TaxTMI 
TaxTMI 
2026 (9) TMI 1770
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....r clearance of the same vide Bill of Entry No.6564645 dated 07.12.2021, by declaring the goods imported as 'Orthopaedic Appliances' which were classified under CTH 90211100. The above classification attracted 'Nil' Basic Customs Duty (BCD) and also entitled the Assessee to the benefit of Notification No.50/2017-Cus. (supra). 3. SIIB, Air Cargo, Chennai after analysis of certain items viz. 'Power Drive Art1', 'Power Stick M5/0 Handpiece', 'Art1 Footswitch' declared in the said Bill of Entry, appears to have entertained a doubt as to the classification, based also on the similar earlier imports which were classified under CTH 9018 and accordingly, visited supplier's website. Consequently, a Show Cause Notice dated 07.07.2023 was issued proposing inter alia to reclassify the imported goods under CTH 9018 thereby denying the benefit of Notification supra, apart from demanding differential duty along with interest and penalty. 4. It appears that the Assessee filed a detailed reply by explaining the reasons for changing the classification from its earlier imports and also trying to justify the declared items of the present import, but however not satisfied with the explanation, the....
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...., the past declaration which was subject to review, was not adopted for the present imports since CTH 9021 contained a specific entry for 'Orthopedic Devices and Appliances'. It is the case of the Ld. Advocate that as per Rule 3 of General Rules for Interpretation, when by application of Rule 2 (b) or for any other reason goods could be classified under two or more Headings, then such goods shall be classified under the Heading which provides the most specific description and if by any chance the goods cannot be classified under any of the conditions (a) or (b) under Rule 2(b), then they shall be classified under the Heading which occurs last in numerical order. It was thus contended that while there is a specific entry for the goods in question in entry 9021, there was no need to opt for general entry in 9018 by virtue of legal maxim 'Generalia specialibus non derogant'. Explaining the nature of the goods imported, it was contended that the usage of goods by a patient directly in order to qualify as 'Orthopedic Appliance' has never been discussed by the Principal Commissioner and nor has the Revenue led in any evidence in this regard. It is thus his case that the goods in question....
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....and implants including bone cement". iii. Amendment was made to CN 50/2017-Cus. dated 30.06.2017 with effect from 02/02/2020 vide CN No. 01/2020 dated 02/02/2020, whereby the following changes were made to the existing CN 50/2017-Cus. dated 30.06.2017. The Item E9 of List 30 was amended as "Instruments and implants for severely physically handicapped patients and joints replacement and spinal instruments and implants-including bone cement" effectively changing it to "Implants for severely physically handicapped patients including bone cement". However, no amendments were made in the IGST Notification No. 01/2017 dated 28.06.2017 in respect of Serial No. 257 of Schedule-I. iv. Subsequent to the amendment of CN 50/2017-Cus dated 30.06.2017 with effect from 02/02/2020 vide CN 01/2020 dated 02/02/2020, the imported goods were cleared from 27.02.2021 to 10.12.2022 by the importer by mis-declaring the description as "Orthopaedic appliances" and mis-classifying the goods under heading 9021 in order to avail ineligible benefit of 'Nil' BCD exemption. v. The BCD exemption, in terms of CN 50/2017-Cus dated 30.06.2017, Serial No. 578, item B1 of List 30 covers "Orth....
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.... * Fluid Management: Often paired with fluid control pumps, the hand piece allows surgeons to irrigate and clear the joint space while simultaneously removing debris; Any orthopaedic set of instruments that utilizes external sources of power or energy for its operation is known as a surgical power tool. ⮚ An Art Footswitch is an accessory or control device for medical and dental equipment. It is not classified as an orthopaedic appliance (like a brace or prosthesis) nor an orthopaedic instrument (like a bone clamp, retractor, or saw). It is commonly used for the following applications : * Electro surgery: It allows surgeons to switch between cutting and coagulation modes. * Dental Equipment: It activates dental scalers, polishers, and curing lights. * Minimally Invasive Surgery: It operates tools like surgical lasers or irrigation pumps without breaking sterility or taking the surgeon's hands off the patient. * Medical Imaging. It controls the capture and recording of images (such as in X-ray or ultrasound units). ⮚ PERCULINE nucleo is an orthopaedic instrument system rather than orthopaedic appliance (appliances a....
