Customs, Excise and Gold Tribunal - Delhi
Superior Air Products Ltd. vs Cce on 22 November, 2000
Equivalent citations: 2001(94)ECR410(TRI.-DELHI), 2001(136)ELT547(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. In this appeal filed by M/s. Superior Air Products Ltd., (hereinafter referred to as 'M/s. Superior'), the matter relates to the classification of the product which the manufacturer sought to classify under sub-heading No. 9402.00 of the Central Excise Tariff (CET), as Anaesthetic Trolley--steel furniture made partly or wholly of steel. The Commissioner of Central Excise, Delhi, who adjudicated the matter classified the said product under sub-heading No. 9018.00 of the CET as an anaesthesia machine. Sub-heading No. 9018.00 covered the instruments and appliances used in medical, surgical, dental or veterinary sciences. The adjudicating authority confirmed the demand of Rs. 3,23,682.77 and Rs. 18,224.25 (total Rs. 3,41,907/-). He had disposed of 2 show cause notices by a common order. A penalty of Rs. 25,000/- was imposed under Rule 173Q of the Central Excise Rules, 1944 (hereinafter referred to as the 'Rules').
2. The matter was heard on 25.9.2000 when Smt. Reena Khair, Advocate appearing for the appellants submitted that the anaesthetic trolley had been specifically referred in Notification No. 80/90-CE dated 20.3.1990 and their classification had been referred to as under Heading No. 94.02 which covers the following:
94.02 Medical, surgical, dental or veterinary furniture (for example, operating tables, examination tables, hospital beds with mechanical fittings, dentists' chairs); barbers' chairs and similar chairs, having rotating as well as both reclining and elevating movements; parts of the foregoing articles.
The appellants had not suppressed the facts and the demand was hit by time bar. The affidavits had been produced in support of the classification of the product under sub-heading No. 9402.00. It was her submission that the anaesthetic trolley was eligible for exemption under Notification No. 80/90-CE dated 20.3.1990 and that as the anaesthetic trolley was specifically mentioned at SI. No. 3 (XIX) of the Table to that Notification, there was no justification for demanding duty and imposing penalty.
2.1. In reply, Dr. Ravinder Babu, JDR submitted that the goods in question were complete machine and were beyond the scope of steel furniture. In common parlance, no one treat such complete anaesthesia machine simply as an item of steel furniture. They were not just anaesthesia trolley but even as per the understanding of the manufacturer they were branded anaesthetic machine. He referred to the product literature on record.
2.2. As regards limitation, it was his contention that the appellants had made incorrect statement and that the extended period of limitation had been rightly invoked. He relied upon the Supreme Court's decision in para 10 of the case of Jaishri Engg. Company (Pvt) Ltd. v. Collector of Central Excise--1989 (40) ELT 214 (SC) : 1989 (21) ECR177 (SC) : ECR C 1376 SC.
3. We have carefully considered the matter. The issue for our consideration is whether the product in dispute was an anaesthetic trolley, an item of furniture for medical and surgical use classifiable under sub-heading No. 9402.00 of the CET; or was it anaesthetic machine for use in medical, surgical, or dental sciences, classifiable under sub-heading No. 9018.00 of the under sub-heading No. 9402.00 and sub-heading No. 9018.00 during the relevant period was as under:
9402.00 Medical, surgical, dental or veterinary furniture (for example, operating tables, examination tables, hospital beds with mechanical fittings, dentist's chairs); barbers' chairs and similar chairs, having rotating as well as both reclining and elevating movements; parts of the foregoing articles. 9018.00 Instruments and appliances used in medical, surgical, dental or veterinary science, including scientigraphic apparatus, other electro-medical apparatus and sight-testing instruments.
4. The appellants had described their product in the excise records as anaesthetic trolley and claimed exemption from payment of duty, which was available to the steel furniture made partly or wholly of steel. Anaesthetic trolley was one of the named product under SI. No. 3 (XIX) of the Table annexed to Notification No. 80/90-CE dated 20.3.1990. From the printed catalogue recovered from the premises of the appellants' factory on 3.11.1993 by the visiting central excise officers, it was found that the said goods have been described by the manufacturer as anaesthetic machine. The production of anaesthetic machine had not been declared by the manufacturer to the Department. While anaesthetic trolley was an item of furniture, anaesthetic machine was an appliance used in medical, surgical, dental and veterinary sciences. Misleading description was given in the classification lists, and approval was obtained on the basis of incorrect facts. The product was found to be more than an item of furniture.
