Customs, Excise and Gold Tribunal - Delhi
Equipment Sales Corporation vs Collector Of Customs on 25 January, 1988
Equivalent citations: 1988(15)ECC287, 1989(39)ELT431(TRI-DEL)
ORDER M. Santhanam, Member (J)
1. This appeal is against the orders of the Collector of Customs, Bangalore dated 27.3.1987.
2. The appellants are dealers in Medical equipments. They placed orders with M/s. Pharma Plast, Drena Plast Division, Denmark for the supply of Ostomy products, Drainage Bags, Bulk Sterile etc. The Drainage Bag consists of a long flexible drainage tubing with a connector on one end with a protective cap and the other end goes into the bag. There is also an outlet for emptying the bag. The appellants filed a Bill of Entry No. 71 dt. 16.2.1985. The importers claimed that the goods imported were covered under OGL vide Appendix 6, List No. 2, SI. No. 38 of the Import Trade Control Policy for AM 1984-85. The appellants contended that the goods imported were wholly exempted from the customs duty as also the additional duty of customs, in terms of Notification 208/81-Cus., dated 22.9.1981. The Customs House did not accept the appellants' contentions and a show cause notice was issued on 7.3.1985 asking the appellants to show cause as to why the goods should not be confiscated and penalty imposed. The appellants filed a detailed reply and on 16.4.1985, the Collector of Customs, Bangalore passed orders confiscating the goods with an option to redeem the same on payment of a fine of Rs. 9,16,000/-.
3. An appeal was filed before the Tribunal. The appellants also produced clarifications issued by the Director General of Health Services stating that the Urinary Drainage Bags should be classified as Male and Female Urinary Incontinence Sets and was included in Notification 208/81-Cus., dated 22.9.1981 (Item No. 22). After admitting the evidence, the Tribunal directed the Collector of Customs, Bangalore to examine the issue as de novo.
4. A fresh show cause notice was issued by the Superintendent on 14.2.1986 enclosing the opinion of Dr. H. S. Bhatt of Christian Medical College and Hospital, Vel-lore to the effect that the samples of plastic bags supplied were not used for Collostomy, Illeostomy etc. The appellants submitted a detailed reply and drew the attention of the authorities to the clarification used by the Director General of Health Services. A copy of the catalogue of Ostomy and Incontinency Aids by M/s. Dauns Surgical Ltd., England was also submitted. The Collector passed an order on 31.3.1986 rejecting the contentions of the appellants. The goods were confiscated and the appellants were given an option to redeem the same on payment of a fine of Rs. one lakh.
5. Aggrieved by the order, the appellants again approached this Tribunal. The Tribunal set aside the order of the Collector and directed the Collector to re-decide the matter after notice to the appellants. The Tribunal also pointed out that the attention of Dr. Bhatt or any other expert could be drawn to certificate from DGHS and comments of such experts obtained in respect of the certificate. The Collector issued yet another show cause notice on 16.2.1987 enclosing the opinion of Dr. Joseph A. Anthony and Dr. A.F.A. Mascrannas of St. John's Medical College, Bangalore. The appellants in their reply referred to the clarification issued by the DGHS and submitted the certificate for Dr. H.S. Agarwal. The appellants requested the Collector to allow them to cross-examine Dr. Joseph A. Anthony and Dr. A.F.A. Mascrannas. On 27.3.1987, the impugned order was passed confiscating the said goods and giving the appellants an option to redeem the same on payment of a fine of Rs. One lakh. The benefit of Notification 208/81-Cus. was denied. Hence the appellants are once again before this Tribunal.
6. Shri V. Lakshmi Kumaran, Ld. counsel for the appellants submitted that the clarification issued by Dr. H. S. Agarwal of DGHS, in reply to their letter dated 12.2.1987 set at rest the controversy. In this communication, the A.D. General has confirmed that Urinary Drainage Bag is a part of a Male and Female Urinary Incontinency Set and is covered under the Ostomy products Item No. 22 of List-B of the Exemption Notification 208/81-Cus., dated 22.9.1981, Ministry of Finance. The Ld. counsel urged that this is an Ostomy product and it is used during the Male-Female Urinary Incontinency. He stated that under the Medical and Surgical Nursing Procedure, Urinary Incontinency Sets are part and parcel of the system. For an individual to suffer from incontinency was one of the most emotional upsetting things, and there are various devices for dealing with the Urinary Incontinency from catheters to absorbent pads. This type of urinary drainage bag has a closed urinary drainage system. He cited page-324 from General Text Book of Nursing by Evelyn Pearce. Section 9 of this book deals with the "The patient with a Genito-urinary disorder". When the patient is sitting in a chair, the drainage bag should be hung low. The drainage bag is widely used to make sure that the catheter is draining properly and to prevent undesirable side effects. He urged that the term "Incontinency" has been defined in Shorter Oxford English Dictionary as "inability to retain a natural evacuation". The goods imported are used as "Night Drainage Bags", and have a capacity of 2 litres. There is an integral non-return valve to prevent back flow of urine. Such a precaution is necessary to prevent bacterial infrection by the urinary flow travelling upwards towards the body. There is provision for hanging the same from standard Night drainage Frame.
