.
7.1 Beside this, it is also the contention of the appellant that the IV Cannula, in question, being manufactured by the appellant can be used for Cephalic veins, Basilic veins and Metacarpel veins etc. for intravenous drug administration, blood transfusion etc. and these veins are similar to vena cavae. As opposed to this, the Departments contention is that the IV Cannula, in question, can be used only for peripheral veins/arteries and cannot be used for aorta and vena cavae or for similar veins or arteries. It is the contention of the Department that the veins similar to vena cavae are the four pulmonary veins and the arteries similar to aorta are the pulmonary arteries and, hence, the IV Cannula, in question, are not covered by the above-mentioned entry. It has been pleaded on behalf of the Department that the opinion of the DGHS on the question as to whether the IV Cannula, in question, can be used for arteries and veins similar to aorta and vena cavae is binding on the Department and there was no need for cross examination of the official of DGHS who had given this opinion. It has also been pleaded by the Department that the expression similar veins and blood vessels in the entry must be construed in ejusdem generus with preceding expression and, therefore, this expression would cover only those IV Cannula which are meant for veins and arteries similar to aorta and vena cavae. With regard to the judgment of the Tribunal in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) and the Apex courts judgment affirming this judgment of the Tribunal by dismissing the civil appeal, the contention of the Department is that in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) the entry in list 37 of the Notification No. 21/02-CUS had not been properly analysed and this judgment of the Tribunal and also the Apex courts order affirming the same has been distinguish by the Tribunal in its stay order No. 455/09-EX (BR) dated 05/12/09 in respect of appeal No. E/2652/08 EX (BR) filed by the present appellant [2009 (242) E.L.T. 584 (Tri. Del.)].
8. We have considered the rival submissions on the question regarding the interpretation of the entry mentioned above in list 37 of the Notification No. 21/02-CUS. The entry, in question, is reproduced below -
Disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces.
Prior to Notification No. 21/02-CUS there was an identical entry No. 34 in Notification No. 55/95-CUS which has been interpreted by the Tribunals in its judgment in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra). In the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) the point of dispute was as to whether top brand scalp infusion set imported by the assessee M/s Saberwal Surgical (P) Ltd. were eligible for Customs duty exemption under Notification No. 55/95-CUS, the Sl. No. 34 of which covered disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces. In that case it was not the claim of the assessee that the scalp vein infusion sets were meant for aorta or vena cavae or similar veins. The Tribunal in para 7 of the judgment made the following observations the respondent clearly admit that the same is not used in aorta, vena cavae and similar veins. But, however, they are stating that it being a Cannula, it is for use in blood vessels. The term blood vessel as explained in all the certificates include arteries and veins. The term similar veins in Sl. No. 34 of the notification appearing earlier to the term blood vessel refers only to the term aorta and vena cavae. Therefore, Cannula used for aorta and vena cavae and similar veins are different in nature to the one used for blood vessels as can be seen from the various certificates produced. Now, we are required to see as to whether the item satisfy the term Cannula. On a perusal of the certificates, it is clear that the item does satisfy the term Cannula. As there is no claim for its use for aorta, vena cavae and similar veins, therefore we are required only to see whether the same is being used for blood vessels. Both the sides have produced large number of certificates which would help in the determination of this aspect of the matter.