5. In the product literature, the goods had been referred to as anaesthetic machines. For the Model CUB Anaesthesia Machine (102000) the standard features were given as under:
Standard Features * Compact frame to fit into space constraint areas * Complete powder coated trolley, mounted on large antistatic rubber castors (for easy rolling) with brakes on front castors * Completely enclosed non interchangeable pneumatic circuitry (accessible by removing back cover) * Differentiated pipeline and 4 Nos. cylinder pressure gauges * Vaporiser manifold with provision for three vaporisers (Back bar fitting) * Ether bottle Vaporiser * Oxygen failure and Nitrous Oxide cut off Alarm--operates on Oxygen failure, cuts off Nitrous Oxide supply simultaneously * 9 inches long Oxygen and Nitrous Oxide gas flowmeter * Pin indexed gas specific dual Oxygen and Nitrous Oxide cylinder base system * Guarded Oxygen flush button * Patient Circuit with Heidbrink valve, face mask and two litre rebreathing bag * Instrument shelf * Steel Ventilator shell * Drawer Assembly * Dimensions (a) W 560 x D 650 x H 1350 (Approx) (Unpacked)
(b) W 650 x D 780 x H 1420 (Packed) * Weight--62 Kgs. (Approx without accessories) 5.1. Similarly, for the Model Pioneer Anaesthesia Machine (1010000), the following were the standard features:
Standard Features * Compact frame to (fit) into space constraint areas * Complete powder coated trolley, mounted on large antistatic rubber castors (for easy rolling) with brakes on front castors * Completely enclosed non interchangeable pneumatic circuitry (accessible by removing back cover) * Differentiated pipeline and 4 Nos. cylinder pressure gauges * Vaporiser manifold with provision for three vaporisers (Back bar fitting) * Ether bottle Vaporiser * Oxygen failure and Nitrous Oxide cut off Alarm--operates on Oxygen failure, cuts off Nitrous Oxide supply simultaneously * 9 inches long Oxygen and Nitrous Oxide gas flowmeter with Hypoxia Safety Device to ensure that patient is never subjected to pure Nitrous Oxide in blow out doses (Diagram - Not reproduced here) * Pin indexed gas specific dual Oxygen and Nitrous Oxide cylinder base system * Guarded Oxygen flush button * High Pressure Oxygen outlet for ventilator operation (4.22kg/cm2).
* Patient Circuit with Heidbrink valve, face mask and two litre rebreathing bag * Instrument tray * Fixed Stainless Steel Monitor tray, Auxiliary tray, Ventilator tray * Drawer Assembly * Dimensions (a) W 650 x D 850 x H 1625 (approx) (Unpacked)
(b) W 740 x D 980 x H 1690 (Packed) * Weight--80 Kgs. approx (without accessories) 5.2. In the Instruction and Maintenance Manual, the salient features for the superior pioneer anaesthesia machine were given as under:
* Complete frame to fit into space constraint areas.
* Complete Powder Coated trolley, mounted on large antistatic rubber castors (for easy rolling) with brakes on front castors. * Completely enclosed non interchangeable pneumatic circuitry (accessible only by removing back covers) * Gas specific 4 Nos. preset regulators.
* Differentiated pipeline and 4 Nos. cylinder pressure gauge.
* Vaporiser manifold with provision for three vaporisers (Back bar fitting). * Oxygen failure and Nitrous Oxide cut off Alarm--operates on Oxygen failure, cuts off Nitrous Oxide supply simultaneously. * 9 inches long Oxygen and Nitrous Oxide gas flowmeter with HYPOXIA SAFETY DEVICE to ensure that the patient is never subjected to pure Nitrous Oxide in blow out doses. * Pin indexed gas specific dual Oxygen and Nitrous Oxide cylinder base system. * Guarded Oxygen flush button with twist lock.
* High pressure Oxygen outlet for ventilator operation (4.22 kg/cm2). * Patient Circuit with heidbrink valve, face mask and two litre rebreathing bag. * Instrument Shelf * Fixed Stainless Steel Monitor shelf, Auxiliary shelf and ventilator shelf. * Drawer Assembly.
* Ether bottle Vaporiser.
5.3. From the product description, it is seen the product had a number of features to put them beyond the scope of steel furniture, and to bring them within the scope of medical and surgical appliances and apparatus.
6. Sub-heading No. 9402.00 covered the medical, surgical, dental or veterinary furniture. By way of example, operating tables, examination tables, hospital beds and dentists' chairs were mentioned. These were simply items of furniture without the addition of instruments, appliances or apparatus for medical and surgical use. The instruments--appliances and apparatus for medical and surgical use were classifiable under Heading No. 90.18 of the CET.
