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Laj Enterprises Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC524DTri(Delhi)
AppellantLaj Enterprises
RespondentCollector of Customs
.....imported one consignment by means of bill of entry no. 125 dated 2-1-1979 consisting of 'blood counting chambers'. the goods were classified to be falling under tariff heading 70.17/18 for the purpose of assessment for customs duty with corresponding assessment under item 23a(2) of the central excise tariff for the purpose of countervailing duty; though the assessment was provisional because of the importer having disputed this classification. it transpires that parts of the goods were got cleared by paying provisionally charged duty whereas part of the consignment was still awaiting clearance pending determination of the dispute.3. the assistant collector (customs) of air cargo unit, new delhi by his order dated 5-11-1979 rejected the party's plea to the effect that this item.....
1. The Revision application filed by M/s. Laj Enterprises, Gurgaon before the Central Government under the provisions of Section 131 of the Customs Act, 1962 was transferred to the Tribunal by virtue of provisions of Section 131-B(2) of the Customs Act, 1962, as if it were an appeal filed before the Tribunal, and is being disposed of as such.

2. The appellant which is a proprietary concern manufacturing, inter alia, medical and surgical appliances imported one consignment by means of Bill of Entry No. 125 dated 2-1-1979 consisting of 'Blood Counting Chambers'. The goods were classified to be falling under Tariff Heading 70.17/18 for the purpose of assessment for customs duty with corresponding assessment under Item 23A(2) of the Central Excise Tariff for the purpose of countervailing duty; though the assessment was provisional because of the importer having disputed this classification. It transpires that parts of the goods were got cleared by paying provisionally charged duty whereas part of the consignment was still awaiting clearance pending determination of the dispute.

3. The Assistant Collector (Customs) of Air Cargo Unit, New Delhi by his order dated 5-11-1979 rejected the party's plea to the effect that this item known as 'Blood Counting Chamber' was part and parcel of an instrument known as Haemocytometer which is built and used for the spscified purpose of counting of blood cells and that it was not a plain glass product but had optically worked element, and that it was a completely finished product at the stage when it was imported and was not subjected to any further process after import before being put to its intended use. The Assistant Collector held the item to be classifiable under Entry 70.17/18 of the Customs Tariff for the purpose of customs duty and auxiliary duty read with Tariff Item 23A(2) of the Central Excise Tariff. The Assistant Collector came to this view by reference to the Explanatory Notes appended to the BTN holding that according to these notes, the apparatus used in laboratories for testing blood, etc. was excluded from Heading 90.17 and that according to these guidelines, the subject goods could fall only under Heading 70.17/18 of the Customs Tariff.

4. Feeling aggrieved by this view, the appellant went in appeal to the Appellate Collector of Customs, Delhi but the latter also agreed with the view expressed by the Assistant Collector so far as classification under Customs Tariff was concerned and confirmed the view that the goods fell under Tariff Entry 70.17/18 of the Customs Tariff. However, the partly conceded contention of the appellant in so far as classification for the purpose of countervailing duty, with reference to Central Excise Tariff, was concerned holding that it did not fall under any of the clauses of Central Excise Tariff Item No. 23A, so far as description of these goods was concerned, and thus partly allowed the appeal holding that no countervailing duty was to be charged, whereas for the purpose of customs duty, the goods were to be treated as falling under Heading 70.17/18 of the Customs Tariff.

