Customs, Excise and Gold Tribunal - Delhi
Vishal Surgical Equipment Co. vs Collector Of Customs on 22 February, 1990
Equivalent citations: 1991(55)ELT393(TRI-DEL)
ORDER Harish Chancier, Member (J)
1. In the above captioned appeals the issue involved is whether 'Foley Balloon Catheters' are similar to 'Suction Catheters' in terms of A.M. 1985-88 Policy, appendix 6, list 2 item No. 31 and whether the goods imported are entitled to the benefit of Notification No. 208/81-Cus., dated 22nd September, 1981 under serial No. 32 of Heading B of the schedule annexed to the said notification. Since the issue involved in the above captioned 10 appeals is common, the same are being disposed of by this common order. For the sake of convenience, facts of appeal No. C/1927/88-B2 are given below :-
2. M/s. Kamal Traders, Bombay had imported 100 cartons of "Kosan Angel" brand "Foley Balloon Catheters" per s.s. State of Nagaland of 2112.87, bill of entry No. 3344/8-1-1988, C.I.F. value Rs. 7,36,952.00. A show cause notice dated 17th February, 1988 was issued to the importers. In the show cause notice the importer was called upon to explain how Foley Balloon Catheters intended for removal of urine by increasing the internal pressure on urine bladder were covered by the entry, Suction Catheters which were primarily intended for removal of unwanted fluids from blood system and also how Foley Balloon Catheters were covered by entry serial No. 31 of list 2 of appendix 6 of ITC Policy A.M. 1988 as they were covered by entry at serial No. 370 of appendix 3 part A of AM 1988 and, therefore, could not be imported without a valid licence.
3. The importers at the time of personal hearing referred to CEGAT's order No. C-421/84 dated 29-6-1984 and 509 and 510/85-B dated 17-6-1985 and also a copy of the letter dated 1st May, 1984 from the Director General of Health Services, New Delhi. The importers had taken the plea that Foley Balloon Catheters were Suction Catheters. The importers were relying on CEGAT's order in the case of P.R. Parekh v. Collector of Customs, Bombay vide order No. C-421/84 dated 29-6-1984 and 509 and 510/85-B dated 17th June, 1985 - 1987 (30) ELT 493 (Tri.). The revenue was relying on the revised opinion of the D.G.H.S. dated 22-12-1984 in which he opined that Foley Balloon Catheters could be used as Suction Catheters but both of these catheters were different and the benefit of Notification No. 208/81 should not be made available to the Foley Balloon Catheters. Opinion of doctors was also taken. Dr. G.B. Parulkar, Dean of Seth G.S. Medical College and K.E.M. Hospital gave his opinion as under :-
1. Balloon Catheters are different from suction catheters.
2. As mentioned above, the uses of these two catheters are not identical.
3. Balloon Catheter is used for drainage of urinary bladder for Gastroendarectomy and colostomy.
Further, A.V. Gondhaleker, Medical Director of Bombay Hospital opined vide his letter dated 18-10-1985 as under :-
1. Balloon Catheter and Suction Catheter are different entities.
2. Both the Catheters are not used for the same purpose.
The Collector also relied on Table's Cyclopaedic Medical Dictionary at page 29 as "a tube passed through the body for evacuating or injecting fluids into the body cavities, made of Elastic, Elastic Web, Rubber, Glass, Metal or Plastic. It further describes Foley Catheters as "A urinary track catheter which has a balloon attachment at one end. After the catheter is inserted, the balloon is filled with sterile water. Thus the catheter is prevented from leaving the bladder until the balloon is emptied." The Director General of Health Services under his letter No. Z-35011/ 5/85-MG(PT.II) dated 14-2-1986 again clarified to M/s. Medimpex (India), Delhi that Foley Balloon Catheters qualify eligibility under Notification No. 208/81-Cus., as male or female urinary inconsistency sets as a part of Ostomy products. The matter was again taken up with the Director General of Health Services for re-examination and again they clarified vide letter No. Z-37030/48/86-MG dated 16-4-1987 that Foley Balloon Catheter is an essential equipment recommended for import under OGL. They did not recommend exemption under Notification No. 208/81-Cus. In view of the specific recommendations of the Director General of Health Services and further clarification, the Collector did not allow exemption benefit of Notification No. 208/81 and also importation under OGL on the ground that Chief Controller of Imports and Exports has not accepted the opinion of the Director General of Health Services. He had imposed a fine in lieu of confiscation at Rs. 1,40,000.00 (Rs. one lac and forty thousand only).
