Narang Scientific Works Pvt. Ltd. Vs. Commr. of C. Ex. - Court Judgment

Excerpt:
1. the issue involved in both these appeals, filed by m/s. narang scientific works, is whether the products manufactured by them are classifiable under heading no. 90.18 of the schedule to the central excise tariff act as instruments and appliances used in medical science as claimed by them or under heading no. 84.19 as machinery, plant, or laboratory equipment for the treatment of the materials by a process involving a change of temperature.2. shri v. lakshmikumaran, learned advocate, submitted that the appellants manufacture serological water bath, water bath rectangular, high temperature water bath, paraffin wax bath incubator universal humidity cabinet, rotary shaker, laminar flow cabinet vertical autoclave; that the revenue has classified all these products under heading 8419 on the ground that all these products are based on processes which essentially involve a change of temperature. the learned advocate, further, submitted that heading 90.18 covers instruments and appliances used in medical, surgical, dental or veterinary sciences, including scientigraphic apparatus, other electro-medical apparatus and sight testing instruments; that the incubators manufactured by them are used to test samples of blood, etc., to study its culture, and characteristics in order to perform diagnosis of blood which ultimately help in treating diseases like t.b., cancer, etc. that the products in question are very crucial in medical research and are used in laboratory for doing various kinds of tests. the learned counsel submitted that as per note 1(1) to section xvi, section does not cover articles of chapter 90; that as per note 1(g) to chapter 90, this chapter does not cover specific products falling under specified headings of chapter 84 such as pump of heading no. 84.13 weight operated counting and checking machinery of heading 84.23, lifting or handling machinery (heading 84.25 to 84.28), fittings for adjusting work or tools machine tools of heading 84.66, calculating machine (84.70) and valve and other appliances (heading 84.81). the learned advocate emphasized that a reading of these two notes clearly indicate that if a product falls under heading 90.18 of the tariff it cannot be classified under any of the chapter falling in section xvi; that only specified products falling under specified headings mentioned in note 1(g) to chapter 90 would be classified in chapter 84 though they may be satisfying the description in any of the headings of chapter 90; that as all the goods in question are instruments and appliances used in medical/surgical sciences they are clearly covered by heading 90.18 and in terms of note 1(1) to section xvi these goods cannot be classified under heading 84.19 even though these goods may be for the treatment of the materials by a process involving a change of temperature. the learned advocate, further, mentioned that the revenue can also not take the plea that heading 84.19 also covers laboratory equipments which are for the treatment of materials by a process involving a change of temperature in view of note 1(1) to section xvi; that in view of specific note 1(1) providing for exclusion of article of chapter 90 from the purview of section xvi heading 84.19 has to be read as laboratory equipments other than instruments and appliances used in medical, surgical, dental or veterinary sciences. finally the learned advocate mentioned that if the products are held to be classifiable under heading 84.19 of the tariff the appellants are eligible to the ssi exemption notification as the value of their clearances during the financial year, 1997-98 was little more than rs. 1.76 crores and during the financial year, 1998-99 they had cleared the goods valued at rs. 1.83 crores (approximately).3. countering the arguments shri vikas kumar, learned sdr, submitted that the appellate tribunal has already decided the classification of incubators manufactured by the appellants vide final order no.513-528/2002-b dated 20-12-2002 [2003 (152) e.l.t. 305 (t)]; that as all the impugned products are used for treating materials by the process which involve the change of temperature these are classifiable under heading 84.19 of the tariff; that once any machinery, plant, or laboratory equipment is used for treating the materials by the process involving the change of temperature the product will be classified under heading 84.19 irrespective of its use in medical sciences. he referred to explanatory note of hsn according to which autoclaves are classifiable under heading 84.19. the learned sdr also referred to the explanatory notes of hsn below heading 90.18 which mentions the instruments covered under heading 90.18 and contended that the products in question manufactured by the appellants are not mentioned therein; that further, it has not been specifically provided that the laboratory equipments which are used for treating the material by the processes involving the change of temperature will not fall under heading 84.19, if these are instruments and appliances used for medical or surgical sciences. he finally submitted that the functions of the goods in question as detailed in the adjudication order reveals that these equipments are used for treating the materials by the process involving change of temperature and there is nothing extra in these equipments to take them away from the purview of heading 84.19. in the reply the learned advocate mentioned that the autoclaves which have been mentioned in explanatory notes below heading 84.19 are those autoclaves which are used in various industries and not which are used in medical/surgical sciences. he also mentioned that the exclusion clause in the explanatory notes of hsn for heading 90.18 reflects the exclusion mentioned in note 1 to chapter 9. the learned advocate finally submitted that the tribunal's final order no. 513-528/2002-b dated 20-12-2002 in their own case classifying bod incubators and other incubators under heading 84.19 was sub silentio the provisions of note 1(1) to section xvi which were not brought to the attention of the bench.4. we have considered the submissions of both the sides. it has not been disputed by the appellants that the goods in question are used for treating the materials by the process which involve change of temperature. hsn explanatory note describes the scope of heading 84.19.certain exceptions have been mentioned in the explanatory notes which are not covered by heading 84.19. the explanatory note mentions "that with these exceptions, the heading covers machinery and plant designed to submit materials (solid, liquid or gaseous) to a heating or cooling process in order to cause a simple change of temperature, or to cause a transformation of the materials resulting principally from the temperature change". the goods which are not covered by heading 84.19 as per explanatory note of hsn, do not include instruments and appliances used for medical, surgical, dental or veterinary sciences.we also observe that note 1(1) to section xvi of the central excise tariff finds place also as note 1(m) to section xvi of hsn i.e. section xvi does not covers articles of chapter 90. once a product is designed to submit materials to a heating process in order to cause a simple change of temperature or to cause a transformation of the material resulting principally from a temperature change, it will be classifiable under heading 84.19 irrespective of its use whether it is used in an industry or in medical or surgical sciences. in view of this, the words 'other than laboratory equipments used in medical or surgical sciences' cannot be read into heading 84.19 of the tariff. as all the impugned products are equipments for the treatment of material by a process involving a change of temperature, they are appropriately classifiable under heading 84.19 and not under heading 90.18. however, we agree with the learned advocate that it has to be examined by the adjudicating authority as to whether they are eligible for the benefit of the notification no. 175/86. we, therefore, remand the matter to the adjudicating authority to examine the availability of ssi notification to the appellants after affording a reasonable opportunity of hearing to them. the appeals are disposed of in the above terms.