5. The Appellant filed revision petition before the Central Government, which is now being disposed of as an appeal, assailing the view held by the lower customs authorities, disputing the assessment made by the Appellate Collector of Customs on the grounds; firstly, that the goods were of highly precision quality 'Blood testing apparatus' used solely for counting blood cells and as such would fall under Chapter 90 where all precision type of instruments were classified and that the goods specifically fall under Heading 90.25 and secondly, since the instrument was made of first quality optical glass and is a fully finished and worked piece, it could not be classified under Heading 70.17/18 which covered only optical glass at the raw material or semi-finished stage. He pleaded that the observation of the Appellate Collector that an optical glass could be considered optically worked only when it undergoes the process of grinding, polishing, etc., for the purpose of producing required optical properties was not correctly applied to the goods under reference because these goods were also, when imported, fully finished and all the grinding, edging, polishing had been given to them before despatch by the supplier and that, in any case, the learned Appellate Collector ought not to have applied his subjective views in the matter, and should have given further opportunity to the appellant for removal of doubts, and that there is, to that extent, violation of principle of natural justice.

6. He further contended that the observations fell short of conclusive study of the case, and that the catalogue annexed with the petition (Annexure C) also substantiated his claim that the goods were diagnostic medical appliances, and that the Appellate Collector erred in ignoring the said material placed on record. It was further elucidated that the goods had been incorporated with very accurate and precision rulings in the form of chambers on which highly diluted blood was introduced in which a firm of fluid of precisely controlled thickness is super-imposed upon an accurately ruled grid permitting the enumeration of cells in a pre-determined volume of diluted blood. It was thus pleaded that the examination was of a highly minute precision and scientific, because this was for the diagnostic purpose in serious diseases and that the examination could not be carried out by naked eye but involved a thorough microscopic study, and thus these blood counting chambers fell within the category of optically worked glass since a microscopic view was not possible without the glass being optically worked and to that extent they stood positively excluded from Chapter 70 of the Customs Tariff by virtue of Note l(d), given at the beginning of the said Chapter. It was further urged that the goods being diagnostic and testing medical equipment would fall under Heading 90.17/18 or alternatively, under Heading 90.25 as 'blood testing apparatus' and that when the Appellate Collector had herself set aside the assessment for the purpose of countervailing duty with reference to Tariff Entey 23 A of the Central Excise Tariff, and held that it could not be considered laboratory glassware, there was patent error in mnintaining the Assistant Collector's finding that for purposes of Customs duty it would still fall under Tariff Entry 70.17/18.

7. Shri Prem Mehra, Proprietor of the Company appearing personally reiterated the pleas set out in the grounds of appeal, reproduced above, and also made pointed reference to the photo-copy of the model and- description of the apparatus named as haemocytometer and accessories which was annexed with the appeal as Annexure 'C. He also produced for observation of the Tribunal, a sample of the 'Blood Counting Chamber' and explained the composition thereof by reading out the description contained in Annexure 'C referred to above. It would be expedient to reproduce the relevant portion of this document because it is pertaining wholly to Blood Counting Chamber, such as the present one in dispute :- "LEVY COUNTING CHAMBERS. Introduced by us in November, 1916, and awarded the Edward Longatreth Medal of Merit by Franklin Institute, Philadelphia, in December, 1917. They were the first counting chambers to be made in the U.S. and continue to offer several important characteristics not found in any other chambers.

They consist of a one-piece solid glass slide 3 X 1 1/4 inches, of either colourless or green glass, with the ruling made directly on the slide, and embody the following features : Rulings consisting of sharp, permanent lines, cut directly into the plane glass surface "A" (see Fig. 1), which is not easily scratched and which, naturally does not become dark with age. The lines are of high visibility and permit focussing of a 4 mm objective on the plane of the corpuscles for counting red corpuscles, and the focussing of 16 mm objective upon the plane of the ruled surface for counting white corpuscles.

Chamber charging inclines "I" (see Fig. 2), which facilitate charging of the chamber and increase accuracy by reducing the risk of overcharging with its consequent tendency to lift the cover glass and increase the cell count. Also lessons danger of bubbles and uneven distribution because the chamber does not start to fill until sufficient solution has been discharged from the pipette at least to cover the ruled area, whereupon the chamber fills with a quick capillary influx.

Deep, wide protesting trenches, both outside "B" (see Fig. 1), and transverse, which facilitate cleaning.

