TaxTMI 
TaxTMI 
2015 (5) TMI 248
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....fied the items under C.E.T. heading 9018 and claimed exemption under Notification No.8/96 dated 23.09.1996 and Notification No.4/97 dated 01.03.97 respectively. The Revenue, however, took a view that the said Defibrillators were not eligible to the benefit of the aforesaid exemption Notifications. Therefore, by letter dated 17.02.98 it directed the appellant to modify its classifications declaration as only miniaturized implantable defibrillators were eligible to the benefit of the Notification. The appellant protested by giving reply and maintaining that the Notification in question encompassed the aforesaid goods manufactured by the appellant as well. The department was not amused by the reply given by the appellant. It resulted in issuance of show-cause notice dated 23.09.1998 whereunder demand duty with respect to Defibrillators manufactured during the period January 1997 to March 1998 was proposed as duty in the said show-cause notice. 3) We may point out at this stage that a defibrillator is a device that delivers electrical shock through paddles placed either directly across the heart or on the surface of the body during cardiac emergency resulting from ventricular fibrilla....
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....firmed the demand of Rs. 27,71,326/- and imposed equivalent penalty under Section 11AC as well as further penalty of Rs. 1 lakh. 6) Thereafter, the appellant filed an appeal before the CEGAT, Madras (now Chennai) against the order of the Commissioner mainly impressing upon the CEGAT that the Commissioner in the impugned order had relied upon extraneous grounds to come to the conclusion that the Defibrillators manufactured by the appellant were only for external use and, therefore, the benefit of Notification could not be extended. The appellant produced evidence in the form of certificates from the Department of Electronics, hospitals, invoices for clearance of the equipment with internal paddles and other technical literature to substantiate their contention that Defibrillators manufactured by them were put to internal use by using internal paddles on the exposed hear during cardiac surgery. They relied upon decisions that the term 'for use' means capable of being used and not actual use and also on interpretation of statute. The CEGAT, by its order dated 01.03.2002, held that the Commissioner had come to a finding on an incomplete reading of the manual and had not consid....
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....it of the notification. 10) As there was a difference of opinion, the issue was referred to a Third Member. The Third Member, viz. the President of the Tribunal, heard the matter and passed the order dated 19.05.2004 disallowing the benefit of the notification to the Defibrillator thereby concurring with the view of the Technical Member. 11) This is how the matter has come up to this court in the form of present appeal filed by the appellant under Section 35 L(b) of the Central Excise Act (herein after refer to as Act), challenging the aforesaid order dated 19.05.2004. 12) We have already taken note of the product in question with its salient features and particular uses it can be put to. Question is as to whether it satisfies the requirement of Notification No. 8/96 and Notification No. 4/97, under which the appellant is claiming exemption. Thus, before we proceed further it would be apt to scan through the ingredients of the aforesaid notifications along with earlier notifications under which exemption is granted in respect of defibrillator, from time to time. First notification in this behalf is the Notification No. 339/86 dated 11.06.1986, which was amended by notifications ....
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....ns, defibrillators for external use are no more eligible for exemption. The entry now reads "D.C. Defibrillator for internal use and pacemaker". Thus, what is omitted is not only external use but also accessories of these D.C. Defibrillators. Likewise in place of earlier entry which mentioned on implantable cardiac pacemaker and accessories, entry in this Notification confines only to implantable cardiac pacemakers. Accessories thereof are specifically removed from exemptions. Moreover in place of pacemaker wires now it is only pacemaker. Though in the earlier notification, patient cable for pacemaker was included as exempted item, it is omitted altogether in Notification No.8/96. This position is maintained in Notification No.4/97 dated 01.03.1997. 15) Keeping in view the aforesaid characteristic and feature of the Notifications in question, in contradistinction to the position which prevailed in the earlier Notification dated 11.06.1986 as amended from time to time and taken note of above, we have to examine as to whether the defibrillator of the appellant would be covered by these two Notifications. 16) It is not disputed by the appellant that their Defibrillators are primaril....
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.... took in both DC Defibrillator for internal and external use. While including accessories in the above items specific reference was made to 'internal defibrillator paddles with 45mm and 55mm sizes'. It is relevant to note that there is a marked difference in the description of the item when it came to Notification Nos.8/96 and 4/97. There is no reference to D.C. Defibrillator for external use or a specific reference to 'internal defibrillator paddles'. Even according to the assessee, its product can be treated as D.C. Defibrillators for internal use only when it is fitted with internal defibrillators. Admittedly assessee is clearing defibrillators without such 'internal defibrillators paddles' also. A reference to assessee's Operating and Service Mannual also would show that 'internal defibrillator paddles' are only optional accessories. Defibrillators for external use which are once included in the exempted category are not taken out of such category under Notification Nos. 8/96 and 4/97. If the assessee's contention is to be accepted then in spite of such specific exclusion its product will continue to get benefit of exemption on the basis of s....
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....ernal use from the exemption provisions in Notification Nos.8/96 and 4/97 cannot be ignored. Appellant's product which is basically a defibrillator for external use but capable of using during open heart surgery if the optional accessory of internal defibrillators paddles are also provided, cannot be treated as defibrillators for internal use are contemplated in the exemption provisions." 18) We approve the aforesaid reasoning and rational given by the Tribunal in coming to the conclusion that the goods of the appellant would not qualify the description contained in Notification Nos.8/96 and 4/97. It is trite that strict interpretation is to be given to the exemption notifications and it is upon the assessee to approve that he fulfills all the conditions of eligibility under such Notifications. This is so held by this Court in Rajasthan Spinning and Weaving Mills, Bhilwara, Rajasthan v. Collector of Central Excise, Jaipur, Rajasthan (1995) 4 SCC 473, wherein this principle was stated in the following manner: "16. Lastly, it is for the assessee to establish that the goods manufactured by him come within the ambit of the exemption notification. Since, it is a case of exemption ....
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....language of the notification i.e. by the plain terms of the exemption." 20) Having regard to the above it is difficult to accept the contention of Mr. Datar, learned senior counsel who appeared for the appellant, predicated on the submission that such defibrillator of the appellant is capable of internal use and, therefore, it would be covered by the aforesaid notifications. No doubt there is difference between the 'actual use' and 'intended for use' and even when a product is not actually used but is capable of being used, it would be treated as the product 'for use' as held in State of Haryana v. Dalmia Dardri Cement Limited (1987) Supp SCC 679. However, in the present case we find that defibrillator when sold without paddle is not capable of being used internally and paddle is only sold as optional accessory. 21) For the same reason, judgment in the case of Collector of Customs, Bombay v. Handicraft Exports (1997) 7 SCC 144 will also have no application to the instance case. In that case exemption from import duty was provided in respect of 'embellishment for footwear under the notification. The Court held that the imported goods need not be capable....