CESTAT Rules, Goods Used As Implants Or Rehabilitation Aids Are Eligible For Customs Duty Exemption
Pranav B Prem
The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), consisting of S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member), held that orthopaedic appliances and medical implants used for procedures such as knee and hip replacements and for the repair of joints and soft tissues qualify for customs duty exemption under relevant notifications, as they fall within the scope of "rehabilitation aids and appliances" listed in the customs exemption notifications.
The appellant, M/s Smith & Nephew Healthcare Pvt. Ltd., is engaged in the business of importing and distributing orthopedic and medical implants. These include devices for knee and hip replacement surgeries, implants for repairing joints such as shoulders and small bones, and products for soft tissue injuries and degenerative conditions. For these purposes, the appellant had imported goods like knee implants, hip implants, Bioraptor, Ultratape Sutures, etc., and classified them under Customs Tariff Item (CTI) 9021 3100 and 9021 1000, claiming exemption from basic customs duty and additional duty based on Notification No. 50/2017-Cus dated 30.06.2017 and Notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017, read with List 30 and List 3 appended to the notifications.
The Revenue issued a show cause notice, contending that the exemption was wrongly claimed since the devices in question were not meant specifically for disabled persons, which they argued was the underlying intention of the exemption notifications. The Commissioner of Customs confirmed the demand, rejecting the appellant’s classification and denying the exemption benefit.
Challenging the order, the appellant submitted that the intended medical use of the devices was clearly indicated in the licenses issued under the Medical Devices Rules, 2017, by the Central Drugs Standard Control Organisation (CDSCO), functioning under the Ministry of Health and Family Welfare. The devices were recognized as assistive aids and rehabilitation devices, which, according to the appellant, qualified them for exemption under the relevant customs notifications.
The Tribunal examined the classification of the goods and their use in medical procedures and observed that the impugned goods such as implants for knees, hips, and shoulders were instruments and appliances used in the rehabilitation or replacement of body parts. Therefore, they were squarely covered under item (B)(1) of List 30 and List 3 attached to the said notifications.
The Tribunal rejected the department’s reliance on the precedent set in Shah & Shah v. CCE, Calcutta [1999 (114) E.L.T. 722], stating that the judgment pertained to contact lenses and interocular lenses, which were not analogous to the present goods. It was held that the decision in Shah & Shah did not apply to orthopedic implants and appliances used in critical surgeries and rehabilitation procedures. The bench emphasized that the law, as stated in the exemption notifications, did not require that the user of the goods must be a "disabled person" in the conventional sense. Instead, the focus was on whether the goods function as rehabilitation aids or appliances, and in the case of the appellant, the goods clearly served that function.
Accordingly, the Tribunal allowed the appeal and set aside the denial of customs duty exemption, concluding that the imported implants and appliances used for orthopedic and soft tissue repairs are eligible for exemption under Notification No. 50/2017-Cus and Notification No. 01/2017-IT (Rate).
Appearance
Counsel for Appellant/ Assessee: Rohan Shah
Counsel for Respondent/ Department: Shambhoo Nath
Cause Title: Smith & Nephew Healthcare Private Limited V. Commissioner of Customs (Import)
Case No: Customs Appeal No. 87524 of 2024
Coram: S.K. Mohanty [Judicial Member], M.M. Parthiban [Technical Member]