Judgment:
1. The issue involved in both these appeals, filed by M/s. Narang Scientific Works, is whether the products manufactured by them are classifiable under Heading No. 90.18 of the Schedule to the Central Excise Tariff Act as instruments and appliances used in medical science as claimed by them or under Heading No. 84.19 as machinery, plant, or laboratory equipment for the treatment of the materials by a process involving a change of temperature.

2. Shri V. Lakshmikumaran, learned Advocate, submitted that the Appellants manufacture Serological Water bath, Water Bath Rectangular, High temperature Water Bath, Paraffin wax Bath Incubator Universal Humidity Cabinet, Rotary Shaker, Laminar Flow cabinet vertical Autoclave; that the Revenue has classified all these products under Heading 8419 on the ground that all these products are based on processes which essentially involve a change of temperature. The learned Advocate, further, submitted that Heading 90.18 covers instruments and appliances used in medical, surgical, dental or veterinary sciences, including scientigraphic apparatus, other electro-medical apparatus and sight testing instruments; that the Incubators manufactured by them are used to test samples of blood, etc., to study its culture, and characteristics in order to perform diagnosis of blood which ultimately help in treating diseases like T.B., Cancer, etc. that the products in question are very crucial in medical research and are used in laboratory for doing various kinds of tests. The learned Counsel submitted that as per Note 1(1) to Section XVI, Section does not cover articles of Chapter 90; that as per Note 1(g) to Chapter 90, this Chapter does not cover specific products falling under specified headings of Chapter 84 such as pump of heading No. 84.13 weight operated counting and checking machinery of heading 84.23, lifting or handling machinery (heading 84.25 to 84.28), fittings for adjusting work or tools machine tools of heading 84.66, calculating machine (84.70) and Valve and other appliances (heading 84.81). The learned Advocate emphasized that a reading of these two notes clearly indicate that if a product falls under heading 90.18 of the Tariff it cannot be classified under any of the Chapter falling in Section XVI; that only specified products falling under specified headings mentioned in Note 1(g) to Chapter 90 would be classified in Chapter 84 though they may be satisfying the description in any of the headings of Chapter 90; that as all the goods in question are instruments and appliances used in medical/surgical sciences they are clearly covered by heading 90.18 and in terms of Note 1(1) to Section XVI these goods cannot be classified under Heading 84.19 even though these goods may be for the treatment of the materials by a process involving a change of temperature. The learned Advocate, further, mentioned that the Revenue can also not take the plea that Heading 84.19 also covers laboratory equipments which are for the treatment of materials by a process involving a change of temperature in view of Note 1(1) to Section XVI; that in view of specific Note 1(1) providing for exclusion of article of Chapter 90 from the purview of Section XVI heading 84.19 has to be read as laboratory equipments other than instruments and appliances used in medical, surgical, dental or veterinary sciences. Finally the learned Advocate mentioned that if the products are held to be classifiable under Heading 84.19 of the Tariff the Appellants are eligible to the SSI Exemption Notification as the value of their clearances during the financial year, 1997-98 was little more than Rs. 1.76 crores and during the financial year, 1998-99 they had cleared the goods valued at Rs. 1.83 crores (approximately).