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....ssues and its primary applications include Herniated Discs, Spinal Stenosis & Decompression, Foraminotomy. ⮚ The VERTEBRIS foraminotomy system is a surgical instrument set (a universal manual drilling and access system). It is not an orthopaedic appliance which generally refers to a device implanted in the body or worn externally (like a brace or joint implant). It is primarily utilized in full- endoscopic or endoscopically assisted spine surgery to relieve pressure on compressed spinal nerves. Its specific include Creating Surgical Access, Foraminotomy Procedures, Tissue Resection, Nerve Protection. II. Regarding Revenue's Appeal, Ld. D.R submitted that: (A) Erroneous extension of Notification Benefit of BCD exemption for the period from 16.07.2018 to 12.12.2019: The Lower Adjudicating Authority has held that the impugned goods are "spinal instruments" and extended the benefit of Sl. No. 578 of CN 50/2017- Customs [Sl. No. E(9), List 30] for the period from 16.07.2018 to 12.12.2019. The above benefit extended by Lower Adjudicating Authority is grossly erroneous on the following grounds: (i) Sl. No. 578 of CN 50/2017 dated 30.06.2017 reads....
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....ems which are for use by the disabled. This is a clarificatory in nature". From the TRU clarification, it is quite clear that it was never the intention of the Government to provide duty exemption to instruments/equipment used in the diagnosis/surgery, however, Lower Adjudicating Authority has erroneously extended the benefit of S.No. 578 of the Notification No.50/2017Customs [Sl. No. E(9), List 30) to the importer for the period from 16.07.2018 to 12.12.2019 by wrongly interpreting it as against the true intention of the Notification. Extract of TRU D.O. letter D.O.F. No.334/2/2020 TRU dated 01.02.2020 is given below: Chapter 90 (1) Health Cess is being levied on all medical devices falling under headings 9018 to 9022 with effect from 2" February, 2020. [Clause 139 and Fourth Schedule of the Finance Bill, 2020 refers]. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, this levy will come into force with immediate effect. However, this Cess is being exempted on medical devices which are exempt from BCD including under FTA notifications. Further, inputs/parts used in the manufacture of medical devices is also being exem....
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....he impugned goods are chargeable to the concessional rate of BCD @ 7.5% for the period under Sl. No. 563A of CN 50/2017-Customs. However, Lower Adjudicating Authority has, without denying the proposal made under SCN regarding the eligibility of the impugned goods under Sl. No. 563A of CN 50/2017-Customs, extended the benefit to the impugned goods. III. Regarding the other ground as to granting IGST exemption, in the Revenue's Appeal, it was submitted that : (A) Erroneous extension of Notification Benefit of IGST exemption for the period from 16.07.2018 to 12.12.2019: Lower Adjudicating Authority has dropped the proposal to levy IGST @12% and the demand of differential IGST and has held that IGST is to be paid @ 5% for the entire period of the Show Cause Notice. Lower Adjudicating Authority's decision to extend the benefit of Notification No. 01/2017(IGST), Schedule-I, Serial No. 257, List 3, E9 is grossly erroneous on the following grounds: a) Lower Adjudicating Authority has wrongly assumed that the benefit of IGST exemption was claimed vide Sl. No. 257 [Sl. No. E (9), List 3] of SCH- I of CN 01/2017- Integrated Tax (Rate) dated 28.06.2017 for the entire....
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....ule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification." The IGST notification states that the rules of interpretation while determining classification of an item stands equally good in determining the IGST schedule of an item. The IGST Notification states that the rules of interpretation while determining classification of an item stands equally good in determining the IGST schedule of an item. f) By virtue of the above explanation, clarification by the Tax Research Unit (TRU) vide their DO letter Ref No.D.O.F.No.334/2/2020-TRU dated 01.02.2020, with regard Sl. No. 578 [Sl. No. E (9), List 30] of CN 50/2017-Cus dated 30.06.2017, that "the said Entry covers only such items which are for use of the disabled" is equally applicable for Entry E (9) of List 3 of SCH-I of the IGST Notification No. 01/2017 dated 28.06.2017. Hence, Lower Adjudicating Authority has completely failed to appreciate the above explanation while extending IGST benefit to the importer. g) SCN has clearly mentioned in para 7.....
