Judgment:
1. This appeal arises from the order dated 11-10-1990, passed by the Collector (Appeals), New Delhi, who has held that the imported item "Foley's Catheter" are not equipment, apparatus and appliances including spare parts and accessories, and hence they are not entitled to the benefit of the Notification No. 63/88, which exempts all equipment, apparatus and appliances including spare parts and accessories thereof from the exemption of customs duty and additional duty. However, the Notification refers to all these items as 'hospital equipment'. However, the conditions stated in the Notification for grant of benefit are as under : (i) the importer produces a certificate from the Directorate General of Health Services to the Govt. of India or the Ministry of Health and Family Welfare in the Govt. of India to the effect that the said hospital falls in either of the categories specified in the said Table; and (ii) the head of the hospital certifies in each case that the hospital equipments are meant for the use in the hospital and are not being manufactured in India and are essential for running or maintenance of the hospital.
(a) the Central Government, a State Government, a Union territory Administration or a local authority; or (b) institutions established by of under any law for the time being in force; or (c) societies registered under any law for the time being in force relating to registration of societies, such societies being controlled by any of the authorities referred to in Clause (a).
Explanation - For the purpose of this notification, the expression "Hospital" includes any Institution, Centre, Trust, Society, Association, Laboratory, Clinic and Maternity Home, which renders medical, surgical or diagnostic treatment." 2. The importer had claimed that the benefit of the Notification for the purpose of supply to Government hospitals. The Assistant Collector in the Order-in-Original observed that the benefit is available to the medical goods which are imported directly by the hospitals as certified under this Notification. He has observed that in the present case the goods had not been imported by any hospital and further the Notification does not extend customs duty free benefit to consumables and the goods imported are consumables in nature. In this regard, he has relied on the definition of the consumables in Chamber's 20th Century Dictionary. He has rejected the plea of the importer to refer to the definition of the consumables as given in the Import Policy on the ground that the same cannot be used for interpreting Customs Tariff. The Collector (Appeals) in the impugned order has observed that the imported item namely, Foley's Catheter are not equipment, apparatus and appliances including spare parts and accessories in terms of the Notification and in this context, he referred to the appellants' letter dated 20th April, 1989, which states as under :- "It is used for the Management of Urinary Incontingency and dwells inside the body for certain period and cannot be re used again." 3. On this premise, he has rejected their appeal. It is contended by the appellants in this appeal that the consignment: was imported for supply to Govt. hospital namely, All India Medical Institute and Lok Nayak Jai Prakash Narain Hospital, New Delhi and in this context, they have relied on the requisite certificates claiming exemption from whole of the customs duty and additional duty leviable as per the said Notification. It is their contention that the item "Foley's Catheter" is not a consumable item, and in this context, they have relied on the definition of consumables available at page 2 of the Chapter I of Import and Export Policy April, 1988 - March, 1991 is defined the same as under:- "Consumable means any item which participates or is required in a manufacturing process, but does not form part of the end product.
4. It is stated that the item is a functional item and that it is an end product by itself and further it is used for the management of urinary incontigency and dwells inside the human body for a certain period; that the item is somewhat equitable to disposable syringes but in no way it can be termed as consumables. It is further stated that in the past the benefit of exemption Notification was being extended to these goods. They have also stated that they had produced the copy of literature "Excel" of M/s. Euromedical Industries, Malaysia (manufacturer/supplier of the goods) which contained complete explanatory notes about functions etc. of the item in question. They have further relied on the term "consumables" not having been defined in the Customs Tariff, therefore, the definition as appearing in the Import and Export Policy cannot be brushed aside. They have relied on the definition of the term "Catheter" appearing in Me Graw Hill Dictionary of Scientific and Technical which states: "A hollow Tubulur device for insertion into a cavity, duct or vessel to permit injection or withdrawal of fluids or to establish patency of the passage way." 5. On this basis they stated that it cannot be considered as consumables as held by the lower authorities.
