Essential character test governs SKD medical imports; components could not be split for separate classification.

Imported medical equipment brought in SKD condition was to be assessed as a complete article where the goods, on assembly, retained the essential character of the finished colour Doppler and ultrasound scanning equipment. Rule 2(a) of the General Rules for the Interpretation of the Customs Tariff required such incomplete or unfinished articles to be classified as the complete product, and Chapter Note 2(b) to Chapter 90, read with the CBIC clarification, supported classification of parts used solely or principally with the machine together with the equipment. The Revenue could not split the imports under different tariff headings, and the demand, penalties and denial of CVD exemption were held unsustainable.

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Issues: Whether goods imported in SKD condition could be split up and classified by the Revenue under different tariff headings instead of being treated as a complete article having the essential character of the finished medical equipment, and whether the consequent denial of CVD exemption was sustainable.

Analysis: The imported goods were presented together in SKD condition for assembly into colour Doppler and ultrasound scanning equipment. Under Rule 2(a) of the General Rules for Interpretation of the Customs Tariff, an incomplete or unfinished article presented as such is to be treated as the complete article if it has the essential character of the finished product. The record did not show any evidence that the goods, when assembled, lacked the essential character of the final equipment. The reliance on Chapter Note 2(b) to Chapter 90 and the CBIC clarification supported classification of parts suitable for use solely or principally with the medical device along with the machine. The clarification was treated as binding on departmental officers.

Conclusion: The Revenue was not justified in segregating the SKD imports and classifying components separately. The impugned orders confirming demand and penalties were unsustainable, and the appeals were allowed with consequential relief.

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