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M/s Becton Dickinson India Pvt. Ltd. Versus CCE, Delhi –III

2015 (6) TMI 335 - CESTAT NEW DELHI

Denial of exemption claim - whether subject Cannula are eligible for full duty exemption under Notification No. 6/03-CE dated 01/3/03 and its successor exemption notifications - Held that:- On the basis of the certificates of various experts certifying that the scalp vein infusion sets, in question, are Cannula which can be used for blood vessels, the Tribunal held that the same would be eligible for exemption. In the same para, the Tribunal s has accordingly given a finding on perusal of all th .....

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for aorta, vena cavae and similar veins .

Notification is not confined only to the IV Cannula meant for aorta or vena cavae and for intra-corporal spaces. It is also applicable to IV Cannula meant for the arteries and veins similar to aorta and vena cavae, if the Department s stand that similar veins and blood vessels means the veins and arteries similar to vena cavae and aorta is accepted. In this Regard, Dr. Prabhu Vinayagam, Assistant Manager (Training) of the appellant company ha .....

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r. P. Ravindran was necessary, but unfortunately the same has not been allowed. In our view, therefore not permitting the cross examination of Dr. P. Ravindran in the circumstances of the case has vitiated the proceeding.

Impugned orders denying the exemption under Notification No. 6/03-CE and its successor notification to the IV Cannula being manufactured by the appellant would not be sustainable. - Decided in favour of assessee. - Excise Appeal No. 541, 2786 of 2007, 2652 of 2008 a .....

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7; 3,49,18,939/- against the appellant covered by three show cause notices show cause notice dated 21/7/06 for the period from March 2003 to July 2004, show cause notice dated 29/5/06 for the period from August 2005 to March, 2006, show cause notice dated 19/1/07 for the period from April 2006 to November 2006. 1.1 Appeal No. E/541/07 is against order-in-original dated 10/11/06 passed by the Commissioner, by which he has confirmed duty demand of ₹ 1,23,36,635/- against the appellant for th .....

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uty demand of ₹ 1,94,47,533/- for the period from November 2007 to August 2008. The show cause notice for this duty demand has been issued on 27/11/08. 1.4 The facts leading to filing of these appeals are, in brief, as under. 1.4.1 The appellant company manufactures of Intravenous Cannula (IV Cannula) under the brand name Venflon and Neoflon. The period of dispute, as mentioned above, is from March 2003 to August 2008. During the period of dispute, Notification No. 6/03-CE dated 01/3/03 an .....

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eriod of dispute, in terms of exemption Notification No. 6/03-CE dated 01/3/03 and its successor notification readwith Customs Notification No. 21/02-CUS dated 01/3/02 (list 37) the Disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces were fully exempt from Central Excise duty. The appellant treating the IV Cannula being manufactured by them as covered by this exemption were clearing the same at nil rate of duty. Ho .....

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d that the Venflon brand IV Cannula is used with peripheral blood vessels similar to aorta, vena cavae, that vena cavae is the biggest vein and other veins are smaller in size, that all smaller veins are similar to vena cavae as they carry impure blood to the heart and are similar in structure and function except for size, that while Venflon Cannula can not be used in aorta, vena cavae and intra-corporal spaces directly, it can be used in similar veins like Cephalic veins, Basilic veins and Meta .....

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lon Cannula being primarily used in peripheral veins and arteries for the purpose of blood sampling, blood transfusion, drug infusion etc. cannot be treated as the Cannula for aorta, vena cavae and similar veins and blood vessels or the Cannula for intra-corporal spaces, as peripheral blood vessels cannot be treated as blood vessels similar to Aorta or vena cavae. It is on this basis that the proceedings were initiated by the show cause notices mentioned above for denying the duty exemption unde .....

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the cases of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. reported in 2000 (117) E.L.T. 400 (Tri.), and also in the case of Medisphere Marketing P. Ltd. vs. CCE reported in 2001 (131) E.L.T. 608 (Tri.), that the Tribunal s judgment in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) was in respect of exemption Notification No. 55/95-CUS (Sl. No. 34) which covered for exemption disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and .....

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n, that in this judgment the Tribunal s finding is that in Sl. No. 34 of the Notification No. 55/95-CUS, the word blood vessels has to be read independent of the earlier expression disposable and non-disposable Cannula for aorta, vena cavae and similar veins , that the Tribunal in this judgment observed that the term similar veins in Sl. No. 34 of the Notification No. 55/95-CUS refers only to the veins which are similar to aorta and vena cavae and that the Cannula used for aorta and vena cavae a .....

