Kidney Dialysis Machine Parts Attract 12% IGST Under CTH 9018, Not 18% Under Residual Entry: CESTAT Mumbai

On 23 June, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that parts and accessories suitable for use solely or principally with kidney dialysis machines are classifiable under Customs Tariff Heading (CTH) 9018 and attract 12% Integrated Goods and Services Tax (IGST), and not 18% IGST under the residual tariff entry CTH 9033.

Technical Member M.M. Parthiban and Judicial Member Ajay Sharma allowed the appeal filed by Baxter (India) Private Limited and set aside the order passed by the Commissioner of Customs, Nhava Sheva. The Bench held:

“On plain reading of the aforesaid clarification issued by the department, it clearly transpires that the impugned goods being parts and accessories of kidney dialysis apparatus i.e., Continuous Renal Replacement Therapy (CRRT) machine and Home choice Claria Machine for Automated Peritoneal Dialysis (APD), are classifiable along with such apparatus and are chargeable to 12% IGST under Serial No.218 of the Schedule – II of the Notification No.01/2017 (IT) dated 28.06.2017."

The dispute arose from the import of various parts and accessories used in Continuous Renal Replacement Therapy (CRRT) machines and Automated Peritoneal Dialysis (APD) machines by Baxter (India) Private Limited. The company classified the imported goods under CTH 9018 and paid IGST at the concessional rate of 12%.

The Customs Department, however, took the view that the goods were classifiable under the residual tariff entry CTH 9033 and therefore attracted IGST at 18%. On that basis, it issued a show cause notice seeking recovery of differential duty along with confiscation of goods and imposition of penalties.

Before the Tribunal, Baxter (India) Private Limited contended that the imported goods were parts and accessories meant exclusively for kidney dialysis equipment and were therefore correctly classifiable under CTH 9018. The company also relied on CBIC Circular No. 113/32/2019-GST dated 11 October 2019, which clarified that parts and accessories suitable for use solely or principally with medical devices falling under Heading 9018 would attract GST/IGST at 12%.

Accepting the contention, the Tribunal observed that Chapter Note 2(b) of Chapter 90 specifically provides that parts and accessories suitable for use solely or principally with a particular medical instrument must be classified along with that instrument.

The Bench further noted that the CBIC circular squarely covered the issue and was binding on departmental officers. Referring to the circular, the Tribunal held that parts and accessories of kidney dialysis apparatus, including Continuous Renal Replacement Therapy machines and Automated Peritoneal Dialysis machines, are chargeable to IGST at 12%.

The Tribunal also relied on its earlier decision in Aloka Trivitron Medical Technologies Ltd., which the Supreme Court had affirmed. Observing that the issue was no longer res integra, the Bench concluded that the demand for differential IGST was unsustainable.

Accordingly, the CESTAT set aside the impugned order and allowed the appeal filed by Baxter (India) Private Limited, granting consequential reliefs.

Appearance for the Applicant: Shri Shrinivas Kothi, Adv

Appearance for the Respondent: Shri Mahesh Patil, Adv