Madras High Court
Becton Dickinson India Private Limited vs The Assistant Commissioner Of Customs on 18 September, 2019
Author: Anita Sumanth
Bench: Anita Sumanth
Writ Petition No.16112 of 2009
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 18.09.2019
CORAM
THE HONOURABLE DR. JUSTICE ANITA SUMANTH
Writ Petition No.16112 of 2009
and M.P.Nos.1 and 2 of 2009
Becton Dickinson India Private Limited,
represented by Anumeha Soni
Legal Counsel
5th Floor, Signature Tower – I,
South City – I, Gurgaon,
Haryana – 122 001.
...Petitioner
Vs
1. The Assistant Commissioner of Customs
(Group V-B/C),
Office of the Commissioner of Customs,
Customs House, 33, Rajaji Salai,
Chennai – 600 001.
2. The Central Board of Excise & Customs,
Ministry of Finance (Department of Revenue)
New Delhi.
... Respondents
Prayer: PETITION filed under Article 226 of The Constitution of India praying for
the issuance of Writ of Certiorari calling for the records on the files of the first
respondent in Order – in – Original No.9157/2009 dated 14.5.2009 and quash
the same.
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http://www.judis.nic.in
Writ Petition No.16112 of 2009
For Petitioner : Mr.K.A.Parthasarathy
For Respondents : Mr.Pramod Kumar Chopda
Central Government Standing Counsel
---------------
ORDER
Heard Mr.Parthasarathy, learned counsel for the petitioner and Mr.Pramod Kumar Chopda, learned Central Government Standing Counsel for the respondents.
2. The challenge is to an Order-in-original dated 14.05.2009 passed by the Assistant Commissioner of Customs. The issue relates to the rate of tax on Intravenous Cannulas and spinal needles. The petitioner was claiming benefit of Notification No.21/2002 which, at Sl.No.363(A), provides for basic customs duty at the rate of 5%. It also claimed benefit of Notification No.6/2006 in respect of Neoflon, Whitacre needle and Venflon Pro safety, which provides for nil CVD at Sl.No.61(a).
3. No counter has been filed in this matter, despite a last chance having been afforded to the respondents.
4. The Assessing Authority has rejected the claim for rate of tax as per the aforesaid Notifications on the ground that the said Notifications cover only those cannulas that are capable of use in major veins, such as aorta and vena cave. According to him, cannulas that can be used on peripheral veins and blood vessels would not be entitled to the benefit of the Notification. He relied on the use of the word 'similar' in the notification that, according to him would cover 2/8 http://www.judis.nic.in Writ Petition No.16112 of 2009 only those cannulas capable of use on major veins/blood vessels. According to the petitioner, the distinction noted by the Assessing Officer has no basis insofar as the Notification is intended to cover all cannulas used in all blood vessels and there was no intention to restrict the same as had been done by the Officer.
5. The Assessing Authority refers to the descriptive catalogues of the products noting that Venflon and Neoflon are used in infusion therapy systems and are ported intra venous cannulas. According to him, Venflon and Neoflon are catheters using thin walled technology used for pediatric/neonatal use. Quincke Spinal needles and Whitacre Pencil Point needles are likewise used for anesthesia. Thus, none of the cannulas/needles imported by the petitioner would be suitable for use with major arteries.
