Customs, Excise and Gold Tribunal - Mumbai
Frontier Trading vs Commissioner Of Customs on 9 January, 2003
Equivalent citations: 2002ECR520(TRI.-MUMBAI), 2003(153)ELT419(TRI-MUMBAI)
ORDER
Gowri Shankar, Member (T).
1. The question for consideration in this appeal is the classification of goods that the appellant imported and cleared through Bombay Custom House. In the bill of entry that it presented for their clearance, it described them as "magnetic accupressure treating instrument." The classification was claimed in Heading 9019.10 of the Tariff. The imports took place during the period between 1997 to 2001. In August of 2000, the department searched the premises of the appellant, conducted some enquiries including recording a statement of Asan Pandit, the Managing Director of the imported firm between September of that year and April next year. Twenty five notices were issued to the appellant. These notices claimed that the product was correctly assessable in Heading 9404.29 and proposed to recover duty short levied. Another notice was issued on 8-12-2000 relating to goods imported by the applicant and not cleared. This notice too proposed classification in Heading 9404.29, proposed confiscation of the goods pending clearance under Clause (m) of Section 111, recovery of duty on goods cleared between June 1997 to July, 2000 invoking the extended period contained in Sub-section (1) of Section 28 of the Act and proposed penalty on the importer. In the order impugned in this appeal, the Commissioner has adjudicated on all the notices. He has confirmed the classification of the goods in Heading 9404.29. He has held that the extended period invoked in the notice last referred to cannot be applied and dropped the demand for Rs. 17.92 crores approx. He has demanded duty short levied of Rs.
16.03 crores approx. on goods imported between March and July, 2000; he has confirmed the classification under Heading 9404.29 with regard to goods provisionally assessed and cleared and asked for recovery of Rs. 6.46 crores as a consequence. It is necessary to record before proceeding to record and deal with the argument of parties, to describe the product under consideration "The total sleeping system" as the appellant calls it, consist of a mattress, pillow and quilt. We think it appropriate to reproduce the description of the product as set forth by the appellant in appeal, which also contains a claim with regard to the functions of the various components of it.
"The magnetic mattress is made up of several layers, namely :
(i) High quality urethane-foam.
(ii) A/10-12 strand elastic steel wire grid.
(iii) Super protruding compressed palm fibre.
(iv) Compressed polyurethane white foam.
(v) Profiled rabatan massage nodes (finger pressure nodules)
(vi) Chemically moisturised protection layer;
(vii) Soft permanent rubberised magnetic lines In other words, the magnetic mattress comprises of an elastic body of cross-linked foamed polyethylene/urethane etc., having protuberances on its surface with a damper felt lined with permanent magnets secured to the surface of the elastic body. The magnetic pillow and magnetic quilt are also specially designed with magnets. The three items, namely, the mattress, pillow and quilt, are designed to be used as a set to obtain a "magnetic shower" effect. Further, the specially designed nodules on the mattress and pillow simulate Japanese and Chinese finger-pressure massage techniques on the body. Hence, as the person turns and moves in his sleep (60 to 80 times a night on an average), the nodules gently massage the body. The effects of the twin action of the magnet field and the accupressure nodules are to stimulate and improve circulation of blood and to impart chiropractic effects to the body, which prevents bedsores by compelling the user to shift his body several time during sleeping. The surface of the mattress has nodules/protuberances providing an "egg crate" structure, which is the recommended structure for prevention and treatment of bedsores. Deep hen-egg size wells are equally distributed on the mattress together with nodules/protuberances, providing pockets for relieving prolonged pressure of sensitive parts of the body liable to bedsores. The mattress set provides a superficial massage effect on tissues liable to necrosis by lines of magnets, proving a continuously magnetising effect capable of achieving the effect of finger pressure therapy, i.e., massage. The product is specially designed to work on magneto-therapy principles improving the natural healing ability of the human body. The magnetic field attracts and repels charged particles in the blood, creating movement and heat and in the process causing blood vessels to dilate, increasing circulation, accelerating the natural healing process. The accupressure nodules/protuberances trigger the release of endorphins, which releases the muscles, dispels fatigue and dissolves tensions/stress. The finger-like protuberances provide a deep tissue massage to the body reducing muscular tension thereby rejuvenating the body. The said product imparts massage and chiropractic or manual pressure effects to the body as well as magnetic treatment effects, thereby preventing or curing a host of ailments. The benefits obtained by using the said product and the manner in which it operates are clearly set out in the catalogue of Japan Life."
