1994 (5) TMI 134 - AT - Customs

Issues Involved:
1. Denial of benefit of exemption under Notification No. 208/81 for Foley Balloon Catheters.
2. Retrospective applicability of the amending Notification No. 46/89-Cus., dated 1-3-1989.
3. Validity of the show cause notice and subsequent proceedings.
4. Classification of Foley Balloon Catheters as Suction Catheters.

Issue-wise Detailed Analysis:

1. Denial of Benefit of Exemption under Notification No. 208/81:
The appeal challenges the denial of exemption for Foley Balloon Catheters under Notification No. 208/81, dated 22-9-1981. The Collector (Appeals) held that the goods were not eligible for duty-free clearance due to the introduction of an explanation in Notification No. 46/89-Cus., dated 1-3-1989, which excluded Foley Balloon Catheters. However, the goods were imported on 1-1-1987, well before the amending notification came into effect. The initial order-in-original dated 30-6-1987 imposed a penalty and redemption fine but acknowledged the exemption under Notification No. 208/81. The appellants argued that the matter had reached finality with the Tribunal's decision, which accepted the exemption.

2. Retrospective Applicability of Amending Notification No. 46/89-Cus.:
The Collector (Appeals) construed the amending Notification No. 46/89-Cus. as clarificatory with retrospective effect. The appellants contended that the notification was not clarificatory but introduced an "Explanation" that specifically excluded Foley Balloon Catheters from the exemption. They cited several judgments, including those from the Calcutta and Bombay High Courts, which affirmed that Foley Balloon Catheters were entitled to the exemption under Notification No. 208/81. The Tribunal agreed with the appellants, stating that the amending notification was not clarificatory and had no retrospective effect. The explanation added by the amending notification was intended to prospectively exclude Foley Balloon Catheters from the exemption.

3. Validity of the Show Cause Notice and Subsequent Proceedings:
The appellants disputed the receipt of the show cause notice issued by the department. The Assistant Collector confirmed the duty ex parte, holding that the goods were incorrectly assessed as duty-free. The appellants argued that the show cause notice did not allege that the goods were dutiable and that the Collector (Appeals) had exceeded the scope of the notice by holding that the amending notification had retrospective effect. The Tribunal upheld this argument, noting that the Collector (Appeals) had proceeded beyond the scope of the show cause notice.

4. Classification of Foley Balloon Catheters as Suction Catheters:
The appellants relied on previous judgments, including those by the Tribunal and High Courts, which classified Foley Balloon Catheters as Suction Catheters eligible for exemption under Notification No. 208/81. The Tribunal reaffirmed this classification, citing expert opinions and medical dictionaries. The Calcutta High Court in Fitwell Fastner (India) Pvt. Ltd. v. Collector of Customs confirmed that Foley Balloon Catheters were Suction Catheters and would have continued to be exempted but for the explanation in the amending notification. The Tribunal concluded that the amending notification was not clarificatory but intended to exclude Foley Balloon Catheters prospectively.

Conclusion:
The Tribunal allowed the appeal, holding that the amending Notification No. 46/89-Cus. was not clarificatory and had no retrospective effect. The show cause notice did not address the retrospective nature of the notification, and the Collector (Appeals) had exceeded the scope of the notice. The classification of Foley Balloon Catheters as Suction Catheters was reaffirmed, and the goods were entitled to exemption under Notification No. 208/81 at the time of import. The appeal was allowed, and the duty demand was set aside.

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