ORDER

G. Sankaran, President

1. M/s. Kidwai Memorial Institute of Oncology, Bangalore, imported a consignment of Calcium Pellets, a radioactive material used in the treatment of cancer. The Customs authorities at the Air Cargo Complex, Bangalore, released the goods free of duty in terms of Customs Notification No. 163/76 read with Notification No. 279/83 and a bond obliging the importers to produce a duty-exemption certificate from the Director General, Health Services, New Delhi. On the Audit objecting to the duty free release on the ground that Caesium Pellets were consumable and were not covered by the notifications, a demand notice was issued for a sum of Rs. 62,472.46. In due course, the Assistant Collector of Customs, by order dated 15-4-1989, confirmed the demand on the ground that Caesium Pellets being inorganic chemicals falling under Heading No. 28.44 of the Customs Tariff Schedule and not fabricated equipment, were consumables, not eligible for exemption in terms of the above notification. In appeal, the Collector (Appeals) took the view that the goods should be more appropriately regarded as a part of the machine employed for treatment since they constituted its most essential part. Further, the operative life of Caesium being very long, over 30 years, it could hardly be called a consumable. The Collector has relied on Notification No. 64/88 which, according to him, recognised even goods falling under Chapter 29 of the Tariff Schedule, viz., Organic Chemicals, as parts/accessories of medical equipment. It is against the Collector (Appeals)'s order allowing the appeal against the Assistant Collector's order that the Collector of Customs, Bangalore, has filed the instant appeal.

2. We have heard Shri M. Jayaraman, SDR, for the appellant-Collector and Shri B. Ravichandran, Professor Radiation Physics, for the respondent.

3. The appellant-Collector's contention, reiterated by the learned SDR, is that the subject goods cannot be considered as parts of equipment or appliance or machine. Even consumables are necessary for a process or using a machinery. The long life of Caesium is not relevant to the issue. The Collector (Appeals)'s reliance on notification No. 64/88 is not correct since he has not mentioned the organic chemicals which are treated as parts or accessories. The goods are consumables, not eligible for the benefit of duty exemption. The S.D.R. clarified that the Caesium Pellets were contained in stainless glass containers.

4. The respondent's contention, however, is that the subject goods are essential for the working of the Selection machine used for treatment of cancer of the uterine cervix. The radioactive caesium is used in the machine in the form of a stainless steel pellet which totally covers a glass activated caesium bead. The machine has a pneumatic mechanism for transfer of active pellets into the applicator which is already embedded into the patient's vaginal cavity and into the uterus.

5. We have carefully considered the submissions of both sides and perused the record.

6. Notification 163/76 dated 2-8-1976 exempts inter alia radio-active isotopes of Caesium falling within Chapter 28 of the First Schedule to the Customs Tariff Act, 1975, when imported into India from payment of the duty of Customs leviable thereon under the said Customs Tariff Act. Notification 279/83 dated 30-9-1983 exempts all equipment/apparatus and appliances, including spare parts, component parts and accessories thereof, but excluding consumable items, the import of which is approved, either generally or in each case, by the Government of India in the Ministry of Health and Family Welfare, or by the Directorate General of Health Services, Government of India, as essential for use in any hospital specified in the Table annexed to the notification, from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and the additional duty leviable thereon under Section 3 of the said Act. The point for consideration is whether the subject Caesium Pellets would be eligible for duty exemption in terms of the notification. They would be eligible if they qualify to be covered by the terms spare parts, component parts and accessories of equipment, apparatus and appliances used in hospitals. Admittedly, the pellets are to be used in conjunction with the Selection machine in the treatment of cancer. The Revenue's contention is that since the pellets are chemicals (the Revenue perhaps means to say that Caesium is an element), and get consumed over a period of time, no matter how long, they cannot be considered as component parts, spare parts or accessories of the machine but only as consumable items. The respondent's contention, on the other hand, is that the subject pellets form an essential part of the machine without which the machine cannot perform the function for which it is designed. In this context, we note that the goods in question are not mere Caesium Pellets as such but pellets enclosed in a stainless steel container which totally covers glass activated caesium beads. This apart, caesium pellets having an effective life of over 40 years and a half life of 30 years can scarcely be described as consumable stores. The expression 'consumable stores' has not been defined in the notification and the purpose of the notification being to remove the duty burden on approved hospital equipment, the term consumables should be construed not literally but liberally having regard to the spirit of the notification. It is, in the nature of things, difficult to lay down any precise criterion as to what should be deemed to be a consumable item and what should be deemed to be not a consumable item for the purpose of the notification. Obviously, each case will have to be considered on its merits. In view of the facts set out earlier, we are of the opinion that the subject caesium pellets cannot properly be regarded as consumable items but as component parts or spare parts or accessories.

7. The Collector (Appeals) has placed reliance on Customs Notification 64/88 dated 1-3-1988. This notification is on the same line as Notification 279/83. As the appellant-Collector has pointed out, this notification does not, in terms, set out any list of goods indicating inter alia that chemicals falling under Chapter 29 of the Customs Tariff Schedule are covered by it, but, as we have held earlier, Caesium Pellets are not to be regarded as consumable items for the purpose of Notification No. 279/83.

8. In this view of the matter, we dismiss the instant appeal.