Case Note & Summary
The dispute concerned the correct tariff classification of imported 'Dryview 6850 Laser Imagers W/3D' under the First Schedule to the Customs Tariff Act, 1975. The appellant importer, M/s. Carestream Health India Pvt. Ltd., had imported the laser imagers from China under Bill of Entry dated 02.04.2013 and classified them under Customs Tariff Heading (CTH) 9018 90 19 as 'other diagnostic instruments and apparatus'. The Assistant Commissioner of Customs, Chennai, by Order-in-Original dated 24.06.2013, rejected this classification and directed re-classification under CTH 9033 00 00 as accessories not specified or included elsewhere in Chapter 90 for machines, appliances, instruments or apparatus of that chapter. The Commissioner of Customs (Appeals) affirmed this by Order-in-Appeal dated 10.03.2014, and the Customs, Excise and Service Tax Appellate Tribunal, South Zone Bench, Chennai, dismissed Customs Appeal No. 41073 of 2014 by Final Order dated 21.08.2024. The importer then filed Civil Appeal No. 3440 of 2025 under Section 130E(b) of the Customs Act, 1962. The laser imager used photo thermographic dry laser technology to develop images on film and interfaced with digital diagnostic machines such as MRI, CT, FFDM, DR, CR, PACS and digital fluoroscopy. However, it had no independent diagnostic skills or capabilities. The differential duty involved was ₹5,21,616, with an increase in duty rate of 2.5% for goods under CTH 9033 00 00 compared to CTH 9018 90 19. The core legal issues were whether the laser imagers were classifiable under CTH 9018 90 19 as diagnostic apparatus or under residuary CTH 9033 00 00, and how Note 2 to Chapter 90 of the Customs Tariff Act, 1975, applied, particularly Rule 2(b), when an accessory was compatible with machines falling under multiple tariff headings. The court also considered whether the importer could claim the benefit of Notification No. 12/2012 dated 17.03.2012. The appellant argued that the laser imager was a diagnostic apparatus used with machines classified under CTH 9018 and therefore fell under the residuary clause CTH 9018 90 19. It relied on Commissioner of Customs, New Delhi v. C-Net Communication (India) (Pvt.) Ltd. and Notification No. 12/2012. The Revenue contended that the laser imager was also usable with machines under CTH 9022, such as CT and X-ray apparatus, and hence fell under residuary CTH 9033 00 00, as it was an accessory not classifiable under Rule 2(b). The Supreme Court found merit in the Revenue's argument. It held that the laser imager had no diagnostic capabilities of its own and was not a diagnostic apparatus; it only served as an accessory by printing transmitted diagnostic data on films. The C-Net case was distinguished. The court interpreted Note 2 to Chapter 90, holding that Rule 2(b) applies only to accessories suitable for use solely or principally with a particular kind of machine or a number of machines of the same heading. Because the laser imagers were compatible with machines falling under both CTH 9018 and CTH 9022, which attracted different tariff rates, Rule 2(b) could not apply, and the accessory fell under Rule 2(c), i.e., residuary CTH 9033. The court also declined to allow reliance on Notification No. 12/2012 as it was raised for the first time and foundational compliance had not been established. The appeal was dismissed, affirming the concurrent findings and classification under CTH 9033 00 00.
Headnote
A) Customs Tariff Classification - Diagnostic Apparatus vs Accessory - CTH 9018 90 19, CTH 9033 00 00, Customs Tariff Act, 1975 - Laser imager without independent diagnostic capability is not diagnostic apparatus but accessory - Imported laser imager had no diagnostic skill of its own and only transferred diagnostic data onto film, so it could not per se be classified under CTH 9018 90 19, which applies only to diagnostic instruments or diagnostic apparatus - Held that the laser imager served as an accessory to diagnostic equipment, not as a diagnostic apparatus itself (Paras 8-9). B) Customs Tariff Classification - Parts and Accessories Rules - Note 2 to Chapter 90 of Customs Tariff Act, 1975, Rules 2(b) and 2(c) - Accessory compatible with machines under multiple tariff headings falls under residuary CTH 9033, not under heading of principal machine - Since the laser imagers were compatible with machines falling under CTH 9018 and CTH 9022, which attract different rates of tariff duty, Rule 2(b) (accessories suitable solely or principally with a particular kind of machine or a number of machines of the same heading) did not apply, and Rule 2(c) attracted residuary classification - Held that classification under CTH 9033 00 00 was correct and the Revenue's argument had merit (Paras 11-17). C) Customs Tariff - Exemption Notification - Notification No. 12/2012 dated 17.03.2012, Sl. No. 473, Customs Act, 1962 - Claim under exemption notification not entertainable without establishing conditions - The notification did not include CTH 9033 among the specific tariff headings listed for concessional duty, and the appellant raised it for the first time before the Supreme Court without first establishing foundational compliance with the conditions required - Held that the appellant could not rely on the notification (Para 10). D) Statutory Interpretation - Meaning of Accessory - Annapurna Carbon Industries Company v. State of Andhra Pradesh, (1976) 2 SCC 273, Customs Tariff Act, 1975 - Accessory contributes to effectiveness without changing basic function and may be accessory of more than one kind of instrument - Court referred to dictionary definitions and precedent; the laser imager, compatible with several machines, was an accessory that aided subordinately without changing the basic diagnostic function of the primary equipment - Held that this definition supported residuary classification under CTH 9033 (Paras 13-15).
Issue of Consideration
Whether imported laser imagers were classifiable under CTH 9018 90 19 as other diagnostic instruments/apparatus or under residuary CTH 9033 00 00 as parts/accessories of Chapter 90 machines, and whether Note 2 to Chapter 90 of the Customs Tariff Act, 1975, particularly Rule 2(b), applied to an accessory compatible with machines falling under separate tariff headings.
Final Decision
Supreme Court dismissed the appeal, affirming concurrent findings and classification of imported laser imagers under CTH 9033 00 00 as accessories not specified or included elsewhere in Chapter 90. The Court held that the laser imager lacked independent diagnostic capability and was not diagnostic apparatus; due to compatibility with machines under both CTH 9018 and CTH 9022, Rule 2(b) of Note 2 to Chapter 90 did not apply, and residuary Rule 2(c)/CTH 9033 applied. The Court also declined to entertain reliance on Notification No. 12/2012.
Law Points
- Classification under Customs Tariff Act
- 1975 requires determination of tariff heading based on function and Note 2 to Chapter 90
- laser imager lacking independent diagnostic capability is an accessory
- not diagnostic apparatus
- accessory suitable for use with machines under multiple tariff headings falls under residuary CTH 9033 under Rule 2(c)
- not Rule 2(b)
- exemption notification cannot be claimed without establishing compliance with conditions
- concurrent findings of lower authorities affirmed
