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TMI Blog2020 (9) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Reproductive Technology Procedures' is classifiable under tariff heading 9018 or 9011, that is, what is the rate of tax on 'Micro-manipulator System'?" 2. The applicant has stated the Micro-manipulator system ('MM system' in short) is also known as IVF technology' in the medical world and in common/trade parlance, it is also called "Micro manipulator'; that globally micro-manipulator falls under the HSN 9018 but in India there is confusion as to whether it falls under HSN 9018 or 9011; that they are of the view that the product in question should be classified under CH-9018 and not under CH-9011. The applicant submits that a micromanipulator is a device which is used to physically interact with a sample under a microscope, where a level of precision of movement is necessary which cannot be achieved by the unaided human hand and may typically consist of an input joystick (a mechanism for reducing the range of movement) and an output section with the means of holding a microtool to hold, inject, cut or otherwise manipulate the object as required; that mechanism for reducing the movement usually requires the movement to be free of backlash which is achieved by the use of kinematic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the micro-injector. * From the opposite side, a thin hollow glass micropipette is used to push a single sperm, having immobilized it by cutting its tail with the point of the micropipette. * The sperm is then released into the oocyte. * The pierced oocyte has an excluded polar body at about 12'o clock indicating its maturity. The polar body is positioned at the 12'o'clock or 6 'o'clock position to ensure that the inserted micropipette does not disrupt the spindle inside the egg. * After the procedure, the oocyte will be placed into cell culture and checked on the following days for signs of fertilization. Thus, it can be seen that a complex process of in-vitro fertilization (IVF) is carried out by the Micromanipulator through the most recognized procedure called ICSI. 5. The applicant has briefly described the guiding principles determining the classification of a product under GST law as: (a) Classification under the Customs Tariff Act, 1975 along with relevant chapter notes pertaining to relevant chapter.(b) General Rules for interpretation of First Schedule to the Customs Tariff Act and (c) HSN explanatory notes released by the World Customs Organization. He has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otes surgical instruments, optical instruments, musical instruments, measuring devices and the like. (ii) Apparatus: apparatus denotes a set of instruments used for purposes like scientific experiments, e.g. laboratory apparatus. The applicant has also defined the above terms as per Advance lexicon also. He has concluded that the above mentioned definitions gives an impression that an apparatus is a wider term than instrument and appliance and it consists of both. MM System has been designed to carry out a specific function of in-vitro fertilization with the help of various equipment like microscope, micromanipulator, micropipette and micro injector wherein microscope is a tool and multiple-micromanipulators are devices. 7. The applicant has stated that ICSI procedure as a part of IVF performed by using MM System can be said to be related to medical science because of the following reasons: (a) It is a part of the curriculum of |"Doctor of Medicine" course which is a medical degree. (b) Applicant has got its product registered under ISO 13485 which is for medical degrees. (c) The developer of this technique, Mr.Robert G.Edwards, was awarded the Nobel Prize for Physiology ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified beyond doubt that MM system is a medical device and hence classifiable under CH-9018 and that therefore it is an instrument for medical science which includes apparatus. The applicant has further mentioned that the impugned item is classifiable under CTH 9018 in terms of Chapter Notes to chapter 90 which reads as under: "3.1 Chapter Note 3 of this chapter mentioned that "the provisions of Notes 3 and 4 to Section XVI apply also to this Chapter" which is as under: 3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. 4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole fails to be classi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as Micromanipulator, micro-injector, micropipettes; that the use of the microscope is merely incidental and the main function remains invitro fertilization which is a well-documented fact; that inverted microscope is just one of the components of the apparatus as the entire process has to be done on minute particles and the said microscope is used merely as a visual aid and does not interfere with the main procedure which is Intra Cytoplasmic Sperm injection (ICSI); that in view of these facts, micromanipulator has pre-dominant function but not the microscope; that even as per General rules for interpretation, impugned item fosters classification under CH- 9018; that the MM system in terms of heading and chapter notes merits classification under CH- 9018. The applicant has referred to Rule 3 of the General Rules for Interpretation which reads as under: 3. When--- for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a)the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c description shall be preferred to headings providing a mere general description; that applying rules of interpretation and specific mentioning of nozzles in Chapter 69, it was held that nozzles are classifiable under SH 6901. 