9911796707
TMI Blog2004 (7) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... Recorder. They filed classification declaration No. 7/96 under Rule 173B of Central Excise Rules, 1944 claiming exemption under Notification No. 8/96-C.E. dated 23-7-1996 and in declaration No. 9/96-97 dated 1-3-1997 under Notification No. 4/97-C.E. dated 1-3-1997. On investigation, it was revealed that exemption is available to only DC Defibrillators for internal use, and they were liable to pay duty @ 5% ad valorem. Accordingly, a Show Cause Notice was issued to them demanding the duty and proposing for penal action. The Show Cause Notice was adjudicated by the Commissioner of Central Excise, Cochin-II, under Order No. 2/99 dated 19-11-1999 wherein he confirmed the duty of ₹ 27,71,236/- demanded under the Show Cause Notice and also imposed a penalty of ₹ 27,71,236/- under Section 11AC of the Central Excise Act, and a penalty of ₹ 1,00,000/- under Rule 173Q of Central Excise Rules, 1944 and interest at appropriate rates under Section 11AB of Central Excise Act. Appeal was filed by the appellants against this order before CEGAT. The CEGAT vide Order No. 288/2002, dated 1-3-2002 [2002 (142) E.L.T. 615 (T)] remanded back the case for de novo adjudication on eligibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C Defibrillators and pace-makers and stated that at Sl. No. 16 of the said list, there is an entry Implantable cardiac pace-makers and at Sl. No. 58, there is an entry Pace-maker . He, therefore, pleaded that since at Sl. No. 7, the entry is only DC defibrillators for internal use and pace-makers , it does not say that it should be implantable. Therefore, the Department s view that it should be implanted in the body for making it as for internal use is not correct. The correct position for availing the exemption would be that the DC defibrillators should be capable of being used for internal use. Since there is provision for having small paddles, which can give the energy up to 3 joules to the heart, and these small paddles can be used in open heart surgery when the heart is open to give this energy of up to 3 joules to the heart, it is considered for internal use. He also referred to the letter No. 1/(1)/2000-HBT, dated 17-7-2000 issued by the Ministry of Information Technology, Electronics Niketan, New Delhi, to the General Manager, BPL Limited, wherein it had clarified that the - Defibrillators is a device that delivers electric shock through paddles placed either direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous mode (yellow SYNC indicator illuminated), the delivered countershock is synchronized with the QRS complex and delivered within 40 milliseconds of the peak of R-wave with proper setting of the SIZE control A SYNC marker purse, appearing on the solid-trace waveform, indicates within 20 milliseconds where the countershock will be delivered. The energy level of the delivered countershock, measured in joules delivered into a 50 ohm load, is variable from 0 to 320 joules. The energy level is easily obtained by depressing the SET CHARGE-Manual pushbutton until the desired value is indicated on the DELIVERED ENERGY indicator bar at the top of the scope screen. Also, AUTOMATIC pushbutton controls are provided for quick selection of present energy levels - 160 or 320 joules. Delivery of the monophasic countershock pulse (Lown/Edmark waveform) is triggered by depressing the discharge buttons on both of the anterior paddles, or if internal paddles are used, by depressing the INT. PADDLE DISCHARGE button located on the control panel. Optional anterior paddles are equipped with a CHARGE pushbutton that functions the same way as the SET CHARGE Manual pushbutton does . 9. According t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for internal use. We also find that under Notification Nos. 8/96 and 4/97, there is an entry at Sl. No. 7 DC defibrillators for internal use and pace-makers , entry at Sl. No. 16 Implantable Cardiac Pace-makers and entry at Sl. No. 58 Pace-makers . Reading these 3 entries, if we read harmoniously, will give clue to the correct interpretation of the entry at Sl No. 7. Since there are separate entries for implantable cardiac pace-makers and pace-makers , therefore, having an entry at Sl. No. 7 with DC defibrillators for internal use and pace-makers can have a meaning only that the DC defibrillators should be in use with the pace-makers and it is possible when these are implanted. 13. The learned JCDR had drawn our attention to the literature available at Para 18 of the order of the Commissioner where he has observed that - Newer devices are a combination of ICD and pace-maker in one unit. These combination ICD/pace-makers are implanted in patients who require both devices (www.emedicine.com) . 14. Since, there are devices available which are combination of Internal Cardiac Defibrillators and Pace-makers in one unit, the entry at Sl. No. 7 of List 6 can have this mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... close to the pace-maker which is why both appeared to have been clubbed together in the Notification. There is a force in the arguments advanced on behalf of the assessee that the Commissioner has violated the principles of Natural Justice by relying on such extraneous evidences obtained behind the back of the appellant and which was not disclosed to the appellant at any stage in order to enable them to counter the same. It was reiterated that an inference drawn by relying upon such evidences is unsustainable in law and based on such evidences no conclusion can be reached against the appellants to deny the benefit of Notification. However, technical literature was placed before us to show that the said automated defibrillators can only be used to deliver shock on the chest and