Exemption classification under customs notification turned on functional use: electro-surgical equipment failed, while cardiac stents qualified.

Exemption under Notification No. 17/2001-Cus. depended on the goods answering the notified description on their functional and technical characteristics. Electro-surgical equipment was held not to be diathermy apparatus because diathermy is non-invasive and used for heat treatment, while the imported generators were used for surgical procedures; exemption was therefore denied. Cardiac stents, however, were treated as accessories of cardiac catheters on the basis of earlier Tribunal reasoning, and exemption was allowed. The result was that the notification applied to cardiac stents but not to electro-surgical apparatus.

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Issues: (i) Whether electro-surgical equipment imported by the assessee was entitled to exemption under Notification No. 17/2001-Cus. as diathermy equipment; (ii) Whether cardiac stents imported by the assessee were entitled to the same exemption as accessories of cardiac catheters.

Issue (i): Whether electro-surgical equipment imported by the assessee was entitled to exemption under Notification No. 17/2001-Cus. as diathermy equipment.

Analysis: The exemption was confined to diathermy apparatus. The imported goods were electro-surgical generators used for surgical procedures, whereas diathermy apparatus is non-invasive and used for heat treatment of certain ailments. The HSN Explanatory Notes distinguished the two categories, and the functional difference showed that electro-surgical equipment could not be treated as diathermy equipment.

Conclusion: The claim for exemption in respect of electro-surgical equipment was rightly rejected and the finding was against the assessee.

Issue (ii): Whether cardiac stents imported by the assessee were entitled to the same exemption as accessories of cardiac catheters.

Analysis: The question stood covered by an earlier Tribunal decision holding that stents are essential for treatment and are to be treated as accessories of cardiac catheters for the purpose of the very same notification. Following that reasoning, the exemption was available to cardiac stents.

Conclusion: The grant of exemption in respect of cardiac stents was upheld and the finding was in favour of the assessee.

Final Conclusion: The common notification was held inapplicable to electro-surgical apparatus but applicable to cardiac stents, so both appeals failed.

Ratio Decidendi: Goods claimable under a specific exemption notification must answer the notified description on their functional and technical characteristics, and an item that is surgically invasive and different in use cannot be treated as diathermy equipment merely by analogy.

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