2017 (12) TMI 1075 - AT - Central Excise

Tribunal grants exemption for I.V. Cannulas, invalidates Circular denial. Appellants eligible under Notification. Duty demand rejected.

The Tribunal ruled in favor of the appellants, holding that the subject goods, I.V. Cannulas, qualified for exemption under the specified description. The ... Exemption by description - cannula for aorta, vena cavae and similar veins and blood vessels - interpretation of exemption notifications - reliance on expert opinion and administrative circular - duty demand and penalty arising from denial of exemptionExemption by description - cannula for aorta, vena cavae and similar veins and blood vessels - interpretation of exemption notifications - I.V. cannula manufactured by the appellants fall within the description and are eligible for exemption under the notification(s). - HELD THAT: - The Tribunal followed its earlier precedents, including Sabharwal Surgical (upheld by the Supreme Court) and subsequent decisions in Becton Dickinson and Eastern Medikit, holding that the phraseology of the entry must be read so that the term 'blood vessels' stands independently and the qualifier 'similar' attaches to 'veins' only. The notifications do not prescribe a degree of similarity; in a broad anatomical sense peripheral veins and arteries may be regarded as similar to vena cavae and aorta respectively. On that interpretative basis the I.V. cannula manufactured by the appellants fall within the description of cannula for aorta, vena cavae and similar veins and blood vessels and hence are eligible for exemption.Exemption allowed; impugned denial of exemption set aside.Reliance on expert opinion and administrative circular - duty demand and penalty arising from denial of exemption - Denial of exemption and consequential demand of duty (including reliance on DGHS opinion / CBEC Circular) and penalties confirmed in the adjudication are unsustainable. - HELD THAT: - The Department's denial, premised on DGHS opinion and a CBEC Circular, could not override the interpretative conclusions reached by the Tribunal and the precedent of the Supreme Court. Since the goods are held to be within the exempt description, the demand for duty and the equal penalty imposed on the appellant and penalty on the partner have no sustaining legal foundation. The adjudicated demand for the period specified thus falls to be set aside.Impugned demand and penalties quashed; appeals allowed.Final Conclusion: Following earlier Tribunal and Supreme Court precedent, the I.V. cannula manufactured by the appellants are covered by the exempt description; the adjudicated denial of exemption, duty demand for the period October, 2004 to 05.02.2007 and the penalties imposed are unsustainable and the appeals are allowed. Issues:1. Interpretation of the term 'Disposable and non-disposable cannula for aorta, vena cavae and similar veins and blood vessels and cannula for intra-corporal spaces' for exemption eligibility.2. Validity of denial of exemption based on Circular No.847/05/2007-CX.3. Applicability of exemption under Notification No.6/2002 and subsequent notifications.4. Justification for demanding duty on goods cleared during a specific period.Issue 1: Interpretation of Exemption Term:The case involved determining whether the subject goods, I.V. Cannulas, fell within the scope of the description 'Disposable and non-disposable cannula for aorta, vena cavae and similar veins and blood vessels and cannula for intra-corporal spaces' for exemption eligibility. Previous decisions by the Tribunal and the Supreme Court had upheld that the subject goods were covered by this description, allowing for exemption. The Tribunal referred to similar cases and emphasized that the term 'blood vessels' should be read independently, concluding that the denial of exemption based on an opinion from the DGHS was not sustainable.Issue 2: Validity of Circular No.847/05/2007-CX:The Central Board of Excise and Customs (CBEC) had issued Circular No.847/05/2007-CX, stating that the subject goods were not covered by the exemption description. This circular led to the Department initiating inquiries and issuing show cause notices to the appellants. However, the Tribunal found that the circular's interpretation was not in line with previous decisions and that the denial of exemption based on this circular was not tenable.Issue 3: Applicability of Exemption Notifications:The appellant had been availing exemption on the subject goods based on Notification No.6/2002 and subsequent notifications that provided exemption for goods under the same description. The Tribunal noted that the appellant was eligible for exemption for the I.V. cannulas manufactured by them, following the precedent decisions and setting aside the impugned order.Issue 4: Duty Demand for Specific Period:The Department had issued a show cause notice proposing to deny the benefit of the Notification and demand duty on goods cleared during a specific period. The appellants contested the notice, arguing that the issue had already been decided by previous judgments and that the demand for the extended period was not justifiable. The Tribunal agreed with the appellants, citing previous decisions and allowing the appeals.In conclusion, the Tribunal held that the subject goods qualified for exemption under the specified description, rejecting the denial of exemption based on the circular and previous decisions. The appellants were granted relief, and the impugned order was set aside, following the precedent decisions and allowing the appeals.