6. This issue has been considered earlier by the CEGAT (as it was then) in the case of Commissioner of Central Excise, Coimbatore V. Saberwal Surgical (P) Ltd. (2000 (117) ELT 400) and in respect of which an appeal was filed by the Revenue that came to be dismissed by the Supreme Court on 17.07.2000. The contention of the Department before the CEGAT was almost identical to that before me now to state that the cannulas referred to in Notification No.55 of 1995 should be used only for aorta and vena cavae and should be read independent of the phrase 'similar' veins. The discussion at paragraph 7 is relevant and is extracted below:
7. On a careful consideration of the submissions and on a perusal of the entire records and the evidence produced by both sides in the form of miscellaneous application, we are of the considered opinion that the evidence on record produced both of the Revenue and the respondent is in 3/8 http://www.judis.nic.in Writ Petition No.16112 of 2009 favour of the respondents' submission and requires to be accepted. It is seen that the item was being granted benefit for a long time and also that there was a clear opinion given by the authorities of DGHS through their Expert Committee to grant the benefit. It was only an other opinion obtained subsequently which resulted in the proceedings which is in contradiction to the opinion given by the Expert Committee of DGHS, which promoted the department to issue show cause notice to deny the benefit. In the concerned notification, mere is no requirement for any certification of the item for use in a particular manner nor declaring the same to be falling within the description of any of the serial numbers shown therein, by the DGHS. The view taken by the Revenue that the subsequent opinion withdrawing the benefit of the item under question has no meaning at all as the Notification does not lay down any such criteria of certification from DGHS. It is only in respect of 'any other medical equipment including accessories or spare parts or both of such equipment' which are not specified in the table of the Notification which requires certification from the DGHS to the effect that they are 'life saving equipment, accessories or spare parts for the purpose of grant of the benefit', as can be seen from the proviso to the notification. In any case, the item being a 'Cannula' cannot be disputed as the certification given by the experts on both the sides do not dispute the item being an 'intravenous cannula'. The Sl. No. 32 incorporates both disposable as well as non disposable cannula. The respondents 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 vein' in Sl. No. 34 of the notification appear 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 being used for "blood vessels". Both sides have produced large number of certificates which would help in the determination of this aspect of the matter. On examination of the certificates of the experts produced by Revenue, it is seen that the certificate of Dr. J.K. Periasamy of G. Kuppuswamy Naid Memorial Hospital has opined in the following terms :-
"With reference to the TOP Brand scalp vein infusion set, these scalp vein infusion sets are used to gain access in to peripheral veins in children and adults with very small veins. The venous access is essential for any hospitalised patient to give injections, IV fluids, blood etc. This is a disposable item though can also be sterilised and reused. Hence the above item can be used in routine practice as well as during major surgeries (like surgeries of blood vessels) when larger bore needles cannot be used."4/8
http://www.judis.nic.in Writ Petition No.16112 of 2009 In the like manner, Dr. S. Natarajan of the same hospital, and Dr. P.R. Vydianathan have supported the respondent's case that it is used to gain access to peripheral veins and in children and adults with very small veins. The certificate of Dr. Vydianathan is that venous access is essential for any hospitalised patient to give injections, IV fluids, blood etc. and the item is a disposable one though can also be sterilized and reused. The certificate states that the item can be used in routine practice. The certificate of Dr. Sambasivam merely states that the item is not used for surgery in major blood vessels and cannot be considered as cannula for aorta, vena cavae and similar veins. This aspect is already accepted by the respondents that the item is not used for such purpose, hence this certificate does not help the Revenue. The Revenue has posed questions to other experts by sending samples and they have also volunteered to answer. To the question posed whether it can be used for aorta, vena cavae and similar veins and blood vessels, and they have merely answered it by showing that it cannot be used as such; while Dr. Thomas Alexander of Kovai Medical Center and Hospital Ltd. has clearly opined that these are disposable cannula used for cannulating peripheral veins and occasionally for access to peripheral arteries and that they are not used for direct cannulation of the aorta or inferior vena cavae. Therefore, this certificate