2. There is no description of the pillow and the quilt.
3. Heading 9019.10 of the Customs Tariff of this heading reads as follows.
9019.10 - Mechano-therapy appliances; massage apparatus;
psychological aptitude-testing apparatus.
4. The explanatory note to the Harmonised System of Nomenclature while dealing with massage apparatus at page 1617 has this to say. "The following are regarded as massage apparatus within the meaning of this heading : mattresses designed to prevent or treat bedsores by constantly varying the places at which the weight of the patient's body rests and also providing a superficial massage effect on tissues liable to necrosis." The heading which according to the department would be appropriate is heading 9404.29 includes articles of bedding and similar furnishings (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered. Heading 9404.29 is for mattresses of other materials.
5. The appellant's claim for classification of these goods rests on the following submissions. Because of the presence of the magnets in it, the mattress provides a magnetic field which stimulates flow of circulation and therefore prevents the cell necrosis leading to loss of tissue. The principle of magnetic therapy is well known in Japan and Korea in other places. The goods in question are licensed as medical apparatus in South Korea and in Japan. A certificate issued by the Government of South Korea is produced in support. Further, the egg like protuberances on the mattresses provide massage to the pressure points on the sleeper's body. These pressure points are recognised in the system of acupressure or shiatsu. These protuberances also result in the sleeper having to change to position constantly with the result that bedsores which arises as a result of constant pressure on one part of the body in contact with a mattress do not arise. Reliance is placed upon the contents of the explanatory notes to the HSN which provided as follows.
9019.10 - Mechano-therapy appliances; massage apparatus;
psychological aptitude-testing apparatus.
The following are also regarded as massage apparatus within the meaning of this heading : mattresses designed to prevent or treat bedsores by constantly bearing the places at which the weight of the patient's body rests and also providing a superficial massage effect on tissues liable to necrosis.
6. The fact of assessment of similar goods under heading 9019 by the Commissioner of Customs, Bangalore is relied upon.
7. It is not necessary for us to ponder to any great extent upon the magnetic properties of the mattress. None of the recognised text or Western European system of medicine finds that any benefit is obtained by the proximity of the person suffering the illness to the magnet to the arrangement of the magnet. No text scientific literature or evidence is produced by the appellant in support of the claim. It is/ we agree/ perhaps within the bounds of possibility that such magnets may have therapeutic effect on human body or on illness or on the disorder to which the human body is subject. Research in future may perhaps establish such an effect. No such research establishing the effectiveness of such a system has been brought to our notice. But even on the assumption that such is the case, it does not help the appellant. The appellant's claim is for classification of the goods as massage apparatus. It is not the appellant's claim that the present of magnet results in massage. Massage is defined in the Medical Dictionary by Stedman (page 925 in the 25th edition) as a "method of manipulation of the body, by pinching, kneading tapping etc." Thereafter there is reference to various kinds of massage such as cardiac massage, close chest massage, external cardiac massage, nerve point massage, chest massage, prostatic massage and vibratory massage, all of which require manipulation of the part of the body. Thus cardiac massage is the manual rhythmic compression of the ventricles (of the heart) to maintain the circulation. Vibratory massage is very rapid tapping of the surface effected by means of an instrument usually on the elastic tip. Unless this is done the fact that the goods may possess magnetic properties which promote the well being of the person using them would not be itself justify the claim that is made for their classification.
8. The claim that the goods are massage equipment is in turn based upon the claim that as a result of the nature of the material used in the construction of the mattress, and having number of protuberances similar in shape and size to eggs, person using the mattress has to frequently shift his position. This results in the improvement of circulation to the skin, and consequent benefits, which includes prevention of bedsores. There is a supplementary claim that this structure of mattress results in pressure upon the points which lie on the medians which are recognised by the ancient oriental system of acupuncture or acupressure, and therefore results in well being of body.
