Customs, Excise and Gold Tribunal - Delhi
Instamedic International vs Collector Of Customs on 30 May, 1994
Equivalent citations: 1997(89)ELT701(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal is directed against the Order-in-Appeal dated 26-2-1993 passed by Collector (Appeals) Trichy against denial of benefit of exemption in respect of imported items namely : Foley Balloon Catheters under Notification No. 208/81, dated 22-9-1981. The ld. Collector has held that the goods are not eligible for duty free clearance under said notification in view of introduction of explanation in the notification brought about by an amending Notification No. 46/89-Cus., dated 1-3-1989 by which the item in question is deleted. These goods had been imported on 1-1-1987 which is much earlier to the date of the amending notification which came into operation on 1-3-1989. The goods had been confiscated on the ground that it had infringed the trade mark of another foreign manufacturer. A show cause notice had been issued to that effect and thereafter an order-in-original dated 30-6-1987 was passed imposing penalty of Rs. 10,000/- and in [lieu] lieu of the confiscation, a redemption fine of Rs. 1. lakh was also imposed. The importer filed an appeal to the Tribunal and the Tribunal had reduced the fine and penalty. In the said order of confiscation and imposition of penalty, the ld. Collector had held that there is no dispute regarding the rate of duty, as the goods in question were exempted under the Notification No. 208/81. The department was, however, not being satisfied with conclusion of proceedings before the Tribunal, again initiated proceedings against the importer, by issue of another show cause notice. The receipt of this show cause notice is disputed by the appellants herein. The Assistant Collector Customs confirmed the duty under Section 28 of the Customs Act, 1962 by his order dated 13-8-1991 ex parte. In this order Assistant Collector has held that due to wrong application of customs Notification No. 208/81 goods were assessed free of duty as 'life savings equipment', but the goods were correctly assessable to the duty under Customs Tariff Heading No. 9018.20 of Central Excise Tariff at 60% + 40% + 15% CEV and hence duty amount of Rs. 13,19,526/- has been confirmed. On appeal the Collector (Appeals) has held in the impugned order, that the amended Notification No. 46/89-Cus., dated 1-3-1989 is clarificatory in nature and it has to be construed as having retrospective effect. The appellants had stated before him, that in the previous proceedings before the Collector of Customs, the only question raised by department was pertaining to infringement of trade mark of another foreign manufacturer and the department had accepted the goods to be exempted under the said notification. The appellant had also submitted that the matter had reached finality in the disposal of appeal before the Tribunal. They had pleaded that as on the date on which the goods were imported, the item had been clearly exempted by the Notification No. 208/81 and that the amending Notification No. 46/89-Cus., dated 1-3-1989 is not a clarificatory notification, as by introduction of an "Explanation" in the notification, the exemption in respect of Foley Balloon Catheters had been withdrawn. It was also brought to the notice of the Collector that the issue had been settled by large catena of judgments, which were as follows :
(i) P.R. Parekh v. Collector of Customs -1987 (30) E.L.T. 493
(ii) Collector of Customs v. P.R. Parekh -1987 (27) E.L.T. 706
(iii) Vishal Surgical Equipment Co. v. Collector of Customs - 1991 (55) E.L.T. 393.
They pointed out that all these judgments had been taken note by Calcutta High Court in the case of Fitwell Fastner (India) Pvt. Ltd. v. Collector of Customs as reported in 1993 (68) E.L.T. 50 and had confirmed that the item in question was entitled to the benefit of the exemption Notification No. 208/81-Cus., dated 22-9-1981. The Calcutta High Court has also noticed the ruling rendered by the Bombay High Court in the case of Mansukhlal Chhaganlal Desai v. Union of India as reported in 1989 (40) E.L.T. 314 (Bombay). However, the Collector had not gone into the details of these judgments but he has held that the Notification No. 46/89-Cus., dated 1-3-1989 is a clarificatory notification and having retrospective effect and hence, the duty was recoverable from the importer.
2. We have heard the ld. advocate Sh. V. Lakshmi M. Kumaran for the appellants and ld. SDR, Sh. B.K. Singh for the Revenue. Ld. Counsel narrating the facts of this case pointed out to the judgments relied by them before the Collector and submitted that the Notification No. 46/89-Cus., dated 1-3-1989 is not a clarificatory notification and, therefore, as on the date of the clearance of goods Notification No. 208/81 has granted benefit to the item in question and, therefore, no duty had also been demanded by the department. The only question the department had raised was pertaining to the infringement of trade mark which was adjudicated by order-in-original dated 30-6-1987 by Collector of Customs, Coimbatore. The Collector in his order had clearly stated that "Foley Balloon Catheter" was exempted in terms of Serial No. 22B and 32 of Notification No. 208/81-Cus., dated 22-9-1981 as amended. The ld. advocate further submitted that, in fact, the show cause notice did not make any allegation regarding the goods being dutiable. He pointed out to the following portion from the previous order :-
"The issue to be decided here is whether the trade mark on the impugned goods namely "ANGEL" is deceptively similar to the trade mark "Kosan Angel" and whether the deceptive similarity is without the assent of the [proprietor] of the trade mark "Kosan Angel". If the reply is in the affirmative the impugned goods become prohibited imports in terms of Notification No. 1, dated 18-1-1964 and attract confiscation under Section lll(d) of the Customs Act, 1962."
