The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai has held that specially designed STA micro-cuvettes used with STAGO blood coagulation analysers are classifiable under CTI 9027 9090 as parts/accessories of analytical instruments, rather than under CTI 3926 9099 as general articles of plastics.

The bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) observed that the fact that the micro-cuvettes are disposable or used only once does not, by itself, make them consumables or exclude them from classification as parts or functional components of a machine. The decisive factors were their specific design, exclusive suitability and functional integration with the STAGO coagulation analyser.

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The appellant had imported 35 shipments of “STA Satellite Cuvette 6X220 (Spare parts for Coagulation Analyser)” and related goods beginning in December 2018. The goods were self-assessed and cleared under CTI 9027 9090 as parts of analytical instruments.

During a Customs Audit, the Department objected to the classification. According to the Revenue, the imported cuvettes were disposable consumables and could not be regarded as parts of the coagulation analyser. The Department therefore proposed classification under CTI 3926 9099, covering other articles of plastics, which attracted a higher rate of duty.

A Show Cause Notice was issued on December 18, 2023. The adjudicating authority subsequently reclassified the goods under CTI 3926 9099 and confirmed a differential customs duty demand of ₹3,38,70,870 along with applicable interest.

An equal penalty under Section 114A of the Customs Act, 1962 was also imposed. In addition, a redemption fine of ₹1 crore was imposed under Section 125 in respect of the goods that had already been cleared and were no longer physically available for confiscation. The importer challenged the order before the Tribunal.

The appellant submitted that it imported STAGO blood coagulation analysers, their parts and related disposables from the original manufacturer, Diagnostica Stago S.A.S., France.

It was argued that the disputed STA micro-cuvettes were not ordinary laboratory vessels. They were patented, sealed cartridge assemblies consisting of a plastic body containing a small steel ball and were specifically designed for use with STAGO coagulation analysers. According to the appellant, the goods had no independent or general laboratory use.

The appellant explained that the particular dimensions, geometry and sealed construction of the cuvette were dictated by the requirements of the STAGO analyser.

The cuvette holds the plasma sample while the steel ball inside it is subjected to magnetic control. During the coagulation process, the formation of fibrin strands causes the steel ball to stop rotating. The analyser detects this change and determines the coagulation time.

Thus, according to the appellant, the micro-cuvette does not merely serve as a container for a blood sample. Its construction and incorporated steel ball directly participate in the analytical process.

The appellant therefore argued that the goods were identifiable and essential functional parts of the STAGO coagulation analyser, notwithstanding their disposable nature.

The importer placed particular reliance on Chapter 90 Note 2(b) of the Customs Tariff.

It was submitted that Heading 9027 covers instruments and apparatus used for physical or chemical analysis, including viscosity-measuring instruments, and that Chapter 90 Note 2(b), read with the relevant provisions, provides for classification of identifiable parts and accessories of such instruments with the principal machine.

The appellant argued that the tariff does not prescribe durability as a condition for an article to qualify as a part. Merely describing an article as a “solution”, “disposable” or “consumable” could not determine its tariff classification.

The appellant also relied upon judicial decisions including Sandor Medicaids, where I-STAT blood-gas investigation cartridges used with an analyser were held classifiable under Heading 9027.

The Revenue opposed the appeal and maintained that the goods were essentially single-use plastic laboratory consumables.

According to the Department, the essential function of the cuvettes was to hold blood or laboratory samples while the actual analytical operation was performed by the coagulation analyser.

The Revenue relied upon the manufacturer’s product literature and contended that the goods were described as single-use disposables or consumables and were not listed as spare parts or sub-assemblies of the STAGO analyser. The cuvettes were discarded after use, including for biosafety reasons.

The Department also argued that the analyser remained a complete instrument without the cuvette and that the cuvette was neither fitted into nor incorporated as a constituent of any assembly or sub-assembly.

According to the Revenue, a “part” must be an integral constituent of an assembly or sub-assembly and must be necessary to complete the principal article. Reliance was placed on Supreme Court decisions concerning the legal tests for determining whether an article constitutes a part or accessory.

The Department therefore maintained that the goods should be classified under CTH 3926 9099 as plastic laboratory articles.

The Tribunal identified the central question as whether the STA micro-cuvettes were merely articles of plastics or laboratory consumables falling under Heading 3926, or whether they were identifiable parts/accessories of the STAGO coagulation analyser classifiable under Heading 9027 by virtue of Chapter 90 Note 2(b).

The Bench examined the actual construction and functioning of the goods.

It noted that the micro-cuvettes were sealed cartridge assemblies consisting of a plastic body containing a steel ball. Importantly, they were not ordinary sample vessels capable of general laboratory use.