is not capable of use directly on the exposed heart during open heart surgery. Apart from this, I find that the Commissioner in the impugned order has observed that the item in question manufactured by M/s. BPL is basically for external use with an in-built provision for emitting low voltage with the assistance of internal paddles used rarely during operation that too external to the heart. There is force in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ha, President]. - The issue that has come up for consideration in this appeal is whether the defibrillators manufactured by the appellants are entitled for exemption under Notification No. 8/96-C.E. dated 23-7-1996 and Notification No. 4/97-C.E., dated 1-3-1997. While the learned Member (Judicial) took the view that the appellant s product would be entitled to exemption under the above notifications, the learned Member (Technical) took a contra view. 23. The appellants are manufacturing defibrillators model DF 2389 without Recorder and DF 2389R with Recorder falling under sub-heading No. 9018.00 of the Schedule to the Central Excise Tariff Act. They filed a classification declaration No. 7/97 under Rule 173B of the Central Excise Rules, 1944 claiming exemption under Notification No. 8/96-C.E., dated 23-7-1996 and declaration No. 9/96/97 dated 1-3-1997 under Notification No. 4/97-C.E. dated 1-3-1997. The Superintendent of Central Excise under his letter dated 17-2-1998 directed the appellants to revise the classification declaration since the department took the view that defibrillators of the type cleared by the appellant are not entitled to exemption from duty. Being not satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epressing the discharge buttons on both of the anterior paddles, or if internal paddles are used, by depressing the INT. PADDLE DISCHARGE button located on the control panel. Optional anterior paddles are equipped with a CHARGE pushbutton that functions the same way as the SET CHARGE MANUAL pushbutton does . In Table 1.1 containing Standard Accessories. Item 2 is Adult Anterior Paddles type PDM-G16. In Table 1.2 the following Optional Accessories are given :- S. No. 1-Adult Anterior -Posterior Paddles TypeL PDM-G19 S. No. 2-Adult Internal Paddles Type: PDM-G18 S. No. 3-Adult Anterior Paddles with Remote Charge button, Type PDM-G16RC S. No. 4-Pediatric Internal Paddles, Type : PDM-G21 The meaning of Cardiac Defibrillation as given in Medicine and Clinical Engineering Physiological and Clinical Medicine by Bertil Jacobson Karolinska Institute, Stockholm, Sweden, Jhon G. Webster, University of Wisconsin, Madison quoted by the appellant it reads as follows :- Some cardiac arrhyhmias can be treated by passing a brief electric shock through the heard. Venticular fibrillation can often be stopped before circulatory arrest has caused irreversible brain damage due t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Even according to the assessee, its product can be treated as D.C. Defibrillators for internal use only when it is fitted with internal defibrillators. Admittedly assessee is clearing defibrillators without such internal defibrillators paddles also. A reference to assessee s Operating and Service Manual also would show that internal defibrillator paddles are only optional accessories. Defibrillators for external use which were once included in the exempted category are now taken out of such category under Notification Nos. 8/96 and 4/97. If the assessee s contention is to be accepted then in spite of such specific exclusion its product will continue to get benefit of exemption on the basis of supply of some optional accessories like internal paddles. 27. The material produced by the Revenue before the Commissioner and accepted by him were later made available to the assessee before this Tribunal. Arguments were addressed by both on that basis. The relevant portion from the Commissioner s order is quoted below : - Internal Cardioverter Defibrillators (ICD) were originally developed and have been most frequently used for prevention of sudden cardiac death (www.americanhe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption under Notification Nos. 8/96 and 4/97 in respect of its product D.C. Defibrillators. 30. I find that the appellant had raised an issue on limitation about which no view is expressed by Member (Technical). Member (Judicial) even though felt that the appellant has a good case on the issue of limitation, did not go into it as he was inclined to allow the appeal on merits. Since the Members have not expressed any view on the issue of limitation, it is not proper for me to consider the question of limitation on merits, even though, it was contended on behalf of the appellant that the dispute relates to interpretation of a notification and when the issue is not very clear as there was difference of opinion between the two learned Members, it is a fit case to accept the contention of the assessee that there was no wilful misstatement or suppression of facts or contravention of any of the provisions of the Act or the Rules with intent to evade payment of duty. It is for the regular Bench to consider the issue on merits. 