The ld. advocate relying on this portion of the order submitted that the show cause notice also not having been received by the appellants and the same also not stating anything about the retrospective nature of Notification No. 46/89-Cus., dated 1-3-1989, the Collector (Appeals) had, therefore, proceeded beyond the scope of the show cause notice to hold that the said notification was a clarificatory notification and it had retrospective effect. Therefore, he submitted that the findings of the Collector was ex facie bad. He submitted that the Tribunal had clarified in the case of Collector of Customs v. P.R. Parekh (supra) that Foley Balloon Catheters are [Suction] Catheters, on the basis of the opinion expressed by DGHS and that this opinion was based on the opinion of the Urologist of Delhi and Assistant Dean of KEM Hospital, Bombay. The issue had also been reconsidered in consultation with urologist, AIIMS. The Tribunal, therefore, in view of these categorical certificates had held that there is no difficulty in coming to the conclusion that Foley Balloon Catheters are [Suction] Catheters. The Tribunal had also noticed several judgments in this case. Ld. advocate submitted that the Bombay High Court in the case of Mansukhlal Chhaganlal Desai v. Union of India (supra) had referred to these judgments of the Tribunal and held that Foley Balloon Catheters were eligible for the benefit under the said Notification. The Bombay High Court had confirmed the Tribunal's finding that Foley Balloon Catheters were covered by expression [Suction] Catheters. The counsel submitted that the matter was again examined by the Calcutta High Court in the case of Fitwell Fastner (I) Pvt. Ltd. (supra) and the Calcutta High Court noting all these judgments had held in Para 16 as follows :-
"16. Now the language used in Items 28 and 39 of the Schedule to Notification 339/86-C.E., corresponds exactly with Items 22B and 32 of the list of life saving equipment in Notification 208-Cus. There is no reason why the item used in the excise Notification should be contrued differently from the items used in the Customs Notification. The conclusion of the Tribunal that Foley Balloon Catheters are Suction Catheters was a finding of fact. That the decision was rendered in the context of a Customs Notification was immaterial. The opinion of the Experts as well as medical dictionaries were taken into consideration before the Tribunal reached the conclusion. Had it not been for the Explanation inserted in Notification 208-Cus., there can be no doubt that Foley Balloon Catheters would have continued to be exempted from duty under that notification. The Explanation was necessary to exclude what would otherwise have been covered."
Therefore, the ld. Counsel submitted that Notification No. 46/89-Cus., dated 1-3-1989 had excluded from the grant of exemption these type of Foley Balloon Catheters, as they were different types of Suction Catheters and that the Government did not intend giving the benefit of Foley Balloon Catheters. He submitted that the explanation which was added by the amending notification is not a clarificatory notification but a categorical notification intended to deny the benefit to Foley Balloon Catheters and, therefore, the notification has only prospective effect and no duty can be claimed in respect of the goods which had been exempted at the time of import of the goods.
3. Countering the arguments of the ld. advocate, ld. SDR vehemently argued and submitted that the Explanation which was added by the amending notification was a clarificatory notification. Being a clarificatory notification, it had a retrospective effect and, therefore, the duty which had not been collected could be done so by issue of show cause notice. He pointed out from the case records that the show cause notice had been received by the appellants and that they had not appeared before the Assistant Collector. He submitted that, although in the show cause notice and in the order of the Assistant Collector, there was no reference to the retrospectivity of the amending notification, it could be so presumed. He submitted that the notification is having retrospective effect and, therefore, the demand raised is sustainable. He submitted that the observation made by the ld. Collector in Order-in-Original dated 30-6-1987 which has been extracted above is a obitor dicta and it did not mean that the issue of dutiability had been given up by the department. He submitted that in another case before the Calcutta High Court as in the case of Pradip Traders v. Collector of Customs as reported in 1987 (30) E.L.T. 703, the department had taken a view that 'Angel Brand Catheters' were Suction Catheters for the purpose of considering classification under Heading 90.17/18 of the Customs Tariff Act, 1975 for the purpose of Customs duty and under Item 68 for countervailing duty. The High Court also considering as to whether goods fell under Appendix 10, List I, Item No. 38. On the submissions made by the department on this aspect the Calcutta High Court had remanded the matter for reconsideration. Therefore, the ld. SDR submitted that the question of Foley Balloon Catheter not being Suction Catheter is still being agitated by the department and the matters is not lying before the Hon'ble Supreme Court. Therefore, the amending notification was specifically issued denying the exemption to Foley Balloon Catheter and that, therefore,-the notification has retrospective effect. He submitted that what was implicit had been made explicit by the amending notification, and hence, it is a clarificatory notification. In this regard, he relied on the ruling rendered in the case of Collector of Customs v. Shaw Wallace Co. Ltd. as reported in 1990 (50) E.L.T. 143. He relied on the ruling rendered by the Supreme Court in the case of Sone Valley Portland Cement Co. v. The General Mining Syndicate Pvt. Ltd. as reported in AIR 1976 SC 2520, which dealt with the aspect of interpretation of the statute having retrospective effect. He also referred to another ruling of Hon'ble Supreme Court in the case of Lathia Industrial Suppliers Co. (P) Ltd. v. Collector of Central Excise, Baroda as reported in 1987 (29) E.L.T. 751. He also referred to pages 290-291 of "Interpretation of Statutes" by G.P. Singh, IV Edition, 1968.