4. Being aggrieved from the order aforesaid, the appellant has come in appeal before the Tribunal. In the similar issues where the matter has been decided in favour of the importer, the revenue has come in appeal, where the matter has been decided against the importer, the importer has come in appeal. Accordingly, we proceed to decide the above captioned 11 appeals by this common order.
5. Shri A.S.R. Nair, the learned Senior Departmental Representative who has appeared on behalf of the revenue, has reiterated the facts. Shri Nair, the learned SDR has argued that the goods imported are Foley Balloon Catheters. He has pleaded that the Suction Catheters are different from Foley Balloon Catheters. The benefit of notification is only available in respect of Suction Catheters. He has stated that the order passed by the Collector (Appeals) in favour of the importer is not correct in law. The order has been based on earlier orders of the Tribunal. The importer is not entitled to the benefit of Notification No. 208/81-Cus., dated 22nd September, 1981. Shri Nair has argued that earlier judgment of the Tribunal in the case of P.R. Parekh v. Collector of Customs, Bombay vide order No. C-421/84` dated 29th June, 1984 which has been reported in 1987 (30) ELT 493 is not correct in law and the Tribunal has not been able to appreciate the facts. He fairly stated that the goods are similar and Foley Balloon Catheters were imported and the Tribunal had held them to be life saving equipment. He pleaded that later on in another revenue's appeal vide order No. 509 and 510/85-B dated 17th June, 1985 in the case of Collector of Customs, Bombay v. P.R. Parekh reported in 1987 (27) ELT 706 the goods were similar and the Tribunal had followed the earlier order No. C-421/84-dated 29th June, 1984. He has pleaded that the Collector (Appeals) in the case of Collector of Customs, Bombay v. Kamal Traders -1986 (24) ELT 702 (Tri.) in appeal No. C/1826/85-B2 had followed an earlier order of the Tribunal and the earlier order of the Tribunal is not correct in law. He has again argued that Suction Catheters are different from Foley Balloon Catheters. He has referred to letter dated 22-12-1984 of Dr. G.H. Gidwani for Director General of Health Services, New Delhi, where it has been mentioned that: "though Foley Balloon Catheters can be used as suction catheters but both of these catheters are different. It is suggested that case may be decided as per the decision taken by the Collectors' conference on 22-6-1984 and the benefit of the Notification No. 208/81 should not be made applicable to the Foley Balloon Catheters." He has also referred to letter dated 18-10-1985 of Dr. A.V. Gondhaleker of Bombay Hospital, Bombay, where it has been mentioned that Balloon Catheter and Suction Catheter are different entities. Both the Catheters are not used for the same purpose. Balloon Catheter is used for inserting into the urinary bladder for emptying urine and the Balloon prevents its coming automatically. The Suction Catheter is used along with the suction machine for sucking out fluids from any cavity. He has also referred to the letter dated 18th October, 1985 of Dr. G.B. Parulkar, Seth G.S. Medical College & K.E.M. Hospital, Bombay, which appears on page 55 of appeal No. C/1927/88-B2 where it has been mentioned that "Balloon Catheters are used for the purpose of drainage and Suction Catheters are used for the purpose of sucking out of fluids.