7. The Ld. counsel also urged that the DGHS being the highest authority, his clarification cannot be ignored. The Urinary Drainage Bag is clearly part of the incontinency set entitled to the exemption. Such a drainage bag is an integral part of the equipment/apparatus during Ostomy operations. This is a life saving equipment and is included under SI. No. 22B of the Notification as also in Appendix 6 of the I.T.C. Policy. He pointed but that the Collector has erred in observing that bottles can be substituted as urine bags. The use of bottles besides being cumbersome is definitey unhygienic and cannot operate as a suitable substitute for these urinary drainage bags. The bags can be used by patients who have to move on wheels and stretchers. The close drainage system and the protective cap prevent bacterial infection.
8. The appellants produced a certificate issued by the DGHS. If the Collector wanted to have further expert opinion, he could have approached the DGHS, Ministry of Health. This caliberation in this bag cannot be a ground to reject it from being a life saving equipment. He, therefore, submitted that the goods are covered under Sl. No. 22B of the Notification 208/81-Cus., dated 22.9.1981.
9. Shri J. Gopinath, SDR stated that the notification would apply only if the goods are Ostomy products or Male or Female Urinary Incontinency Sets. He stated that Dr. A.F.A. Mascrannas and also Dr. Joseph A. Anthony have given opinion holding that the goods could not be classified as Male or Female Urinary Incontinency Sets. They have differed from the opinion of Dr. A.K. Bhoumik in his communication dated 13.11.1985. The SDR stated that to be an incontinency bag, the capacity should be 750 ml. A Night Drainage Bag having a capacity of 2 litres cannot be considered as an incontinency bag. Further such bags should be "leg bags", for promoting continence with facility for keeping them fastened. He stated that no caliberation is required for Night Drainage Bags as it is merely for collecting the urine from the affected persons. He contended that there is no facility for keeping the bag suspended from a hook. He emphasised that the bag cannot be considered as "life saving equipment" or as a Male or Female Urinary Incontinency Set.
10. The classification of the Urinary Drainage Bags under Heading 90.17/18 is not disputed. The only question to be considered in this appeal is whether the benefit of Notification 208/81-Cus. dated 22.9.1981 is applicable. Item 22A of the Notification under sub-heading 'B' is as follows :-
"Ostomy products (appliances) for managing. Illeostomy, ureterostomy, Heal conduit urostomy stoma cases such as bags, belts, adhesive seals or discs or rolls, adhesive remover, skin barriers, microplre surgical tapes, bag closing clamps, Karaya seals, paste or powder, irrigation sets, plastic or rubber faceplates, flanges, male or female urinary incontinency sets, skingles in parts or sets."
11. We also notice that Appendix 6, List No. 2, Item No. 38 of the ITC Policy for AM 1984-85 contains the similar wordings. If these goods are "male or female urinary incontinency sets", then the benefit of the notification cannot be denied. The appellants have produced before us a catalogue issued by the suppliers. The products are for "promoting continence". From a perusal of the literature, filed by appellants, it is seen that the patients affected by incontinence have, unfortunately, to face urinary problems of a highly complicated nature. A certain amount of understanding and moral support is absolutely essential to assist such patients. Viewed in the complexity of the problem, the use of urinary drainage bags is absolutely essential and is a necessary measure and device for collecting the urine from the affected persons. Such types of bags have a closed urine drainage system with a long and flexible drainage tubing. There is a provision for protection cap as also non-return valve besides an outlet tap. These precautions enable the use of such urine bags with safety and free from bacterial infection and is definitely a hygienic method of assisting the persons concerned. We must say that the notification prescribed three schedules of exemptions of "life saving drugs and medicines". Schedule 'A' refers to Life Saving Drugs and Medicines, Schedule 'B' to Life Saving Equipments. There is a Schedule 'C in respect of Drugs and Medicines not specified in Heading 'A' and 'B'. We notice that in regard to Schedule 'C, the Director General or Deputy Director General or Assistant Director General, New Delhi is specified as the expert who should certify in each individual case to be life saving drugs, medicines or equipments. In other words, we must point out that the notification itself contemplates a specified authority who could certify whether particular items are life saving equipments or not. No doubt, in respect of heading 'A' & 'B', no such stipulation is prescribed. Nevertheless, if we take the notification as a whole, we can come to the conclusion that the opinion of DG(HS), ADG(HS) have to be given credence in deciding the issue. In this case, the appellants obtained the opinion of Dr. A.K. Bhoumik for, (sic) Director General of Health Services. Thereafter, the department relied on the views of Dr. H. S. Bhatt who was of the view that these equipments are not used for male or female urinary incontinency sets. The appellants wrote to the ADG(HS) on 12.2.1987. In their letter, they drew the attention of the ADG(HS) to the opinion offered by Dr. Bhatt. They also forwarded the opinion of Dr. V. J. Anand of Maulana Azad Medical College. The ADG(HS) was requested to re-affirm that the import of Urine Drainage Bags were covered under the Heading Male or Female Urinary Incontinency Sets was also covered under Notification 208/81-Cus., dated 22.9.1981. In reply to this letter, a communication has been received from Dr. H. S. Agarwal, ADG (Medical) dated 15th March, 1987 who confirmed that the Urine Drainage Bag was a part of the Male or Female Urinary Incontinency Set. This opinion, which is a re-affirmation of the earlier opinion by the competent authorities cannot be ignored without valid reasons. The emphasis is greater because the notification itself constitutes this authority to certify the nature of drugs, medicines or equipments in respect of those falling under Heading 'C.