4. We have carefully considered the submissions made by both the sides and we are fully convinced that the appeals deserves to be allowed. The matter has been now fully settled in terms of the citation referred to by the ld. advocate. The ld. SDR has been emphasising that the amending notification has retrospective effect. We are not in a position to appreciate this argument for the simple reason that there is no ambiguity in the original notification calling for a clarification or for that matter any aspect which was implicit which required to be clarified explicitly. There was a .dispute as to whether Foley Balloon Catheter would come within the several type of Suction Catheters. The matter had been agitated time and again and after considering enormous evidence, the Tribunal, Hon'ble Bombay High Court and Calcutta High Court had categorically stated that the Foley Balloon Catheters were also Suction Catheters, as they were life saving equipments and that they were eligible for the exemption as per Serial No. 32 of Notification No. 208/81-Cus. The Government had decided to specifically deny exemption to Foley Balloon Catheters. Hence, they issued the amending Notification No. 46/89-Cus., dated 1-8-1989, by which an Explanation was added, which states:-
"For the purpose of this notification, the item listed under this heading shall not include Foley Balloon Catheters."
The above Explanation clearly indicates that Suction Catheters continued to get the exemption and that the Foley Balloon Catheters were not to be included in that category. The item which was earlier granted exemption was clearly excluded from the benefit of notification by adding an explanation clause. Therefore, there was no ambiguity words which required to be clarified or as an elaboration of the earlier notification, for the purpose of its clarity and easy interpretation an amending notification was required to be issued. The earlier notification was a general one to include all Suction Catheters. By adding the explanation clause in the amending notification, the item in issue was clearly excluded from the grant of benefit of the notification. The amending notification is as a result of due deliberation to exclude a item from grant of benefit, which was otherwise covered in the previous notification. The subsequent notification is not in a nature of clearing any doubts, but it is in the nature of excluding an item from the grant of benefit, which was hither-to covered. Therefore, from the facts and circumstances of the case it cannot be said that the amending notification is a clarificatory notification.
5. It is also seen that in the show cause notice this ground has not been taken. In that event of the matter, the arguments advanced by the ld. advocate that the Collector (Appeals) had proceeded beyond the scope of show cause notice requires to be upheld. The ld. SDR has drawn attention to several judgments. We are of the considered opinion that all the judgments referred to by ld. SDR were in a different context and the same is not applicable to the situation arising herein. In Sone Valley Portland Cement Co.'s case, Hon'ble Supreme Court was dealing with interpretation of various provisions of Bihar Land Reforms Act (30 of 1950). The Hon'ble Supreme Court also was dealing with the meaning of statue in the context of subsequent amending statutes, which would shed light upon the meaning of an Act by taking into consideration. 'Parliamentary expositions' as revealed by the later Act, which amends the earlier one for clearing any doubt or ambiguity. The Hon'ble Supreme Court held that this principle has to be followed where a particular construction of the earlier Act will render the later incorporated Act ineffectional or otiose or inept. We do not see any applicability of this ruling to the facts of this case. In Lathia Industrial Supplies Co. (P) Ltd.'s case (supra), the Hon'ble Supreme Court was dealing with the question as to whether re-rubberising and relining of old and used rollers would amount to manufacture. The ratio of this ruling has no reliance to the facts of the present case.
In Shaw Wallace Co. Ltd.'s case, (supra) it was found that the amending Notification No. 295/87, the words "or retained or board the vessel or the time of its reservation from foreign run to coastal run and consumed during its coastal run" were inserted after the word "Bunker" appearing in Notification No. 157/76, therefore, the Tribunal held that these words were added to remove ambiguity existing, to make it more explicit by the amending notification, as an elaboration of the spirit and objective of another notification. Thus, this ruling is also not applicable.
We have also gone through the portion referred by the ld. SDR from G.P. Singh's "Interpretation of Statutes". We are of the view that the issue discussed therein does not apply to the facts and circumstance of this case. The Hon'ble Calcutta High Court in the case of P.R. Parekh v. Collector of Customs (supra) has clearly concluded in Para 16 as extracted above that Foley Balloon Catheters are also Suction Catheters. It has also been held but for the explanation introduced by amending notification, there can be no doubt that Foley Balloon Catheters would have continued to be exempted from duty under that notification. It has been further held that Explanation was added to exclude what could otherwise have been covered for the benefit of exemption from payment of duty. This finding of the Calcutta High Court clinches the issue and makes it very clear that the amending notification is not a clarificatory notification to have any retrospective effect. In that view of the matter, we do not find any merits in the arguments raised ,by the ld. SDR and we reject the same. This appeal is, therefore, deserve to be allowed and we order accordingly.