9. We have reproduced above the definition of the term "massage" as contained in Stedman Medical Dictionary. The New Shorter Oxford Dictionary defines "massage" as "The application fusu with the hands) of pressure and strain on the muscles and joints of the body by rubbing kneading etc, in order to stimulate their action and increase their supplings; an instance or spelt of such manipulation." It is thus clear that all massage therefore requires manipulation of the body or any part of another person or instrument. Massage thus can be performed on a person by any part of his body being manipulated by hands or as happened in the case of ayurvedic massage in Kerala with their feet. Massage can also be performed by means of a vibrator which is applied to any part of the body. This requires therefore that the motion which results in the massage is imparted by another person or where a mechanical device is used for massage by the person, who massages any part of his body. It would be correct to say that, the movement for the massage that is carried out by any part of the body must originate from outside the part of the body. However, the movement by itself of a body or a part of the body cannot itself be massage. We thus cannot conceive that a person walking on the road is being massaged on the soles of his feet because they are subjected to manipulation by coming into contact with the road surface or that a swimmer is being massaged by the action upon his body of the water in which he swims. Therefore the claim that because a person using these mattresses turns around more frequently than he would otherwise, the mattress performs massage upon his body cannot be accepted. If this were accepted, it would follow that a person walking on the road, swimming, or using a typewriter or has his feet body and finger tips respectively massaged by his activity. In fact to extend this logic would mean that every surface upon which a person sleeps provides massage to that person. It is common knowledge that all persons except those who are unable to do so due to serious medical conditions, constantly shift their sitting or sleeping position. Therefore if the activity performed by the mattress in question results in it being a massage equipment, every mattress and other piece of furniture on which a person sits or lies down would be a massage equipment. Such a claim is obviously absurd.
10. The Commissioner has given examples of mattress which are so specifically constructed so as to provide massage. Such mattress would be obviously those which are referred to in the explanatory notes to the HSN that the appellant cites.
11. This view also would answer the appellant's claim that the mattress performed accupressure. Stedmen's Medical Dictionary defines acupuncture as an ancient oriental system of therapy and more recently anaesthesia by acupuncture. Acupuncture therapy, as we understand it consists of movability performed by the needles resulting in the easier flow of the energy referred to as ki, chi, or qi along the medians or channels in which it travels by removing any blockage to its flow. In acupressure the medians are stimulated by pressure with the finger of the hand or some kind of instrument. Such a procedure would not be a massage. Even it is assumed to be acupressure apparatus, for the reason that we have already noted, the mattress does not provide the massage. On merits therefore we do not find it possible to agree that the goods are to be classified in Heading 9091.01, and therefore, are unable to interfere with the Commissioner's finding on this score.
12. The next contention of the appellant is based upon a circular no. 56/2001 dated 25-10-01 issued by the Board. The circular is reproduced below.
"Classification of goods described as 'Magnetic Accupressure Treatment System' Cus. Cir. No. 56/2001 Date 25-10-2001 Sub : Classification of goods described as 'Magnetic Accupressure Treatment System - Regarding I am directed to refer to the subject mentioned above and to say that the matter regarding classification of subject goods has been engaging the attention of the Board for some time. It appears that in a Custom House, departing from the assessment practice of classifying such goods under CTH 9019.10 as 'massaging apparatus', an order has been passed classifying such goods under CTH 9404.29 as 'articles of bedding'. Instances have also been brought to the notice of the Board indicating that in other Custom Houses such goods have been assessed under CTH 9019.10 as 'massaging apparatus'. The matter has been further examined in Board for appropriate classification of subject goods.
