2016 (7) TMI 886 - HC - Customs

Classification of import of soft shell filter for blood bag - whether the goods imported by the petitioner is filtering equipment for filtration of blood . - claim of exemption under Sl.No.309(i) of notification No.12/2012 CE dated 17/3/2012 - validity of Circular No.19/2013 - The contention urged by the revenue while supporting the Circular is that in view of the specific entry under sub heading 8421, the item cannot come under Chapter 90 - The main contention urged by the petitioner is that if the product is classified under Chapter 9018, then the product is eligible for exemption or reduction in basic duty of customs. It is contended that the Circular issued by the 2nd respondent is illegal since the item in question namely Disposable Sterilized Dialyzer and Microbarrier would only fall under chapter heading 9018 and not under chapter heading 8421. Held that - a bare reading of various tariff items coming under Chapter sub heading 8421 do not tend me to think that a component for filtering blood could be included in any of the items coming under 8421. The word other occurring in 8421 99 00 can have relation only to the main heading parts relating to centrifuges including centrifugal dryers or other parts which can be characterized as coming under such equipment and cannot be imported to sub heading 9018 90. Therefore, Note 2(b) clearly applies to the fact situation since there are no entries in the tariff head items which can take care of parts and accessories of renal dialysis equipment which comes under the tariff head 9018 90 31. The Circular is not in terms with the statutory provisions and is liable to be set aside. - Decided in favor of assessee.

Summary

Issues Involved:
1. Validity of Board's Circular No.19/2013.
2. Classification of imported goods under the appropriate tariff heading.
3. Applicability of additional customs duty.

Issue-wise Detailed Analysis:

1. Validity of Board's Circular No.19/2013:
The petitioner challenged the validity of Ext.P6, Board's Circular No.19/2013, which classified "Disposable Sterilized Dialyzer" and "Microbarrier" under Chapter heading 8421 29 00. The petitioner argued that this classification was incorrect and that the Circular was illegal. The court noted that the Circular was issued to clarify the classification of filters used for blood filtration, and it concluded that the Circular was not in accordance with the statutory provisions. The court quashed the Circular, stating that it was not in terms with the statutory provisions.

2. Classification of Imported Goods:
The petitioner imported soft shell filters for blood bags and claimed exemption under Chapter heading 9018 90 99, which covers renal dialysis equipment and blood transfusion apparatus. The respondent, however, classified the goods under Chapter heading 8421 29 00 as filtering equipment for blood filtration, based on Note 2(a) of Chapter 90. The court examined the relevant tariff headings and notes, including Note 2(a) and Note 2(b) of Chapter 90. It found that the imported goods were parts of renal dialysis equipment and blood transfusion apparatus, which should be classified under Chapter heading 9018 90 31. The court emphasized that the imported components were specifically designed for use in dialysis machines and blood transfusion systems and should not be classified under the general category of filters in Chapter 8421.

3. Applicability of Additional Customs Duty:
The respondent's classification under Chapter heading 8421 29 00 resulted in an additional 12% customs duty. The petitioner contested this, arguing that if classified under Chapter 9018, the goods would be eligible for exemption or reduction in customs duty. The court agreed with the petitioner, stating that the imported goods were correctly classified under Chapter 9018 90 31, which entitled the petitioner to a reduction in customs duty. Consequently, the court set aside the proceedings initiated against the petitioner for imposing additional duty.

Conclusion:
The court allowed the writ petitions, quashed Ext.P6 Circular No.19/2013, and set aside the proceedings for imposing additional customs duty. It declared that the imported equipment should be classified under Chapter heading 9018 90 31, entitling the petitioner to a reduction in customs duty.