2014 (4) TMI 413 - AT - Central Excise

Manufacturing of Needles - Eyed Suture Needles - Atraumatic Needles (Eyeless) - Benefit of Exemption under Notification No.6/2006-CE, dated 01.03.2006 (S.No.59) - Classification of goods - Held that - classification adopted by the applicant at eight digit level for Atraumatic Needles - (Eyeless) , is 9018 9019, is wrong and the correct classification appears to be 9018 3210. But this change of classification at eight digit level with common four digit level for both the rival classifications does not have any impact on the decision to be made in this application because at any rate, the item is admitted to be falling under Chapter Heading 9018 and the exemption in question is applicable to such goods. Whether the item which is specified in a Tariff Entry can be considered to be part of another item for the purpose of an exemption notification - Held that - In our prima facie view, Atraumatic Needle (Eyeless) is a part required for manufacturing needled sutures . On a perusal of the different entries in the said notification it is seen that wherever there is an intention to restrict the scope of exemption to specified parts it is done by specifying the classification of the goods - In this case the impugned goods satisfy such condition - Stay granted.

Summary

Issues:
Classification of 'Atraumatic Needles - (Eyeless)' for Central Excise Duty exemption under Notification No.6/2006-CE, dated 01.03.2006.
Whether 'Atraumatic Needles - (Eyeless)' can be considered as a part of 'needled sutures' for exemption.

Analysis:

1. The applicant manufactures two types of needles, 'Eyed Suture Needles' and 'Atraumatic Needles - (Eyeless)'. The dispute arises regarding the latter's classification for excise duty exemption under Notification No.6/2006-CE. The Revenue challenges the classification under Central Excise Tariff Item 9018 3210, arguing that it should be treated as a complete product, not a part of another item.

2. The Revenue contends that 'Atraumatic Needles - (Eyeless)' falls under Central Excise Tariff Item 9018 3210 and should not be considered a part of 'needled sutures'. The Hon. Apex court's classification of 'needled sutures' under Chapter Heading 9018 is referenced. Two show-cause notices were issued, leading to a demand for payment and penalties.

3. The applicant argues that 'Atraumatic Needles - (Eyeless)' cannot be used directly by consumers and must be attached to a 'gut' by manufacturers like M/s. Johnson & Johnson. They claim that these needles are essential for manufacturing 'needled sutures' and should be exempt from excise duty.

4. The Tribunal considers three key issues for granting the exemption: classification of the product, classification of 'needled sutures,' and whether 'Atraumatic Needles - (Eyeless)' can be deemed a part of 'needled sutures'. The correct classification of the needles is deemed to be 9018 3210, but the exemption applies to goods under Chapter Heading 9018.

5. The Tribunal acknowledges that the classification of 'needled sutures' has been settled by the Hon'ble Apex Court as 9018. It then deliberates on whether 'Atraumatic Needles - (Eyeless)' can be considered a part of 'needled sutures' for the purpose of the exemption notification.

6. Upon analysis of the exemption notification, the Tribunal finds merit in the applicant's argument that 'Atraumatic Needles - (Eyeless)' is a necessary part for manufacturing 'needled sutures'. The notification's conditions are met, warranting a waiver of dues and stay on recovery during the appeal's pendency.

7. The Tribunal grants the stay petition, allowing the applicant relief pending the appeal process.