TMI Blog2019 (9) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... al, or missing. The dialysis machine consists of plastic tubing that carries the removed blood to the dialyser which is a bundle of hollow fibers that forms a semipermeable membrane for filtering out impurities. In the dialyser, blood is diffused with a saline solution called dialysate, and the dialysate is in turn diffused with blood. When the filtration process is complete, the cleansed blood is returned to the patient. Dialyzers are not used for filtration or purification of any liquids or gases. Chapter Heading 9018 covers Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scientographic apparatus, other electromedical apparatus and sight-testing. Renal dialysis equipment (artificial kidneys, kidney machines and dialyzers) are classified under CSH 9018 90 31 - From the submissions made by the applicant, it is found that the subject product does not make up a Renal Dialysis Equipment but it can very definitely be considered as a part of a renal Dialysis Equipment. Since a dialyzer is used in performing the functions of a kidney, it goes without saying that it is required to be sterilized and free from contamination. We are also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICANT The submissions, as reproduced verbatim, could be seen thus - Statement of the relevant facts having a bearing on the question raised The relevant facts of the case are as follows: Background of operations: 2.1. Applicant, a Pvt. ltd company incorporated under the provisions of the Companies Act, 1956 holding GST regn no. ( GSTIN ) 27AADCN1920C1ZZ with effect from 01.07.2017, is located at Plot No. E-1, MIDC, Kesurdi, Taluka-Khanda1a, Dist. Satara 412 801. 2.2. The Applicant is engaged in the manufacturing of medical equipments such as dialyzers, blood tubing sets, arterial fistulas, syringes and needles. 2.3. The Applicant runs a manufacturing facility at Shirwal, Maharashtra. Goods manufactured by the Applicant are sold within India and also exported outside India. Product information: 2.4. Under the current application for advance ruling, the Applicant seeks to determine the classification of the product Dialyzer . 2.5. The product Dialyzer is a medical equipment/apparatus used for purification of blood. It is a life saving device, used in the Dialysis Machine for the dialysis treatment which separates blood impurities like urea/cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39 30 6.00% 12.00% 12/2012-CE dt. 17.03.2012 Needles 9018 32 30 9018 32 30 6.00% 12.00% 12/2012-CE dt. 17.03.2012 Clinical / Adult Diaper 9619 00 40 9619 00 40 6.00% 12.00% 2/2011-CE dt. 01.03.2011 Rubber Stoppers 4016 99 80 4016 99 80 12.50% 18.00% NA Rubber Product-Other 4016 99 90 4016 99 90 12.50% 18.00% NA Statement containing the Applicant s interpretation of classification in respect of the aforementioned products Applicant prefers to present the application before this Hon ble Authority on the following, among other grounds, each of which is taken in the alternative without prejudice to the other. 2.10. Applicant s interpretation of law or facts: (i) As menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading 8421 covers filtering or purifying machinery and apparatus, for liquids and gases and Tariff Item 8421 29 00 covers Other filtering or purifying machinery and apparatus for liquid (vi) Meaning assigned under independent treatise: (a) As per the trade parlance, artificial kidney is often a synonym for hemodialysis, but may also, more generally, refer to renal replacement therapies (with exclusion of renal transplantation) that are in use and/or in development. (b) As per Dr. Thiagarajan Thandavan, Ph.D, (Dialysis) M.Sc. (Renal Science and Dialysis) Certified lead auditor QMS, OHSAS and NABH Assessor of National Clinical Manager Dialysis - This write-up is based on scientific reference articles published in journals. Hemodialysis refers to the dialysis of blood, during which the patient s blood is passed through an artificial kidney or dialyzer (haemodialyzer) containing a membrane (2). The dialyzer, is a semipermeable membrane inside a polypropylene cylinder (3). Dialyzer is used in hemodialysis to filter out wastes and fluid from the bold of patient with kidney failure. Blood flows on one side of the membrane, whilst the other side is bathed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii. Plasmac Machine Mfg. - 1991 (51) ELT 161 (SC) = 1990 (11) TMI 142 - SUPREME COURT iv. VAC Met Corporation - 1985 (22) ELT 330 (SC) = 1985 (8) TMI 381 - SUPREME COURT 2.12 Essential character/use of product relevant for classification: (i) The Applicant submits that the essential use of