Imported massagers classified under CTI 9019 10 20, eligible for concessional customs rate; natural justice breach found

CESTAT MUMBAI - AT allowed the appeals, holding the imported massagers fall under CTI 9019 10 20 and are entitled to the concessional customs rate under the notification because the text did not limit "for medical use" with words like "only" or "exclusively." The Tribunal found violation of natural justice where the Additional Commissioner issued speaking findings for only one bill of entry while leaving 42 without speaking orders; the Commissioner(Appeals) erred in dismissing those appeals on that basis. The impugned order of 23.02.2024 is set aside and benefit granted.

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ISSUES PRESENTED AND CONSIDERED

1. Whether imported massage apparatus falling under Customs Tariff Item 9019 10 20 is entitled to the concessional rate of customs duty under the notification that grants a reduced rate for "Goods required for medical, surgical, dental or veterinary use" where the notification's description does not use words such as "only", "exclusively", "wholly" or "entirely" before "for medical use".

2. Whether, in appeals against assessment/denial of concessional duty where the adjudicating officer (Appraising/Additional Commissioner) did not pass a speaking order under section 17(5) of the Customs Act for each Bill of Entry, the appellate authority was justified in refusing to remand to secure separate speaking orders on the ground that a speaking order had been passed in respect of one other Bill of Entry expressing the same departmental view.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Entitlement to concessional rate where notification uses "required for medical ... use" without express restrictive words

Legal framework:

- The relevant Customs Tariff Item (CTI 9019 10 20) describes the goods as "massage apparatus" attracting a standard duty rate (10%).

- The notification grants an effective (preferential) rate (5%) for specified tariff items described in the notification as "Goods required for medical, surgical, dental or veterinary use", subject to any conditions and to the Annexure/Explanation attached to that notification entry.

Precedent Treatment (followed/distinguished):

- National authority decisions and tribunal jurisprudence construing concessions/notifications where the notification did not include restrictive qualifiers (e.g., "only", "exclusively", "entirely", "solely") have been relied upon to hold that the absence of such words means the concession is not confined strictly to products used exclusively for the stated purpose and that benefit cannot be denied merely because alternative or additional uses exist.

- Conversely, authorities emphasizing strict construction of fiscal notifications where the textual language is plain were considered but found inapplicable to add restrictive words not present in the notification.

Interpretation and reasoning:

- The notification entry includes CTI 9019 10 20 and describes the concessional class as "Goods required for medical, surgical, dental or veterinary use." The Explanation appended to the entry clarifies that the term "Goods" refers to medical instruments or appliances required for such uses and "does not refer to parts and spares thereof." The Explanation uses the word "only" to limit the meaning of "Goods" in the sense of excluding parts and spares, not to insert a restriction on the uses qualifying for the concessional rate.

- The tribunal reasoned that the appearance of the word "only" in the Explanation serves the narrow purpose of excluding parts and spares from the scope of "Goods" for that Entry, and cannot be read as inserting the word "only" immediately before "for medical use" in the main description. To read the Explanation as having the effect of re-wording the main entry would effect a change in the concession's scope that the notification text does not support.

- Comparative reasoning: where prior jurisprudence addressed similar textual omissions (absence of "only/exclusively/entirely"), the principle adopted is that a concessioning notification should not be construed as imposing a restriction that the instrument is used solely for the enumerated purpose unless the notification expressly so provides. That approach avoids imposing double taxation or denying relief where the statutory text grants exemption to articles "used" for a purpose without further restriction.

Ratio vs. Obiter:

- Ratio: In the absence of express restrictive words in the main entry, a concessional notification granting a reduced duty for "Goods required for medical ... use" cannot be read down by imposing the requirement that the goods be used exclusively or only for medical use. The Explanation's use of "only" to delimit "Goods" vis-à-vis parts and spares does not introduce a restriction on the qualifying use.

- Obiter: Observations on alternative factual contentions (whether the specific massagers in question were in fact deployed for medical use) were not necessary to decide entitlement once the textual construction point was resolved; accordingly detailed factual findings on medical use are obiter to the extent they were unnecessary to the legal conclusion.

Conclusions:

- The imported massage apparatus classified under CTI 9019 10 20 falls within the scope of the notification's entry and, because the notification does not qualify the phrase "required for medical ... use" with express restrictive qualifiers, the applicant is entitled to the concessional rate of customs duty (5%) under the notification.

- It was unnecessary to decide the alternative contention on actual medical purpose/use of the imported items after resolving the interpretive question in the appellant's favour.

Issue 2 - Requirement of speaking orders under section 17(5) for each Bill of Entry and appellate remand

Legal framework:

- Section 17(5) of the Customs Act requires that when an adjudicating officer declines to allow any claim or refund or denies any beneficial concession, a speaking order be passed commensurately to record reasons for the decision.

- Appellate authorities have power to remand matters to the adjudicating authority for de novo consideration or for the passing of required orders when procedural or mandatory requirements (such as speaking orders) have not been complied with.

Precedent Treatment (followed/distinguished):

- The court/tribunal authorities require compliance with statutory mandates like speaking orders and have held that each assessment or Bill of Entry requires a separate, reasoned order when claims are denied; the absence of such orders undermines the correctness of the adjudication and the appellate authority should ordinarily remand or direct fresh speaking orders.

Interpretation and reasoning:

- The Additional Commissioner passed a speaking order in respect of one Bill of Entry, but did not pass speaking orders for the forty-two Bills of Entry under challenge. The Commissioner (Appeals) declined to remand or require separate speaking orders for each Bill of Entry on the basis that the departmental view was already evident from the speaking order in the one Bill of Entry.

- The tribunal found this approach incorrect: statutory requirement for speaking orders under section 17(5) is discrete and applies to each Bill of Entry. A speaking order in respect of one entry cannot substitute for compliance in respect of each separate transaction/entry. The appellate authority ought not to have dismissed the procedural contention solely because a similar view had been set out elsewhere; remand or direction for speaking orders was necessary to fulfill statutory accountability and to allow meaningful appellate review.

Ratio vs. Obiter:

- Ratio: A speaking order as required by section 17(5) must be passed in respect of each Bill of Entry where a claim is denied and a benefit refused; an appellate authority cannot decline to remand or require such orders merely because a speaking order was passed in relation to another Bill of Entry expressing a similar departmental view.

- Obiter: Comments on the adequacy of particular reasoning contained in the single speaking order relied upon by the department (beyond the procedural deficiency) are not essential to the holding that separate speaking orders were required.

Conclusions:

- The refusal by the appellate authority to secure speaking orders for each of the forty-two Bills of Entry was procedurally incorrect. Nonetheless, on the substantive construction of the notification the tribunal held that the appellant was entitled to the concessional rate; consequently, the appellate orders dismissing the appeals were set aside and all forty-two appeals were allowed to the extent of granting the concessional rate of duty.

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