Accordingly, on the basis of the certificates of various experts certifying that the scalp vein infusion sets, in question, are Cannula which can be used for blood vessels, the Tribunal held that the same would be eligible for exemption. In the same para, the Tribunals has accordingly given a finding on perusal of all the certificates from both the sides, a clear string of opinion is in favour the respondents and the item having satisfied the term Canula and it is used in blood vessels, therefore, the Commissioner (Appeals) having granted the benefit is totally justified. Thus, the Tribunal in this order has held that the term blood vessels in the entry No. 34 in the Notification No. 55/95-CUS is not qualified by the word similar appearing before the word veins and has to be read independent of the expression for aorta, vena cavae and similar veins. This judgment of the Tribunal has been affirmed by the Apex court by the way of dismissal of civil appeal. Though the Apex courts order dismissing the civil appeal does not record any reasons, in view of the Apex courts judgment in the case of Kunhayammed vs. State of Kerala reported in 2001 (129) E.L.T. 11 (S.C.) [para 44], the implication of the dismissal of the civil appeal, even if without recording any reason, is that the Tribunals order stands merged with the Apex courts order and the same would be a binding precedent. The point as to whether dismissal of civil appeal by the Apex court against lower courts/Tribunals order without giving any reason is a binding precedent or not, has also been dealt with by the Apex court in its judgment in the case of Medley Pharmaceuticals Ltd. vs. CCE, Daman reported in 2011 (263) E.L.T. 641 (S.C.) in para 32 of which the Apex court has held thus :
This court has consistently held that the medical supplies supplied to the Doctors are liable to excise duty. Elaborate consideration may not be forthcoming in these judgments, but, in our view, the issue stands concluded. We say so for the reason that this Court, in catena of cases, has opined that in case, the appeal has been dismissed in the absence of detailed reasons or without reasons, such order will entail the application of the doctrine of merger, wherein the superior court upholds the decision of the lower court from which the appeal has arisen. The apex court in the case of V.M. Salgaocar & Bros. (P) Ltd. vs. C.I.T., (2000) 5 SCC 373, has held as under :-
8 Different considerations apply when a special leave petition under Article 136 of the Constitution is simply dismissed by saying dismissed and an appeal provided under Article 133 is dismissed also with the words the appeal is dismissed. In the former case it has been laid by this Court that when a special leave petition is dismissed this Court does not comment on the correctness or otherwise of the order from which leave to appeal is sought. But what the Court means is that it does not consider it to be a fit case for exercise of its jurisdiction under Article 136 of the Constitution. That certainly could not be so when an appeal is dismissed though by a non-speaking order. Here the doctrine of merger applies. In that case, the Supreme Court upholds the decision of the High Court or of the Tribunal from which the appeal is provided under clause (3) of Article 133. This doctrine of merger does not apply in the case of dismissal of a special leave petition under Article 136.
Thus, in this judgment the Apex court has held that when civil appeal filed against order of the Tribunal or lower court has been dismissed by the Apex court, even if without giving any reasons, the doctrine of merger would apply and the order of the Tribunal or lower court has to be treated as upheld by the Apex court and becomes a binding precedent.
8.1 This question was also examined by the Constitutional Bench of the Apex court in the case of Waman Rao vs. Union of India reported in (1981) 2 SCC 362, wherein the Apex court has examined, in detail, the question as to whether dismissal by the Apex court without giving any reasons of the appeal against an order of the Tribunal or a High Court would be a binding precedent and the Apex court has answered this question in affirmative observing as under :-
40. It is also true to say that for the application of the rule of stare decisis, it is not necessary that the earlier decision or decisions of longstanding should have considered and either accepted or rejected the particular argument which is advanced in the case on hand. Were it so, the previous decisions could more easily be treated as binding by applying the law of precedent and it will be unnecessary to take resort to the principle of stare decisis. It is, therefore, sufficient for invoking the rule of stare decisis that a certain decision was arrived at on a question which arose or was argued, no matter on what reason the decision rests or what is the basis of the decision. In other words, for the purpose of applying the rule of stare decisis, it is unnecessary to enquire or determine as to what was the rationale of the earlier decision which is said to operate as stare decisis.