Finding lines on the matte surfaces on left side of the slide. These lines facilitate location of the ruled area in the microscope field without danger of disturbing the distribution-and vitiating the count-by touching the cover glass with the objective.

A shallow, polished concavity on the under surface beneath the rulings eliminates the possibility of scratching this surface and tends to reduce glare from an illumination source of great intensity." 8. He also placed reliance on a previous judgment by the Tribunal with reference to identical case which was given in Appeal No. CD (SB) (T) A. No. 445/81-D relating to another importer, namely M/s. Delhi Surgical and Dressings, Bhagirath Palace, Delhi-110006, decided vide Order No. D-35/83 dated 18th January, 1983 [1983 E.L.T. 575] and pleaded that the consignment of goods imported by him being of similar nature, they may also be held to be classifiable under Tariff Entry 90.17/18 of the Customs Tariff. However, Shri M. Chatterjeee representing the Revenue vehemently defended the classification of the subject goods under Tariff Entry No. 70.17/18 by reference to BTN notes and by contending that this matter was sorted out in a Collectors' Conference held in July, 1979 and that from appearance this item looks like glass slide, and is not used by a medical man directly and that these had been rightly treated as plain glass, as contemplated in the aforesaid Tariff Entry, namely 70.17/18.

9. We have given our careful thought to the arguments advanced by both the sides, and have also referred to the previous judgement of the Tribunal and' we find that some identical issues are involved in the present appeal as were in the previous one, namely, pertaining to M/s.

Delhi Surgical and Dressings. A perusal of the said judgement reveals the real characteristics of this item known as "blood counting chamber", both by reference to catalogues of the supplier as well as technical literature. The arguments advanced by the learned Departmental Representative in opposing the appeal have also been noted in detail in the said judgement and for reasons recorded therein, the Tribunal did not find them tenable. The appellant in this case has reiterated all those pleas as were taken up in that appeal adding further that the certificate of the National Physical Laboratory placed on record proved beyond doubt that these were optically worked and not plain optical glass as appellate authorities treated them to be, and further that these were imported against specific import licence and were highly specialised intended for specified use, and could not be assessed as plain optical glass, as held by the lower authorities.

10. We consider it expedient to reproduce the pertinent portions, particularly paragraphs 6, 7 and 8 of the previous judgement, of which also I incidentally happen to be the author, which set out the reasoning for arriving at the conclusion tha the classification determined by the lower authorities of the subject goods, as falling under Tariff Entry 90.17/18 of the Customs Tariff:- 6. We have given very careful thought to these respective contentions and have gone through the relevant literature, and also perused the physical samples, which were produced by Shri Kumra-one of which being from the consignment in dispute or identical thereto, and the other being a similar item.

7. We find on a reference to the technical literature in the form of catalogue of another German concern, named 'Albert Sass" that these blood counting chambers are not plain glass slides, but have a specific function, and the "Bright-Line" effect is obtained by fusing into the polished surface of the counting areas, a very thin semi-transparent layer of Rhodium this metal layer and appear under the microscope as a net of very bright radient lines. Shri Kumra also explained that these chambers have very fine grooves which are also not visible to naked eye, and these help the blood to disintegrate to facilitate counting. The catalogue of his own supplier, namely, 'Glas Messgerate' also a German concern further corroborates his plea in this regard because at page 18 of this catalogue, a haemocytometer is described to be containing- (2) 1 blood mixing pipette (white), (i) 2 cover slides, optically plane, and 8. It is thus abundantly clear from a perusal of these catalogues that what was imported as blood counting chambers, were not plain glass slides but highly specialised appliances to be employed for the specific purpose of blood counting, and made to definite specifications and a great deal of technology has gone into their making. The fact that blood counting chamber by itself is known as haemocytometer is supported from a sample-a product of an American Company which describes this as "haemocytometer: for diagnostic use for counting blood cells". The party's own box also is being sold as a haemocytometer set and except for this box nothing else is added to the imported item, namely, the chamber and the two pipettes. The physical examination of the pipettes further reveals that they are not wholly of glass but among half of the portion is of transparent plastic tube and the other of the glass tube having measurements, and one of them has a red nozzle and the other white nozzle, and it is apparent that these red or white nozzles are to be co-related to red or white blood cells.

