2020 (7) TMI 93 - AT - Customs

Classification of imported goods - Micropore, Transpore and Tegaderm - whether eligible for exemption contained in notification No. 21/2002-Customs dated 01/03/2002 as amended from time to time or not - contention of the appellants is that their products are rightfully eligible for the exemption contained in the notification under the description Skin Barriers Micropore Surgical Tapes , whereas Department contends that there exists a product which suits the description Skin Barriers Micropore Surgical Tapes and the notification should not be read as per convenience. HELD THAT - The department has established that a product named and known as Skin Barriers Micropore Surgical Tapes exists. The evidence of the same has been supplied as RUD to the appellants. Under such circumstances, the appellants contention that no product known as Skin Barriers Micropore Surgical Tapes exists and there should have been a comma (,) in between doesn t hold water. When such products are sold and used as such, it cannot be inferred that the notification was wrongly worded and therefore, it is to be interpreted to mean Skin Barriers, Micropore Surgical Tapes is not acceptable. There is no ambiguity in the notification and there is no need to interpret the notification by supplying what is assumed to be missing in the notification. The impugned order is correct as far as it holds that the items imported by the appellants are not eligible for the exemption contained in the notification No.21/2002-Cus dated 01.03.2002. The appellants argue that another part of the notification mentions bag closing clamps karaya seals paste or powder whereas no such products are available and therefore, it need to be understood that notification misses out on certain symbols like (,). We find that as the items described therein are not under discussion, we need not turn our attention to the same. Time Limitation - penalties - HELD THAT - The fact that the appellants are importing from a long period is not disputed. It is not the case of the department that all the consignments were cleared under self-assessment procedure. It is not the contention of the Revenue that the impugned products were not subjected to examination or assessment any time - the extended period is not invokable and penalties are not imposable. Appeal allowed in part.

Issues Involved:

1. Eligibility for exemption under Notification No. 21/2002-Cus for Micropore, Transpore, and Tegaderm products.
2. Interpretation of "Skin Barriers Micropore Surgical Tapes" in the notification.
3. Applicability of alternative exemptions under Sl.No. 365 of Notification No. 21/2002-Cus.
4. Invocation of the extended period for demand and imposition of penalties.

Issue-wise Detailed Analysis:

1. Eligibility for Exemption under Notification No. 21/2002-Cus:

The appellants, M/s 3M India Ltd, claimed exemption for their imported Micropore, Transpore, and Tegaderm products under Sl.No. 363A of Notification No. 21/2002-Cus, arguing that these products qualify as "Skin Barriers Micropore Surgical Tapes" or alternatively as ostomy products. The Directorate of Revenue Intelligence (DRI) contended that these products do not meet the criteria for the claimed exemption as they are general-purpose medical adhesive tapes and not specific ostomy appliances.

2. Interpretation of "Skin Barriers Micropore Surgical Tapes":

The appellants argued that the term "Skin Barriers Micropore Surgical Tapes" should be read as two separate items: "Skin Barriers" and "Micropore Surgical Tapes," due to the absence of a comma. The department, however, demonstrated the existence of products fitting the combined description, such as the "HOL-3723 Cut-to-fit Flex wear Flat Skin Barrier, Porous Paper Tape" by M/s. Hollister. The tribunal upheld the department's view, stating that the notification's wording should not be altered and that the products imported by the appellants do not match the combined description.

3. Applicability of Alternative Exemptions under Sl.No. 365:

The appellants also claimed exemption under Sl.No. 365 of Notification No. 21/2002-Cus, which provides exemption for life-saving medical equipment subject to certification by the Director General of Health Services (DGHS). The tribunal found that the certificates provided by the appellants were issued under an earlier notification (No. 208/81) and did not pertain to the current imports. Hence, this claim was not accepted.

4. Invocation of Extended Period for Demand and Imposition of Penalties:

The appellants argued that the extended period for demand should not be invoked as they had a bona fide belief in the exemption's applicability, supported by previous customs clearances and the decision in the Sutures India Pvt Ltd case. The tribunal agreed, noting that the appellants' belief was reasonable and that the products had been subjected to customs examination over the years. Consequently, the extended period was deemed not invocable, and penalties were set aside.

Conclusion:

The tribunal concluded that the imported products did not meet the description of "Skin Barriers Micropore Surgical Tapes" and were not eligible for the claimed exemption. The demand for duty was confirmed for the normal period only, and penalties were set aside due to the appellants' bona fide belief in the exemption's applicability. Appeals C/25676/2013 & C/25677/2013 were allowed, and appeal C/25625/2013 was partly allowed.

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