1991 (2) TMI 127 - HC - Customs

Issues Involved:
1. Classification of Hakko Brand Scalp Vein Sets under Customs Notification No. 208/81.
2. Applicability of Customs Duty at 40% ad valorem under Notification No. 65/88-Cus.
3. Consistency in customs duty assessment across different ports.
4. Binding nature of CEGAT decisions on Customs Authorities.
5. Ambiguity in the classification of 'Intravenous Cannulae & Tubing (for long term use)'.
6. Authority of Customs Authorities to refuse duty-free import based on updated classifications.
7. Impact of non-response by Customs Authorities to petitioners' letters.

Detailed Analysis:

1. Classification of Hakko Brand Scalp Vein Sets under Customs Notification No. 208/81:
The petitioners argued that the imported Hakko Brand Scalp Vein Sets should be classified as "Intravenous Cannulae and Tubing for long term use" under Item 19 of Schedule B of Customs Notification No. 208/81, which exempts such items from customs duty. They relied on various documents and past decisions, including letters from the Directorate General of Health Services and the Chief Controller of Imports & Exports, which supported their classification.

2. Applicability of Customs Duty at 40% ad valorem under Notification No. 65/88-Cus:
The respondents contended that Notification No. 65/88-Cus., effective from 1-3-1989, imposed a customs duty of 40% ad valorem on infusion sets, including scalp vein sets. They argued that the scalp vein sets did not qualify as "Intravenous Cannulae and Tubing for long term use" and thus were subject to this duty. This position was supported by a letter from the Directorate General of Health Services dated 9-9-1988, which differentiated long-term cannulae from disposable infusion sets.

3. Consistency in customs duty assessment across different ports:
The petitioners claimed that similar goods had been cleared without duty at other ports like Bombay and Delhi, citing the principle of non-discrimination. However, the respondents pointed out that recent communications between customs authorities aimed to standardize the classification and duty assessment, ensuring uniformity across all ports.

4. Binding nature of CEGAT decisions on Customs Authorities:
The petitioners referenced past CEGAT decisions that classified scalp vein sets as duty-free under Notification No. 208/81. The respondents countered that these decisions were made before the introduction of Notification No. 65/88-Cus. and thus were not applicable to the current case.

5. Ambiguity in the classification of 'Intravenous Cannulae & Tubing (for long term use)':
The petitioners argued that any ambiguity in the classification should be resolved in favor of the assessee. The court examined the definitions and expert opinions, concluding that scalp vein sets did not meet the criteria for "Intravenous Cannulae and Tubing for long term use" as they lacked a catheter-like tube around the needle, essential for prolonged use.

6. Authority of Customs Authorities to refuse duty-free import based on updated classifications:
The court upheld the customs authorities' decision to classify scalp vein sets under Notification No. 65/88-Cus., supported by expert opinions and consistent with recent communications among customs officials. The court found no arbitrariness in their actions, as they were based on relevant and updated information.

7. Impact of non-response by Customs Authorities to petitioners' letters:
The petitioners argued that the lack of response from customs authorities to their letters requesting duty-free clearance implied wrongful refusal. The court, however, held that non-response alone did not invalidate the customs authorities' decision, especially when there was sufficient material to justify their classification.

Conclusion:
The court dismissed the writ application, concluding that the scalp vein sets imported by the petitioners did not qualify as "Intravenous Cannulae and Tubing for long term use" under Notification No. 208/81 and were subject to customs duty at 40% ad valorem under Notification No. 65/88-Cus. The court emphasized the need for uniformity in customs duty assessment and upheld the customs authorities' classification based on updated expert opinions and consistent application of the law.

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