CESTAT Holds Oxygen Concentrators Covered By Pandemic-Era Customs Duty Exemption Under Notification 20/2020-Cus
Pranav B Prem
The Customs, Excise and Service Tax Appellate Tribunal, New Delhi, has held that oxygen concentrators are eligible for customs duty exemption under Notification No. 20/2020-Cus, issued during the early phase of the COVID-19 pandemic, rejecting the Revenue’s restrictive interpretation that sought to confine the benefit only to conventional ventilators. The Bench comprising Justice Dilip Gupta, President, and C. J. Mathew, Technical Member, observed that the expression “artificial respiration or other therapeutic respiration apparatus” used in the exemption notification is broad, functional and purposive in nature. The Tribunal clarified that the parenthetical reference to “ventilators” does not curtail or restrict the scope of the exemption to ventilators alone.
The dispute arose from the import of an oxygen concentrator in May 2020, at a time when the country was grappling with an unprecedented public health emergency. The importer had claimed a nil rate of basic customs duty under Notification No. 20/2020-Cus dated 9 April 2020, which granted exemption to “artificial respiration or other therapeutic respiration apparatus (ventilators)”. However, Customs authorities denied the benefit, taking the view that the notification covered only ventilators and not oxygen concentrators, which according to the Department merely supply oxygen and do not assist respiration in the same manner as ventilators.
On this basis, the oxygen concentrator was classified under tariff item 9019 2010 and a differential duty demand of ₹36.66 lakh was raised. The Commissioner (Appeals) upheld the denial of exemption, relying on dictionary meanings, a contemporaneous press release issued at the time of the notification, and a subsequent notification issued in 2021 which separately referred to ventilators and oxygen concentrators.
The CESTAT strongly disagreed with this approach. It observed that if the Government’s intent was to exempt only ventilators, there was no necessity to employ an elaborate descriptive phrase preceding the parenthetical reference. The Tribunal held that the notification must be read holistically and purposively, particularly in the context in which it was issued—namely, the acute shortage of respiratory support equipment during the onset of the COVID-19 pandemic.
Rejecting the Department’s reliance on later notifications, the Tribunal clarified that subsequent legislative or executive actions cannot be used to retrospectively narrow the scope of a beneficial exemption issued earlier, especially one framed as an emergency measure during a public health crisis. It noted that the 2021 notification, which separately mentioned ventilators and oxygen concentrators, expanded the coverage to accessories and attachments and therefore could not be treated as determinative of the intent behind the 2020 notification.
In unusually strong language, the Tribunal emphasised the humanitarian and crisis-driven backdrop against which the exemption was introduced. It observed that the notification was intended to provide broad-based and immediate relief at a time when the healthcare system was under severe strain and respiratory equipment was in acute shortage. The Bench remarked that adopting a narrow, revenue-centric or hyper-technical interpretation during such “apocalyptic” times reflected a lack of sensitivity to the public health emergency then confronting the nation.
The Tribunal also found fault with the Department on procedural grounds. It held that the assessing officer had failed to comply with Section 17(5) of the Customs Act, 1962, which mandates the passing of a reasoned speaking order when an exemption claim is denied. The failure to issue such an order, coupled with the Commissioner (Appeals)’ omission to correct this defect, was held to be a serious lapse in statutory compliance.
Holding that oxygen concentrators clearly fall within the ambit of “artificial respiration or other therapeutic respiration apparatus”, the CESTAT set aside the order of the Commissioner (Appeals) and allowed the appeal. It conclusively held that oxygen concentrators are eligible for exemption under Notification No. 20/2020-Cus and that the differential duty demand was unsustainable in law.
Appearance
For Petitioner: B L Narasimhan
For Respondent: Nikhil Mohan Goyal
Cause Title: M/s. Aspen Diagnostics Pvt. Ltd. Versus Commissioner of Customs
Case No: Customs Appeal No. 51525 of 2022
Coram: Justice Dilip Gupta, President, and C. J. Mathew, Technical Member
