I-STAT Diagnostic Cartridges Classifiable as Accessories Under CTH 9027; CESTAT Quashes Rs. 5.06 Crore Customs Demand

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Mumbai, has set aside a major customs demand of over Rs. 5.06 crore holding that I-STAT diagnostic cartridges imported for use with handheld blood analysers are correctly classifiable under Customs Tariff Heading (CTH) 9027 and not under CTH 3822. The bench of Dr. Suvendu Kumar Pati (Judicial Member) and R. Bhagya Devi (Technical Member) has also quashed the associated penalties and redemption fine, ruling that the extended period of limitation was wrongly invoked. The case arose from imports made by Sandor Medicaids Pvt. Ltd. between April 2018 and July 2019. The company imported I-STAT blood gas and immuno cartridges, used exclusively with I-STAT handheld analysers, and classified them under CTH 9027 as accessories of analytical instruments. Based on this classification, the importer availed the benefit of concessional customs duty under Notification No. 25/2005-Customs. After a gap of nearly four years, the Customs Department issued a show cause notice in April 2023, alleging that the cartridges were misclassified and ought to have been assessed under CTH 3822 as “diagnostic or laboratory reagents.” The Commissioner of Customs (Import), Mumbai, confirmed a differential duty demand of ₹5.06 crore, ordered confiscation of the goods with a redemption fine of ₹2.3 crore, and imposed an equivalent penalty under Section 114A of the Customs Act, 1962. A separate penalty was also imposed on the Managing Director under Section 112(b). The Tribunal carefully examined the technical nature and functionality of the I-STAT system. It noted that the cartridges are single-use items embedded with micro-fabricated sensors and cannot perform any diagnostic function independently. The cartridges generate results only when inserted into the I-STAT analyser, which reads and displays the analytical output. Rejecting the Revenue’s argument that the cartridges are “diagnostic reagents” under CTH 3822, the Tribunal held that such reagents typically yield results through chemical reactions on their own, as in pregnancy or HIV test kits. In contrast, I-STAT cartridges merely act as components or accessories of an analytical instrument and derive their essential character only when used with the analyser. Relying on Chapter Note 2(b) of Chapter 90, the Bench emphasized that parts and accessories suitable for use solely or principally with a particular instrument must be classified along with that instrument. Since the cartridges are designed exclusively for use with I-STAT analysers, they were held to be classifiable under CTH 9027. The Tribunal placed strong reliance on its earlier decision in the appellant’s own case decided by the Hyderabad Bench in March 2023, where I-STAT analysers and cartridges were classified under CTH 9027. It also drew support from the Bombay High Court’s judgment in Ascensia Diabetes Care India Pvt. Ltd., which held that glucometer strips and meters together constitute instruments for chemical analysis under CTH 9027—a view later upheld by the Supreme Court. The Bench observed that the function of I-STAT cartridges is analogous to glucometer strips, reinforcing the conclusion that they are accessories to analytical instruments rather than standalone diagnostic reagents. On the issue of limitation, the Tribunal found that the show cause notice was issued well beyond the normal period of two years prescribed under Section 28 of the Customs Act. It rejected the Revenue’s allegation of suppression or misdeclaration, noting that the importer had consistently declared the goods as accessories of I-STAT analysers and that the issue was purely interpretational. Referring to the Supreme Court’s ruling in Uniworth Textiles Ltd., the Tribunal held that mere differences in interpretation of tariff classification cannot amount to wilful suppression or misstatement justifying invocation of the extended period. The CESTAT set aside the entire demand, confiscation order, redemption fine, and penalties. The Tribunal conclusively held that I-STAT cartridges are accessories classifiable under CTH 9027 along with the analyser. Classification under CTH 3822 is unsustainable on facts and law. Extended limitation and penalties were wrongly invoked in the absence of suppression or intent to evade duty. Case Details Case Title: M/s. Sandor Medicaids Pvt. Ltd. Versus Customs Commissioner Case No.: Customs Appeal No. 87321 of 2024 Date: 24.12.2025 Counsel For Appellant : Anil Balani, Advocate Counsel For Respondent: Ram Kumar, Deputy Commissioner (AR) Click Here To Read Order Read More: Personal Penalty on Directors Requires Proof of ‘Knowing Involvement’: CESTAT Quashes S. 78A Penalty

I-STAT Diagnostic Cartridges Classifiable as Accessories Under CTH 9027; CESTAT Quashes Rs. 5.06 Crore Customs Demand

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