The Tribunal found that their dimensions, configuration and construction were specifically designed for the STAGO analytical system. The Revenue had also not established that the goods had any practical use with instruments other than the STAGO coagulation analyser.

The Tribunal placed considerable emphasis on the functioning of the steel ball incorporated into the cuvette.

It noted that the plasma sample is contained inside the micro-cuvette, while the steel ball is subjected to magnetic control within the analyser. As coagulation takes place and fibrin strands form, the ball stops rotating. The analyser detects the resulting change and determines the coagulation time.

According to the Bench, this meant that the micro-cuvette was not merely a passive container in which a sample happened to be placed.

The construction of the cuvette, including the incorporated steel ball, participated directly in the analytical process. The Tribunal therefore rejected the Revenue’s argument that the analyser could be regarded as complete without the cuvette.

The Tribunal held that classification had to be determined by considering the article as a whole, including its specific design, exclusive use and functional relationship with the principal instrument.

It rejected an approach that would isolate the plastic body of the article and classify it merely on the basis of its material.

According to the Tribunal, the imported article was a specially designed cartridge incorporating a steel ball and intended for a particular analytical system.

The Bench further examined Chapter 90 Note 2(b), which provides for classification of other parts and accessories suitable for use solely or principally with a particular kind of machine, instrument or apparatus along with that machine, instrument or apparatus.

The Tribunal clarified that the provision does not require the article to be permanently fitted into the principal machine. What matters is whether the article qualifies as a part or accessory and is suitable for use solely or principally with the particular instrument.

A significant observation of the Tribunal concerned the distinction between “disposable” and “consumable.”

The Bench held that the two expressions are not synonymous.

“Disposable” refers to an article’s intended life or use-cycle, whereas “consumable” refers to an article that is used up, exhausted or otherwise loses its identity in operation or manufacture.

Therefore, the Tribunal held that single use, short durability or disposal after use does not by itself make an article a consumable or exclude it from classification as a part, accessory, apparatus or functional component of a machine.

The Tribunal stressed that classification must instead be determined under the General Rules for Interpretation, the relevant tariff headings and the applicable Section and Chapter Notes, having regard to the objective characteristics, function and sole or principal suitability of the article.

It held that commercial descriptions such as “disposable” or “consumable” are not determinative.

The Bench also considered the decision in Chemilab Corporation, where specially treated TLC sheets used in chromatographic analysis had been considered under Chapter 90 Note 2(b).

The Tribunal observed that the TLC sheets were treated in the context of their essential function in the chromatographic process and their specific use with the chromatograph. The fact that they had been described as consumables did not by itself prevent their classification with the analytical instrument.

The Tribunal also took note of Sandor Medicaids, concerning I-STAT blood-gas investigation cartridges used with an analyser. In that case, the Tribunal had considered the functional integration of the cartridges with the analytical system relevant to classification under Heading 9027.

On the other hand, the Revenue’s reliance on Laxbro Manufacturing Co. was not accepted because the goods and their factual and functional characteristics were materially different.

The Bench reiterated that classification decisions depend upon the nature, design, use and tariff context of the goods involved.

The Tribunal also rejected the argument that the plastic composition of the micro-cuvettes required their classification under Chapter 39.

It observed that the material of construction, by itself, does not determine classification where the imported article has acquired a specific identity and function as a component of an analytical instrument.

Heading 3926, being a residuary entry for other articles of plastics, could not be resorted to where the article was otherwise covered by a specific tariff provision read with the relevant Chapter Notes.

The Tribunal further held that the steel ball could not be treated as an incidental metal component comparable to a metal handle attached to a plastic article.

The steel ball was specifically incorporated into the cuvette and its magnetically controlled movement formed part of the mechanism through which coagulation time was determined. Therefore, the article had to be considered in its entirety.

After considering the tariff provisions, functional characteristics and judicial precedents, the Tribunal concluded that the STA micro-cuvettes were identifiable and functionally integrated parts/accessories suitable for use solely or principally with the STAGO coagulation analyser.

Accordingly, applying Chapter 90 Note 2(b), the Bench held that the goods were classifiable with the analytical instrument under Heading 9027 and that the appellant’s classification under CTI 9027 9090 was sustainable.

Since the Tribunal accepted the classification declared by the appellant, the basis for the differential duty demand disappeared.

The Bench held that the differential duty demand and interest arising from the proposed reclassification were liable to be set aside. Consequently, the questions of penalty, confiscation and redemption fine also did not arise.

CESTAT Chennai held that the STA micro-cuvettes were classifiable under CTI 9027 9090 and not CTI 3926 9099.

The impugned adjudication order was set aside and the appeal was allowed with consequential relief in accordance with law.

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