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ical (P) Ltd. (supra) and SLP filed by the Government against this judgment has also been dismissed by the Apex court vide order dated 07/2/13, that Apex court in the case of Medley Pharmaceuticals Ltd. vs. CCE, Daman reported in 2011 (263) E.L.T. 641 (S.C.) in para 32 of the judgment has held that once the civil appeal filed before the Apex court has been dismissed, even in the absence of detailed reasons or without reasons, such order will entail the application of doctrine of merger, to be fo .....

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d at on a question which arose or was argued, no matter on what reason the decision rests or what is the basis of the decision, or in another words, for the purpose of applying the Rule of stare decisis, it is unnecessary to inquire or determine as to what was the rationale of the earlier decision which is said to operate as stare decisis, that in view of this, the decision of the Tribunal in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) which has been affirmed by the Apex c .....

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ify the words blood vessels , and that since the Cannula, in question, are meant for blood vessels, the same are covered by the exemption. Shri Ravinder Narain, also pleaded that the entire case of the Department against the appellant is based on the opinion given by an officer of the DGHS and before acting on the opinion given by the DGHS Officer his cross-examination should have to be allowed and without permitting the cross examination of Dr. P. Ravindran of DGHS, the opinion given by him can .....

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of the Tribunal in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) is of the period prior to the period of dispute, the appellant had bonafide belief that the goods manufactured by them are eligible for exemption. He also pointed out to the facts narrated in 1st para of the Tribunal judgment in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) from which it appears that earlier, the duty exemption under Notification No. 55/95-CUS (Sl. No. 34) was being extende .....

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proviso to Section 11A (1) would not be applicable and for the same reason to the fact that provision of Section 11AC would not be invokable. 4. Shri A.K. Raha, Advocate, the learned Counsel for the Revenue, pleaded that the point of dispute in this case is as to whether in the entry disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces , the word similar would quantify the expression blood vessels also or whether t .....

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ellant had vide order dated 12/05/09 reported in 2009 (242) E.L.T. 584 (Tri. Del.) ordered 100% pre-deposit and had refused to grant un-conditional waiver and subsequently the High Court had only reduced the pre-deposit to 50% with bank guarantee for the remaining amount, that similar pre-deposit order has been passed by the Tribunal in respect of stay application No. 501/2010 in appeal No. E/488/2010 filed by the appellant, that in the expression similar veins and blood vessels , the term blood .....

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question, are meant for use only with peripheral veins which are not similar to aorta and vena cavae, that in this regard he places reliance on opinion dated 08/4/04 of Dr. P. Ravindran of DGHS, that in any case, it is well settled law that while interpreting an exemption notification, the benefit of doubt must go to Revenue, that in this regard he relies upon the Apex court s judgment in the case of Liberty Oil Mills (P) Ltd. vs. CCE, Bombay reported in 1995 (75) E.L.T. 13 (S.C.), and Novopan .....

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ered by the exemption notification whose benefit is being claimed by him, that when in the present case, the exemption is confined only to the disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces and when the assessee claims that the IV Cannula manufacture by him is meant for the veins and blood vessels similar to aorta and vena cavae, the evidence in this regard has to be produced by him, while no such evidence has .....

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has not vitiated the proceeding in any manner. With regard to the appellant s plea that since the Tribunal s judgment in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) stands affirmed by the Apex Court by dismissal of the Government civil appeal and, hence, by virtue of the doctrine of merger, the Tribunal s judgment in the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) stands merged with the Apex court s judgment order dismissing the civil appeal and, hence, .....

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34 in the list No. 37 of the Notification No. 21/02-CUS and beside this, the decision in CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) was based on a number of certificates of experts produced by the assessee in relation to the product, in question, in the said case, while in the case in hand, undisputedly, the Department has produced a certificate from DGHS, while there is no independent evidence brought on record on behalf of the appellant, that in the stay order, the Tribunal also ob .....

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re used only for peripheral blood vessels and not with great arteries or the great veins which are similar to aorta and vena cavae. Shri Raha, therefore, pleaded that there is no infirmity in the impugned order. 5. We have considered the submissions from both the sides and perused the records. 6. The appellant manufacture IV Cannula (Intravenous Cannula) of different gauges which are sold under the brand name Venflon. The point of dispute is as to whether these Cannula are eligible for full duty .....

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other items, disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces . The point of dispute is as to whether the IV Cannula being manufactured by the appellant are covered by the above entry in list 37 of Notification No. 21/02-CUS. The Department s contention is that this entry covers only the three types of Cannula (a) disposable and non-disposable Cannula for aorta and vena cavae; (b) disposable and non-disposable f .....