12. The applicant has further submitted that in light of the above judicial precedents, it is clear that in case a specific entry exists, goods must be classified in that entry even though there is a general entry as well; that since CH- 9011 covers only a standalone microscope, MM system comprising microscope as a tool to enhance the magnification embedded with multiple manipulator systems should be considered as a instrument and appliances used in medical sciences; that even if MM system is a composite supply and two headings refer to part only of the materials i.e. 9011 refers to standalone microscope and 9018 refers to manipulator system then even in terms of Rule 3(b), classification shall be made under CH- 9018 i.e. heading which gives it its essential character; that in the present case, micromanipulator has the pre-dominant function because of the following reasons: (i) The weight of the microscope is 19 kgs.(approx.) whereas weight of manipulator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the explanatory notes of SH 9011 which mentions that "this heading covers microscopes used by amateurs, teachers, etc. and those for industrial use or for research laboratories, they remain classified in the heading whether or not they are presented with their optical elements (objectives, eyepieces, mirrors, etc.). This heading also includes universal microscopes, polarizing microscopes, metallurgical microscopes, stereoscopic microscopes, phase contrast and interference microscopes, reflecting microscopes, microscopes with drawing attachments; special microscopes for examining clock or watch jewels; microscopes with heating or freezing stages." Explanatory notes to CH- 9011 also describe Special purpose microscopes covered under CH-9011 which include Trichinoscopes, Microscopes for measuring or checking operations in certain manufacturing processes, laboratory measuring microscopes for separation of spectrograms and surgical microscopes. The applicant has stated that each of the above different microscopes are standalone microscopes whose principal function is magnification, are used without any medical device and are used by amateurs and teachers and not by professionals l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 'parts and accessories' under 'microscope'. In the context of the functions performed by 'micromanipulator', it can, by no stretch, be considered to be an accessory of 'microscope'. No distinction has been carved out between the two articles in the impugned order. In the absence of such distinction, the attempt to classify the goods, as presented, under heading no 90118000 of the First Schedule to Customs Tariff Act, 1975 suffers from inconsistency as 'microscope' cannot be an accessory of 'microscope'. Had it been the intent of the lower authorities to accord a separate and distinct classification to each of the two articles, it was necessary to ascertain the separate assessable values also. No exercise has been undertaken in that direction. 13. From the above, we conclude that 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. We also do not find any reason to discard the declared classification as, contrary to the presumption of customs authorities, the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e required to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 containing the sub-headings as well as the rates of Central Tax GST applicable to various goods, which are covered under schedules therein, as under: (i) 2.5 per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule II, (iii) 9 per cent. in respect of goods specified in Schedule III, (iv) 14 per cent. in respect of goods specified in Schedule IV, (v) 1.5 per cent. in respect of goods specified in Schedule V, and (vi) 0.125 per cent. in respect of goods specified in Schedule VI Further, Explanation (iii) and (iv) of the said Notification read, as under: (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N 9018 or 9011. 20.1 In view of the above, it appears that the applicant considers that the sub-heading 9018 provides a more specific description for their product 'micromanipulator'. Therefore, in order to confirm as to whether the said product is actually covered under the said sub-heading 9018 or 9011, a reference is required to be made to the explanatory notes to the Harmonized Commodity Description and Coding System. But, prior to that, it is necessary to find out as to what a 'Micro-manipulator' is. We find that a micromanipulator is a device, which is used to physically interact with a sample under a microscope, where a level of precision of movement is necessary that cannot be achieved by the unaided human hand. 20.2 From the above, it can be derived that in the absence of a microscope, a micromanipulator cannot function i.e. a micromanipulator is dependent on the microscope to do the function that it is created for i.e. micromanipulation. However, since the applicant has time and again stressed on the point that the aforementioned product is correctly classifiable under Sub-heading 9018 and not under Sub-heading 9011 of the First Schedule to the Customs Tariff Act, 1975 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes universal microscopes; polarising microscopes; metallurgical microscopes; stereoscopic microscopes; phase contrast and interference microscopes; reflecting microscopes; microscopes with drawing attachments; special microscopes for examining clock or watch jewels; microscopes with heating or freezing stages. 