2020 (2) TMI 1136 - HC - Customs

Validity of Circular issued by the Central Board of Excise and Customs on May 9 2013 - disposable sterilised dialysers - classification of goods - levy of duty - HELD THAT - Paragraph 5 of the impugned circular of May 9 2013 purported to club the dialyser or the equipment pertaining to dialysers that purify the blood along with generic equipment for purification of water or liquids or the like. Ordinarily it appears that the writ petitioner s product would have more nexus with Chapter 90 and the goods covered by the heading Renal Dialysis Equipment rather than filtering or purifying machinery and apparatus for liquids. It is true that the particular equipment which is the subject-matter of the present case undertakes the work of purifying blood. It is in a sense a purifier. The input and output to and from such equipment is a liquid; it is blood in the toxic form which goes in and in a cleaner form that comes out. Considering the other products pertaining to the group of 8421 in Chapter 84 and the other products in the group of 9018 in Chapter 90 it is obvious that the writ petitioner s product has overwhelming nexus with medical equipment and renal dialysis equipment and only an incidental connection by reason of its use as a purifier of blood with other classes of purifiers used in the industry. The approach of the Single Bench and the final conclusion rendered in the impugned order that the writ petitioner s product had to be classified in Chapter 90 do not call for any interference. There does not appear to be any error in the judgment and order impugned arriving at the conclusion that by the impugned instructions issued under Section 151A of the Act of 1962 the very nature and efficacy of the writ petitioner s product could not be altered from that which is used in connection with renal dialysis to being a mere purifier of liquids - Appeal dismissed.

Summary

Issues:
Classification of goods under Customs Tariff Act, 1975 - Circular issued by Central Board of Excise and Customs - Applicability of duty rates - Interpretation of Chapter 90 - Nexus of goods with specific categories - Authority to issue instructions under Customs Act, 1962 - Jurisdiction of Central Government to alter duty rates and classifications.

Analysis:
The judgment by the High Court of Calcutta involved the classification of goods under the Customs Tariff Act, 1975, specifically focusing on disposable sterilised dialysers. The writ petitioner, a dealer in hollow fibre dialysers, claimed that their product fell under Chapter 90 of Section XVIII of the Customs Tariff Act. Chapter 90 covers optical, photographic, cinematographic, measuring, checking precision surgical instruments, and similar products. The specific item number for the writ petitioner's product was 9018 9031, classified under "Renal Dialysis Equipment, blood transfusion apparatus and Haemofiltration instruments."

The Court highlighted the importance of matching the description of goods with the relevant product to determine the applicable duty rate. It was noted that the Central Board of Excise and Customs issued a circular on May 9, 2013, attempting to classify the writ petitioner's product along with generic equipment for purification of water or liquids. However, the Court emphasized that the writ petitioner's product had a significant nexus with medical equipment and renal dialysis equipment, rather than being solely a purifier of liquids. The judgment upheld the classification of the writ petitioner's product under Chapter 90, affirming that the nature and efficacy of the product could not be altered by the instructions issued under Section 151A of the Customs Act, 1962.

Furthermore, the Court clarified that while the Central Government has the authority to change duty rates and classifications, such changes must be made through appropriate statutory procedures. Instructions issued by the Central Board of Excise and Customs cannot substitute the formal process of amending or altering classifications by rules. The judgment dismissed the appeal, affirming the Single Bench's conclusion regarding the classification of the writ petitioner's product under Chapter 90.

In conclusion, the Court dismissed the appeal, upholding the judgment and order dated April 7, 2016. The respondent authorities were directed to refund any enhanced duty paid by the writ petitioner within three months, failing which interest at the rate of 6% per annum would be applicable. The judgment emphasized the importance of accurate classification of goods under the Customs Tariff Act and the limitations on the authority to alter classifications and duty rates.