Imported Medical Imaging Printers was classifiable under CTH 9018 and not under CTH 8443 : Differential Customs Duty Demand was set aside

AGFA Healthcare India Pvt. Ltd. Vs Additional Director General (Adjudication) (CESTAT Delhi)

Conclusion: Imported printers were not ordinary network printers falling under CTH 8443. Accordingly, the thermal printers were held classifiable under CTI 9018 90 99, and not under CTI 8443 32 90.

Held: Appellant imported Drystar series thermal printers during the period 01-07-2017 to 31-03-2019, used for printing diagnostic images generated by medical imaging devices such as MRI, CT Scan, Digital X-Ray and Ultrasound machines. The goods were classified by the appellant under CTI 9018 90 99 as instruments used in medical sciences, claiming exemption under Notification No. 50/2017-Customs and paying applicable duties. Directorate of Revenue Intelligence (DRI) initiated investigation and alleged that the goods were thermal printers capable of connecting to automatic data processing machines, classifiable under CTI 8443 32 90 attracting higher duty and IGST. A show cause notice was issued proposing reclassification, recovery of differential duty under section 28(4) of the Customs Act, and imposition of penalties. Additional Director General confirmed the demand, ordered recovery of duty with interest, and imposed penalties including a penalty on Manager of the appellant company. Aggrieved, appellant filed the present appeals. Appellant contended that the imported printers were specially designed for medical diagnostic use, capable of printing high-resolution diagnostic images on medical films and therefore properly classifiable under CTI 9018. It was argued that such printers were integral to the diagnostic process and differed from ordinary thermal printers used in commercial printing. Appellant also submitted expert certificates from medical professionals and a Chartered Engineer to support the classification. It was further contended that the burden to justify reclassification rested on the department, which had failed to produce evidence showing that the goods were ordinary printers falling under CTI 8443. Department argued that the printers merely printed images generated by medical equipment and performed no diagnostic function themselves. Since they were capable of connecting to ADP machines and networks and merely printed digital images, they were classifiable as printing machinery under CTI 8443 32 90. It was held that classification under CTH 9018 depends on whether the equipment was specifically designed or intended for use in medical sciences. Evidence on record, including product literature, technical documentation, expert declarations of radiologists and a Chartered Engineer, demonstrated that the imported thermal printers were designed to produce diagnostic-quality medical images on specialized film for clinical interpretation. Such equipment formed an integral part of the diagnostic workflow and was distinct from ordinary thermal printers used in general industries. Tribunal further held that thermal printing technology alone could not determine classification, since thermal printers were used across several industries. Printers specifically designed for medical diagnostic imaging remain classifiable under CTH 9018, notwithstanding that they employ thermal printing technology. It was also reiterated that the burden of proving reclassification lies upon the department, and in the present case the department failed to adduce evidence showing that the imported printers were ordinary network printers falling under CTH 8443. Accordingly, the thermal printers were held classifiable under CTI 9018 90 99, and not under CTI 8443 32 90. Consequently, the demand of differential duty, interest and penalties was set aside.

Customs Appeal No. 50795 of 2020 has been filed by M/s. AGFA Healthcare India Pvt. Ltd.^l. to assail that portion of the order dated 17.02.2020 passed by the Additional Director General (Adjudication), Directorate of Revenue Intelligence, New Delhi² that holds that the classification of goods imported by the appellant would be under Customs Tariff Item³ 8443 32 90 and accordingly, confirms the demand of differential duty. The goods have also been held liable to confiscation under sections 111(d) and (m) of the Customs Act 1962^g. Penalties under section 112(a) and section 114AA of the Customs Act have also been imposed upon the appellant.