7. Under the Harmonised Commodity Description and Coding System (HSN) Explanatory Notes, the scope of the term furniture has been defined as under:
(A) Any "movable" articles (not included under other more specific headings of the Nomenclature), which have the essential characteristic that they are constructed for placing on the floor or ground, and which are used, mainly with a utilitarian purpose, to equip private dwellings, hotels, theatres, cinemas, offices, churches, schools, cares, restaurants, laboratories, hospitals, dentists' surgeries, etc., or ships, aircrafts, railway coaches, motor vehicles, caravan-trailers or similar means of transport. (It should be noted that, for the purposes of this Chapter, articles are considered to be "movable" furniture even if they are designed for bolting, etc., to the floor, e.g., chairs for use on ships). Similar articles (seats, chairs, etc.) for use in gardens, squares, promenades, etc., are also included in this category. (B) The following:
(i) Cupboards, bookcases, other shelved furniture and unit furniture, designed to be hung, to be fixed to the wall or to stand one on the other or side by side, for holding various objects or articles (books, crockery, kitchen utensils, glassware, linen, medicaments, toilet articles, radio or television receivers, ornaments, etc.) and separately presented elements of unit furniture.
(ii) Seats or beds designed to be hung or to be fixed to the wall.
7.1. While dealing with the scope of medical, surgical, dental or veterinary furniture, HSN explains that trolley for anaesthesia equipment is an item of furniture (refer inclusion No. (ii) at page 1577 of the HSN under Heading No. 9402). It is obvious that trolley for anaesthesia equipment is different than the trolley with anaesthesia equipment. The trolley with anaesthesia equipment is not the anaesthesia trolley but the anaesthesia machine. The anaesthesia machine was not classifiable as an item of furniture but was classifiable as an appliance and apparatus used in the medical and surgical sciences and was classifiable under sub-heading No. 9018.00.
7.2. According to the HSN Explanatory Notes under Heading No. 9018, the Heading No. 9018 does not cover medical or surgical furniture (refer exclusion (p) at page 1488 under Heading No. 9018.00).
7.3. Anaesthetic apparatus and instruments have been specifically described for inclusion under Heading No. 9018 (refer Clauses E at page 1490 under Heading No. 9018).
8. In the Indian Standard No. 11378-1985 specification far anaesthetic apparatus (anaesthetic machines) continuous flow inhalational for use with human, have been given. The apparatus could be moveable or designed to be attached to a wall or ceiling structure. When it is designed to be attached to a wall or ceiling structure, there would be no use for the trolley. Thus, the use of trolley was not an indispensable requirement of anaesthetic apparatus (anaesthetic machine). When the machine was moveable, it was provided in the ISI Standard that the design of castors and weight distribution of components was to be such at to minimise the possibility of the machine tipping over.
9. The mobility provided to the anaesthetic machine was thus for ease of use. The mobility did not impart the essential character to the machine. The essential character was imparted to the equipment installed on the trolley. In fact, anaesthetic machine could work independently without a trolley and the trolley was only for imparting mobility to the machine. The anaesthetic machine could as well be fixed at permanent or semi-permanent location without the use of a trolley. The trolley was only for the convenient use of the anaesthetic machine. The standard components were not for making the anaesthetic trolley complete but to impart it the character of anaesthetic machine.
10. Shri V.C. Singhal, Manager in his statement dated 3.11.1993 had stated as under:
It takes considerable time to the extent of 3-4 months to complete these trollies and that proper entries are made in central excise records after the completion of full testing, etc. It is not feasible to record the entries on day to day basis because the manufacture of trollies requires lot many components and considerable amount of time for testing. 10.1. This also shows that what was referred to by the manufacturer as anaesthetic trolley was in fact anaesthetic machine.
11. From the evidence on record, and as discussed by the adjudicating authority in para-10 of his order, it is also seen that the persons concerned with the use of the product understood it not as an item of furniture but as a surgical appliance. The goods were referred to as anaesthetic machine trolley type, which appears to be the correct description of the product.
11.1. The Government General Hospital, Madras had placed orders with the appellants under their communication dated 17.3.1992 (at page 123 of the paper book) for 12 Nos. of Anaesthesia machines trolley type. They have referred to as under:
Kindly arrange to supply 12 Nos. of Anaesthesia Machine Trolley Type.