1. Balloon Catheters are different from suction catheter.
2. As mentioned above, the uses of these two catheters are not identical.
3. Balloon Catheter is used for drainage of urinary bladder for Gastroendarectomy and colostomy."
He has referred to the letter dated 1st May, 1984 of Dr. G.H. Gidwani, Director General of Health Services which appears on page 38 of the appeal No. C/1927/88-B2 where it has been mentioned that: "the opinion that Foley Catheters are Suction Catheters was based on the opinion of Urologist in Delhi and Asstt. Dean, KEM Hospital, Bombay. And now we have again reconsidered the issue in consultation with Prof. Sarinder Man Singh, Head of the Deptt. of Urology, All India Institute of Medical Sciences and he has confirmed that Foley Balloon Catheters can be used as Suction Catheters and, therefore, come under the term 'Suction Catheter'." Shri Nair has pleaded that letter dated 1st May, 1984 should not be deemed to be a letter from the Director General of Health Services. He has referred to the letter dated 22-12-1984 of Dr. G.H. Gidwani which appears on page 41 of the paper book of appeal No. 1927/88-B2. The Director General of Health Services had revised his opinion. He has also referred to Director General of Health Services letter dated 16th April, 1987 which appears on page 11 of the revenue's paper book in appeal No. C/1826/85-B2 where it has been clearly mentioned that: "This Directorate is of the opinion that the Foley Balloon Catheter is an essential equipment and is recommended for import under OGL. This Directorate do not recommend exemption from payment of customs duty on the import of the equipment under Ministry of Finance Notification No. 208/81-Customs, dated 22-9-1981." Shri Nair has pleaded for the acceptance of the revenue's appeals and has pleaded for the rejection of the importers' appeals.
6. Shri S.D. Nankani, the learned advocate has referred to the order of the Collector of Customs (Appeals) dated 22nd August, 1985 in appeal No. C/1826/85-B2 and has pleaded that the order passed by the Collector (Appeals) is correct in law. He has argued that Dr. Gidwani's letter dated 22nd December, 1984 which appears on page 4 of the revenue's appeal paper book is not correct in law. He has referred to the letter No. SIB-CUS/57/84/503 dated 7th July, 1984 written by the Collector of Customs, New Delhi, to the Director General of Health Services, New Delhi, where the Collector had written for the review of the clarification given by the Director General of Health Services, New Delhi and withdraw the earlier letter. Shri Nankani has pleaded that the subsequent letter of DGHS dated 22nd December, 1984 is in clarification of the letter dated 25th February, 1983. Mr. Nankani has pleaded that once the item is capable of suction it itself is sufficient. The importer is entitled to the benefit of Notification No. 208/81-Cus. He has pleaded that no reliance should be placed on the letter of the DGHS. He had referred to Dr. Dhawan's letter and also certificate of Dr. V.J. Anand's letter where it has been clearly mentioned that Foley Catheter is used in the context of surgery of prostate gland and the catheter should be regarded as a life saving device. Shri Nankani further argued that he does not press denial of principles of natural justice. He has referred to the ITC Policy and the notification. He has pleaded that the wording in Notification No. 208/81-Cus and the wording in ITC Policy are similar. He has referred to 1989 (39) ELT 431 (Tri.), Equipment Sales Corporation v. Collector of Customs, Bangalore, where the Tribunal had followed the CGHS certificate to the effect that disputed drainage bags were classifiable as male and female incontinency sets and benefit of Notification No. 208/81-Cus was extended. Shri Nankani has also referred to Gynaecological Nursing by Maureen Reynolds where it has been clearly mentioned that for the treatment of Fistulae it is mentioned that: "Occasionally this type of fistula may respondent to conservative treatment, by passing a Foley Catheter and continuously draining the bladder. A low suction pump may facilitate drainage. Shri Nankani has pleaded that Suction Catheter is a Balloon Catheter. Shri Nankani has argued that the goods imported are covered under OGL and are entitled to the benefit of Notification No. 208/81-Cus., dated 22nd September, 1981. He has pleaded that Appendix 6 of the Import Policy which appears on page 28 of the paper book of Appeal No. C/1927/88-B2 which is Appendix 6 list 2 A.M. Policy 1985-88. Serial No. 31 