Accessories usable with machines under different customs tariff headings must be classified under residuary CTH 9033, rules Supreme Court

Carestream Health India Pvt. Ltd. imported “Dryview 6850 Laser Imagers W/3D” from China under a Bill of Entry dated 02.04.2013.

It classified the goods under Customs Tariff Heading (CTH) 9018 90 19 as “other diagnostic instruments and apparatus.” The Assistant Commissioner rejected the classification and directed classification under residuary CTH 9033 00 00, covering parts and accessories not specified or included elsewhere in Chapter 90. The Commissioner (Appeals) and the Customs, Excise and Service Tax Appellate Tribunal affirmed that decision. The importer consequently appealed to the Supreme Court under Section 130E(b) of the Customs Act, 1962.

The laser imager is a printer using dry-laser photothermographic technology to develop images on film from digital diagnostic machines, including MRI, CT, mammography, radiology and other systems; it does not possess independent diagnostic capability.

1. Whether the imported laser imagers are classifiable as “other diagnostic instruments and apparatus” under CTH 9018 90 19.

2. Whether the laser imagers are accessories suitable for use with machines under different tariff headings and are therefore classifiable under residuary CTH 9033 00 00 pursuant to Chapter 90, Note 2(c).

The Court applied Chapter 90, Note 2 of the First Schedule to the Customs Tariff Act, 1975. Under Note 2(a), parts and accessories included in specified tariff headings are classified under those headings; under Note 2(b), other parts and accessories suitable for use solely or principally with a particular kind of machine, or with machines under the same heading, are classified with those machines; and under Note 2(c), all other parts and accessories are classified under CTH 9033.

A diagnostic instrument or apparatus must itself possess diagnostic capability; an accessory that merely performs a supplementary or ancillary function does not qualify as a diagnostic apparatus.

The Court also relied on Commissioner of Customs, New Delhi v. C-Net Communication (India) (Pvt.) Ltd., (2007) 12 SCC 72, concerning the functional test for determining whether an item is an accessory.

The Court also relied on Annapurna Carbon Industries Co. v. State of Andhra Pradesh, (1976) 2 SCC 273, which recognised that an accessory may be suitable for use with more than one kind of instrument.

The Court held that the laser imagers were not diagnostic apparatus in their own right because they had no independent diagnostic skill or capability and could function only after receiving inputs from diagnostic equipment.

Their function was limited to transferring diagnostic data onto film for preservation or subsequent use; they neither performed nor enhanced the diagnostic function of the connected medical equipment.

Accordingly, they were accessories rather than instruments or apparatus classifiable directly under CTH 9018 90 19.

Although the imagers were compatible with several machines under CTH 9018, they were also compatible with CT scanners, X-ray equipment and other apparatus under CTH 9022.

The phrase “solely or principally” in Note 2(b) distinguishes accessories usable with machines under the same tariff heading from accessories usable with machines under different headings.

Since the imagers could be used with machines falling under both CTH 9018 and CTH 9022, they did not satisfy Note 2(b); they consequently fell within the residuary rule in Note 2(c), notwithstanding the different rates of duty applicable to the connected machines.

It held that the goods were accessories, not independent diagnostic instruments or apparatus under CTH 9018 90 19, and that accessories usable with machines falling under different Chapter 90 tariff headings must be classified under the residuary CTH 9033.

Pending applications were also disposed of.