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2025 (6) TMI 1102 - AT - CustomsClassification of imported goods - Freestyle Neo Glucose Meter Freestyle Libre Sj sensor Kits and Freestyle Libre Pro sensor Kits - classifiable under CTH 9027 80 90 or under CTH 9018 90 99? - applicability of NIL rate of BCD under N/N. 24/2005-Cus. dated 01.03.2005 - HELD THAT - The issue arising out of the present dispute with regard to classification of the subject goods is no more res integra in view of the order passed by this Bench of the Tribunal in the case of Bayer Pharmaceuticals (P.) Ltd. Vs. Commissioner of Cus. Mumbai 2015 (11) TMI 943 - CESTAT MUMBAI . In the said order by relying upon the HSN Explanatory Note appended to the competing headings the Tribunal has held that the imported goods viz. glucometers are classifiable under heading 90.27 and are eligible for exemption under N/N. 24/2005-Cus. dated 01.03.2005. The order of the Tribunal passed in the case of Bayer Pharmaceuticals (P.) Ltd. was approved by the Hon ble Bombay High Court in the case of Ascensia Diabetes Care India Pvt. Ltd. 2022 (11) TMI 871 - BOMBAY HIGH COURT . The Hon ble High Court has held that the Notification No.50/2017-Cus. dated 30.06.2017 at Sl. No. 576 prescribing the concessional rate of duty of 5% shall be applicable in case of goods falling under CTH 9018; and the same would not be applicable where the goods are classified under CTH 9027. In the present case since the appellant had claimed the classification of subject goods under CTH 9027 the benefit provided under Notification No.24/2005- Cus. 01.03.2005 should alone be applicable. Conclusion - The classification of the subject goods under CTH 9027 80 90 upheld thereby entitling the appellant to NIL BCD. There are no infirmity in the said order passed by the learned Commissioner (Appeals) - appeal of Revenue dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal in the present appeal are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Correct Classification of the Subject Goods Relevant Legal Framework and Precedents: The classification of goods for customs duty purposes is governed by the Customs Tariff Act, 1975, and the General Rules for the Interpretation of the Customs Tariff Act. Rule 1 mandates classification according to the terms of the headings and any relative Section or Chapter notes. Rule 3 prescribes that a more specific description is preferred over a general one. The HSN Explanatory Notes provide authoritative guidance on the scope of headings. Precedent decisions relevant to this issue include the Tribunal's ruling in Bayer Pharmaceuticals (P.) Ltd. Vs. Commissioner of Customs, Mumbai (2016), where glucometers were held classifiable under heading 90.27, and the Hon'ble Bombay High Court's decision in Ascensia Diabetes Care India Pvt. Ltd. Vs. Union of India (2023), which affirmed the Tribunal's approach. Court's Interpretation and Reasoning: The Tribunal examined the HSN Explanatory Notes to the competing headings 90.27 and 90.18. Heading 90.27 covers "instruments for chemical analysis," while heading 90.18 covers "instruments used in medical, surgical, dental or veterinary sciences." The Tribunal emphasized that heading 90.27 is more specific than 90.18, invoking Rule 3 to prefer the specific description. The Tribunal further analyzed the Explanatory Note to heading 90.18, which states that this heading covers instruments predominantly used in professional medical practice. It excludes instruments used in laboratories for testing blood or tissue fluids, which are generally covered under heading 90.27. Since glucometers are widely used by individuals outside professional practice (e.g., at home or workplace), they do not fall under heading 90.18. Key Evidence and Findings: The nature of the goods as glucometers and sensor kits used primarily for self-monitoring of blood glucose by individuals was central. The Tribunal relied on the HSN Notes and the factual usage pattern of the goods to distinguish them from professional medical instruments. Application of Law to Facts: Applying the Customs Tariff Act rules and HSN Notes, the Tribunal concluded that the goods are classifiable under heading 90.27, which covers instruments for chemical analysis, rather than heading 90.18, which is confined to professional medical instruments. Treatment of Competing Arguments: The Revenue argued for classification under heading 90.18 to attract a 5% BCD, relying on Notification No. 50/2017-Cus. The appellant contended for classification under 90.27, which carries NIL BCD under Notification No. 24/2005-Cus. The Tribunal rejected the Revenue's broader interpretation of heading 90.18, emphasizing the specificity and intended use of the goods as per HSN Notes. Conclusions: The Tribunal upheld the classification of the subject goods under CTH 9027 80 90, thereby entitling the appellant to NIL BCD. Issue 2: Applicability of Notifications and Duty Rates Relevant Legal Framework and Precedents: Notification No. 24/2005-Cus. grants NIL BCD on goods classified