1991 (3) TMI 237 - AT - Customs

Summary

Issues Involved:
1. Jurisdiction of the Bench
2. Eligibility of the imported goods for duty exemption and Open General Licence
3. Compliance with bond conditions and production of required certificates
4. Legality of the Assistant Collector's actions in demanding payment from the bank
5. Adherence to principles of natural justice
6. Merits of the dispute regarding classification of goods as accessories/spares of haemodialysers

Issue-wise Detailed Analysis:

1. Jurisdiction of the Bench:
The respondent objected to the hearing of the appeal by the Bench, arguing it fell within the jurisdiction of Special Bench-B. The objection was overruled, noting that the division of work among Special Benches is administrative for convenience, and parties were already present.

2. Eligibility of the Imported Goods for Duty Exemption and Open General Licence:
The appellants imported haemodialysis machines and related equipment, claiming benefits under the Import Policy 1985-88 and Customs Notification No. 208/81. The haemodialysers and most accessories were released, except for six water treatment plants, one reverse osmosis unit, and one water softening unit, valued at Rs. 49,19,284 CIF. The appellants executed bonds with bank guarantees to produce required certificates from DGHS and CCIE, which were not initially provided. Certificates from nephrologists and a write-up by the appellant's Chief Medical Adviser supported their claim that the disputed goods were essential accessories.

3. Compliance with Bond Conditions and Production of Required Certificates:
The Assistant Collector demanded payment from the bank due to non-production of the required certificates. The appellants argued that they had obtained a certificate from DGHS stating the reverse osmosis machine was essential for a functional dialysis unit, but the Assistant Collector deemed it insufficient. Further correspondence and extensions did not resolve the issue, leading to a show cause notice and subsequent adjudication.

4. Legality of the Assistant Collector's Actions in Demanding Payment from the Bank:
The Assistant Collector's actions were criticized for being irregular and illegal, showing undue haste in recovering the guaranteed amounts before the Collector's adjudication. The Assistant Collector pressured the bank to pay, disregarding the adjudication process and the appellants' right to defend themselves. The Tribunal noted that the bank, as a surety, should be called upon to pay only after the appellants refused to honor an adjudicated liability.

5. Adherence to Principles of Natural Justice:
The Tribunal found breaches of natural justice, as the appellants were not provided with all evidence relied upon by the Collector, and their request to cross-examine experts was denied. The Collector's reliance on undisclosed expert opinions further compromised the appellants' defense.

6. Merits of the Dispute Regarding Classification of Goods as Accessories/Spares of Haemodialysers:
The Tribunal emphasized a liberal interpretation of "accessories/spares" under the Customs Notification and ITC Policy. Evidence from nephrologists and technical literature indicated that water treatment and softening units were essential for the safe operation of haemodialysers. The Tribunal rejected the Collector's reliance on Dr. Varma's certificate, which was based on unidentified experts and not subject to cross-examination. The appellants' evidence, including supplier confirmations and medical expert opinions, supported their claim that the disputed goods were designed as accessories for haemodialysers.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellants. The Assistant Collector's role was referred to the Chairman C.B.E.C. for appropriate action due to the irregularities and illegalities in handling the case.