2. The imported goods comprise of a magnetic mattress, magnetic pillow and magnetic quilt variously described as "medical devices/medical appliances; magnetic treatment mechanism; magnetic mattress; accupressure appliances", etc. The goods are stated to help in treating certain ailments of the human body by providing magnetic treatment while at the same time producing appropriate chiropractic or manual pressure effects as well as magnetic treatment effects. Such goods have been declared as "magnetic accupressure treatment instruments" for customs purposes. The goods essentially comprise of an elastic body of crosslinked foamed polyethylene/urethane, etc. having protruberances on its surface with a damper felt lined with permanent magnets secured to the surface of the elastic body.
3. Mattress is specifically covered under Customs Tariff heading 94.04 as 'articles of bedding'. The HS Explanatory notes to this heading states that the heading covers, "Articles of bedding and similar furnishing which are sprung or stuffed or internally fitted with any material or of cellular rubber or plastics".
It also gives a few examples, i.e., (1) Mattresses, including mattresses with a metal frame, (ii) Quilts and bedspreads, eiderdowns and duvets, mattress protectors, bolsters, pillows, cushions, pouffes, etc., and (iii) Sleeping bags.
The dictionary (Concise Oxford Dictionary of current English; 8th edition) meaning for the 'mattress is a fabric case stuffed with soft, firm, or springy material, or a similar case filled with air or water, used on or as bed. It appears that the goods imported do not fit the description of a mattress described in the HS explanatory notes and dictionary. It is also noted that such mattresses are of a specialisation not stated in the HS explanatory notes to heading 94.04. Such goods therefore do not appear to be classifiable as 'mattress' by applying the terms of heading/sub-heading as envisaged in Rule 1 of the General Interpretative Rules (GIR). It has been noted that by application of Rule 3(b) of the GIR also taking value of such goods being indicative of the essential character (as upheld by the hon'ble Supreme Court in the case of Sprint RPG v. Commissioner of Customs, [2000 (116) E.L.T. 6 (S.C.)], the goods cannot be classified as a 'Mattress - Article of Bedding", as the landed cost of such goods is much higher than as ordinary mattress.
4. It is further noted that (I) such magnetic mattress increases circulation of blood which prevents bedsore by compelling the user to shift his body several times during sleeping, since the surface of the mattress is all modules/protuberances providing an "egg crate" structure which is the recommended structure for treatment and prevention of bedsores, (II) the deep hen egg size wells are equally distributed on the matters together with the modules/protruberances provide pockets for relieving prolonged pressure of sensitive part of body liable to bedsores. The mattress set provides superficial massage effect on tissues liable to necrosis by lines of magnet, providing a continuously magnetising effect capable of achieving the effect of a finger pressure therapy, i.e., massage. This is stated to be producing appropriate chiropractic as well as magnetic treatment effects. HS explanatory notes to heading 90.19 states inter alia that mattresses designed to prevent bedsores by constantly varying the places at which the weight of the patient's body rests while also providing superficial massage effect on tissues liable to necrosis, will also be classifiable as 'massage apparatus'. Hence, massage apparatus may also be in the form of a mattress and the imported goods appear to fulfil the HS explanatory notes to the heading.
5. Similar goods manufactured by a local manufacturer were also inspected. The goods are described as magnetic health sleeping pad/mattress, magnetic health cervical Pillow, magnetic health back rest/ seat/cushion/calf rest, etc. A perusal of the technical literature/catalogue indicated the following.
6. The goods are designed to work on magneto therapy principles improving the natural healing ability of the human body: The magnetic field attracts and repels charged particles in the blood, creating movement and heat and in the process causing blood vessels to dilate, increasing circulation, accelerating the natural healing process; the magnetic field also creates a slight electric current and this electric current stimulates the nervous system triggering a blockage of pain sensations: The Accupressure nubs/nodules/protuberances trigger the release of endorphins which relaxes the muscles; dispels fatigue; dissolve tension/stress: The finger like projections provide a deep tissue massage to the body reducing muscular tension thereby rejuvenating the body. A few letters issued by well known hospitals in New Delhi indicate that medical effects like reduction in blood pressure of patients, comfortable sleep to patients of all diseases, improvement in treating arthritis, blood pressure, joint pain, head ache, early morning stiffness/swelling, insomnia, symptomatic improvement in pain, early morning fitness and swelling, etc, has been achieved by use of the product.