9. In the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra), the Tribunal interpreted the entry No. 34 the Notification No. 55/95-CUS has held that in this entry, the term blood vessels has to be read independent of the expression for aorta, vena cavae and similar veins and that the word similar would not qualify the expression blood vessels and accordingly IV Cannula meant for any blood vessels would be covered by this entry and would be eligible for exemption. This decision of the Tribunal has been affirmed by the Apex court vide judgment reported in 2000 (121) E.L.T. A74 (S.C.) by dismissing the civil appeal. In view of the above judgments of the Apex court, the decision of the Apex court in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) has to be treated as biding precedent even though while dismissing the civil appeal and affirming the Tribunals order, no reasons has been recorded. In view of this, we hold that the IV Cannula being manufactured by the appellant would be covered by entry in the list 37 of Notification No. 21/02-CUS and accordingly would be exempt from Central Excise duty under Notification No. 6/03-CE and its successor notifications. In this regard, the plea of the learned Counsel for the Department that Similar veins and blood vessels must be construed in ejusdem generus with preceding expression and that in view of the Apex courts judgment in the cases of Liberty Oil Mills (P) Ltd. vs. CCE, Bombay reported in 1995 (75) E.L.T. 13 (S.C.), and Novopan India Ltd. vs. CCE, Hyderabad reported in 1994 (73) E.L.T. 769 (S.C.), while interpreting an exemption notification, in case of doubt, the benefit has to go to the Revenue and that these points were not considered by the Tribunal in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) and by the Apex court, is not acceptable, as once the Tribunals judgment has been affirmed by the Apex court by the way of dismissal of the civil appeal, even if without giving any reasons, that becomes a binding precedent and in view of the Apex courts judgment in the case of Waman Rao vs. Union of India (supra) for applying the principle of stare decisis it is unnecessary to enquire or determine as to what was the rationale of the earlier decision which is said to operate as stare decisis. As regards the Tribunals stay order dated 12/5/09 in respect of an appeal filed by the Appellant involving an identical issue wherein the Tribunal expressing a contrary prima facie view, has ordered pre-deposit for compliance with the provision of Section 35F of the Central Excise Act, 1944, it is well settled law that an order passed by the Tribunal in respect of stay application expressing prima facie view has no precedence value.
10. The controversy in the present case can to be looked at from another angle also. Even if the Departments plea that the word similar appearing before the word veins would also qualify the expression blood vessels and accordingly the expression similar veins and blood vessels should be read as one expression and the term blood vessels should not be read independently, is accepted, in terms of the exemption notification the following type of disposable and non-disposable Cannula would be eligible for exemption (1) Cannula for aorta and vena cavae (2) Cannula for veins and blood vessels similar to aorta and vena cavae (3) Cannula for intra-corporal spaces. Now the question is as to which are the blood vessels similar to aorta and vena cavae.
10.1 As per the opinion dated 08/12/04 of Dr. P. Ravindran of Directorate General of Health Services aorta and vena cavae are anatomically classified as great vessels and the peripheral arteries and veins are smaller vessels. According to this opinion, while aorta and vena cavae are large blood vessels with thick walls and no valves, the peripherals veins have valves and thus, the peripheral blood vessels are not similar to Aorta and vena cavae. Accordingly, it has been opined that the Cannula for aorta and vena cavae which are used in heart surgery, are totally different from IV Cannula. In his opinion, Dr. P. Ravindran, has discussed the difference between the great blood vessels aorta and vena cavae and the peripheral blood vessels and accordingly has opined that the IV Cannula Venflon manufactured by the appellant are meant only for peripheral blood vessels and the same cannot be treated as the Cannula for aorta or vena cavae. He has also discussed the intra-corporal spaces and the Cannula meant for the same. Though in this case there is no claim of the appellant that the IV Cannula, in question, are meant for Aorta or vena cavae or for intra-corporal spaces, the alternate claim of the appellant is that the IV Cannula, in question, can be used with veins and blood vessels similar to Aorta and vena cavae. Dr. P. Ravindran of DGHS, however, in his opinion has nowhere discussed as to which are the arteries and veins similar to aorta and vena cavae. In this regard, the opinion dated 08/12/04 of Dr. P. Ravindran reproduced in para 6 of the impugned order is reproduced below:-
6. The Directorate General of Health Services (DGHS), vide their letter No. Z-36011/12/98-MG dated 08/12/2004, have given the following expert opinion in the matter :
Z-36011/12/98-MG dated 08/12/2004 Dte. General of Health Services (Medical General) I am directed to refer to your letter number C. No. IV (15) Hqrs. AE/D-III/11/2004-1955 dated 09/9/2004 and convey that the matter has been re-examined in the Directorate in consultation with experts in the field of Anatomy, Surgery, Neuro-Surgery, Cardio-thoracic Surgery and Anaesthesia from Central Government Hospitals. The opinion given by the experts is given below :
(i) IV Cannula (Venflon, Neoflon etc.) are primarily used in the peripheral veins and arteries for the purpose of blood sampling, blood transfusion, single and multiple drug infusion, arterial pressure monitoring etc.
(ii) Aorta and vena cavae are not similar to peripheral arteries and veins Anatomical differentials :
- Aorta and vena cavae are anatomically classified as great vessels, where as the peripheral arteries and veins are small vessels.
