Dornier India Medical Systems Pvt. Ltd. v. Commr. Of Cus., Chennai

[Order per : T.K. Jayaraman, Member (T)]. - This is an appeal against O-I-A No. C-Cus. 200/2003, dated 30-5-2003 passed by the Commissioner of Customs (Appeals), Chennai. The appellant imported an item “Sphinx 80 Watt Holmium Yag Laser with accessories”. The goods were classified under CTH 9018.19 at Nil rate of duty under Customs Notification No. 16/2000 Sl. No. 323A. Later, it was found that only spare parts were exempted under the said Notification and not accessories. Therefore, Revenue proceeded against the appellants and demanded short levy of Rs. 1,02,420/-. The appellants approached the first Appellate Authority. She held that the impugned goods viz. Power Fib, Percu Fib. etc. are not essential parts but are accessories. The fact that the invoice value shows separate values for the laser and the impugned goods indicate that the goods are not Parts but are accessories. The general trade practice is that the value of the essential parts will be included in the main system and only for Accessories, the value will be shown separately. Therefore, the Commissioner (Appeals) denied the benefit of Notification to the appellants.

2. The appellants strongly challenge the findings of the Appellate Authority.

3. Shri M.S. Kumaraswamy, the learned Consultant appeared for the appellants and Shri R.N. Vishwanath, the learned SDR appeared for Revenue.

4. The learned Consultant urged that the items imported are Parts of the Laser system. By mistake, they have described it as Accessories. Without the imported item, the Laser System is of no use. The laser equipment by itself will not accomplish anything unless it is fitted with an applicator. The applicators imported are in the nature of Toolings i.e. a Set of Tools, each tool is to be employed for a particular operation. For different applications, there are different applicators. There are several types of applicators that are sold along with such laser equipments. The appellants have consigned only some of the applicators to suit their requirements. The applicators are mostly bought out items. The manufacturer of Laser equipment themselves may not manufacture these applicators. This is one reason why the applicators are invoiced separately. The impugned special applicators at that time when it is fitted to a laser equipment and while performing a particular function constitutes Part of the said laser equipments. In other words, a laser equipment fitted with an applicator constitutes one whole functional unit. As the laser equipment cannot perform any function without the applicator, it is beyond doubt a Part. As the applicator does not enhance the performance of the laser equipment and without which the laser equipment cannot perform any job, it is not correct technically to treat this as an Accessory to laser equipment. The inescapable conclusion is that the applicator is a Part of the laser equipment. The Consultant produced the technical literature on the equipment.

5. The learned Departmental Representative, referring to the Accessories (Condition) Rules, 1963, pointed out that Accessories and Spare Parts of any article when imported along with that article shall be chargeable at the same rate of duty as that article, if such accessories, parts are compulsorily supplied along with that article and no separate charge is made for such supply, their price being included in the price of the article.

6. We have gone through the records of the case carefully. The fact that the imported item is an opthalmalogical equipment is not in dispute. The Holmium Yag Laser is a versatile laser and finds application in almost all surgical areas. The parts of opthalmalogical equipments are also exempted from the above mentioned notifications. The only question to be decided in this appeal is whether the items, which are imported, are Parts of the laser system or not. The Revenue contends that these are Accessories. The appellants have explained that without these items that they call as applicators, the laser system cannot be used at all. It is well known that laser finds great application in surgery. What is a laser? The term laser is an acronym for Light Amplification by Stimulated Emission of Radiation. Laser is actually an electronic device that converts input power into a very narrow intense beam of coherent visible or infra red light. In Layman’s language, laser is a powerful light beam. Ordinary light can be compared to a crowd and laser to soldiers who march in measured steps. The imported items are used in laser delivery system to target tissue. As per the invoice,

(a)     Powerfib : It is a laser fibre, which delivers laser energy to the tissue to destroy pathological tissue during blood less Surgery.

(b)     Percufib : It is a base laser fibre system used to precisely deliver high energy pulses to the target tissue to destroy the calcified fibrous tissue.

(c)     Facerstripper : They are used for precisely cutting the laser fibres to make the surgery economical,

7. After going through the catalogue, the technical information available and also the explanation given by the appellants, we find that the items imported are optical fibres which deliver the laser for specific applications. We are also convinced that without any of the items imported, the laser system cannot be used at all. Moreover, the letter from the supplier dated 1-2-2002 indicates the following :

“The items are part of laser delivery systems and are essential for applying laser energy to the garget tissue. These are designed for specific application areas mentioned above. Therefore, the above items are essential for the functioning, use and operation of the laser system and in other words, they can be considered as essential parts or equipment of the laser system.”

We agree with the appellants that without the imported items, the laser system cannot be used for any surgery. Hence, they have to be considered as Parts. They are rightly entitled for exemption. We allow the appeal by setting aside the impugned order.

(Pronounced in open Court on 20-5-2005)