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2015 Supreme(SC) 403
SUPREME COURT OF INDIA
A.K. SIKRI, ROHINTON FALI NARIMAN, JJ.
M/S. B.P.L. LIMITED – APPELLANTS
VERSUS
COMMISSIONER OF CENTRAL EXCISE, COCHIN-II COMMISSIONERATE – RESPONDENT
CIVIL APPEAL NO. 5523 OF 2004 WITH CIVIL APPEAL NO. 6037 OF 2004
Decided On : 05-05-2015
IMPORTANT POINT
D.C. Defibrillators predominantly sold for external use cannot be exempted under Notification No.8/96 dated 23.09.1996 and Notification No.4/97 dated 01.03.97 of C.E.T. heading 9018.
Headnote:(a) C.E.T. heading 9018 – Notification No.8/96 dated 23.09.1996 and Notification No.4/97 dated 01.03.97 – Exempted category includes D.C. Defibrillators for internal use – Defibrillators cleared by appellant with an accessory of internal defibrillators paddles – Predominantly sold for external use only – Both are distinct – Defibrillators cleared by appellant not satisfying conditions of the notifications – Strict interpretation is to be given to the exemption notifications and it is upon the assessee to approve that he fulfills all the conditions of eligibility under such Notifications. (Para 17)
(1995) 4 SCC 473; (2001) 1 SCC 236 – Relied upon
(b) C.E.T. heading 9018 – Notification No.8/96 dated 23.09.1996 and Notification No.4/97 dated 01.03.97 – ‘Actual use’ and ‘intended for use’ – Expressions are different – However, even when a product is not actually used but is capable of being used, it would be treated as the product 'for use' – But instantly, defibrillator when sold without paddle is not capable of being used internally and paddle is only sold as optional accessory. (Para 20)
(1987) Supp SCC 679; (1997) 7 SCC 144 – Distinguished
Facts of the case:
The appellant herein is engaged in the manufacture of excisable goods falling under Chapter 85 and 90. From January 1997 onwards the appellant had been manufacturing and clearing two models of D.C. Defibrillators which are known as Model No. DF2389R with recorder and Model 2389 without recorder. The appellant had filed classification declaration from time to time and classified the items under C.E.T. heading 9018 and claimed exemption under Notification No.8/96 dated 23.09.1996 and Notification No.4/97 dated 01.03.97 respectively. The Revenue, however, took a view that the said Defibrillators were not eligible to the benefit of the aforesaid exemption Notifications. Therefore, by letter dated 17.02.98 it directed the appellant to modify its classifications declaration as only miniaturized implantable defibrillators were eligible to the benefit of the Notification. The appellant protested by giving reply and maintaining that the Notification in question encompassed the aforesaid goods manufactured by the appellant as well. The department was not amused by the reply given by the appellant. It resulted in issuance of show-cause notice dated 23.09.1998 whereunder demand duty with respect to Defibrillators manufactured during the period January 1997 to March 1998 was proposed as duty in the said show-cause notice.
The CESTAT finally disallowed the benefit of the notification to the Defibrillator.
Finding of the Court:
The D.C. Defibrillators manufactured by appellant are not entitled to exemption.
Result: Appeal dismissed.
JUDGMENT
A.K. SIKRI, J.
The issue, which arises for consideration in the present appeals is whether the Central Excise and Service Tax Appellate Tribunal (for short, 'CESTAT'), Bangalore erred in disallowing the benefit of the Notification No.8/96 dated 23.07.1996 and Notification No.4/97 dated 01.03.97 respectively to the appellant.
2) The appellant herein is engaged in the manufacture of excisable goods falling under Chapter 85 and 90. From January 1997 onwards the appellant had been manufacturing and clearing two models of D.C. Defibrillators which are known as Model No. DF2389R with recorder and Model 2389 without recorder. The appellant had filed classification declaration from time to time and classified the items under C.E.T. heading 9018 and claimed exemption under Notification No.8/96 dated 23.09.1996 and Notification No.4/97 dated 01.03.97 respectively. The Revenue, however, took a view that the said Defibrillators were not eligible to the benefit of the aforesaid exemption Notifications. Therefore, by letter dated 17.02.98 it directed the appellant to modify its classifications declaration as only miniaturized implantable defibrillators were eligible to the benefit of the Notification. The appellant protested by giving reply and maintaining that the Notification in question encompassed the aforesaid goods manufactured by the appellant as well. The department was not amused by the reply given by the appellant. It resulted in issuance of show-cause notice dated 23.09.1998 whereunder demand duty with respect to Defibrillators manufactured during the period January 1997 to March 1998 was proposed as duty in the said show-cause notice.
3) We may point out at this stage that a defibrillator is a device that delivers electrical shock through paddles placed either directly across the heart or on the surface of the body during cardiac emergency resulting from ventricular fibrillation. The meaning of Cardiac Defibrillator is explained in Medicine and Clinical Engineering Physiological and Clinical Medicine by Bertil Jacobson Karolinska Institute, Stockholm, Sweden, Jhon G. Webster, University of Wisconsin, Medison. It reads as follows:-
“Some cardiac arrhyhmias can be treated by passing a brief electric shock through heart. Ventricular fibrillation can often be stopped before circulatory arrest has caused irreversible brain damage due to oxygen deficiency. Likewise, atrial fibrillation and atrial flutter can often be stopped by defibrillator.”
4) Ventricular fibrillation may be caused by an external electric shock, which occurs near the peak of the T wave-the vulnerable period when the ventricle is re polarizing. It may also be caused when a PVC occurs during this same vulnerable period; in this case the heart electrocutes itself. Fibrillation has been likened to a dog chasing its tail, with continuous travel of the waves of depolarization and repolarization. During defibrillator, a large electric shock causes simultaneous depolarization of all cardiac muscle fibres. When they recover, normal packing resumes. An energy 50-500 ws (joules) has been found most effective, with the current passing through the heart along the longitudinal axis. Defibrillator can be performed externally via two electrodes placed on the chest or internally on the exposed heart during an operation. With an electrode about 50 cm in area, the resistance through the thorax is about 100 ft. For internal defibrillator on an exposed heart the resistance is lower, about 50 ft.
5) As per the department, Defibrillators manufactured by the appellant were designed to provide external counter shock and the apparatus for which nil rate of duty had been prescribed was for defibrillators meant for internal use only and not for conventional Defibrillators manufactured and cleared by the appellant. The department had also invoked the longer period of limitation under Section 11A of the Excise Act by alleging suppression. The appellant filed their reply to the show-caus
