T.K. Jayaraman, Member (T)

1. These two appeals have been filed against the Order-in-Original No. 127/2001-CAU., dated 26-7-2001, passed by the Commissioner of Customs, Madras.

2. The short point involved in this case is whether the Path Speed Work Station imported by the appellants vide Bill of Entry No. 261693 dated 23-2-2000 is entitled for the benefit of exemption Notification No. 20/99 (Sl. No. 271A). The Adjudicating authority in the impugned order has held that the goods covered by the Bill of Entry 261693, dated 23-2-2000 are not entitled for the benefit of Notification No. 20/99. He has also rejected the request of the appellants for re-exporting the above goods. He has confiscated the impugned goods under Section 111(m) of the Customs Act, 1962, however he allowed the goods to be redeemed on payment of redemption fine of Rs. 50,00,000/-. Further he has imposed a penalty of Rs. 20,00,000/- on the appellants. He has also imposed a penalty of Rs. 20,00,000/- on M/s. Wipro GE Medical Systems, Bangalore under Section 112 (a)/(b) of the Customs Act, 1962. The appellants have strongly challenged the findings of the Adjudicating authority.

2. Shri B.V. Kumar, learned Advocate appeared for the appellants and Smt. Shobha L. Chary, learned JCDR appeared for the Revenue.

3. The learned Advocate said that the goods were sold on High Seas Sales Contract by M/s. Wipro GE Medical Systems Ltd., Bangalore to the appellants vide High Seas Sales Agreement dated 30-12-1999. The goods were declared as partial shipment of GE 0.2T Signa Profile Magnetic Resonance Imaging System (hereinafter referred to as the MRI System). However on examination, the goods were found to be Path Speed Work Station which in the opinion of the Revenue was not entitled for the exemption Notification. The learned Advocate explained the functioning of the system and said that it can be used in conjunction with MRI system for storing and retrieval of MRI images. It definitely enhances the working of MRI system and it can be considered as an accessory of the MRI system. Since an accessory of MRI system is entitled for exemption, the learned Advocate urged that the item imported, being an accessory should not have been confiscated. He explained the meaning of the word accessory by quoting from various standard dictionaries. He also produced the technical opinion from the TATA Memorial Hospital, Mumbai and Christian Medical College & Hospital, Vellore and some literature from the Internet on the functioning of the imported items. He also relied on the following case laws :-

(1) Collector of Customs v. Jolly Exports (P) Ltd. - 1990 (45) E.L.T. 612 wherein it was held that an accessory means something which contributes in a subordinate degree to attain a general result or effect. If a machinery cannot be worked without the part, then it ceases to be an accessory. If it adds merely to the convenience or effectiveness of a machinery like a speedometer it would be an accessory.

(2) In the case of Annapurna Carbon Industries Co. v. State of Andhra Pradesh 1976 (37) STC - 378 (S.C.), the scope of the term accessories was elaborated in the following manner :-

"We find that the term accessories" is used in the schedule to describe goods which may have been manufactured for use as an aid or addition. A sense in which the word "accessory" is used is given in Websters Third New International Dictionary as follows : "an object or device that is not essential in itself but that adds to the beauty, convenience, or effectiveness of something else". Other meanings given there are : "supplementary or secondary to something of greater or primary important", "additional"; "any of several mechanical devices that assist in operating or controlling the tone resources of an organ". "Accessories" are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more than one kind of instrument."

(3) In Eureka Forbes Ltd. v. CCE, 2000 (120) E.L.T. 533, the Larger Bench held that the Prefilter is suggested for enhancing the utility of the activated carbon column, it cannot be taken as an essential part of Aquaguard but only an accessory to it The Tribunal held that an object or device which adds to the effectiveness of something else cannot be considered to be an integral part of the equipment but it can only be an accessory.