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list 37 of the exemption Notification No. 21/02-CUS and, hence, are not eligible for exemption under Notification No. 6/02-CE and its successor notifications. 7. The appellant s plea, on the other hand, is that the entry in list 37 of Notification No. 21/02-CUS covers (a) disposable and non-disposable Cannula for aorta and vena cavae; (b) disposable and non-disposable Cannula for veins similar to vena cavae (c) disposable and non-disposable Cannula for blood vessels and (d) Cannula for intra-cor .....

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Ltd. (supra), the civil appeal against which has been dismissed by the Apex court vide judgment reported in 2000 (121) E.L.T. A74 (S.C.). In the case of CCE, Coimbatore vs. Saberwal Surgical (P) Ltd. (supra) the Tribunal in para 7 of its judgment while interpreting an identical entry No. 34 in the exemption Notification No. 55/95-CUS had held that the term similar vein in Sl. No. 34 of the notification appears earlier to the term blood vessels and refers only to the term aorta and vena cavae and .....

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ly the word veins and does not qualify the word blood vessels and thus the expression blood vessels has to be read independent of the preceding expression Cannula for aorta, vena cavae and similar veins . 7.1 Beside this, it is also the contention of the appellant that the IV Cannula, in question, being manufactured by the appellant can be used for Cephalic veins, Basilic veins and Metacarpel veins etc. for intravenous drug administration, blood transfusion etc. and these veins are similar to ve .....

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lf of the Department that the opinion of the DGHS on the question as to whether the IV Cannula, in question, can be used for arteries and veins similar to aorta and vena cavae is binding on the Department and there was no need for cross examination of the official of DGHS who had given this opinion. It has also been pleaded by the Department that the expression similar veins and blood vessels in the entry must be construed in ejusdem generus with preceding expression and, therefore, this express .....

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been properly analysed and this judgment of the Tribunal and also the Apex court s order affirming the same has been distinguish by the Tribunal in its stay order No. 455/09-EX (BR) dated 05/12/09 in respect of appeal No. E/2652/08 EX (BR) filed by the present appellant [2009 (242) E.L.T. 584 (Tri. Del.)]. 8. We have considered the rival submissions on the question regarding the interpretation of the entry mentioned above in list 37 of the Notification No. 21/02-CUS. The entry, in question, is r .....

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brand scalp infusion set imported by the assessee M/s Saberwal Surgical (P) Ltd. were eligible for Customs duty exemption under Notification No. 55/95-CUS, the Sl. No. 34 of which covered disposable and non-disposable Cannula for aorta, vena cavae and similar veins and blood vessels and Cannula for intra-corporal spaces . In that case it was not the claim of the assessee that the scalp vein infusion sets were meant for aorta or vena cavae or similar veins. The Tribunal in para 7 of the judgment .....

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and similar veins are different in nature to the one used for blood vessels as can be seen from the various certificates produced. Now, we are required to see as to whether the item satisfy the term Cannula . On a perusal of the certificates, it is clear that the item does satisfy the term Cannula. As there is no claim for its use for aorta, vena cavae and similar veins , therefore we are required only to see whether the same is being used for blood vessels . Both the sides have produced large n .....

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ts and the item having satisfied the term Canula and it is used in blood vessels, therefore, the Commissioner (Appeals) having granted the benefit is totally justified . Thus, the Tribunal in this order has held that the term blood vessels in the entry No. 34 in the Notification No. 55/95-CUS is not qualified by the word similar appearing before the word veins and has to be read independent of the expression for aorta, vena cavae and similar veins . This judgment of the Tribunal has been affirme .....

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s to whether dismissal of civil appeal by the Apex court against lower court s/Tribunal s order without giving any reason is a binding precedent or not, has also been dealt with by the Apex court in its judgment in the case of Medley Pharmaceuticals Ltd. vs. CCE, Daman reported in 2011 (263) E.L.T. 641 (S.C.) in para 32 of which the Apex court has held thus : This court has consistently held that the medical supplies supplied to the Doctors are liable to excise duty. Elaborate consideration may .....

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, (2000) 5 SCC 373, has held as under :- 8 Different considerations apply when a special leave petition under Article 136 of the Constitution is simply dismissed by saying dismissed and an appeal provided under Article 133 is dismissed also with the words the appeal is dismissed . In the former case it has been laid by this Court that when a special leave petition is dismissed this Court does not comment on the correctness or otherwise of the order from which leave to appeal is sought. But what .....

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eave petition under Article 136 Thus, in this judgment the Apex court has held that when civil appeal filed against order of the Tribunal or lower court has been dismissed by the Apex court, even if without giving any reasons, the doctrine of merger would apply and the order of the Tribunal or lower court has to be treated as upheld by the Apex court and becomes a binding precedent. 8.1 This question was also examined by the Constitutional Bench of the Apex court in the case of Waman Rao vs. Uni .....

