The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a customs demand that sought to reclassify imported parts used in dialysis equipment and impose a higher rate of Integrated Goods and Services Tax (IGST). 

The bench of Ajay Sharma (Judicial Member) and M.M. Parthiban (Technical Member) has held that the imported components were correctly classifiable under Customs Tariff Heading (CTH) 9018 as parts and accessories of medical devices and were therefore eligible for the concessional 12% IGST rate.

The company imports medical and surgical equipment, including Continuous Renal Replacement Therapy (CRRT) machines and Automated Peritoneal Dialysis (APD) machines. The imported products included APD sets with four-prong cassette, PRISMAFLEX M100 set kits, PRISMAFLEX TPE 2000 set circuits, PRISMAFLEX M60 set kits, OXIRIS sets and ADSORBA 300C, all intended for use with dialysis equipment.

At the time of import, the company classified the goods under various tariff items falling under CTH 9018 and paid IGST at 12% by availing the benefit of Serial No. 218 of Schedule II of Notification No. 01/2017-Integrated Tax (Rate) dated June 28, 2017. However, the Customs Department took the view that the goods were classifiable under CTH 9033 as parts and accessories not specified elsewhere in Chapter 90 and therefore attracted IGST at 18% under Serial No. 423 of the notification.

Following a pre-notice consultation and issuance of a show cause notice in June 2023, the department proposed reclassification of the imported goods, recovery of differential duty, confiscation of goods and imposition of penalties. The Commissioner of Customs, Nhava Sheva, confirmed the department’s position through an adjudication order dated June 26, 2025, prompting the company to approach the Tribunal.

Before the Tribunal, Baxter argued that the issue had already been clarified by the Central Board of Indirect Taxes and Customs (CBIC) through Circular No. 113/32/2019-GST dated October 11, 2019. The circular clarified that parts and accessories suitable for use solely or principally with medical devices falling under Heading 9018 would attract GST/IGST at the rate applicable to those medical devices, namely 12%. The company also relied on the Tribunal’s earlier decision in Aloka Trivitron Medical Technologies Pvt. Ltd., which was subsequently affirmed by the Supreme Court.

Examining the tariff structure, the Tribunal observed that Heading 9018 specifically covers instruments and appliances used in medical, surgical, dental and veterinary sciences, including their parts and accessories. In contrast, Heading 9033 is a residual entry meant for parts and accessories not specified elsewhere in Chapter 90. Referring to Chapter Note 2(b) of Chapter 90, the Bench held that parts and accessories suitable for use solely or principally with a particular machine are to be classified along with that machine.

The Tribunal concluded that the imported products were parts and accessories specifically designed for kidney dialysis apparatus and therefore fell under Heading 9018 rather than the residual Heading 9033. It further noted that the CBIC circular issued in 2019 squarely covered the issue and was binding on departmental officers. The Bench emphasized that even if the circular was not specifically brought to the notice of the adjudicating authority, it remained binding on the customs administration.

The Tribunal also relied on the precedent in Aloka Trivitron Medical Technologies Ltd., where a similar dispute involving classification of medical equipment parts had been decided in favour of the importer. Notably, the Supreme Court dismissed the Revenue’s appeal against that decision on March 15, 2024, thereby affirming the legal position adopted by the Tribunal.

Holding that the assessee had correctly paid IGST at 12% and that no additional tax liability arose, the Tribunal ruled that the demand for differential duty, confiscation of goods, redemption fine and penalties could not survive. Consequently, the impugned order was set aside and the appeal was allowed in favour of the company.

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