The Supreme Court has dismissed an appeal concerning the customs classification of imported laser imagers, holding that accessories capable of being used with machines falling under different tariff headings in Chapter 90 are required to be classified under the residuary Customs Tariff Heading (CTH) 9033 00 00.
The bench of Justice Sanjay Kumar and Justice Sanjeev Sachdeva observed that the imported laser imagers could not be classified as “other diagnostic instruments and apparatus” under CTH 9018 90 19 because the devices did not possess any independent diagnostic capability. The Court further held that where an accessory is suitable for use with machines falling under different tariff headings, Rule 2(b) of the Notes to Chapter 90 cannot be invoked to classify it alongside machines under one particular heading.
The dispute arose from the import of ‘Dryview 6850 Laser Imagers W/3D’ from China by Carestream Health India Pvt. Ltd. under a Bill of Entry dated April 2, 2013.
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The importer classified the goods under CTH 9018 90 19, treating them as “other diagnostic instruments and apparatus” under Chapter 90 of the Customs Tariff Act, 1975. Chapter 90 covers optical, photographic, measuring, precision, medical and surgical instruments and apparatus, including parts and accessories thereof.
The Assistant Commissioner of Customs, however, rejected the claimed classification through an Order-in-Original dated June 24, 2013 and directed classification under CTH 9033 00 00, covering parts and accessories not specified or included elsewhere in Chapter 90. The Commissioner (Appeals) subsequently affirmed the decision on March 10, 2014.
The importer then approached the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), South Zone Bench, Chennai. The Tribunal dismissed the appeal by Final Order dated August 21, 2024, resulting in the matter reaching the Supreme Court under Section 130E(b) of the Customs Act, 1962.
The classification dispute had a direct impact on the rate of customs duty. At the relevant time, goods classified under CTH 9033 00 00 attracted duty that was 2.5 percentage points higher than goods falling under CTH 9018 90 19.
Consequently, the differential customs duty demanded from the importer was ₹5,21,616.
The Supreme Court examined the actual function of the imported equipment.
The laser imager uses photo-thermographic or dry-laser technology to develop images on film. It can interface with several digital diagnostic systems, including MRI, CT, Full-Field Digital Mammography, Digital Radiology, Computed Radiography, Picture Archiving and Communication System (PACS) and Digital Fluoroscopy systems. It can also be used for other grayscale film applications.
The importer argued that the equipment should be regarded as an apparatus used for diagnostic purposes rather than as an accessory. According to the appellant, because the laser imager was used with medical machines falling under CTH 9018, it should be classified under the residual clause for “other such apparatus” in CTH 9018 90 19.
The Revenue, on the other hand, argued that the laser imager could also be used with machines outside CTH 9018 and therefore had to be classified under the residuary CTH 9033 00 00.
The Court rejected the central contention of the importer that the laser imager itself constituted diagnostic apparatus.
The Bench noted that the equipment has no diagnostic skill or capability of its own. It must receive inputs from diagnostic equipment and merely performs the subsequent function of transferring those inputs onto film.
According to the Court, the medical equipment providing the diagnostic information is itself complete and capable of carrying out the diagnostic function without the laser imager. The laser imager does not assist or augment that diagnostic process; instead, it performs the ancillary function of printing the transmitted diagnostic information onto film for preservation or subsequent use by medical professionals.
The Court therefore concluded that the device was an accessory to the diagnostic equipment, rather than a diagnostic instrument or apparatus in its own right.
The Supreme Court also considered the functional test discussed in its earlier decision in Commissioner of Customs, New Delhi v. C-Net Communication (India) Pvt. Ltd.
Applying that approach, the Court observed that the laser imager does not contribute to the diagnostic performance of the equipment from which it receives data. Its role begins after the diagnostic equipment has generated the relevant information, when it transfers that information onto film.
Thus, its function was ancillary rather than diagnostic.
Having concluded that the laser imager was an accessory, the Supreme Court turned to Note 2 to Chapter 90, which lays down rules for classification of parts and accessories of machines, apparatus, instruments or articles covered by the Chapter.
Under Note 2, parts and accessories are dealt with through three relevant principles. Goods already covered by specified headings are classified under their respective headings. Other parts and accessories suitable for use solely or principally with a particular kind of machine, or with machines of the same heading, are classified with those machines. All other parts and accessories are classified under Heading 9033.
The Court found that Rule 2(a) was not applicable because the laser imagers were not goods already included under the relevant headings of Chapter 90 or the other chapters referred to in that provision.
The real question, therefore, was whether Rule 2(b) could be applied or whether the goods necessarily fell under Rule 2(c), namely CTH 9033.
The Court found that the laser imagers were compatible with several medical machines falling under CTH 9018. These included MRI apparatus, linear ultrasound scanners, echo cardiographs and certain ultraviolet or infrared ray apparatus.
However, the Court noted that the appellant’s own catalogue also established compatibility with machines falling under CTH 9022, including CT apparatus, X-ray generators and apparatus, portable X-ray machines and other apparatus based on ionising radiation.
This multi-heading compatibility became the decisive factor in the classification dispute.
The importer argued that because the laser imager was compatible with several machines falling under CTH 9018, it should be classified with those machines under CTH 9018 90 19.
The Revenue contended that Rule 2(b) could not apply because the accessory was not confined to machines under one tariff heading. It could also be used with machines falling under CTH 9022. Consequently, the residuary provision under Rule 2(c) was attracted.
The Supreme Court accepted the Revenue’s interpretation.
The Bench stressed that the words “solely or principally” in Rule 2(b), read with the reference to a particular kind of machine or machines falling under the same heading, distinguish such accessories from accessories capable of use with machines classified under different tariff headings.
The Supreme Court also considered the different tariff rates applicable to the machines with which the laser imager could be used.
At the relevant time, MRI apparatus and linear ultrasound scanners under CTH 9018 attracted a tariff rate of 7.5%. By contrast, CT apparatus under CTH 9022 attracted 10%, while non-portable X-ray generators and apparatus attracted 15%.
Against this background, the Court observed that it would be illogical to apply Rule 2(b) to an accessory capable of being used with machines falling under both CTH 9018 and CTH 9022, particularly when those headings carried different tariff rates.
The Court ultimately upheld the interpretation adopted by the CESTAT.
It ruled that accessories suitable for use with several machines, instruments or apparatus falling under the same tariff heading would have to be classified with those machines under Rule 2(b).
However, where an accessory is suitable for use not only with machines under one particular tariff heading but also with machines falling under another tariff heading, it must be classified under the residuary CTH 9033 00 00.
The Court therefore held that the CESTAT had correctly interpreted Rule 2(b) and dismissed the appeal as devoid of merit.
The Supreme Court accordingly dismissed Carestream Health India Pvt. Ltd.’s appeal and left undisturbed the classification under CTH 9033 00 00, with the consequential differential duty liability of ₹5,21,616. The judgment was pronounced in New Delhi on August 12, 2026.
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