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ing should have considered and either accepted or rejected the particular argument which is advanced in the case on hand. Were it so, the previous decisions could more easily be treated as binding by applying the law of precedent and it will be unnecessary to take resort to the principle of stare decisis. It is, therefore, sufficient for invoking the rule of stare decisis that a certain decision was arrived at on a question which arose or was argued, no matter on what reason the decision rests o .....

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, vena cavae and similar veins and that the word similar would not qualify the expression blood vessels and accordingly IV Cannula meant for any blood vessels would be covered by this entry and would be eligible for exemption. This decision of the Tribunal has been affirmed by the Apex court vide judgment reported in 2000 (121) E.L.T. A74 (S.C.) by dismissing the civil appeal. In view of the above judgments of the Apex court, the decision of the Apex court in the case of CCE, Coimbatore vs. Sabe .....

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l for the Department that Similar veins and blood vessels must be construed in ejusdem generus with preceding expression and that in view of the Apex court s judgment in the cases of Liberty Oil Mills (P) Ltd. vs. CCE, Bombay reported in 1995 (75) E.L.T. 13 (S.C.), and Novopan India Ltd. vs. CCE, Hyderabad reported in 1994 (73) E.L.T. 769 (S.C.), while interpreting an exemption notification, in case of doubt, the benefit has to go to the Revenue and that these points were not considered by the T .....

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rationale of the earlier decision which is said to operate as stare decisis. As regards the Tribunal s stay order dated 12/5/09 in respect of an appeal filed by the Appellant involving an identical issue wherein the Tribunal expressing a contrary prima facie view, has ordered pre-deposit for compliance with the provision of Section 35F of the Central Excise Act, 1944, it is well settled law that an order passed by the Tribunal in respect of stay application expressing prima facie view has no pre .....

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would be eligible for exemption (1) Cannula for aorta and vena cavae (2) Cannula for veins and blood vessels similar to aorta and vena cavae (3) Cannula for intra-corporal spaces. Now the question is as to which are the blood vessels similar to aorta and vena cavae. 10.1 As per the opinion dated 08/12/04 of Dr. P. Ravindran of Directorate General of Health Services aorta and vena cavae are anatomically classified as great vessels and the peripheral arteries and veins are smaller vessels. Accord .....

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lood vessels and accordingly has opined that the IV Cannula Venflon manufactured by the appellant are meant only for peripheral blood vessels and the same cannot be treated as the Cannula for aorta or vena cavae. He has also discussed the intra-corporal spaces and the Cannula meant for the same. Though in this case there is no claim of the appellant that the IV Cannula, in question, are meant for Aorta or vena cavae or for intra-corporal spaces, the alternate claim of the appellant is that the I .....

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owing expert opinion in the matter : Z-36011/12/98-MG dated 08/12/2004 Dte. General of Health Services (Medical General) I am directed to refer to your letter number C. No. IV (15) Hqrs. AE/D-III/11/2004-1955 dated 09/9/2004 and convey that the matter has been re-examined in the Directorate in consultation with experts in the field of Anatomy, Surgery, Neuro-Surgery, Cardio-thoracic Surgery and Anaesthesia from Central Government Hospitals. The opinion given by the experts is given below : (i) I .....

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nto heart. The peripheral vessels (arteries and veins) are indirectly connected to the heart through the large and medium size vessels. - The great vessels have big lumens where as the peripheral vessels have small lumens. - The thickness of the walls of the Aorta and Vena cavae and that of peripheral arteries and veins differ. - Aorta is an elastic artery while peripheral arteries are classified as muscular arteries. - Inferior and superior vena cavae are large veins with thick wall with no val .....

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The CVP Cannulas for measuring the Central Venous pressure are placed in the right atrium through internal jugular or subclavian vein, both of which are large veins. They measure 20 cm for adults and 10 cm for children; if it is through cubital fossa, then it measures 75 cms for adults and 40 cms for children. In contrast, the IV Cannulas are of short length (4-6 cm) with small lumen and cannot be used for monitoring CVP. (iii) If IV Cannulae are used for access to medium/great vessels, the plas .....

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ters/drainage tubes available for accessing the pleural cavities, the peritoneal cavities, the sub-diaphragmatic cavities and intra ventricular spaces. These are larger in size, have bigger lumen, and have trochars for their introduction. In exigencies, where specific catheter is not available, IV Cannula are rarely used in abdominal/pleural cavities but this does not justify their use and they are not recommended by standard medical text books for this purpose. Literature alongwith samples as p .....

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