Dialyzers is for dialysis, i.e. purification of blood in human body and not for filtration or purification of any other liquids or gases. (ii) It is a settled position of law that essential character/use of the products has also to be considered for classification; in support which reliance is placed on the following judgments: i. Sprint R.P.G. India - 2000 (116) ELT 6 (SC) = 2000 (1) TMI 194 - SUPREME COURT ii. Fedders Llyod Corporation -2001 (135) ELT 1331 (T) = 2001 (5) TMI 109 - CEGAT, COURT NO. II, NEW DELHI iii. Prag Industries - 1998 (103) ELT 62 (T) = 1998 (6) TMI 159 - CEGAT, NEW DELHI 2.13 Principles of ejusdem generis and/or noistur a sociis: (i) Heading 8421 covers filtering or purifying machinery and apparatus for liquids which inter alia include ion exchanger plant or apparatus; household type filters; machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Dialyzer is not an independent or separate equipment or apparatus and it cannot function on its own, but it is a part or accessory of Dialysis Machines and it works in combination with other equipment or apparatus, still the same would be correctly and appropriately classifiable under Tariff Item 9018 90 31, as based on Note 2 to Chapter 90, parts and accessories which are suitable for sole or principal use with a particular kind of machine, instrument or apparatus, or with number of machines, instruments or apparatus of the same Heading are to be classified with the machines, instruments or apparatus of that kind. Since, Dialyzer is meant for sole and principal use with Dialysis Machine, the same would be correctly and principally classifiable under the Heading meant for Dialysis Machine, i.e. Tariff Item 9018 90 31. 2.15. General Rules for Interpretation of tariff (i) The Applicant submits that even invoking General Rules for Interpretation (GIR), the product Dialyzer would find appropriate parentage under Heading 9018 and not under Heading 8421, which would get substantiated from the following: (ii) As per Rule I of GIR, firstly, the classification of a product h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion is commercially known by the manufacturers, importers, dealers, user, etc. as Dialyzer meant for medical use for dialysis purposes, i.e. purification of blood in human body, and not meant for filtration or purification of any other liquids. Therefore, invoking commercial parlance test also, the product in question would be classifiable under Tariff Item 9018 90 31, in support of which reliance is place on the following judgments: i. Kedia Agglomerated Marbles - 2003 (152) ELT 22 (SC) = 2003 (1) TMI 104 - SUPREME COURT ii. G.S. Auto International -2003 (152) ELT 3 (SC) = 2003 (1) TMI 700 - SUPREME COURT iii. Purewal Associates - 1996 (87) ELT 321 (SC) = 1996 (10) TMI 74 - SUPREME COURT iv. Krishna Carbon Paper - 1988 (37) ELT 480 (SC) = 1988 (9) TMI 50 - SUPREME COURT 2.17 Heading beneficial to the assessee: (i) Without prejudice to the above submissions, the Applicants submit that if the product in question equally merits classification under two different Headings, the classification one beneficial to the assessee has to be preferred, in support of which we place reliance on the Hon ble Supreme Court judgment in the case of CC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with certain supporting material. 2.20 Judicial precedents: The Applicant wishes to place reliance on certain judgements pronounced under the erstwhile regime. The Applicant submits that in other identical cases under the erstwhile regime, higher authorities have pronounced judgments which have upheld the Applicant s contentions. It merits appreciation that the issue involved is prima facie covered in the following cases wherein Customs Circular No. 19/2013 dated 9 May, 2013 has been set aside by the respective High Courts in the following cases: Sanwar Agarwal v. Commissioner of Customs (Port) and Ors [2016 (336) ELT 42 (HC-Kol) = 2016 (4) TMI 621 - CALCUTTA HIGH COURT - Enclosed as Exhibit B; and Additional Commissioner of Customs, Cochin v. Terumo Penpol Ltd [2017 (350) E.L.T. 74 (Ker.)] = 2017 (1) TMI 1466 - KERALA HIGH COURT Enclosed as Exhibit C - Maintained by Hon ble Supreme Court in Additional Commissioner v. Terumo Penpol Ltd. [2018 (360) E.L.T. A178 (S.C.)] - Enclosed as Exhibit D. (ii) The above decision of the Kerala High Court in the case of Terumo Penpol Ltd. vs, Additional Commissioner of Customs, Cochin [2017 (35 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn away (iii) Further, based on the information available in the public domain [Source: Wikipedia], A disposable product is a product designed for a single use after which it is recycled or is disposed