- The great vessels are close to the heart and opens into heart. The peripheral vessels (arteries and veins) are indirectly connected to the heart through the large and medium size vessels.
- The great vessels have big lumens where as the peripheral vessels have small lumens.
- The thickness of the walls of the Aorta and Vena cavae and that of peripheral arteries and veins differ.
- Aorta is an elastic artery while peripheral arteries are classified as muscular arteries.
- Inferior and superior vena cavae are large veins with thick wall with no valves, while peripheral veins have valves.
Physiological differentials :
The great vessels and the peripheral vessels differ in pressure gradient, volume of blood etc. Cannulas for Aorta, inferior cava and superior cava used in cardiac surgeries are totally different from IV Cannulas in length, diameter of the lumen and shape. These Cannula are big, of the size of drumstick and have holes for drainage of blood and have twisted wires all along its length to prevent twisting/kinking of the Cannula. The CVP Cannulas for measuring the Central Venous pressure are placed in the right atrium through internal jugular or subclavian vein, both of which are large veins. They measure 20 cm for adults and 10 cm for children; if it is through cubital fossa, then it measures 75 cms for adults and 40 cms for children. In contrast, the IV Cannulas are of short length (4-6 cm) with small lumen and cannot be used for monitoring CVP.
(iii) If IV Cannulae are used for access to medium/great vessels, the plastic can get detached and then may cause embolism, threatening the life of the patient.
(iv) In Pediatric Cardiac surgery, cardioplegia Cannula is used for inducing cardioplegia. However, if cardioplegia Cannula is not available the IV Cannula can be used in emergencies but it is not a substitute for cardioplegia Cannula. However, the standard texts do not advocate use of IV Cannula for such procedure.
(v) Intra corporal spaces imply non visceral cavities inside the body. There are specific catheters/drainage tubes available for accessing the pleural cavities, the peritoneal cavities, the sub-diaphragmatic cavities and intra ventricular spaces. These are larger in size, have bigger lumen, and have trochars for their introduction. In exigencies, where specific catheter is not available, IV Cannula are rarely used in abdominal/pleural cavities but this does not justify their use and they are not recommended by standard medical text books for this purpose.
Literature alongwith samples as per annexure is enclosed.
This issues with the approval of competent authority.
Thus the opinion of Dr. P. Ravindran of DGHS while explaining the difference between Aorta and Vena Cavae and peripheral blood vessels and what are intra-corporal spaces, does not explain as to which blood vessels are similar to aorta and vena cavae.
10.2 But the notification is not confined only to the IV Cannula meant for aorta or vena cavae and for intra-corporal spaces. It is also applicable to IV Cannula meant for the arteries and veins similar to aorta and vena cavae, if the Departments stand that similar veins and blood vessels means the veins and arteries similar to vena cavae and aorta is accepted. In this Regard, Dr. Prabhu Vinayagam, Assistant Manager (Training) of the appellant company has claimed that cipahlic veins, basilic veins and metacarpal veins etc. are similar to vena cavae and the IV Cannula can be used for these veins. The Department, however, has chosen to rely only on the opinion of Dr. P. Ravindran which, as discussed above, is silent on the point as to which blood vessels are similar to aorta and vena cavae and whether the Cannula, in question, can be used for the blood vessels similar to aorta and vena cavae. In view of this, permitting the cross examination of Dr. P. Ravindran was necessary, but unfortunately the same has not been allowed. In our view, therefore not permitting the cross examination of Dr. P. Ravindran in the circumstances of the case has vitiated the proceeding. Moreover the entry in the exemption notification does not prescribe the degree of similarity in respect of blood vessels similar to aorta and vena cavae and in broad sense, even peripheral veins would be similar to vena cavae as both carry de-oxygenated blood from various parts of the body to the heart and peripheral arteries would be similar to aorta, as both carry oxygenated blood from the heart to various parts of the body. For these reasons also we hold that the impugned orders denying the exemption under Notification No. 6/03-CE and its successor notification to the IV Cannula being manufactured by the appellant would not be sustainable.
11. In view of the above discussion, the impugned orders are not sustainable. The same are set aside. The appeals are allowed.
(Pronounced in open court on 02/06/2015.) (Rakesh Kumar) Member (Technical) (S.K. Mohanty) Member (Judicial) PK ??
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