2014 (3) TMI 134 - AT - Customs

Exemption under Notification 21/2002-Cus., dated 1-3-2002 (S. No. 83) - Adjudicating authority denied the exemption on the ground that the goods imported are not complete kits but only a raw material for making such kits - Whether an exemption available for HIV Diagnostic Kit can be extended to an essential item used to make the kit work - Held that - What we notice is that the exemption notification uses broad description rather than specific descriptions supported by Section Notes and Chapter Notes of the Tariff. The exemption is available to goods classifiable under Chapter 28, 29, 30 or 38 - exemption was meant also for something like the item imported which is not the reactive agent. The question is whether the exemption is to be given only when the entire kit is imported together. This does not stand to reason because this is a beneficial notification for providing exemption to Life Saving Diagnostic Kits as seen from the description given in the Table to Notification. Revenue has nothing to prove that this item is not used in diagnostic kits for HIV. To argue that the exemption will be extended when the equipment is imported and exemption will be denied when consumable is imported does not make sense in the case of a notification like the one being interpreted - exemption is to be extended to the impugned goods - Decided against Revenue.

Summary

Issues:
- Classification of imported goods under Customs Tariff
- Eligibility for exemption under Notification 21/2002-Cus.
- Interpretation of exemption for diagnostic kits
- Consideration of essential items for diagnostic kits

Classification of Imported Goods:
The respondent imported goods declared as "HIV 1/2 uncut sheet for device raw material for making HIV Kits" and claimed classification under Customs Tariff Item 3002 10 99. The adjudicating authority denied exemption, stating the goods were raw materials, not complete kits. The Commissioner (Appeals) allowed the appeal, considering the goods as parts of diagnostic kits. Revenue appealed this decision, arguing the imported goods were not diagnostic kits but mere raw materials.

Eligibility for Exemption:
The exemption under Notification 21/2002-Cus. was claimed by the respondent for life-saving drugs/medicines and diagnostic test kits specified in List 4. The Commissioner (Appeals) allowed the exemption, noting that similar goods had received exemption elsewhere. Revenue contended that the imported goods were not complete kits and lacked essential components for testing, citing previous court decisions and the absence of specific exemption for such parts.

Interpretation of Exemption for Diagnostic Kits:
The Tribunal analyzed whether the exemption for "HIV Diagnostic Kit" could extend to essential items used in making the kit functional. The exemption covered goods classifiable under specific chapters, including diagnostic kits for detecting HIV antibodies. The Tribunal noted that the exemption did not require the entire kit to be imported together, emphasizing the broad description in the notification and the purpose of providing exemption for life-saving diagnostic kits.

Consideration of Essential Items for Diagnostic Kits:
The respondent argued that the imported item was essential for making the HIV diagnostic kit operational, as without it, the kit would not function. Relying on previous Tribunal decisions, the respondent contended that the exemption for kits should extend to essential components. The Tribunal agreed with the respondent's main argument, holding that the exemption should apply to the imported goods. Consequently, the appeal filed by Revenue was rejected, affirming the Commissioner (Appeals) decision in favor of the respondent.