21.2 Special purpose microscopes include: (1) Trichinoscopes, a type of projection microscope, used for examining pork suspected of threadworm. (2) Microscopes for measuring or checking operations in certain manufacturing processes; these may be of the conventional types or may be special models designed for fitting to machines. These appliances include comparison microscopes ( for comparing the surface finish of precision articles with that of a standard article); co-ordinate reading microscopes (for locating the position of clock or watch parts); tool makers or other measuring microscopes ( for checking threads, profiles, gear-cutters or cutting tool profiles, etc.); small portable microscopes for placing directly on the object to be examined (for the Brinell hardness test, for printers' type, printing blocks etc.); centring microscopes (fitted on spindles of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the function that it is created for i.e. micromanipulation. From the above, it can be seen that microscope is the primary and essential constituent of micromanipulator. Further, looking at the procedure of IVF described by the applicant in his submission at para-4 above, it appears that the entire procedure needs precision and perfection, for which a microscope with extremely powerful objective lenses and high magnification would be required. In view of the above, it appears that the 'micromanipulator' is nothing but a surgical microscope and should be rightly classified under the heading of 'microscope'. Further, Rule 2 of the General Rules for Interpretation to the First Schedule to the Customs Tariff Act, 1975(51 of 1975) reads, as under: "2(a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential characteristic of the complete or finished article. It shall also be taken to include a reference to that article complete or finished ( or falling to be classified as complete or finished by virtue of this rule), presented unassembled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or being classified in Sub-heading 9018 is that it is a instrument/appliance or apparatus used in the medical sciences, however, not much details vis-a-vis classification have been provided. Thus, the said classification has been entirely based on a general entry 'instruments and appliances used in medical science'. They have also gone on to describe in great detail, the procedure followed for IVF but have failed to justify how their product merits classification under Sub-heading 9018. However, as discussed above, since the procedure of micromanipulation cannot be carried out in the absence of a microscope and that the micromanipulator would be an incomplete product without a microscope, it can safely be concluded that the 'micromanipulator' is nothing but a microscope and should be rightly covered under the head of 'microscope'. Therefore, in view of the above discussions and in light of Rule 3(a) of the General Rules for Interpretation to the First Schedule to the Customs Tariff Act, 1975(51 of 1975), which very clearly stipulates that a specific description shall be preferred to headings providing a more general description, it can be concluded that in the instant case, the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low (by means of a mirror illuminated by a light source) and a set of condenser lenses which directed the beam of light onto the object. Thus, the micromanipulator would be rightly classified under the head 'Compound Optical Microscope' falling under Sub-heading 9011. But, we need to find out as to under which specific microscope covered under the Sub-heading 9011 would micromanipulator be classified. From the procedure of micromanipulation described, it appears that the same can be compared to surgery. As can be seen from the explanatory notes to the Harmonized Commodity Description and Coding System, surgical microscopes find mention under the Sub-heading 9011 and tariff item no.90118000 i.e. other microscopes. Surgical microscopes are described as under: "Surgical microscopes for use by surgeons when operating on a very small portion of the body. Their light sources result in independent light paths which provide a three-dimensional image." 22.1 From the above, it can be concluded that the said product would be rightly classifiable as 'Surgical microscope' (Tariff item No.90118000) under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) covered under the Sub-hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olders, -introducers, cephalotribe bone holding and other holding instruments 9018 90 24 ---- Chisel, gauges, elevators, raspatones osteotome, craniotome, bone cutters 9018 90 25 ---- Retractors, spatulaprobes, hooks dialators, sounds, mallets 9018 90 29 ---- Other ---- Renal dialysis equipment, blood transfusion apparatus and haemofiltration Instruments. 9018 90 31 ---- Renal dialysis equipment(artificial kidneys, kidney machines and dialysers) 9018 90 32 ---- Blood tranfusion apparatus 9018 90 33 ---- Haemofiltration instruments. ---- Anesthetic apparatus and instruments, ENT precision instruments, acupuncture apparatus, and endoscopes : 9018 90 41 ---- Anesthetic apparatus and instruments. 9018 90 42 ---- ENT precision instruments. 9018 90 43 ---- Acupuncture apparatus 9018 90 44 ---- Endoscopes ---- Other : 9018 90 91 ---- Hilerial or venous shunts 9018 90 92 ---- Baby incubators 9018 90 93 ---- Heart-lung machines 9018 90 94 ---- Defibrillators 9018 90 95 ---- Fibrescopes 9018 90 96 ---- Laproscopes. 9018 90 97 ---- Vetrasonic lithotripsy instruments 9018 90 98 ---- Apparatus for nerve stimulation 9018 90 99 ---- Other 23.1 Also, the explanatory not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.19. (m) Orthopaedic appliances, artificial parts of the body and fracture appliances, including those for animals (heading 90.21). (n) X-ray apparatus (whether medical or not) of heading 90.22. (o) Clinical thermometers (Heading 90.25). (p) Instruments and appliances used in laboratories to test blood, tissue fluids, urine etc., whether or not such tests serve in diagnosis (generally heading 90.27). (q) Medical or surgical furniture, including that for veterinary use (operating tables, examination tables, hospital beds, dentists chair not incorporating dental appliances of this heading etc. (heading 94.02). 