There can also be no denying the fact, that this blood counting is a pathological function of blood testing, for various medical purposes.

Even the Explanatory Notes to the BTN on which the learned Departmental Representative placed reliance clearly show that the expression 'hygienic and pharmaceutical glassware' refers to articles of general use, 'not requiring the services of a practitioner'. The subject goods cannot, by any straining of reasoning, be deemd to be articles of such general nature which can be put to use by a non-professional man. They are, on the other hand, highly specialised items to be read with the aid of a microscope, by qualified pathologists. The Department has apparently taken an earroneous view in regard to these specialised articles, as general laboratory glassware, in which category only such items as bottles, tubes, filters, distilling flasks, jars, etc. could fall, and pipettes also of general nature, and not made to specific requirements, as in the present case. The Department has itself been admittedly regarding them as such before the decision of the Collectors' Conference referred to by the learned Departmental Representative. A reference to the extract of this Conference also reveals that they have proceeded on a wrong assumption, namely, that the 'blood counting chamber' consisted of a simple glass container and has no other specific character whereas the catalogues mentioned above make it manifest that they have grooves as well as finely ruled lines, drawn on the thin layer of rhodium fused into them. Apart from the fact that the Collector's conference could not be treated as a guide for this Tribunal to arrive at a proper decision, otherwise also, hypothesis being unfounded, the validity of the decision is apparently open to question ." 11. In view of the above, in the present case also, we find the classification of these goods which were imported as 'blood counting chambers' under Tariff Entry 70.17/18 to be not sustainable.

12. However, we find that in the present case, the appellant has laid stress repeatedly in the grounds of appeal and also during hearing that the goods were properly classifiable under Tariff Entry 90.25. We have considered this aspect of the matter and we find ourselves in agreement with the plea of the appellants in this case that the goods are more appropriately classifiable as "apparatus for physical analysis" as contemplated by Tariff Entry 90.25. This particular head was not projected before as during hearing of the earlier appeal and consequently we had not then adverted to it, but now the same having been brought in focus, we are of the considered opinion that the proper classification of these goods has to be under Tariff Entry 90.25 of the Customs Tariff. We accordingly allow the appeal and direct consequential action to be taken up by the departmental authorities.

13. Apart from the considerations discussed by my learned colleagues in the Bench, I would also like to refer to the fact that the Explanatory Notes appearing on page 1575 Volume 4 of the CCCN Explanatory Notes indicate that Heading No. 90.17 of the CCCN does not cover instruments and appliances used in laboratories to test blood, tissue fluids, urine, etc. whether or not such tests serve in diagnosis and the classification of such excluded items is indicated as "generally heading 90.25". Though the CCCN Explantory Notes have no legal binding nature, they have considerable persuasive value since they constituted valuable aid in interpreting and understanding the CCC Nomenclature on which pattern the Indian Customs Tariff Nomenclature is based with some adaptations. The statement of objects and reasons attached to the Customs Tariff Bill, 1974, which was enacted as the Customs Tariff Act, 1975 was that in the first Schedule to the Bill the description of articles is based on Brussels Tariff Nomenclature. Therefore, it is permissible to look at the CCCN (BTN) Explanatory Notes to interpret the entries in the first schedule to the Customs Tariff Act and take their assistance so long as the conclusion is not in conflict with the express words used in the said first schedule. On this reasoning also I agree with the conclusion reached by my learned colleagues on the Bench that the appropriate classification for the impugned goods is under Heading No. 90.25 of the Customs Tariff Schedule and that, therefore, the appeal is allowed.

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