31. Appeal will be placed before the Regular Bench for passing appropriate orders. Sd/- (Justice K.K. Usha) President MAJORITY ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oever to evade payment of duty. The Notification was not crystal clear whether the equipment was for external/internal use. Since the issue was not clear, therefore the appellants have declared the classification and claimed the exemption as they have interpreted and made the declaration to the Department. Accordingly, there cannot be any suppression of the fact with an intention to evade payment of duty. He relied on the following decisions - (i) M/s. G.C. Jain v. CC, Calcutta [2003 (162) E.L.T. 733 (Tri - Kolkata)]. In this case it was held that goods cleared by appellants after declaring the same in Bills of Entries and giving their correct classification - availing of benefit of a notification by assessee which held to be not available subsequently, by Revenue, not amounts to misdeclaration or misstatement - extended period of limitation not invocable. (ii) UOI v. New Vinodh Silk Mills Pvt. Ltd. [1997 (95) E.L.T. 165 (S.C.)] (iii) Easland Combines v. CCE, Coimbatore [2003 (152) E.L.T. 39 (S.C.)] (iv) Sutham Nylocots v. CCE, Coimbatore [2003 (161) E.L.T. 287 (Tri. - Chennai)] In this case it was held that extended period of demand not invocable when classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extended period for demanding duty is not applicable. When a new view has been taken on classification, mandatory penalty under Section 11A and penalty under Rule 173Q is not imposable on the appellants. 33. Smt. Shobha L. Chary, ld. JCDR appearing for the Revenue pleaded that the appellants who manufactured the goods and their users can only know that what is the exact use of the equipment manufactured by them. Simply making a declaration in the classification list mentioning only the name of the equipment i.e. DC defibrillators with or without recorder is not sufficient to claim exemption when they were knowing that where these goods were used/sold as defibrillator for external use or internal use was not disclosed to the Department. If a person claims benefit of a notification then all the information about the equipment/articles should be furnished and the claimant has to establish that they are eligible for such exemption. She relied on the decision of the Supreme Court in the case of CCE, Baroda v. L.M.P. Precision Engg. Co. Ltd. [2004 (163) E.L.T. 290 (S.C.)] wherein it was held that description of goods given in C.L.I Form by the appellant for the period in question di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) E.L.T. 721 (S.C.)], extended period is fully applicable and the appellants are liable for penalty under Section 11AC. 34. Shri Arvind P. Dattar, the ld. Senior Advocate stated that it is not correct that the appellants had not declared about the external use of the equipment. Rule 173B declaration was filed right from January 1997. Full description of the equipment manufactured and exemption notification claimed was indicated in classification list. Department was aware of the size of the equipment as indicated in their letter dated 17-2-1998. The interpretation of the term in the notification was done differently by the Department. They were not liable to make any declaration about the external use. Information not required to be declared as per law not amounts to suppression. 35. We have carefully considered the submissions made by both the sides. From the show cause notice we find that the appellants have filed declaration No. 7/96 dated 9-1-1997 under Rule 173B of Central Excise Rules, 1944 and in the said declaration they had declared the item in dispute as Defibrillator Model/2389, 2389R under chapter sub-heading 9018.00 and have claimed exemption under Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... external use denotes external defibrillation of the heart. The D.C. Defibrillator manufactured by them have multipurpose utility, infact counter shock could be administered directly on the external surface of the heart during open heart surgery. With this letter only they have submitted the documents to prove that the D.C. Defibrillator manufactured by them for internal use can also be used externally. Thus it is clear that in their declaration filed by them on 9-1-1997 under Notification No. 8/96-C.E., where the exemption was for Defibrillator for internal use they had described the goods as D.C. Defibrillator without mentioning whether these are for internal use or external, use or both for internal and external use. In their second declaration No. 9/96-97, dated 1-3-1997 they described the goods as Defibrillator with and without recorder/without intimating the Department whether these were for internal use, when the requirement of exemption under the Notification No. 4/97-C.E. dated 1-3-1997 was D.C. Defibrillator for internal use and pace-makers. Thus the basic fact that the D.C. Defibrillator manufactured and cleared by them whether these are for internal use or for external ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rately did not give the correct description of the defibrillator manufactured by them in the classification list to avail the exemption notification. It was only on the enquiry from the Department that this fact came to notice and admitted by them first time that the D.C. Defibrillator manufactured by them weighs 16 kgs and it is used by them for internal use but it could also be used externally. During investigation it was found that the main use of the D.C. Defibrillator manufactured by the appellants was only for external use and the internal paddles for making use as internal defibrillators were optional and in 99% cases they have sold only the D.C. Defibrillator for external use and this optional paddle for internal use was not sold. This fact was well known to the appellants despite that they did not disclose these facts to the Department nor gave the proper description in the classification list and cleared the goods under exemption. Thus the intention to evade duty by misdeclaration is clear. The subsequent events leading to difference of opinion between the two members of the Tribunal in any manner does not rectify the basic defect of giving incomplete declaration in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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