relates to Suction Catheters and serial No. 38 relates to male or female urinary incontinency sets. Shri Nankani has also referred to Notification No. 208/81-Cus. which appears on pages 35-36 of the paper book and has referred to page 35, Item 22B where it has been mentioned "male or female urinary incontinency sets" and Serial No. 32 which appears on page 36 is Suction Catheter. Shri Nankani has argued that Suction Catheters are not excluded, alternatively it may be treated as male or female urinary incontinency sets. The appellants' claim is of clearance under OGL and also benefit of Notification No. 208/81-Cus. He has pleaded that the present matter is fully covered by earlier judgments of the Tribunal reported in 1987 (30) ELT 493 P.R. Parekh v. Collector of Customs, Bombay and 1987 (27) ELT 706 Collector of Customs, Bombay v. P.R. Parekh, Bombay. He has argued that the Tribunal's order are in favour of the assessee and no reliance should be placed on the subsequent clarification of the DGHS which is not concerned with the ITC Policy. In the case of Equipment Sales Corporation v. Collector of Customs, Bangalore reported in 1988 (16) ECR 206 the Tribunal had held that bags fall under OGL and ordered the benefit of Notification No. 208/81-Cus., dated 22nd September, 1981. He has referred to pages 47, 48, 49 and 50 of the paper book which are letters from the Ministry of Commerce, where in the letter dated 22nd November, 1986 from the office of the Chief Controller of Imports and Exports, it has been mentioned that import of Latex Foley Balloon, Catheters 2 way standard, Paedistrics and 3 way standard are covered under entry No. 31, list 2 of Appendix 6 to the Import and Export Policy 1985-88 and import is allowed under OGL, and another letter of DGHS dated 22nd December, 1986 has also mentioned that import of male or female urinary incontinency set is covered at Serial No. 38 of list 2 of Appendix 6 of Import and Export Policy 1985-88. Shri Nankani has argued that Suction Catheters are covered by Import and Export Policy 1985-88. Shri Nankani has pleaded that his argments in Appeal No. C/2120/88-B2 and C/1826/85-B2 are the same.
7. Shri N.C. Sogani, the learned consultant, who has appeared in Appeal Nos. C/12/85-B2, C/13/85-B2, C/14/85-B2 and C/420/87-B2 pleaded that he adopts the same arguments as adopted by Shri Nankani. Shri Nankani also referred to another judgment of the Bombay High Court in the case of Mansukhlal Chhaganlal Desai, Bombay v. Union of India reported in 1989 (40) ELT 314 where the Bombay High Court had followed the Tribunal's order. He further argued that against this order of the CEGAT appeals were filed before the Supreme Court, but the appeals were dismissed being hit by limitation. Shri Nankani has argued that there is no difference in the earlier import policy, exemption notification as well as subsequent import policy. He has pleaded that it is a life saving equipment. He has also argued that the trade parlance has to be looked into. In support of his argument, he has referred to Swastic Woollen and Ors. v. Collector of Customs, Bombay reported in 1988 (34) ELT 83 and had laid special emphasis on para No. 15 which appears on pages 92 and 93 and pleads that instructions given by the Tariff advice are not binding. In the case of Collector of Customs, Bombay v. Swastic Woollen (P) Ltd. and Ors. reported in 1988 (37) ELT 474 (SC) the Supreme Court had held that "in the absence of statutory definition, its connotation in trade parlance is acceptable. A well considered decision of the Tribunal should not be reversed merely because another interpretation is possible." Shri Nankani, the learned advocate and Shri N.C. Sogani, the learned consultant have pleaded for the acceptance of the importers' appeals and rejection of the revenue's appeals.
8. Shri V. Lakshmi Kumaran, the learned advocate who has appeared in Appeal Nos. C/1620/85-B2, C/2084/86-B2 and C/2085/86-B2, has argued that the importers' case is covered by the earlier judgments of the Tribunal. He has referred to the judgment of the Tribunal in the case of Equipment Sales Corporation, Delhi v. Collector of Customs, Bombay reported in 1988 (12) ETR 269. He has pleaded that urinary drainage bag is a life saving device and Foley Balloon Catheters are also entitled to the benefit of Notification No. 208/81-Cus. He has pleaded that no penalty and fine has to be imposed. He adopts the same arguments as adopted by Shri Nankani. He has pleaded for the dismissal of the revenue's appeals and acceptance of the importers' appeals.