7. Keeping in view the foregoing, the Central Government is of the considered opinion that such goods are more appropriately classified under subheading 9019.10 as 'massage apparatus'.
8. Difficulties, if any faced in the implementation of this circular, may be brought to the notice of the Board. Please acknowledge receipt of this circular."
13. Contention of the counsel for the appellant that the circular is clearly issued in order to bring uniformity in the classification of the goods, and therefore must be considered under the provisions of Section 37B of the Act. It is settled law that such a circular is binding upon the department. The representative of the Commissioner, the respondent therefore took a stand contrary to that which the Board has taken in the circular.
14. The departmental representative contends that the goods referred to in the circular are in fact not descriptive of the goods under consideration. The circular essentially relies on the contents of the Explanatory Notes to Heading 90.19 to the tariff that a mattress designed to prevent bedsores on which the patients' body rests while also providing superficial massage effect on tissue to reduce or prevent necrosis will also be classifiable as massage apparatus. He points to the fact that there is no evidence to show that the mattresses in question are designed to prevent bedsores. He points out that the counsel for the appellant had stated before the Tribunal that he does not rely upon the letter dated 23-12-97 of the Director of Health Service, Government of Maharashtra stating that "accupressure magnet ... given by the appellant prevented bedsores and provide superficial massage to tissue liable to necroses." This is sought to be rebutted by the counsel for the appellant that description of the structure of the mattress, their presence of egg shape protuberance and magnetic and accupressure properties shows that the board circular covers the goods under consideration.
15. We are compelled to reject as entirely incorrect and unsubstantiated the classification that the Board has determined. The classification is based upon the so-called scientific theory of magnetism the validity of which claim we have earlier been unable to accept. We have already gone into some detail earlier in our order to conclude that even on the assumption that as a result of the more frequent movement induced in a sleeper lying on a mattress as a result of its construction and its superficial structure bedsores are prevented and those already existing are cured, the mattress would not be a massage apparatus. At the same time, however we are mindful that the circular of the Board of such a nature are binding upon its officers. The Courts have emphasised uniformity in classification and even a circular that is palpably wrong is nevertheless binding upon the officers.
16. We also heard arguments as to whether a circular of this kind issued by the Board would be applicable to goods already cleared. The appellant contends that in the absence of any other earlier circular, the contents of the circular would apply to the goods prior to its issue; both sides have submitted case laws on the subject.
17. We also note that the circular was issued after the Commissioner passed this order impugned in this appeal. Whether as is claimed on behalf of the Commissioner, the goods under consideration are those referred to in the circular, thus, in our opinion, requires verification. The circular also refers in paragraph 5 to similar goods manufactured in India and reproduced in the next paragraph, the technical literature, and catalogue of such local manufacturers. It is clear that the conclusion in the circular have been guided to some considerable extent by the catalogue or literature of the local manufacturer.
18. The applicability of the circular to the goods under consideration is essentially one of fact. While there is something to be said for the claim that the reference in the circular as to the magnetic principles and the "egg crate" structure appears to refer to the goods under consideration, it is not possible to conclude with any degree of certainty that it does describe the goods in question. The circular does rely heavily on the ability of the goods referred to in it to treat or prevent bedsores; the evidence that the goods under consideration before us do so is virtually non-existent. We have also noted the fact that the Board's circular has also relied upon the technical literature relating to indigenously manufactured goods which it found similar to the imported goods that it deals with. We are therefore of the view that the matter should be examined in detail to see whether the goods in question correspond to the goods referred to in the circular. We think that since it calls for determination of facts and examination of goods, this exercise is best undertaken by the Commissioner. While doing so, the Commissioner should also consider and apply the case law relating to the scope and applicability of such circulars and determine whether the circular under consideration applies to the goods in question and if it does, whether it would apply to goods imported prior to its issue. While doing so, the Commissioner may also take into account the nature of the locally manufactured goods and technical literature relating to the omission. He shall pass orders after hearing the submissions of the appellant for which reasonable opportunity may be given.
19. The appeal is accordingly allowed and the impugned order set aside.