TaxTMI 
TaxTMI 
2016 (7) TMI 886
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....s. 2,50,268/-. Petitioner was thereafter faced with Ext.P3 notice dated 21/1/2014 wherein it is stated that the goods imported by the petitioner is "filtering equipment for filtration of blood". It is mentioned in Ext.P3 that the item is classifiable under Chapter heading 8421 2900 based on Note 2(a) of Chapter 90. Reference is also made to Board's Circular No.19/2013 issued by the 2nd respondent wherein it is clarified that filtering apparatus for filtration of blood is classifiable under chapter heading 8421 29 00. Therefore, according to the 1st respondent, an additional 12% tax is leviable and hence the differential duty has to be paid. 3. The main contention urged by the petitioner is that if the product is classified under Chapter 9018, then the product is eligible for exemption or reduction in basic duty of customs. It is contended that the Circular issued by the 2nd respondent is illegal since the item in question namely Disposable Sterilized Dialyzer and Microbarrier would only fall under chapter heading 9018 and not under chapter heading 8421. 4. Counter affidavit has been filed on behalf of the respondents inter alia stating that soft shell filter being a filtering....
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.... for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes." In accordance with Rule 1 and Note 2(a) to Chapter 90, subject to Note 1 to Chapter 90, "parts and accessories for machines, apparatus, instruments or articles of this Chapter,.....which are goods included in any of the headings of this Chapter or of Chapter 84, 85 or 91 (other than Heading No.84.85, 85.48 or 90.33) are in all cases to be classified in their respective headings;..." Further, the second paragraph of Part III of the HS General Explanatory Note to Chapter 90, gives guidance for the application of Chapter Note 2(a) to this Chapter. According to this Note, "parts which in themselves constitute articles falling in any particular heading of Chapter 90, 84, 85 or 91 are in all cases to be classified in their respective headings." 6. The Heading 84.21 covers, inter alia filtering or purifying machinery and apparatus for liquids. Therefore, in accordance with the stipulation mentioned in paragraph 5 above, the aforementioned articles viz. "Disposable Sterilized Dialyzer" and "Microbarrier", are classifiable in Heading 84.21, sub-heading....
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....2(b) of Chapter 90, which indicates that parts and accessories which are suitable for use solely or principally with a particular kind of machine, instrument or apparatus are to be classified with the machines, instruments or apparatus of that kind. It is contended that soft shell filter is a non sterile product when they are imported and are taken to the factory and assembled with blood bags and thereafter the entire set including soft shell filter and blood bag is sterilized. It thereafter becomes usable or marketable. It is meant only for the use of blood transfusion. It is also contended that the classification made in Chapter heading 8421 29 00 by itself would indicate that the imported materials cannot fall under the said Chapter. The items specified therein would indicate that the legislature never thought of including blood purifying systems in the said Chapter. In regard to imugard filters also, similar contentions have been raised. It is stated that imugard filters are leukocyte removal filter system which is meant solely and exclusively for blood transfusion. 13. The contention that Note 1(n) of Section XVI of the Customs Tariff Act, 1975 excludes articles of Chapter 90....
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....of Chapter 90 are to be classified according to the categories mentioned therein. Note 2(a) indicates that parts and accessories which are goods included in the headings of Chapter 90 or of Chapter 84, 85 or 91 are in all cases to be classified in their respective headings. It is not disputed that the imported goods are not mentioned in any of headings of Chapter 90. Note 2(b) states that other parts and accessories suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading are to be classified with the machines, instruments or apparatus of that kind. There is no dispute about the fact that the products in question are used for the purpose of renal dialysis equipment. What was considered by the authorities in the Circular is with reference to 'Disposable Sterilized Dialyser' and 'Micro Barrier'. It is observed that the complete machine which performs the blood purifying is classifiable in sub heading 9018 90 and is covered under tariff item 9018 90 31. It is also an admitted fact that the 'Disposable Sterilized Dialyser' and 'Micro Barrier&#....