9. Shri K.D. Tayal, the learned SDR has referred to the Bombay High Court order in the case of Mansukhlal Chhaganlal Desai, Bombay v. Union of India reported in 1989 (40) ELT 314 and has referred to paras No. 6 and 9. He has argued that in Para No. 7 the High Court has observed that if the department does not accept the Tribunal's order, action for excluding Foley Balloon Catheters from the exemption may be taken. He has pleaded that the earlier judgment of the Tribunal in the case of P.R. Parekh v. Collector of Customs, Bombay reported in 1987 (30) ELT 493 is not correct. Director General of Health Services has revised his decision. He has referred to the meaning of Suction. He has also referred to page 41 of the paper book in Appeal No. C/1927/88-B2. He has also referred to the department's tariff advice dated 24th July, 1984. He has referred to the judgment of the Supreme Court in the case of South Bihar Sugar Mills Ltd. and Anr. v. Union of India and Anr. reported in 1978 (2) ELT J-336 para No. 15. He has argued that the expert opinion filed by the department should be relied upon. He has also referred to the Notification No. 208/81-Cus. Shri Tayal has argued that in case the revenue's plea is not accepted, the matter may be remanded.
10. Shri V. Lakshmi Kumaran, the learned Advocate, again has pleaded for the acceptance of the importers' appeals and dismissal of the revenue's appeals.
11. We have heard both the sides and have gone through the facts and circumstances of the case. The facts are not disputed. The goods imported are brand Foley Balloon Catheters. We have also perused the import policy. The matter stands fully covered by the earlier judgment of the Tribunal which was followed by the Bombay High Court in the case of Mansukhlal Chhagan Lal Desai v. Union of India reported in 1989 (40) ELT 314. We have also considered the revised opinion of the DGHS. Para Nos. 6, 7 and 8 from the judgment of the Tribunal in the case of P.R. Parekh v. Collector of Customs, Bombay reported in 1987 (30) ELT 493 are reproduced below :-
"6. We have carefully considered the submissions before us. The letter dated 1-5-1984 from the Director General of Health Services signed by Dr. G.H. Gidwani for the Director General of Health Services clearly states that the opinion that Foley Catheters are Suction Catheters is based on the opinion of the Urologist in Delhi and Asstt. Dean, KE.M. Hospital, Bombay. The Directorate has since reconsidered the issue in consultation with Prof. Sarinder Man Singh, Head of the Department of Urology, All India Institute of Medical Sciences, New Delhi and the Professor has confirmed that Foley Balloon Catheters could be based as Suction Catheters and would, therefore, come under the term "Suction Catheters". Copies of the letters of the Asstt. Dean, KE.M. Hospital, Bombay and the Head of Department of Urology, AIIMS have been perused. In the letter dated 23-3-1984 to the Director General of Health Services, the Head of Dept. of Urology, AIIMS has stated that Foley Balloon Catheters come under the term Suction Catheters and would qualify for exemption from Customs duty as life saving equipment. In his letter dated 21-5-1981 to the Collector of Customs, AIR Cargo, Bombay, the Asstt. Dean, KE.M. Hospital, Bombay has said that Foley Catheters are Suction Catheters and are used for urine suction. In the light of these categorical certificates, we have no difficulty in coming to the conclusion that the Collector's finding that the subject goods were not Suction Catheters was clearly erroneous. His reliance on the statement of Shri P.R. Parekh cannot detract from the evidentiary value of the certificates issued by eminent men of medicine. At any rate, what Shri Parekh had said in his statement was that Foley Balloon Catheters were different from Suction Catheters but the former was an improved version of Suction Catheters. The Collector in his order says that the function of Suction Catheters is to remove unwanted fluids in the blood system. This finding also stands negatived by the certificates produced. The book "Medical Dictionary" 21st edition, published by E. & S. Livingstone Limited, at page 278 defines "Catheter" as "A hollow cylinder of silver, India rubber, or other material designed to be passed through the urethra into the bladder to drain this viscus of urine in case of retention; a similar instrument used for passage through other canals."
7. Based on the above discussions, we have no hesitation in coming to the conclusion that the goods imported were Suction Catheters and as such eligible for clearance without licence in terms of Open General Licence contained in Appendix 10, List 2, Sl.No. 31. They are also eligible for duty exemption in terms of Customs Notifications 208/81, dated 22-9-1981 and 262/82, dated 30-11-1982 vide Sl. No. 32 in the list of life saving equipments annexed to the notification. We, therefore, set aside the impugned order, allow the appeal and direct consequential relief to the appellants within 2 months from the date of communication of this order.
