HIV-VL Test Kits Eligible for Customs Duty Exemption: CESTAT
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside a customs demand of over Rs. 3.55 crore against Cepheid India in a high-stakes dispute over valuation of imported HIV viral load test kits and other diagnostic equipment.
The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that HIV-VL test kits, although detecting viral RNA rather than antibodies, serve the same life-saving purpose. Relying on Lekhraj Jessumal & Sons and Ethnor Ltd., it emphasized that exemption entries must consider technological advancements. The kits are crucial for early detection, monitoring, and treatment planning under the National AIDS Control Programme.
The appellant/assessee, Cepheid India, a subsidiary of the California-based Cepheid Group, was accused of undervaluing imports from related parties and availing ineligible customs duty exemptions.
Cepheid India has challenged the Order passed by the Principal Commissioner of Customs at the Air Cargo Complex, New Delhi. The customs department had rejected the declared value of goods imported through 85 Bills of Entry under Rule 12 of the Customs Valuation Rules, 2007, and denied exemption benefits under multiple customs and excise notifications.
The Customs department contended that HIV-1 viral load (VL) test kits imported by the company were not eligible for the exemptions applicable to “diagnostic kits for detection of HIV antibodies.” The declared transaction values were re-determined with a loading of up to 822%, invoking Rules 4, 5, and 9 of the Valuation Rules, alleging influence due to related party transactions. A penalty under Section 114A of the Customs Act and interest under Section 28AA were also imposed.
The CESTAT noted that the Special Valuation Branch (SVB) report was not furnished, despite being heavily relied upon in the show cause notice and order. This denied Cepheid an opportunity to rebut the findings.
The Tribunal noted that the final order deviated significantly from the show cause notice, applying loadings far exceeding the proposed 93.93% without adequate justification or adherence to valuation rules. It also criticized the use of unrelated Bills of Entry not cited in the notice.
The Tribunal set aside theorder in its entirety, including the denial of exemption, re-determined values, duty demands, interest, and penalty.
The tribunal emphasized the need for purposive interpretation of exemption notifications in public interest, especially for life-saving medical devices.
Case Details
Case Title: M/s Cepheid India Private Limited Versus The Principal Commissioner of Customs
Case No.: Customs Appeal No. 52186 Of 2022
Date: 25.06.2025
Counsel For Appellant: Rohan Shah,Senior Advocate, Shri Kumar Visalaksh, Ms. Tejas Pathak, Ms. Akansha Dikshit and Shri Mohd. Anajwala
Counsel For Respondent: S.K. Rahman, Authorised Representative
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