3. Countering the arguments Shri Vikas Kumar, learned SDR, submitted that the Appellate Tribunal has already decided the classification of Incubators manufactured by the Appellants vide Final Order No.513-528/2002-B dated 20-12-2002 [2003 (152) E.L.T. 305 (T)]; that as all the impugned products are used for treating materials by the process which involve the change of temperature these are classifiable under Heading 84.19 of the Tariff; that once any machinery, plant, or laboratory equipment is used for treating the materials by the process involving the change of temperature the product will be classified under Heading 84.19 irrespective of its use in medical sciences. He referred to Explanatory Note of HSN according to which Autoclaves are classifiable under Heading 84.19. The learned SDR also referred to the Explanatory Notes of HSN below Heading 90.18 which mentions the instruments covered under Heading 90.18 and contended that the products in question manufactured by the Appellants are not mentioned therein; that further, it has not been specifically provided that the laboratory equipments which are used for treating the material by the processes involving the change of temperature will not fall under Heading 84.19, if these are instruments and appliances used for medical or surgical sciences. He finally submitted that the functions of the goods in question as detailed in the Adjudication Order reveals that these equipments are used for treating the materials by the process involving change of temperature and there is nothing extra in these equipments to take them away from the purview of Heading 84.19. In the reply the learned Advocate mentioned that the autoclaves which have been mentioned in Explanatory Notes below Heading 84.19 are those autoclaves which are used in various industries and not which are used in medical/surgical sciences. He also mentioned that the exclusion clause in the Explanatory Notes of HSN for Heading 90.18 reflects the exclusion mentioned in Note 1 to Chapter 9. The learned Advocate finally submitted that the Tribunal's Final Order No. 513-528/2002-B dated 20-12-2002 in their own case classifying BOD Incubators and other Incubators under Heading 84.19 was sub silentio the provisions of Note 1(1) to Section XVI which were not brought to the attention of the Bench.

4. We have considered the submissions of both the sides. It has not been disputed by the Appellants that the goods in question are used for treating the materials by the process which involve change of temperature. HSN Explanatory Note describes the scope of Heading 84.19.

Certain exceptions have been mentioned in the Explanatory Notes which are not covered by Heading 84.19. The Explanatory Note mentions "that with these exceptions, the heading covers machinery and plant designed to submit materials (solid, liquid or gaseous) to a heating or cooling process in order to cause a simple change of temperature, or to cause a transformation of the materials resulting principally from the temperature change". The goods which are not covered by Heading 84.19 as per Explanatory Note of HSN, do not include instruments and appliances used for medical, surgical, dental or veterinary sciences.

We also observe that Note 1(1) to Section XVI of the Central Excise Tariff finds place also as Note 1(m) to Section XVI of HSN i.e. Section XVI does not covers articles of Chapter 90. Once a product is designed to submit materials to a heating process in order to cause a simple change of temperature or to cause a transformation of the material resulting principally from a temperature change, it will be classifiable under Heading 84.19 irrespective of its use whether it is used in an industry or in medical or surgical sciences. In view of this, the words 'other than laboratory equipments used in medical or surgical sciences' cannot be read into Heading 84.19 of the Tariff. As all the impugned products are equipments for the treatment of material by a process involving a change of temperature, they are appropriately classifiable under Heading 84.19 and not under Heading 90.18. However, we agree with the learned Advocate that it has to be examined by the Adjudicating Authority as to whether they are eligible for the benefit of the Notification No. 175/86. We, therefore, remand the matter to the Adjudicating Authority to examine the availability of SSI Notification to the Appellants after affording a reasonable opportunity of hearing to them. The appeals are disposed of in the above terms.