Smith & Nephew Healthcare Private Limited Vs Commissioner of Customs (Import) (CESTAT Mumbai)
Conclusion: Goods used as implants or rehabilitation aids were eligible for Customs Duty exemption as once assessee had declared what was being imported in the invoice and the Bill of Entry, they could not be faulted for claiming a classification which, according to them was correct and the product was correctly classifiable under Customs Tariff Heading 9021 as an implantable medical device and the adjudged demands confirmed in the adjudication proceedings were set aside.
Held: Assessee was engaged in the business of supplying orthopaedic and medical appliances, implants which were used for knee, hip replacement surgeries; implants for repair of joints, shoulder and various other parts of the body; repair of soft tissue injuries and degenerative conditions of the shoulder, knee, hip and small joints. Assessee had imported and supplied knee, hip implants by classifying the same under Customs Tariff Item (CTI) 9021 3100 and ‘Bioraptor, Ultratape Suture etc.,’ under CTI 9021 1000 of the First Schedule to the Customs Tariff Act, 1975, both as ‘orthopaedic or fracture appliances, artificial joints’ claiming customs duty exemption benefits. Department alleged that certain importers were wrongly availing the customs duty notification benefits in respect of imported goods, which were being used in orthopaedic surgeries of trauma injuries occurring during day-to-day activities of a normal person and not being used for disabled persons, for which the exemption was intended to. A show cause notice was issued to the assessee for denial of Customs duty exemption claimed by the assessee in various imports. Commissioner of Customs had confirmed the entire differential duty. Assessee submitted that the intended use of these products was explicitly outlined by the medical licenses that had been awarded to assessee under Medical Devices Rules, 2017. Thus, the use of the imported goods as assistive devices, rehabilitation aids, devices for the disabled were evidentially proved and therefore they were eligible to claim the customs duty exemption and CVD exemption. It was held that once assessee had declared what was being imported in the invoice and the Bill of Entry, they could not be faulted for claiming a classification which, according to them was correct. Further, it was also held by the Tribunal in that case, that the product was correctly classifiable under Customs Tariff Heading 9021 as an implantable medical device and the adjudged demands confirmed in the adjudication proceedings were set aside. The case law of Shah & Shah had dealt with the goods of description ‘Contact lenses and inter-ocular lenses’ which were entirely different from the impugned goods which were used as implants for repair of knee, hip and other joints, shoulder and various other parts of the body. Therefore, the said decision in the above case, where such ‘Contact lenses and inter-ocular lenses’ were held as neither artificial limbs nor rehabilitation aids for the handicapped, was distinguishable from the facts of the present case and therefore, could not be applied to the present case for denying the duty exemption benefits. Consequently, confiscation of imported goods, imposition of redemption fine, penalties on assessee was not legally sustainable.