as solid waste . (iv) Additionally, your good office would appreciate that Dialyzer being a medical device used in blood purification and removing impurities, it cannot be used more than once i.e. the Dialyzer would have to be safely disposed of after single use, in order to avoid contamination. (v) The Company, being a manufacturer of medical devices which are marketed globally, is required to display the information essential for proper use on the medical device, its packaging or in the associated documentation, in terms of ISO 15223-1 - Medical devices - Symbols to be used with medical device labels, labelling and information to he supplied . ISO 15223-1 identifies requirements for symbols used in medical device labelling that convey information on the safe and effective use of medical devices. It also lists symbols that satisfy the requirements of this part of ISO 15223. This part of ISO 15223 is applicable to symbols used in a broad spectrum of medical devi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r advance ruling, the question raised in the application is not pending in any proceedings under the GST law. However, the same is pending under the erstwhile regime in the Applicant s case in multiple proceedings under the Central Excise Act, 1944 and Customs Act, 1962. In the notice for preliminary hearing issued by your good office, we have been requested to provide copies of show cause notices/ adjudication orders in respect of Central Excise or Service Tax issued during last five years. We have enclosed the same herewith as Exhibit J , for your reference. (iv) Request you to acknowledge the receipt of this letter. Should you require any further information or clarification, we will be glad to provide the same. 03. CONTENTION - AS PER THE CONCERNED OFFICER The jurisdictional office has not made any submissions. 04. HEARING The case was taken up for Preliminary hearing on dt. 03.05.2019 with respect to admission or rejection of present application when Sh. Nitin Vijaivergia and She Shivraj Mhaske, Advocates appeared and made oral submissions requesting for admission of their application. Jurisdictional Officer was not present. The application was admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t does not make up a Renal Dialysis Equipment but it can very definitely be considered as a part of a renal Dialysis Equipment. As per Note 2 to Chapter 90, parts and accessories for machines, apparatus, instruments or articles of Chapter 90 are to be classified according to the following rules: a. Parts and accessories which are goods included in any of the heading of Chapter 90 or of Chapter 84, 85 or 91 (other than heading 8487, 8548 or 9033) are in all cases to be classified in their, respective headings; b. Other parts and accessories, if suitable for solely or principally with a particular kind of machine, instrument or apparatus, or with number or machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of heading 9010, 9013 or 9031) are to be classified with the machines, instruments or apparatus of that kind. The Applicant has drawn our attention to the fact that the ambiguity in the classification of the product has arisen because of the Board s Circular No.19/2013 dated 09/05/2013 wherein it has been clarified that Disposable Sterilized Dialyzer and Micro barrier for filtering blood are correctly classifia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that given the importance of the subject product in performing the work of a kidney albeit externally, the same should not be reused. The table above mentions that the sterilized dialyzer should be disposable i.e for a single use purpose only. The applicant has contended that the subject product are disposable in nature and are marketed as such. We are in agreement with the contention of the applicant that the subject product is performing a very crucial function in the case of persons suffering from kidney failure and therefore very critical and with contamination can also lead to serious consequences in such patients. In normal circumstances and in all situations such dialyzers should not be reused and in fact are not being reused which therefore implies that they are disposed of after a single use, In view of the above discussions and applicant s submissions, we hold that the subject product, namely, dialyzers are used in sterilized form and are also disposable after single use. Hence the same will be covered under Entry No. 255 of Schedule I to the Rate Notifications. 06. In view of the deliberations as held hereinabove, we pass the order as under : ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X
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