2018 (10) TMI 224 - AT - Customs

Tribunal classifies 'SYNVISC HYLAN G-F 20' as orthopaedic implant, rejecting differential duty claim

The Tribunal ruled in favor of the appellant, determining that the medical device 'SYNVISC HYLAN G-F 20' should be classified under chapter 9021 as an ... Classification of import goods - “SYNVISC HYLAN G-F 20 medical device in sterile solution form for treatment of Osteoarthritis” - Importer claimed classification of these as medical devices under Customs Tariff No. 90214090 and claimed the benefit of exemption notification No. 21/2002 (S.No. 370) and cleared the goods at nil rate of duty as applicable - demand of differential duty - extended period of limitation - penalty u/s 114A. Whether SYNVISC HYLAN G-F 20 imported by the appellant assessee is rightly classifiable under chapter heading No. 9021 or under chapter heading 3006 and consequently whether any differential duty liability arises? - Whether the interest is payable and penalties imposable? - Whether extended period of limitation can be invoked? Held that:- Chapter heading No. 3006 includes products such as Sterile laminaria, blood grouping reagents, diagnostic reagents designed to be administered to the patients, dental cements and other dental fillings, chemical contraceptive and Gel preparations used in human or veterinary medicines as a lubricant for parts of the body for surgical operations or physical examinations or as a coupling agent between the body and medical instruments. Chapter No. 9021 covers “orthopaedic appliances including crutches, surgical belts and trusses, splints and other fracture appliances, artificial parts of the body, hearing aids and other appliances which are worn or carried, or implanted in the body to compensate for a defect or disability” - it is found from the expert opinion of the Professor & Head of Rheumatology of Nizam’s Institute of Medical Sciences that the imported product is an absorbable implant in the knee joint for pain relief and improvement of joint mobility of the knee joints. There is nothing in this order to show why the goods which are imported cannot be classified as medical devices as claimed by the appellant. The literature produced by appellant as well as expert opinion produced by them clearly show that the goods in question are known as and used as implantable medical devices by doctors. Customs Tariff heading 3006 covers Gel preparations designed for humans as lubricant for parts of the body for surgical operations. This product does not appear to fall in this category as the purpose of this product is to facilitate lubricant of the joints and not to facilitate lubricant during the surgical operation. It compensates a defect which arises during osteoarthritis in the form of lack of lubrication in the knees. Therefore, the product is to be correctly classifiable under Customs Tariff Heading 9021 as an implantable medical device - the demand of duty, interest and penalty do not survive. Extended period of limitation - Held that:- Once the appellant has declared what is being imported in the invoice and the Bill of entry, they cannot be faulted for claiming a classification which, according to them is correct - Nothing prevented the assessing officer from seeking further literature and information and re-determining the classification if the classification claimed in the Bill of Entry is felt to be incorrect. Clearly, there is no evidence on record that the appellant assessee had misdeclared the nature of goods - Extended period cannot be invoked. Appeal allowed - decided in favor of appellant. Issues:Classification of imported medical device, differential duty liability, extended period of limitation, penalty imposition, appeal against Order-in-Appeal.Classification of Imported Medical Device:The appeals revolve around the classification of a medical device, 'SYNVISC HYLAN G-F 20,' used for treating Osteoarthritis. The importer claimed classification under Customs Tariff No. 90214090 for exemption benefits. However, the show cause notice alleged misclassification under CTH 3004 9099, proposing re-assessment and duty recovery. The central question was whether the product qualified as a medical device or a pharmaceutical under Customs Tariff headings 9021 or 3006. The appellant argued based on expert opinions and literature that the product functioned as an implant providing functional support, thus falling under chapter 9021 for orthopaedic devices.Differential Duty Liability and Penalty Imposition:The issue of differential duty liability and penalty imposition arose due to the disputed classification. The appellant contended that the product should be classified as a medical device, not a pharmaceutical, supported by expert opinions and literature. The Customs authorities argued for classification under chapter heading 3006 as Gel preparations for surgical operations, leading to differential duty demands. The Tribunal analyzed the product's composition, indications, and expert opinions to conclude that it qualified as an implantable medical device under chapter 9021, dismissing the duty and penalty claims.Extended Period of Limitation and Time Bar:Another key issue was the invocation of the extended period of limitation based on alleged suppression of product details by the appellant. The Customs authorities sought to impose penalties under section 114A of the Customs Act, 1962. However, the appellant argued that the show cause notice was time-barred as there was no evidence of wilful suppression. The Tribunal agreed, stating that the appellant had correctly declared the product in the invoice and Bill of Entry, and there was no proof of misdeclaration, leading to the rejection of the penalty imposition.Appeal Against Order-in-Appeal:The Revenue's appeal challenged the Order-in-Appeal by the first appellate authority, which classified the goods under chapter 90, granting exemption benefits. The Tribunal upheld the first appellate authority's decision, rejecting the Revenue's appeal. The Tribunal allowed the appellant's appeals, providing consequential relief, emphasizing the correct classification of the imported medical device under chapter 9021. The judgment highlighted the importance of expert opinions, literature, and the nature of the product in determining its classification and duty liability.