8. We do not think that the reason given by the Collector for not accepting the licence offered for clearance of the goods (presuming the licence was valid to cover the goods) is a sound one. Even if the party had attempted to clear the goods under OGL under a misdescription (we have found that there was no misdescription), that would not be a sufficient reason not to accept a licence offered for clearance of the goods if that licence was valid otherwise to cover the goods."
A simple reading of the earlier judgment shows that the facts of the present appeals are very much similar. This judgment was followed by the Tribunal in the later decision in the case of Collector of Customs, Bombay v. P.R. Parekh reported in 1987 (27) ELT 706. Para No. 4 from the said judgment is reproduced below :-
"4. The respondents have produced a photostat copy of Order No. C-421/84 dated 29th June, 1984. There is no dispute by either party that this order by the Tribunal squarely covers the goods in question. We observe that Collector of Customs (Appeals) merely followed this order which has detailed discussion about the eligibility/classification of goods in question in paras 6 onwards of the order under the notification. We see no reason to interfere with the orders passed by the Collector of Customs (Appeals), Bombay and dismiss the appeals filed by the Collector of Customs, Bombay."
Later on this decision was followed by the Bombay High Court in the case of Mansukhlal Chhaganlal Desai, Bombay v. Union of India reported in 1989 (40) ELT 314. We have perused the import policy as well as the exemption Notification No. 208/81-Cus. There are divergent views of technical experts and in the earlier view DGHS has written in favour of the importers and in the later they had written against the importers. Hon'ble Supreme Court in the case of Commissioner of Income-tax, Punjab v. Kulu Valley Transport Co. (P) Ltd. had held that if the interpretation of a fiscal enactment is open to doubt, the construction most beneficial to the subject should be adopted reported in 77 ITR 518 : AIR 1970 S.C. 1734. Para No. 20 from the judgment reported in AIR 1970 S.C. 1734 is reproduced below :-
"20....It cannot be overlooked that even if two views are possible, the view which is favourable to the assessee must be accepted while construing the provisions of a taxing statute."
Delhi High Court in the case of Paras Laminates Pvt. Ltd. v. CEGAT reported in 1990 (45) ELT 521 had held that "Tribunal is bound to follow its earlier decisions in similar matters - Decisions of co-ordinate bench or of superior bench to be followed otherwise amounts to judicial indiscipline." Para No. 12 from the said judgment is reproduced below :-
"12. In a recent judgment reported as Sunder Jas Kanyalal Bhatija and Ors. v. The Collector, Thane, Maharashtra and Ors., Judgments Today, 1989 (3) S.C. 57, the court impressed upon the Judges to maintain judicial decorum and legal propriety while disposing of the cases on the points already covered by the same Court. The relevant observations of the Court read as under :-
"It would be difficult for us to appreciate the judgment of the High Court. One must remember that pursuit of the law, however, glamorous it is, has its own limitation on the Bench. In a multi-Judge Court, the Judges are bound by precedents and procedure. They could use their discretion only when there is no declared principles to be found, no rule and no authority. The judicial decorum and legal propriety demand that where a learned single judge or a Division Bench does not agree with the decision of a Bench of co-ordinate jurisdiction, the matter shall be referred to a larger Bench. It is a subversion of judicial process not to follow this procedure."
It is hardly necessary to emphasize that considerations of judicial propriety and decorum require that if a two-member Bench is appraised of a decision given by a larger Bench on the same subject matter, the said Bench should accept and follow the same and not embark upon to consider the matter even if they are inclined to take a different view. That is proper and traditional way to deal with such matters. This practice is founded on healthy principles of judicial decorum and propriety. This doctrine of binding precedent has the merit of promoting certainty and consistency in judicial decisions and enables an organic development of the law, besides providing assurance to the individual as to the consequences of transactions forming part of his daily affairs."
In view of the earlier judgments of the Tribunal and the observations of the Delhi High Court in Paras Laminates Pvt. Ltd. v. CEGAT reported in 1990 (45) ELT 521, the appeals filed by the importers are allowed and the appeals filed by he revenue are dismissed. Revenue authorities are directed to give consequential effect to this order.