2024 (2) TMI 1269 - AT - Customs

Imported goods declared as Sonalleve MR HIFU KIT'' - MRI System accessories - classified them under 90181300 - claiming concessional rate of Basic Customs Duty at 5% as per serial no.357B (ii) of Customs Notification No. 021/2012- Cus and CVD at nil rate in terms of serial no. 59(i) of Central Excise Notification No.6/2006 - differential duty demand confirmed along with interest - whether the Sonalleve MR HIFU KIT are accessories to MRI machine - HELD THAT - In the case of Commissioner of Customs, Chennai Vs. Indian Surgicals 2009 (8) TMI 280 - CESTAT, CHENNAI , the question considered was whether cardiac stents can be considered as accessories of cardiac catheters so as to be eligible for exemption under Notification 17/2001-Cus. The Tribunal observed that stents are used in cardiac catheters and are mounted and placed after dilation of blood vessels. They are essential for cardiac catheter treatment through the process of angioplasty. Without implanting the stent with help of catheters, the treatment cannot be completed. The Tribunal held that the stent are accessories to cardiac catheters. After understanding the function of the impugned goods and following the decisions above we hold that the Sonalleve HIFU KIT classified under CTH 9018 13 00 is an accessory to MRI. The goods are eligible for benefit of Notification of 21/2002-Cus at Sl.No.357B (ii) and benefit of Notification of 6/2006 CE at Sl. No. 59 (i). Allegation raised in the Show Cause Notice is that the appellant has wrongly availed benefit of Notification 21/2002 Cus at serial no. 357B (ii) in regard to BCD. There is no mention of wrong availment of CVD under Notification No.6/2006. However, the impugned order has denied the exemption of CVD available @ serial no. 59 (i) of Central Excise Notification No. 6/2006. The argument of the Learned Counsel that the impugned order has travelled beyond the scope of the Show Cause Notice is not without substance. The confirmation of the differential duty which has not been proposed in the Show Cause Notice cannot be sustained. For this reason also the demand of differential duty cannot sustain. In the result, the impugned order set aside. The appeal is allowed with consequential relief. The Miscellaneous application is disposed.

Summary

Issues Involved:
1. Classification of Sonalleve MR HIFU KIT as accessories to MRI machines.
2. Eligibility for exemption from Basic Customs Duty (BCD) and Countervailing Duty (CVD) under relevant notifications.
3. Validity of the Show Cause Notice and whether the adjudicating authority exceeded its scope.
4. Time-barred nature of the demand.

Summary:

1. Classification of Sonalleve MR HIFU KIT as Accessories to MRI Machines:
The appellant classified the imported Sonalleve MR HIFU KIT under CTI 90181300, arguing it as an accessory to MRI machines. The department contended that the goods are standalone equipment and not accessories. The Tribunal noted that the goods enhance the MRI machine's function from diagnostic to therapeutic, thus fitting the definition of accessories as per Note 2(b) to Chapter 90. The Tribunal relied on previous decisions, including Manipal Academy of Higher Education Vs. CC, Chennai and Commissioner of Customs, Chennai Vs. Indian Surgicals, to conclude that the Sonalleve MR HIFU KIT is indeed an accessory to MRI machines.

2. Eligibility for Exemption from BCD and CVD:
The appellant claimed concessional rates of BCD and nil rate of CVD under Notification 21/2002-Cus and Notification 6/2006-CE, respectively. The Tribunal found that the department did not dispute the classification under CTI 90181300. Therefore, denying the exemption benefits on the grounds that the goods are not accessories is inconsistent. The Tribunal upheld the appellant's claim for exemption under both notifications.

3. Validity of the Show Cause Notice and Scope of Adjudicating Authority:
The Show Cause Notice alleged wrong availment of Notification 21/2002-Cus but did not mention the denial of CVD under Notification 6/2006-CE. The Tribunal agreed with the appellant that the adjudicating authority had exceeded its scope by denying the CVD exemption, which was not proposed in the Show Cause Notice. Citing Reckitt and Coleman (I) Ltd. Vs. CCE and Commissioner of C. Ex., Nagpur Vs. Ballarpur Industries Ltd., the Tribunal held that the order could not travel beyond the Show Cause Notice.

4. Time-Barred Nature of the Demand:
The appellant argued that the demand was time-barred. The Tribunal did not specifically address this issue in the judgment, as the primary grounds for setting aside the demand were the improper classification and the scope of the Show Cause Notice.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal with consequential relief, and disposed of the Miscellaneous application. The judgment emphasized that the Sonalleve MR HIFU KIT is an accessory to MRI machines and eligible for the claimed exemptions. The adjudicating authority's order was found to have exceeded the scope of the Show Cause Notice, rendering the differential duty demand unsustainable.