6. The Learned Advocate, Shri J.S. Agarwal submits that the Notification does not specify that the item should be imported directly by a hospital and he points out to the certificate dated 13-4-1988 issued by the authorities, Dr. K.K. Sen, Assistant Director General (ME) who has certified as follows: "It is certified that the Lok Nayak Jai Prakash Narain Hospital, New Delhi 110004 falls under category (a) of the Table, in terms of the Ministry of Finance (Deptt. of Revenue) Notification No. 63/88-Customs, dated 1-3-1988." 7. He submits that this certificate satisfies the conditions laid down in the Notification. He further points out to the explanation to the definition 'Hospital' including any Institution, Centre, Trust, Society, Association, Laboratory, Clinic and Maternity Home, which renders medical, surgical or diagnostic treatment and therefore, he submits that the terms of the Notification have been fulfilled. He also submits that the item has been held to be a life saving equipments under Notification No. 208/81 as in the case of Collector of Customs v.Fertility Clinic,Vishal Surgical Equipment Co. v. Collector of Customs, as reported in 1991 (55) E.L.T.393, Instamedic International v. Collector of Customs, as reported in 1994 (4) RLT 149.
8. The Learned DR reiterated the findings given by the lower authorities.
10. The short point on which the Assistant Collector rejected their plea is that the item is a consumable in terms of the dictionary meaning and such consumables are specifically excluded from the benefit of the Notification.
11. The second plea on which it has been rejected as noted above is that the appellants are not a Govt. hospital.
12. As regards the second ground the Collector has not given any finding and has confirmed the order of the Assistant Collector on the first ground alone. Taking second ground in the first instance, it has to be observed that the appellants have produced a certificate dated 13-4-1988 from the Assistant Director General (ME), Directorate General of Health Services, who has certified as noted above. In the said certificate the medical superintendent Lok Nayak Jai Prakash Narain Hospital, New Delhi has also endorsed as follows :- 4(1)/PS/JPH/88-89/S 28 dated 28-1-1989 for Foley's Catheter imported size 8,10." 13. It is very clear from these endorsements that the supplies have been made to the Govt. Hospital. Further the explanation of the Notification also clarifies that the expression "Hospital" includes any Institution, Centre, Trust, Society, Association, Laboratory, Clinic and Maternity Home, which renders medical, surgical or diagnostic treatment. The Notification exempts all equipment, apparatus and appliances including spare parts and accessories thereof, but excluding consumable items (hereinafter referred to as the 'hospital equipment').
Further it is noticed that the Notification does not restrict to Govt.
hospital alone but covers to hospitals run by Union Territory Administration or a local Authority or institution established by or under any law for the time being in force, or societies registered under any law for the time being in force relating to such registration of societies, such societies being controlled by any of the authorities referred to in Clause (a). It follows that all hospitals are entitled to import this either directly or through others; provided that they satisfied the conditions, that: (i) the importer produces the certificate from the Directorate General of Health Services to the Govt. of India or the Ministry of Health and Family Welfare in the Govt. of India to the effect that the said hospital falls in either of the categories specified in the said Table; (ii) the head of the hospital certifies in each case that the hospital equipments are meant for the use in the hospital and are not being manufactured in India and are essential for running or maintenance of the hospital.
14. In view of the certificate produced and endorsements of the hospital, there is no doubt of its utilisation by hospital itself and hence the Assistant Collector's finding on this ground is not sustainable.
15. The other ground is as to whether it is a consumable and gets excluded from the Notification. In this regard, the Assistant Collector has relied on the Dictionary meaning which states that the consumable means "something that we can consume". But drawing attention to this, he does not say how this particular item is a consumable and as to how it is excluded from the other terms. In all the judgments referred to above the question was as to whether this item "Foley Balloon Catheters" are life saving equipment. In all these judgments, experts opinion have been taken into consideration and on the basis of these experts opinion, the Tribunal as well as Calcutta High Court has come to a very clear conclusion that the item "Foley Balloon Catheters" are life saving equipment. The issue of the item being an equipment in the form of life saving devices having been settled by the judgment cited above, it is not proper for the lower authorities now to take a different stand that it is covered by the term "consumable" and to deny the benefit. It was also brought to our notice that the judgments on this point for applicability of the Notification 208/81 as a life saving equipment having been confirmed by the Hon'ble Supreme Court, therefore, it is not open to the department to take a different view that it is a consumable and not an equipments or an apparatus or appliances. There is a lot of force in the submissions made and we note that the issue pertaining to the nature of the goods have already been decided and therefore, it is not open to the Revenue to plead that it is not an equipment but a consumable. It was emphasised by the Learned Advocate that the term 'consumable' not having been defined in the Notification, therefore its meaning has to be read in terms of what is stated in the Import Policy which defines this term to mean any item which participates or is required to be manufacturing process but does not form part of the end product. The dictionary meaning will also reflect on the same meaning as in the Import Policy inasmuch as the dictionary meaning merely states that the consumables are something which we can consume. Therefore, the consumption of an item is reflected in terms of participation or being required in a manufacturing process but does not form part of the end product. There is a lot of force in the submissions made by the Learned Advocate.
