2018 (12) TMI 881 - AT - Customs

Classification of imported goods - compound optical microscopes or not - whether classifiable under heading no. 90189099 of the First Schedule to Customs Tariff Act, 1975 or classifiable under heading no 90118000 of the First Schedule to Customs Tariff Act, 1975? Held that - There is no doubt that the goods, as presented, includes a microscope. The description of the impugned goods goes beyond to encompass micromanipulator along with microscope and to be deployed in treatment of infertility, an increasingly prevalent problem in the modern world for various reasons, with ever growing demand for medical intervention as an alternative to resigned acceptance of divinely ordained fate. The problem has repercussions that are not only genealogical but, at a macro level, impacting the productive future strength of the nation - It is, thus, abundantly clear that the goods, as presented, consist of a microscope and a micromanipulator. It is not the case of the customs authorities that the goods, as presented, is only a microscope. Neither is it their case that the microscope can, on its own, perform the tasks necessary for in vitro fertilisation. We have rendered the finding supra that the micromanipulator is an essential implement for in vitro fertilisation for which the imported goods are to be utilised. The heading proposed by customs authorities is that of parts and accessories under microscope . The classification of the impugned goods under heading no 90118000 of First Schedule to the Customs Tariff Act, 1975 fails and, in the face of such failure and want of an alternative classification in the show cause notice, the declared classification must be accepted - there is no reason to discard the declared classification as, contrary to the presumption of customs authorities, the impugned goods are instruments used for surgical therapy to overcome a physiological problem in a human body, viz., inability to conceive. It is not a diagnostic instrument that, in the medical field, a microscope is. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of imported goods under heading no. 90118000 vs. 90189099 of the First Schedule to Customs Tariff Act, 1975.

Analysis:
1. The dispute revolves around the classification of imported goods by the appellant under heading no. 90189099, while customs authorities argue for classification under heading no. 90118000. The appellant claims the goods fall under the former, relating to medical instruments, whereas the authorities assert they are compound optical microscopes.

2. The Revenue's argument, based on a Supreme Court decision, is challenged as irrelevant due to the distinct nature of the present dispute concerning tariff classification rules. The dispute primarily centers on the applicability of a partial exemption for goods under the appellant's claimed heading, necessitating a resolution based on the heading alone within the context of statutory rules.

3. The challenge lies in determining the classification under the residual entry in the two headings, complicating the resolution. The judgment emphasizes the importance of statutory classification once items are placed under a distinct entry, cautioning against ambiguity in classification and advocating for a clear determination to avoid controversy over residual clauses.

4. The crux of the issue is whether the imported goods qualify as compound optical microscopes under chapter 90 of the Customs Tariff Act, 1975. The lower authorities upheld the classification as microscopes, but the appellant argues for a broader interpretation due to the goods' functionality in infertility treatment.

5. The appellant's goods consist of a microscope and a micromanipulator crucial for in vitro fertilization. The authorities contend that the micromanipulator is an accessory to the microscope, leading to the classification as microscopes. However, the judgment rejects this view, emphasizing the essential role of both components in the process.

6. The application of rule 1 and rule 2 of General Interpretative Rules leads to setting aside the lower authorities' classification and allowing the appeals. The declared classification is upheld, considering the goods as instruments for surgical therapy rather than diagnostic instruments, as presumed by the customs authorities.

In conclusion, the judgment favors the appellant's classification under heading no. 90189099, emphasizing the critical role of both the microscope and micromanipulator in surgical therapy, leading to the allowance of the appeals.