12. The appellants had pleaded that Anaesthetic trolley and Anaesthesia machine are one and the same thing. It is their plea that an anaesthetic trolley must provide and be fitted with all the standard fittings, accessories and gadgets necessary for anaesthesia purposes to provide controlled flow of anaesthesia to the patients with improved patient safety and equipment operation. In their reply dated 26.8.1994 to the show cause notice, they have referred to as under:
Whether it is called an Anaesthesia Machine or Anaesthetic Trolley, it becomes a trolley or machine only when it contains the standard features described in our pamphlet or the pamphlet of Blease Medical Equipment Ltd. These features have been described as standard features in our pamphlet and also in the pamphlet of Blease Medical Equipment Ltd. They are the following:
(i) Stainless Steel frame;
(ii) Completely enclosed non-interchangeable pneumatic circuitry, which is made of copper. These are copper pipelines for interconnecting pipelines of flow meters, gauges for oxygen and nitrous oxide, vapourisors warning devices, outlet points;
(iii) The frame consists of instrument shelf, lower shelf, manifold, gas outlet block, yoke assembly on which cylinders are mounted.
12.1. We find that in the Product Literature of M/s. Blease Medical Equipment Ltd., England, there is a separate description of Blease Medical Chiltern Anaesthetic Trolley/Universal Anaesthetic Trolley on the one hand and that of Anaesthetic machines on the other hand.
12.2. In the Blease Chiltern Trolley, the following fittings were offered as standard:
Stainless Steel Frame Cylinder Content gauges (except C3H6) Oxygen flush, front panel mounted Oxygen operated failure warning device multi gas cut off fixed fresh gas outlet instrument shelf lower shelf and static castors with locks on front pair 9" flowmeter control box pipeline gauges for O2 and N2O 12.3. The universal Anaesthetic Trolley had been constructed with economy in mind. 12.4. As against the trollies, the anaesthetic machines were supplied with the following components:
Oxygen flush operated by push button with twist lock feature.
Cylinder contents gauges for each gas except C3H5. Pipeline gauges for oxygen, air and nitrous oxide. Oxygen operated failure warning device.
Oxygen operated multi gas cut off device (excludes air).
Fixed fresh gas outlet with 22mm male/15mm female taper.
Instrument shelf.
Overhead monitoring equipment shelf.
Lower shelf.
Drawer unit. For Superior Air Products Ltd. Patchat Cylinder Key.
12.5. For the Blease Front Line Anaesthetic Machines built in standards were as under:
Oxygen supply pressure failure warning devices.
Whistle to provide audible Indication of O2 supply pressure failure. Oxygen alarm reservoir with automatic multi-gas shut off in the event of O2 failure. Air entertainment valve to allow the patient access to ambient room air. Preferential oxygen flowmeter.
Touch coded oxygen flow control knob.
Height indexed flowmeter tubes.
Colour coded gauges for cylinders and pipelines.
Emergency Oxygen flush.
Common gas outlet over pressure protection.
Simplex rotameter.
Electrical sockets.
On/Off pneumatic switch.
Cardiff Swivel common gas outlet (can be mounted on left or right side of machine). Auxiliary high pressure oxygen outlet.
Tidy tray.
Multi-purpose hooks and mounting blocks.
Cable hook.
Drawer unit.
Roller bearing anti-static castors.
Lockable front castors.
Disposable Magill breathing circuit.
12.6. In the major Anaesthetic machines, the following were the standard fittings:
Button Shelf.
Overhead Shelf.
Drip stand.
Yokes for O2, NO2, C2O and C3H6 Cylinder content gauges for O2 N2O.
Pipelines with probes for O2 & N2O.
O2 Failure alarm with N2O cut off.
High pressure O2 outlet.
Emergency O2 tape.
Cardiff swivel gas outlet.
Magill breathing assembly complete.
Anti-static castors with brakes on front units.
Circle absorber bracket.
Ratchet cylinder key.
9" Flowmeter unit.
12.7. The list of standard features of the Anaesthetic machines leaves no scope of doubt that the machines were much more than an item of furniture, the anaesthetic trolley.
13. From the standard features of the product before us, it is clear that it is much more than a trolley and had been rightly classified as a machine, an appliance and apparatus for medical and surgical use.
14. We may also refer to the price of the product. The value of 61 items was declared as Rs. 20,63,352/- with an average price of Rs. 33,825 for each item. Other prices referred to are Rs. 33,000/- (page 127 of the paper book), Rs. 38,280/- (page 126 of the paper book), Rs. 32,500/- (page 124 of the paper book) and Rs. 37,500/- (page 122 of the paper book).
