1997 (3) TMI 101 - SC - Central Excise

Whether the goods in question fall within Entry 3005.90 or they fall within the scope of Entry 90.18 within the meaning of the respective terms others and instruments and appliances used in surgical sciences? Whether the appellants are entitled to exemption under Notifications Nos. 339/86-C.E. dated 11th June 1986 and 69/93-C.E. dated 28th February 1993 respectively? Held that - The intention of the authorities was to grant exemption to certain life saving and sight saving articles manufactured in the country and once this intention is clear from the subsequent Notifications issued under Section 5A of the Act in 1995 we do not see any reason why we should take a narrow view to confine the two items produced by the appellants to Entry 3005.90 rather than place them in the wider connotation of surgical appliances in Entry 90.18 of Chapter 90. In this view of the matter we allow these appeals set aside the orders of the authorities below and hold that the appellants were entitled to exemption from the whole of the duty payable on the said two items. In this view of the matter the stay granted earlier is made absolute

Summary

Issues Involved:
1. Classification of Cardio Vascular Sutures and Atraumatic Needled Sutures under the Central Excise Tariff.
2. Applicability of Exemption Notifications Nos. 339/86-C.E., 69/93-C.E., 60/95-C.E., and 61/95-C.E.
3. Interpretation of Chapter 30 and Chapter 90 of the Central Excise Tariff.
4. Relevance of subsequent Notifications and Circulars in clarifying the position.

Detailed Analysis:

1. Classification of Cardio Vascular Sutures and Atraumatic Needled Sutures:
The appellants manufacture highly specialized "Cardio Vascular Sutures" and "Atraumatic Needled Sutures," used in Cardio Vascular and Ophthalmic Surgery, respectively. The primary issue was whether these items should be classified under Entry 3005.90 ("others") or Entry 90.18 ("instruments and appliances used in medical, surgical, dental or veterinary sciences") of the Central Excise Tariff.

The court held that the composite items comprising the needle and suturing material should fall within Entry 90.18 as surgical appliances. The terminology "surgical appliances" has a broader compass than "suturing appliances" of Chapter 30.

2. Applicability of Exemption Notifications:
The court examined several exemption notifications:
- Notification No. 339/86-C.E., dated 11th June 1986: Exempted certain life-saving equipment from excise duty.
- Notification No. 69/93-C.E., dated 28th February 1993: Exempted certain sight-saving equipment from excise duty.
- Notification No. 60/95-C.E., dated 16th March 1995: Exempted certain special medical, surgical instruments, and apparatus from excise duty.
- Notification No. 61/95-C.E., dated 16th March 1995: Clarified the exemption status of the goods.

The court concluded that the subsequent notifications clarified the position and removed any ambiguity regarding the exemption status of the items produced by the appellants.

3. Interpretation of Chapter 30 and Chapter 90:
The court analyzed Note 3 of Chapter 30, which applies to sterile surgical catgut and similar sterile suture materials, and Chapter 90, which refers to instruments and appliances used in medical, surgical, dental, or veterinary sciences.

The court found it difficult to accept the Revenue's contention that the composite items should fall under Entry 3005.90. It held that if the needle by itself fell within Entry 90.18, then the composite item (needle with suturing material) should also fall within the broader term "surgical appliances."

4. Relevance of Subsequent Notifications and Circulars:
The court referred to a Circular issued by the Central Board dated 13th February 1996, which clarified that exemption notifications should not be denied based on the mismatch between the description of goods and the Tariff References.

The court opined that the subsequent notifications (Nos. 60/95 and 61/95) and the Circular clarified the intention of the authorities to grant exemption to the life-saving and sight-saving articles manufactured by the appellants.

Conclusion:
The court allowed the appeals, set aside the orders of the authorities below, and held that the appellants were entitled to exemption from the whole of the duty payable on the Cardio Vascular Sutures and Atraumatic Needled Sutures. The stay granted earlier was made absolute, with no order as to costs.