4. The learned JCDR urged the following points :-

The appellants imported first shipment of the MRI system vide Bill of Entry 259838, dated 11-2-2000. The description in the Bill of Entry as well as in the invoice was "partial shipment of GE Signa Profile MRI System". In the second shipment also, the declaration was "partial shipment of GE Signa Profile MRI System". Even though in the first shipment, the entire MRI System was imported, the appellants declared the second shipment also as MRI System. Actually on examination, it was found to be Path Speed Work Station which consists of a Computer system. In view of this clear cut misdeclaration, the longer period is applicable to the extent confiscation and penalties are justified. The learned JCDR urged that the impugned goods are nothing but "Picture Archiving and Communication System". This enables the pictures taken in either MRI or X-ray or Ultra scan to be stored and later retrieved for various purpose. This Path Speed Work Station itself is a stand alone system and by no stretch of imagination be called as an accessory of MRI system. This has nothing to do with MRI in the sense that it does not enhance the functioning of MRI system. Its only function is storing all other inputs from MRI, CT, X-ray, etc. for retrieval. She relied on the following case laws :-

(1) Nirulas Corner House Pvt. Ltd. v. Collector of Customs, Bombay, , wherein the Supreme Court has held that Can filler fruit feeder and ripple machine are all independent machines and not accessories to the continuance ice cream freezer.

(2) In the case of Electronics Ltd. v. Superintendent of Central Excise, the Apex Court has held that Trolleys for coolers classifiable as steel furniture under Item 40 of erstwhile Central Excise tariff and not treatable as non-dutiable accessories for coolers.

(3) In the case of Sen and Pandit Electronics Pvt. Ltd. v. Commissioner of Central Excise, Calcutta-I, . The Tribunal has held that Voltage Stabilizer used to regulate the input-current and give a particular determined output which can be fed to in all of the electrically operated machines is not a accessory of refrigerating and air-conditioning appliances so as to exclude from the benefit of Notification No. 175/86-C.E. or 1/93-C.E.

She also drew our attention to the judgment of the Apex Court in the case of Commissioner of Customs, Kolkata v. Grand Prime Ltd., , wherein it was observed that Customs Act does not contain any provision regarding re-export of goods. It gives power of confiscation of goods which are illegally imported and for various other reasons enumerated in Section 111 of the.

5. We have gone through the rival contentions. The Original authority has held that the impugned goods mainly Path Speed Imaging System cannot be called as an accessory to MRI system for the following reasons :-

(1) There is no indication that it is designed to be linked exclusively to the MRI system. (Para 21 of the impugned Order-in-Original)

(2) From the literature available, it is clear that the data processing system under import is neither essential for the MRI nor it is intended exclusively for the MRI system. (Para 22 of the impugned Order-in-original).

(3) The value of the goods claimed as accessories is Rs. 2,19,67,500/- while the value of the main MRI system cleared was Rs. 1,90,32,468/- and it is beyond imagination that an MRI system or any equipment can have an accessory which is costlier than the system itself. (Para 21 of the impugned Order-in-Original).

In order to decide the issue, one should understand the function of the impugned goods. Similar goods are in the use of TATA Memorial Hospital, Mumbai. The appellants have produced a document dated 30-12-2003 from the Medical Superintendent, TATA Memorial Hospital, Mumbai. In the above document, the use of the equipment is outlined. We are giving the following extract from the letter :-

"Tata Memorial Hospital is a tertiary care centre for Cancer. Evaluation of Cancer requires comparing of images accrued over a period of time for proper diagnosis and treatment.

It has been our experience that manual storage of radiographs are cumbersome, time consuming for retrieval and is associated with the radiographs being spoilt thereby negating the very purpose of archiving.

It was in this context that Tata Memorial Hospital explored the possibility of archiving images on an electronic format. Numerous options were explored and it was finally decided to procure the Picture Archival and Communication System (PACS) from Wipro GE since they were first to market the product in India and had one working installation to its credit.

The Picture Archival and Communication System is being fully integrated with the imaging modalities and the Radiology Information System which is in existence for the past two years. This facility enables the Clinicians to view the images along side the reports. The pre-fetch facility makes available all previous images to the Clinicians on their desktop for comparison with recent ones. Further the procurement of Diagnostic workstations for Radiologists will enable them to do soft copy reporting which will enable the hospital to go Film less."

Similarly the Christian Medical College and Hospital, Vellore has also given a document regarding the functioning of the system. The appellant has produced the following extract on the system from Internet. We are reproducing the same for the proper understanding of the system.

