Goods Used As Implants Or Rehabilitation Aids Are Eligible For Customs Duty Exemption: CESTAT

S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) observed that “since, the implants such as repair of knee, hip and other joints, shoulder and various other parts of the body; repair of soft tissue injuries and degenerative conditions of the shoulder etc., are in the nature of instruments/implants described in item (B)(1), the impugned goods are also specifically covered under the List-30 and List-3 of the notifications No. 50/2017-Customs and No.01/2017-Integrated Tax (Rate).”

The assessee/appellant is engaged in the business of supplying orthopaedic and medical appliances, implants which are used for knee, hip replacement surgeries; implants for repair of joints, shoulder and various other parts of the body; repair of soft tissue injuries and degenerative conditions of the shoulder, knee, hip and small joints.

For this purpose, the assessee has imported and supplied knee, hip implants by classifying the same under Customs Tariff Item (CTI) 9021 3100 and 'Bioraptor, Ultratape Suture etc.,' under CTI 9021 1000 of the First Schedule to the Customs Tariff Act, 1975, both as 'orthopaedic or fracture appliances, artificial joints' claiming customs duty exemption benefits.

The department alleged that certain importers are wrongly availing the customs duty notification benefits in respect of imported goods, which are being used in orthopaedic surgeries of trauma injuries occurring during day-to-day activities of a normal person and not being used for disabled persons, for which the exemption was intended to.

A show cause notice was issued to the assessee for denial of Customs duty exemption claimed by the assessee in various imports. In adjudication the Commissioner of Customs had confirmed the entire differential duty.

The assessee submitted that the intended use of these products is explicitly outlined by the medical licenses that have been awarded to the assessee under Medical Devices Rules, 2017 issued by the Central Drugs Standard Control Organisation, Directorate General of Health Services, Ministry of Health and Family Welfare. Thus, the use of the imported goods as assistive devices, rehabilitation aids, devices for the disabled are evidentially proved and therefore they are eligible to claim the customs duty exemption and CVD exemption.

The Tribunal opined that the case law of Shah & Shah v. CCE, Calcutta – 1999 (114) E.L.T. 722 relied upon by the department, have dealt with the goods of description 'Contact lenses and inter-ocular lenses' which are entirely different from the impugned goods which are used as implants for repair of knee, hip and other joints, shoulder and various other parts of the body.

The said decision in the above case, where such 'Contact lenses and inter-ocular lenses' were held as neither artificial limbs nor rehabilitation aids for the handicapped, is distinguishable from the facts of the case and therefore, cannot be applied to the case for denying the duty exemption benefits, added the bench.

In view of the above, the Tribunal allowed the appeal.

Case Title: Smith & Nephew Healthcare Private Limited v. Commissioner of Customs (Import)

Case Number: CUSTOMS APPEAL No. 87524 of 2024

Counsel for Appellant/ Assessee: Rohan Shah

Counsel for Respondent/ Department: Shambhoo Nath

Click Here To Read/Download The Order