23.2 On the other hand, this heading includes specialised measuring instruments used exclusively in professional practice, such as cephalometers, dividers for measuring cerebral lesions, obstetrical pelvimeters etc. It should also be noted that a number of the instruments used in medicine or surgery (human or veterinary) are, in effect, tools (e.g. hammers, mallets, saws, chisels, gouges, forceps, pliers, spatula, etc.), or articles of cutlery (scissors, knives, shears etc.). Such articles are classified in this heading only when they are clearly identifiable as being fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to determine basal metabolism.). (iii) Sphygmomanometers, tensiometers, oscillometers,(to measure blood pressure). (iv) Spirometers ( to assess lung capacity). (v) Cephalometers. (vi) Pelvimeters. (C) Opthalmic instruments: These fall into various categories: (i) Surgical instruments such as corneal trephines, keratomes. (ii) Diagnostic instruments such as opthalmoscopes; binocular loupes with head bands and binocular type microscopes, consisting of a microscope, an electric lamp with a slit, and a head rest, the whole being mounted on an adjustable support, for the examination of the eyes; tonometers(for testing the intra-ocular tension) eye specula. (iii) Orthoptic or sight setting apparatus including ambyloscopes, retinoscopes, skiascopes, strabometers, keratometers, keratoscopes, eye measurement meters designed to measure the distance between the pupils, trial cases (of lenses) and trial frames (for carrying the trial lenses), optometric scales, test charts. However, optometric scales and charts on paper, paperboard or plastics, used for colour perceptions are excluded. (Chapter 49). This heading also covers electrically heated compresses for the eyes, and ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn as decompression chambers) which are specially equipped pressure vessels to administer oxygen at elevated atmospheric pressure levels. They are used for the treatment of conditions such as decompression sickness, air embolism, gas gangrene, carbon monoxide poisoning, refractory osteomylitis, skin grafts and flaps, actinomycosis, and exceptional blood loss anaemia. (Q) Lamps which are specially designed for diagnostic, probing, irradiation etc.purposes. Torches, such as those in the shape of a pen are excluded (heading 85.13) as are other lamps which are not clearly identifiable as being for medical or surgical use (heading 94.05). (IV) SCINTIGRAPHIC APPARATUS: These are apparatus which scans parts of the body and creates image of an organ or record of it's functioning. It includes apparatus incorporating a scintillation counter the data from which is converted into analogue signals for the purpose of making medical diagnosis (e.g. gamma camera, scintillation scanner). (V) OTHER ELECTRO-MEDICAL APPARATUS: This heading also covers electro-medical apparatus for preventive, curative or diagnostic purposes, other than X-ray etc. apparatus of heading 90.22. This group includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illators for defibrillating the heart by the application of electric current. (7) Electro-surgical apparatus. These utilise high frequency electric currents, the needle, probe, etc., forming one of the electrodes. They can be employed to cut tissues (electrocuting) with a lancet (electric lancet), or to coagulate the blood (electrocoagulation). Certain combined instruments may, by the use of control pedals, be made to act interchangeably as electrocutters or electrocoagulators. (8) Actinotherapy apparatus: These employ radiations within, or more generally, just outside, the visible spectrum (infra-red, ultra-violet) for treatment of certain diseases or for diagnostic purposes (special lighting to reveal skin diseases). This apparatus generally incorporates lamps though infra-red apparatus may be fitted with heating resistances or heating panels with reflectors. (9) Artificial incubators for babies: Basically these consist of a transparent cubicle of plastics, electrical heating equipment, safety and warning devices, and oxygen and air filtering and regulating apparatus. In most cases they are mounted on a trolley and have built-in baby scales. Cases containing electrodes or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l microscopes, including those for photomicrography, cinephotomicrography or microprojection. 23.5 In view of the above, we come to the conclusion that 'micromanipulator system' falls under the Tariff item No.9011 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). The same is covered under Entry No.184 of Schedule-IV of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 upto 14.11.2017 and covered under Entry No.411F of Schedule-III of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 (as amended) from 15.11.2017 onwards. The rate of GST applicable would be 28% (14% SGST + 14% CGST) upto 14.11.2017 and 18% GST (9% SGST + 9% CGST) with effect from 15.11.2017. 24. In view of the discussions as detailed above, we rule as under - RULING The product 'Micromanipulator system' manufactured and supplied by M/s. Shivani Scientific Industries pvt.ltd. is classifiable under Tariff item no.9011 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). The said product is covered under Entry No.184 of Schedule-IV of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 (upto 14.11.2017) and under Entry No.411F of Schedule-III of Notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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