Therefore, viewing from this point as well it is to be held that the item does not fall within the ambit of consumable items. The Learned DR during the course of argument was trying to impress that the item in question after use is discarded and therefore, it has to be taken in the meaning of consumable. This argument is not acceptable, as the meaning of this term "consumable" is not defined in the Notification and hence only its plain meaning as per its understanding in the common parlance is required to be accepted.Indian Telephone Industries Ltd. v. Collector of Customs, as reported in 1983 (13) E.L.T. 1012, while interpreting the term "consumable item" as appearing in Notification 211/76-Cus., dated 2-8-1976 held that Silicone Rubber Sleevings for which the benefit was denied on the ground that it did not fall within the category of equipments/instruments/appliances held in paras 5 and 6 as follows :- "5. Silicone rubber may not be durable as some other materials.
However, that should not lead to the conclusion that an article of silicon rubber is consumable and therefore not eligible for the benefit of the notification, which excludes "consumable items" even more quickly than one of Silicone rubber. In our view, the expression "consumable item" would more appropriately apply to chemicals, etc., which are used up in the course of research, and not to an article made of silicone rubber, merely because it is less durable than an article of some other material.
6. As regards the objection that the goods are in the nature of raw material, it appears to us that it would be totally inappropriate to apply that expression to goods of this nature. The objection is really that the sleeving is not cut to length and ready for use.
There is substance in the contention of the appellants that, considering the multifarious uses of the sleeving, it would not be feasible to import it in cut lengths. Even if it were feasible, it would not only lead to avoidable wastage but also to avoidable expenditure of foreign exchange. But apart from these general aspects, we consider that the term "equipments" in the notification, taken with the evident objective of that notification can be considered as wide enough to cover the silicone rubber sleeving in running length." 17. On perusal of the above judgment, the Tribunal has categorically held that the expression "consumable item" should get consumed like chemicals which are used up in the course of research, but it does not include an article merely because it is less durable then an article of some other material. The Tribunal, as can be seen, has held that silicon rubber sleevings to be an equipments, in the present case, the item has already been considered as a 'life saving equipment', in a series of the judgments and therefore, the meaning attached to the term 'consumable' as laid down in the above paragraphs in the cited judgment, would apply to the facts of the present case.
18. In the case of Anwar Khan Mehboob & Co. v. State of Bombay as reported in 1960 (11) STC 698 (S.C.), the Hon'ble Supreme Court while considering the term 'consumed' and 'consumption' held that consumption consists in the act of taking such advantage of the commodities and services produced as constitutes the 'utilisation' thereof. It further held that for such commodity, there is ordinarily what is generally considered to be the final act of consumption. For some commodities, there maybe even more than one kind of final consumption. The judgment further gave an example that grapes may be 'finally' consumed by eating them as fruits; they may also be consumed by drinking the wine prepared from 'grapes'. Again, the final act of consumption may in some cases be spread over a considerable period of time. Books, articles of furniture and painting may be mentioned as examples. The Supreme Court also further proceeded to say that another portion of the final act of consumption may be performed by his heir or successor-in-interest, a transferee. It held that there is for each commodity, what may be considered ordinarily to be the final act of consumption should not make us forget that in reaching that stage, the commodity may pass through different stage of production and for such different stages, there would exist one or more intermediate acts of consumption. From this ruling also it is clear that the term 'consumable' has been given the meaning of an article getting used up during the course of manufacture. Likewise, the Kerala High Court in the case of Chirukandan v. Supdt. of Central Excise, as reported in 1984 (15) E.L.T. 7 has held relying on the above Supreme Court's judgment, that the term denotes production or manufacture of a new article from the raw material. In view of the understanding placed by the Court's to the term 'consumable item' and the Tribunal's judgment in the Indian Telephone Industries and further the item in question having been held as life saving equipments, we have to hold that the lower authorities considering the items as consumable is out of context and requires to be negatived.
Thus the impugned order is set aside and the appeal is allowed.