"Extract from http://www.gwhospital.com/p5581.html

Picture Archiving Communication System (PACS)

The NEW George Washington University Hospital will offer some of the most technologically advanced patient care equipment in the country including a filmless picture archiving communication system (PACS), manufactured by DR Systems. Manufactured by DR Systems, PACS will be fully integrated into the new facility and used with all imaging modalities including standard x-rays, CT, MRI, Ultrasound, and Nuclear Medicine and allow images to be distributed electronically and interpreted on computer workstations. The benefits of a PACS system are multifold; report turnaround time is reduced and patient care is improved, as physicians will no longer need to wait for film images to be processed and then analysed and/or delivered. These benefits will be monumental for OR and ER cases, where immediate decisions are critical.

The anytime-anywhere access will provide for ease of consultation between physicians who can instantly and simultaneously access images, reports and audio report summaries throughout the hospital or in their office through a secure web server. The system can be configured to automatically acquire all prior images, which become available in the patients virtual folder in the PACS. Images will be permanently stored at the Hospital in a DVD jukebox, eliminating lost records. PACS can reduce or even abolish the use of films, resulting in cost savings. Finally, patients will benefit because they will no longer need to bring their x-rays to their physicians. For those situations where films are still needed, the hospital will have the ability to print images.

The George Washington University Hospital is excited to provide clinicians and patients with a including a filmless picture archiving communication system that will significantly improve patient care."

In the literature relating to the impugned goods, the following advantages of the system have been given :-

(1) Improves the productivity of CT and MR scanner.

(2) Decreases operational costs through film related savings.

(3) Promotes high speed, seamless access to everything from images and demographics to reports through a universal worklist.

Great strides have been made in diagnosis of various diseases. Medical imaging has played a great role in clinical diagnosis. According to the Dictionary of Scientific and Technical McGraw-Hill, the term medical imaging means - The production of visual representations of body parts, tissues or organs, for use in clinical diagnosis; encompasses x-ray methods, magnetic resonance imaging, single-photon-emission and positron-emission tomography, and ultrasound. With the use of sophisticated instruments, it is possible to scan any part of the body and get the image for proper diagnosis. Normally, the image is recorded in a film. However, with the Picture Archiving Communication System, it is possible to store and retrieve the image through the computer system and one can dispense with the films also. Even when scanning is being done by the MRI system or any other equipment, the physician can have a look at the image. Moreover, the images recorded on earlier occasions also would be available in the Archival Communication System. From this, it is very clear that the impugned goods definitely enhance the utility of MRI and other scanning systems. The impugned goods may not be exclusively used with only MRI system. It is capable of use along with CT, Ultra scan, X-ray systems. But that cannot be the reason to say that the system cannot be used as an accessory to the MRI system. What is the test to decide that an equipment is an accessory The Advanced Learners Dictionary (Oxford) given a very simple definition of word accessory - an extra piece of equipment that is useful but not essential or that can be added to something else as a decoration. A simple example would be a speedometer of the motor vehicle. The speedometer is not very essential for functioning of a motor vehicle. However, it definitely enhances the utility of a motor vehicle in the sense that speedometer is useful to know the speed. In a similar manner, the impugned goods which are computer based system for storing and accessing the images developed in the MRI system is not very essential for the working of MRI system. But there is no doubt that the impugned goods which are connected to the MRI system enhance their utility. This is very clear after going through the literature and the opinion of the experts which are given above. In our view the finding of the adjudicating authority to that extent is not correct. The case laws relied on by the learned JCDR are distinguishable. The fact that the impugned goods cost much more than the MRI system cannot be a reason to hold that they are not accessories. In our view the impugned goods pass the test of being an accessory to the MRI system. The fact that the system can be integrated with other system in the hospital also cannot be a reason to hold that they are not accessories. Since the packing list submitted to the Customs contain the full description of the goods imported, the charge of misdeclaration is not sustainable. Therefore, we set aside the confiscation of the equipment. We also set aside the penalty imposed since the impugned goods can be considered as accessories and are entitled for the Notification benefit under Customs Notification No. 20/99. The appellants request for re-export of the impugned goods can be considered favourably by the Original Authority. The appeals are disposed of in the above terms.

(Pronounced in the Court on 6-5-2005)