12. In the prior order, the Tribunal directed the Collector to draw-the attention of Dr. H.S. Bhatt to the opinion of the DGHS. The Tribunal, however, took care to point out that if the opinion of other .expert was obtained, his attention could be drawn to the certificate of the DGHS and comments of such expert obtained in respect of such certificate. It is significant to note that the Collector did not draw the attention of Dr. H.S. Bhatt to the opinion of DGHS as directed by the Tribunal. Be that as it may, the Collector got the opinion of two other experts i.e. Dr. A.FA. Mascrannas and Dr. Joseph A. Anthony. But one would expect the Collector to have drawn the attention of the experts to the observations of the Tribunal and requested the experts to give their comments in regard to the certificate issued by the recognised authority, namely, the DGHS. We regret to note that in their certificates, Dr. Mascrannas and also Dr. Anthony have generally stated that the parts could not be termed as Male and Female Urinary Incontinency Sets as stated by Dr. A.K. Bhoumik of DGHS. The communication received from Dr. Anthony and Dr. Mascrannas do not contain specific reasons as to why the opinion of Dr. A.K. Bhoumik should be ignored. A general statement that the sample bag is used only for collecting the urine or any other body fluid is hardly sufficient to reject the opinion of Dr. A. K. Bhoumik. We must point out that the Collector ought to have secured detailed comments from these experts if he wanted to differ from the views expressed by the DGHS more so, as the Tribunal directed such a course. At least, opportunity should have been granted to the appellants to test the opinion by cross-examination of the Doctors. The certificates issued by the recognised authorities constituted by the Government, cannot be arbitrarily disregarded. We do not, for a moment, say that the certificates of the DGHS should have unquestioned acceptance. But at the same time, such certificates should not be ignored without any reasons or on whimsical or illusory grounds. It is obligatory to state the reasons as to why the opinion is not accepted. Since the expert opinion secured by the Revenue herein do not specify the reasons for rejecting the earlier opinion, we do not accept the contentions of the Revenue that the benefit of the notification should be denied to the appellants.
13. It was urged that the bag is of 2 litres capacity and had no provisions for being used as "leg bags". But these arguments are not relevant, for, the DGHS in his considered opinions has confirmed that these bags are part of Male or Female Urinary In-continency Sets and is covered under Ostomy products. The appellants have also filed the extracts from Medical Surgical Nursing Procedure which emphasises that these drainage bags are part of catheterisation sets. The bags have special caliberation to find out the discharge of urine during a particular period. If it is an ordinary urine bag for merely collecting the fluids, such caliberation would be unnecessary. The persons concerned with Ostomy like Dr. K. C. Garg, Hony. Secy., Ostomy Association has given a certificate stating that the imported "bags" is an Ostomy product. Dr. P. Prasad has given a certificate stating that the Urinary Incontinency Bag system is to be used for the management of patients in whom ureterostomy has been carried out. Thus, we notice that the opinion of the DGHS as also the opinion of these experts lend support to the contentions of the apellants. The Ld. counsel for the appellants pointed out that the cost of the imported urine bags was negligible and the same is used even by people with little resources and the same is a life saving equipment. He emphasised that such equipment are in high demand in hospitals, Nursing Homes and number of patients require them as a measure of amelioration in their suffering due to urinary incontinence. Hence, on a careful consideration of all the circumstances, we are of the view that the appellants are entitled to the benefit of exemption under Notification No. 208/81-Cus., dated 22.9.1981 vide Item 22A.
14. In the result, the impugned order is not sustainable and the same is set aside. The appeal is allowed. We direct expeditious clearance of the consignment since the goods are under confiscation. The efficacy of such life saving equipments should not be allowed to be lost by efflux of time due to such prolonged controversy on the applicability of the exemption notification.