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....ist 3, E9 @ 5% IGST, which was not at all claimed by the importer. c. Further, w.e.f. 18.07.2022, Entry at Sl. No. B1, List 3 of SCH-I of Notification No. 01/2017- Integrated Tax (Rate) dated 28.06.2017 was omitted vide the Notification No. 06/2022-IT (Rate) dated 13.07.2022 which implies that for the period from 18.07.2022 to 10.12.2022 benefit of the above Sl. No. was not available to the importer however, they wilfully wrongly claimed the said benefit for the above period. However, Lower Adjudicating Authority had proceeded to erroneously extend the benefit of Notification No. 01/2017(IGST), Serial No. 257, List 3, E9 @ 5% IGST for the period from 18.07.2022 to 10.12.2022 which was not at all claimed by the importer. d. It has been clearly mentioned at para 7.3 of the Show Cause Notice that since the impugned goods are classifiable under 9018 9019, the same are appropriately covered under S.No. 218 of Schedule II of the Notfn. No.01/2017- Integrated Tax (Rate) dated 28.06.2017 which has the most specific description, attracting 12% IGST. Lower Adjudicating Authority has completely failed to bring this in the impugned order, as no discussions has been made by hi....
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....0.12.2022 which has resulted in non-imposition of mandatory penalty under Section 114A of Customs Act, 1962 for this period, is not proper in view of the facts and the circumstances of the case. (a) Reliance is placed on judgement in Oswal Agro Mills Ltd Vs CCE [1993 (66) ELT 37 (SC)] wherein it has been held that the classification of goods to be governed by terms of headings read with relevant provisions or statutory rules or interpretation put up thereon, there is no room for intendment, assumption or presumptions and nothing to be added and no word to be rendered otiose. (b) Reliance is placed on judgement in UOI Vs Bharat Forge [2022 (64) G.S.T.L. 3 (SC)] wherein it has been held that it is the responsibility of the importer to quote the correct HSN code and applicable tax rate for the purpose of preventing revenue loss. (c) Reliance is placed on the judgement in A. Raghavamma & Anr. Vs. Chenchamma & Anr. [1963 (4) TMI 67-SC] holding that there is an essential distinction between burden of proof and onus of proof. The burden of proof lies upon a person who has to prove the fact and which never shifts. Onus of proof shifts. Such a shifting of onus is ....
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.... under: '6. For the purpose of heading 9021, the expression "orthopaedic appliances" means appliances for : (i) preventing or correcting bodily deformities; or (ii) supporting or holding parts of the body following an illness, operation or injury. Orthopaedic appliances include footwear and special insoles designed to correct orthopaedic conditions, provided that they are either (1) made to measure, or (2) mass produced, presented singly and not in pairs and designed to fit either foot equally.' 12.2 Preamble to the HSN Explanatory Notes of Heading 9018 is as under : 'This heading covers a very wide range of instruments and appliances which, in the vast majority of cases, are used only in professional practice (e.g., by doctors, surgeons, dentists, veterinary surgeons, midwives), either to make a diagnosis, to prevent or treat an illness or to operate, etc. Instruments and appliances for anatomical or autoptic work, dissection, etc., are also included, as are, under certain conditions, instruments and appliances for dental laboratories (see Part (II) below). The instruments of the heading may be made of any material (including preciou....
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....t. 30.06.2017 applicable for the period under dispute refers to 'Assistive Devices, rehabilitation aids and other goods for disabled, specified in List 30' ; and List 30 at Sl.No.E(9) reads: 'Instruments and implants for severely physically handicapped patients and joints replacement and spinal instruments and implants including bone cement'. The above entry apparently stood amended by Notification No.1/2020-Cus. dt. 02.02.2020 which read as : 'Implants for severely physically handicapped patients including bone cement'. 16. It was thus contended that all the entries in List 30 are aids or equipment that help or assist the disabled and none of these is used in diagnosis or performing surgery on the disabled. Thus, even the Notification No.1/2020 (supra) finds no place of the word 'instruments' which means the benefit of the said Notification is available only for 'Assistive devices, rehabilitation aids and other goods for disabled specified in List 30'. 17. We find that the goods in question are specifically designed as surgical tools which are used in various spinal surgeries and hence, they are only 'spinal instruments' and hence, the Adjudicating Authority is correct in ex....