15. The appellants have referred to the affidavits filed by them in support of their claim that the anaesthetic trolley and anaesthetic machine were one and the same thing. We have already discussed the product literature, and the facts on record clearly establish that anaesthetic trolley was not the same as anaesthesia machine. In common parlance what was manufactured by the appellants, was a anaesthesia machine. We find that there are affidavits filed by the appellants, and there are affidavits filed by the Revenue. The two set of affidavits lead to different conclusions. The affidavits filed by the appellants do not refer to the standard features of the product with which they were related. While there is no dispute that there are products in the market known anaesthetic trolley but these are trolley thai, contain only furnishing and no mechanical equipment. The products before us contained more than items of furniture. They were machines for ready use only requiring consumables and other items for immediate use in the operation theatre. 15.1. In this regard, we may refer to the observations of the Bombay High Court in the case of Kulkarni Black and Decker Ltd. v. Union of India--1992 (57) ELT 401 (Bombay) : 1991 (37) ECR 377 (Bom). 15.2. Extracts from the decision of the Madras High Court in the case of Tawakkal Tanning Company are also given below:--(page 115).
The learned Counsel for the assessee contends that the Tribunal is in error in rejecting the affidavits as not "admissible in evidence and that in certain circumstances, the affidavits also can be taken as substantial evidence in the absence of the necessary documents. We find from the order of the Tribunal that they have not rejected the affidavits as not admissible in evidence. What they have stated is that they are not inclined to accept the affidavits as fully supporting the claim of the assessee for exemption in the absence of other relevant documents. Therefore, the Tribunal has not proceeded on the basis that the affidavits cannot be taken as evidence, but they have not chosen to give any weight to the affidavits in the absence of other corroborative documents or materials. Merely because the assessee has chosen to produce affidavits in support of his claim for exemption, it cannot be said that it must be automatically accepted as sufficient proof of the claim for exemption. Whether the statements made in the affidavits should be taken as correct or not is for the Tribunal, and it cannot be said that in every case, if evidence is adduced in the form of affidavits, it should be straightway accepted by the Tribunal without reference to the other facts and circumstances. In our view, in this case, the exporters, who had given affidavits, could have easily produced the agreements entered into with the foreign buyers to show that the export contract was entered into before the sales were effected by the assessee and that the said sales are penultimate sales preceding the export sale". Oji the facts, the Tribunal appears to have come to the right conclusion. The tax case is dismissed.
15.3. In the case oflndru Rantchand Bharvani v. Union of India--1992 (59) ELT 201 (SC) : 1988 (19) ECR 295 (SC), the affidavits of various witnesses were filed after the initiation of the proceedings and the Supreme Court observed that the burden was not discharged by the petitioners with such delay in filing of the affidavits. In the present case also, two affidavits were filed by the appellants on 6.2.1995 while the show cause notice had been issued on 4.11.1993 and 24.5.1994.
15.4. Thus, no reliance could be placed on such affidavits.
16. As regards the limitation in para-13, the adjudicating authority had discussed the justification for invoking the extended period of limitation.
16.2. We find that no full and complete description was given in the classification list. In the classification list, the goods were described as trolley while the same were described in the product literature, invoices, etc., as machine.
16.3. What is 'suppression of fact' for the purposes of provisions to Section HA of the Central Excises Act, 1944 will depend on the specific circumstances of each case. In the case ofjayshree Engg. Company (Pvt.) Ltd. v. CCE--1989 (40) ELT 214 (SC) : 1989 (21) ECR177 (SC) : ECR C 1376 (SC), the Hon'ble Supreme Court had observed that whether there was any fraud, collusion, wilful mis-statement or suppression of facts for the Deptt. to justify the claim of duty beyond the period of six months was a question of fact. The Hon'ble Supreme Court had further observed that the fact that the Department visited the factory of the appellants and they have been aware of the production of goods in question were not reason for the appellants not to truely and properly describe those goods. It was further added that having come to the conclusion that there was deliberate suppression or wrong statement, it follows automatically that the Tribunal was justified in upholding the imposition of penalty.
16.4. The appellants had not declared the goods in question correctly. The adjudicating authority after analysing the facts on record, had held that the appellants had failed to properly declare the product which they had manufactured in their factory and that amounts to suppression of facts.
16.5. When no classification list was filed in respect of goods, it was tantamount to suppression of facts refer Kiran Spinning Mills v. CCE, Bombay-II--1987 (30) ELT 550 (Tribunal) : 1987 (13) ECR 563 (T).
16.6. Thus, the allegation of suppression of facts is established against the appellants and the extended period of limitation has been correctly invoked.
17. In the light of the above discussion, we do not find any merit in this appeal. In the facts and circumstances of the case, the penalty imposed was also justified.
18. As a result, the appeal is rejected. Ordered accordingly.