is clearly in favour of the respondents. Likewise, there are number of other certificates also produced by the Revenue which are all in favour of the respondents except those where in a specific question was asked with regard to the exclusion portion of the notification which has been answered in negative, which are not required for purpose of determining the matter. We notice that the respondents have also produced large number of certificates from eminent doctors like Dr. K.M. Cherian, Emeritus Professor in Cardio Thoracic and Vascular Surgery of Dr. M.G.R. Medical University. Also there are other senior experts like Dr. A. Ramamoorthy, Dr. S. Ranjan of the same University who have all opined in favour of the respondents regarding its use in the blood vessels. There are further opinions of experts like Dr. V. Satya Prasad of Amrita Institute of Medical Sciences and Research Centre and Dr. S. Thanikachalam, Director of Cardiac Care Centre of Sri Ramachandra Medical College & Research Institute. On a perusal of all the certificates from both sides, a clear string of opinion is in favour of the respondents and the item having satisfied the term 'cannula' and it is used in blood vessels, therefore the Commissioner (Appeals) having granted the benefit is totally justified. The Revenue's plea in the appeal is to interpret in the light of the High Court of Calcutta's judgment in Trio Marketing Pvt. Ltd. which was context of the description in Notification No. 208/91-Cus., dated 22-9-1981 which is not pertinent and relevant with regard to interpretation to be given to Sl. No. 34 of Notification No. 55/95. The other grievance is that the Commissioner in other cases had remanded the matter and hence he should not have arrived at the final conclusion is also not justified in view of the fact that the Tribunal had given an opportunity to the Revenue to produce all the evidence in their support, and Revenue, through their miscellaneous application, has produced all the evidences in the form of expert's opinion which has been taken on record and the said expert evidence is also in favour of the respondents. It is clarified that in this order we have only considered a scalp vein set which has a shorter, 5/8 http://www.judis.nic.in Writ Petition No.16112 of 2009 narrower tubing to which a metal needle (cannula) finely coated with teflon is attached. At this point of attachment, it has a "butterfly" plastic strip. Therefore, it is distinct from a "drip" infusion set which has a longer, thicker tubing; a longer needle with no coating; an air-trap-cum-drip speed monitoring bulb. In the product under consideration, there is no such air- trap and drip speed monitoring bulb also.
7. As noted earlier, this decision has been confirmed by the Supreme Court and has been followed in the case of Medisphere Marketing (P) Ltd. V. Commissioner of C.Ex.New Delhi (2001 (131) ELT 608), also confirmed by the Supreme Court in SLP (Civil) No.0012-0017 of 2002 on 07.02.2003. These decisions were specifically brought to the notice of the Assessing Authority, who merely brushes them aside stating that 'the Apex Court also has not gone into the merits of the case. Hence, in view of the above inadequacies, the order cannot be stated to be good in law'.
8. The approach of the Assessing Officer certainly cannot be countenanced. The importance of adherence to judicial discipline has been set out unequivocally by the Supreme Court in the case of Union of India and others V. Kamalakshi Finance Corporation (AIR 1992 SC 711) and hence the conclusion of the Assessing Authority contrary to the pronouncements of the CEGAT, confirmed by the Supreme Court, is liable to be reversed.
9. The respondent relies on a circular dated 06.02.2007, which appears to state that cannulas are used for peripheral veins and arteries that are different from aorta and vena cavae. The Officer also refers to two subsequent decisions, one in Eastern Medikid Ltd. V. CCE,Delhi (2008 (227 ELT 392) and the other in 6/8 http://www.judis.nic.in Writ Petition No.16112 of 2009 this petitioners' own case, wherein this issue is stated to have been referred to a Larger Bench for re-examination.
10. Despite a pointed query, no subsequent order of a Larger Bench that has taken a view contrary to that of the CEGAT in the decisions of Saberwal Surgical and Medisphere (supra) is brought to my notice by either learned counsel.
11. Thus, I am of the considered view that this very issue has been considered by the CEGAT as confirmed by the Supreme Court and the Assessing Officer erred in not following and applying the rationale of the same. The impugned order is set aside and the Writ Petition allowed. No costs.
Consequently, connected Miscellaneous Petitions are closed.
18.09.2019 Index : Yes/No Speaking Order/Non speaking Order sl To
1. The Assistant Commissioner of Customs (Group V-B/C), Office of the Commissioner of Customs, Customs House, 33, Rajaji Salai, Chennai – 600 001.
2. The Central Board of Excise & Customs, Ministry of Finance (Department of Revenue) New Delhi.
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