Covid Customs Duty Exemption Covers Oxygen Concentrators, Not Just Ventilators: CESTAT, New Delhi

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that oxygen concentrators are eligible for exemption from customs duty under the Covid-19 relief notification issued in April 2020 and that the benefit cannot be restricted only to ventilators. Thr tribunal set aside a duty demand of Rs. 36.66 lakh raised on Aspen Diagnostics Pvt. Ltd.

The bench comprising President Justice Dilip Gupta and Technical Member C.J. Mathew observed that the notification granting a nil rate of duty on "artificial respiration or other therapeutic respiration apparatus (ventilators)" was intended to be read broadly, especially in the extraordinary circumstances prevailing at the onset of the pandemic.

Aspen Diagnostics/appellant had imported an oxygen concentrator in May 2020 and claimed exemption under Notification No. 20/2020-Cus dated 9th April 2020.

Customs authorities denied the benefit on the ground that oxygen concentrators were distinct from ventilators and assessed the goods under tariff item 90192010, demanding a differential duty of Rs. 36.6 lakh.

The Commissioner (Appeals), New Delhi, upheld the denial, relying on dictionary meanings, a press release issued with the notification and a later 2021 notification which separately mentioned ventilators and oxygen concentrators.

Disagreeing with this approach, the Tribunal held that a customs exemption notification must be interpreted holistically and in conjunction with the tariff headings referred to therein.

It noted that "ventilator" is not a tariff item under the Customs Tariff Act, 1975 and therefore could not be used to limit the scope of the exemption.

The bench opined that,

".......'ventilator' is not enumerated, at any level, in the First Schedule to Customs Tariff Act, 1975 and the presence of two headings from First Schedule to Customs Tariff Act, 1975 corresponding to the impugned description in the notification is adequate for inferring that 'ventilator', which, in terms of General Rules for Interpretation of the Import Tariff appended to Customs Tariff Act, 1975, must fall within one or the other, does not control the reach and extent of the impugned description in the notification. Consequently, any apparatus conforming to the elaborated description merits intended exemption and the lower authorities are in error for attempting such narrow and revenue-centric circumscribing in the face of the design of the notification."

The bench also rejected reliance on subsequent notifications and press releases to construe the intent of the earlier notification, particularly when the April 2020 exemption was framed as an emergency relief measure during an unprecedented public health crisis.

The tribunal stated that,

"We find no reason to interpret the broad framework of description in the notification as restricted to only the parenthetical emplacement. No evidence has been put forth in support of the only ground for denial of exemption, viz., not being apparatus for therapeutic respiration, that is touted as essence of eligibility".

Holding that oxygen concentrators are apparatus for therapeutic respiration, the CESTAT set aside the impugned order and allowed the appeal, granting Aspen Diagnostics the benefit of the duty exemption.

For Appellant: B L Narasimhan, Anurag Kapur and Shri Kausal Jaisalmeria

For Respondent: Nikhil Mohan Goyal