G. Sankaran, President

1. M/s. Kidwai Memorial Institute of Oncology, Bangalore, imported a consignment of Calcium Pellets, a radioactive material used in the treatment of cancer. The Customs authorities at the Air Cargo Complex, Bangalore, released the goods free of duty in terms of Customs Notification No. 163/76 read with Notification No. 279/83 and a bond obliging the importers to produce a duty-exemption certificate from the Director General, Health Services, New Delhi. On the Audit objecting to the duty free release on the ground that Caesium Pellets were consumable and were not covered by the notifications, a demand notice was issued for a sum of Rs. 62,472.46. In due course, the Assistant Collector of Customs, by order dated 15-4-1989, confirmed the demand on the ground that Caesium Pellets being inorganic chemicals falling under Heading No. 28.44 of the Customs Tariff Schedule and not fabricated equipment, were consumables, not eligible for exemption in terms of the above notification. In appeal, the Collector (Appeals) took the view that the goods should be more appropriately regarded as a part of the machine employed for treatment since they constituted its most essential part. Further, the operative life of Caesium being very long, over 30 years, it could hardly be called a consumable. The Collector has relied on Notification No. 64/88 which, according to him, recognised even goods falling under Chapter 29 of the Tariff Schedule, viz., Organic Chemicals, as parts/accessories of medical equipment. It is against the Collector (Appeals)'s order allowing the appeal against the Assistant Collector's order that the Collector of Customs, Bangalore, has filed the instant appeal.

2. We have heard Shri M. Jayaraman, SDR, for the appellant-Collector and Shri B. Ravichandran, Professor Radiation Physics, for the respondent.

3. The appellant-Collector's contention, reiterated by the learned SDR, is that the subject goods cannot be considered as parts of equipment or appliance or machine. Even consumables are necessary for a process or using a machinery. The long life of Caesium is not relevant to the issue. The Collector (Appeals)'s reliance on notification No. 64/88 is not correct since he has not mentioned the organic chemicals which are treated as parts or accessories. The goods are consumables, not eligible for the benefit of duty exemption. The S.D.R. clarified that the Caesium Pellets were contained in stainless glass containers.

4. The respondent's contention, however, is that the subject goods are essential for the working of the Selection machine used for treatment of cancer of the uterine cervix. The radioactive caesium is used in the machine in the form of a stainless steel pellet which totally covers a glass activated caesium bead. The machine has a pneumatic mechanism for transfer of active pellets into the applicator which is already embedded into the patient's vaginal cavity and into the uterus.

5. We have carefully considered the submissions of both sides and perused the record.

6. Notification 163/76 dated 2-8-1976 exempts inter alia radio-active isotopes of Caesium falling within Chapter 28 of the First Schedule to the Customs Tariff Act, 1975, when imported into India from payment of the duty of Customs leviable thereon under the said Customs Tariff Act. Notification 279/83 dated 30-9-1983 exempts all equipment/apparatus and appliances, including spare parts, component parts and accessories thereof, but excluding consumable items, the import of which is approved, either generally or in each case, by the Government of India in the Ministry of Health and Family Welfare, or by the Directorate General of Health Services, Government of India, as essential for use in any hospital specified in the Table annexed to the notification, from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and the additional duty leviable thereon under Section 3 of the said Act. Th