Customs Duty Exemption Available For ELISA Kits Cannot Be Claimed By Individual Components: CESTAT Delhi

The Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi, has recently held that QFT Tubes, though functionally used with ELISA kits, are not entitled to the concessional 5% Basic Customs Duty (BCD) available to ELISA kits. 

ELISA (Enzyme-Linked Immunosorbent Assay) is a diagnostic testing method used to detect diseases by analysing blood samples.

It held that the exemption applies only to the complete diagnostic kit and not to its individual components. The Tribunal accordingly allowed the Department's appeals and set aside the Commissioner (Appeals)' order granting the exemption.

A bench comprising Officiating President Dr. Rachna Gupta and Technical Member Hemambika R. Priya allowed eleven appeals filed by the department.

The tribunal observed, “The exemption benefit is extended not to the components but to the ELISA kit as such. As already discussed above that strict interpretation is to be given to the exemption notifications, it is held that Commissioner (Appeals) has wrongly extended the exemption benefit of ELISA kit to QFT tubes.”

The dispute arose after QIAGEN India Pvt. Ltd., engaged in importing diagnostic reagents and medical testing products, imported QFT Tubes between September 2023 and February 2024.

The importer initially classified the goods under CTH 3002 9020 and claimed concessional duty under Serial No. 166(A) of Notification No. 50/2017-Customs. Customs, however, reclassified the goods under CTH 3822 1990, demanded differential duty and withheld clearance until the duty was paid.

Although the importer accepted the revised classification, it continued to claim the exemption on the ground that QFT Tubes formed an integral component of ELISA kits. The Commissioner (Appeals) accepted the contention. Aggrieved by the order, the department filed appeals before the tribunal.

Before the tribunal, the Department argued that exemption notifications must be construed strictly. It submitted that the notification extended the benefit only to ELISA kits and not to individual components imported separately.

It further argued that QFT Tubes and ELISA kits were imported under different Bills of Entry at different times. According to the Department, functional interdependence could not substitute the requirement that the exemption applied to the kit itself.

The importer, on the other hand, contended that QFT Tubes and ELISA plates were functionally inseparable. It argued that the diagnostic process could not be completed without both components and, therefore, the exemption should extend to the imported tubes.

Examining the notification, the tribunal found that Entry 166(A) specifically granted the concessional rate to diagnostic kits, including ELISA kits, and not to their individual components. It observed that if the legislature intended to extend the benefit to components, it would have expressly provided so in the notification.

The bench further stated, “The fact that the ELISA kit is not just QFT tubes/imported goods but a combination of 7 to 8 other components is also relevant to hold that the QFT tubes cannot be held as ELISA kit.”

Rejecting the importer's reliance on functional interdependence, the tribunal held that end use or functional interdependence cannot justify extending an exemption where the notification does not expressly provide for it.

Relying on the Supreme Court's decisions in Dilip Kumar & Co. and Welkin Foods, it reiterated that exemption notifications are to be interpreted strictly. It held that their scope cannot be enlarged beyond their plain language.

Accordingly, the tribunal set aside the order of the Commissioner (Appeals), allowed all eleven departmental appeals and disposed of the connected stay applications as infructuous.

For Department: Nikhil Mohan Goyal, Authorised Representative

For Respondent: Advocates Manish Mishra, Mr. Ankur Mittal and Mr. Shubh Dixit