under heading 90.27, while Notification No. 50/2017-Cus. prescribes concessional 5% BCD on goods under heading 9018. The Hon'ble Bombay High Court in Ascensia Diabetes Care India Pvt. Ltd. clarified that the concessional rate under Notification No. 50/2017-Cus. applies only to goods under heading 9018 and not to goods under heading 9027. Court's Interpretation and Reasoning: Since the Tribunal held the goods under heading 9027, the benefit of Notification No. 24/2005-Cus. applies exclusively. The Tribunal noted that the Revenue's contention to apply the 5% BCD under Notification No. 50/2017-Cus. to goods classified under 9027 was contrary to the High Court's ruling. Key Evidence and Findings: The Tribunal relied on the judicial pronouncements and the plain language of the notifications to determine the applicable duty rates. Application of Law to Facts: The appellant's claim for NIL BCD under Notification No. 24/2005-Cus. was consistent with the classification under heading 9027. The Revenue's reassessment and imposition of 5% BCD under heading 9018 was found unsustainable. Treatment of Competing Arguments: The Revenue's argument for applying the concessional 5% BCD to the goods was rejected based on the classification outcome and binding judicial precedents. Conclusions: The Tribunal confirmed that the subject goods attract NIL BCD under Notification No. 24/2005-Cus., and the Revenue's appeal on this ground lacks merit. Issue 3: Binding Effect of Precedents and Review of Commissioner (Appeals) Order Relevant Legal Framework and Precedents: The principle of stare decisis and the binding nature of Tribunal and High Court decisions on classification issues were invoked. The Commissioner (Appeals) had allowed the appellant's appeal relying on the Tribunal's and High Court's decisions. Court's Interpretation and Reasoning: The Tribunal observed that the impugned order of the Commissioner (Appeals) is in line with the established judicial precedents. The Revenue's review by the Committee of Commissioners and subsequent appeal before the Tribunal were acknowledged, but the Tribunal found no infirmity in the Commissioner (Appeals) order. Key Evidence and Findings: The Tribunal noted the consistency of the Commissioner (Appeals) order with the judicial pronouncements and the absence of any new material warranting deviation. Application of Law to Facts: The Tribunal applied the binding precedents and upheld the Commissioner (Appeals) order. Treatment of Competing Arguments: The Revenue's challenge to the Commissioner (Appeals) order was dismissed as lacking merit. Conclusions: The Tribunal affirmed the correctness of the Commissioner (Appeals) order allowing the classification under heading 9027. 3. SIGNIFICANT HOLDINGS The Tribunal's crucial legal reasoning is encapsulated in the following verbatim extract from the Bayer Pharmaceuticals case, which the Tribunal relied upon: "6. For a deeper examination of the issue, we may refer to the HSN Explanatory Notes and the Customs Tariff Act. The General Rules for the Interpretation of the Customs Tariff Act provide that (Rule 1) 'for legal purposes classification shall be determined according to the terms of the Headings and any relative Section or Chapter notes...' We find in this case that heading 90.27 covers instruments for chemical analysis. This heading appears to be more specific than the description of heading 90.18 which covers instruments used in medical, surgical etc. sciences. Thus by virtue of Rule 3 which says that a specific description is to be preferred over a general description, the Heading 90.27 appears more appropriate. 6.1 Further, we may refer to the HSN Explanatory Note to Heading 90.18 which states that 'This heading covers a very wide range of instruments and appliances which, in the vast majority of cases, are used only in professional practice (for example, by doctors, surgeons, dentists,....) either to make a diagnosis, to prevent or treat an illness or to operate etc. Instruments and appliances for anatomical or autoptic work, dissection etc. are also included...' From the language of this Note it appears that only those instruments fall under Heading 90.18 which are used in professional practice in the vast majority of cases. It is obvious that the Glucose meters are not vastly used only in professional practice. Mostly they are used by individuals at home or in the workplace, that is, by common people other than professional practitioners. Further under paragraph (o) of the same Note it is stated 'This heading does not cover, instruments and appliances in laboratories to test blood, tissue fluids, uren etc. whether or not such tests serve in diagnosis (generally Heading 90.27)'. It is quite evident that the product in question is not an instrument which is generally used in laboratories. Therefore by virtue of the Explanatory Note under Heading 90.18, the impugned goods, that is Glucose meters are classifiable under Heading 90.27." Core principles established include:
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