CESTAT Mumbai Ruled on IGST Rate and Classification for Imported Medical Equipment Parts

Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 25.06.2026

CESTAT Mumbai Ruled on IGST Rate and Classification for Imported Medical Equipment Parts

This article explores the recent decision by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, in the case of Baxter India Private Limited, which has significant implications for the classification and customs duty assessment of imported medical equipment and their parts in India.

Background of the Case

Baxter India Private Limited, a regular importer of advanced medical equipment such as the PRISMAFLEX Continuous Renal Replacement Therapy (CRRT) machine and the Home Choice Claria Machine for Automated Peritoneal Dialysis (APD), imported various parts and accessories for these devices between July 2018 and November 2022. These included:

1. APD set with 4-prong cassette migrated
2. PRISMAFLEX M100 set kit
3. PRISMAFLEX TPE 2000 set CKT
4. PRISMAFLEX M60 set kit
5. OXIRIS set
6. ADSORBA 300C

Baxter classified these imports under Customs Tariff Heading (CTH) 9018, which covers medical, surgical, dental, or veterinary instruments and appliances, and paid Integrated Goods and Services Tax (IGST) at a concessional rate of 12% as per Notification No. 01/2017-IT (Rate).

The Dispute: Classification and IGST Rate

The Customs Department challenged Baxter’s classification, arguing that the imported goods should be classified under CTH 9033 (parts and accessories not specified elsewhere in Chapter 90) and subjected to a higher IGST rate of 18%. A Show Cause Notice was issued, proposing reclassification, recovery of differential duty, confiscation of goods, and imposition of penalties.

Key Legal Issues Considered

The Tribunal focused on two main issues:

1. Proper Classification: Whether the imported parts and accessories should be classified under CTH 9018 (as claimed by Baxter) or CTH 9033 (as held by the Customs Department).
2. Sustainability of Confiscation and Penalties: Whether the confiscation of goods and imposition of fines and penalties were justified.

Tribunal’s Analysis and Findings

1. Classification of Goods

• Tariff Interpretation: The Tribunal analyzed the Customs Tariff Act and relevant Chapter Notes. It found that CTH 9018 specifically covers instruments and appliances used in medical sciences, including their parts and accessories, while CTH 9033 is a residual entry for parts not specified elsewhere.
• Departmental Clarification: The Ministry of Finance, via Circular No. 113/32/2019-GST dated 11.10.2019, clarified that parts and accessories suitable for use solely or principally with medical devices classifiable under 9018 are subject to 12% IGST.
• Precedent: The Tribunal relied on its earlier decision in Aloka Trivitron Medical Technologies Pvt. Ltd. v. Commissioner of Customs, which was upheld by the Supreme Court. This precedent established that such parts and accessories should be classified under CTH 9018 and taxed at 12% IGST.

2. Confiscation and Penalties

• Since the demand for higher IGST was not sustainable, the Tribunal held that the associated confiscation and penalties were also unjustified.

Outcome of the Appeal

The Tribunal set aside the order of the Commissioner of Customs, ruling in favor of Baxter India Private Limited. The appeal was allowed, confirming that:

• The imported parts and accessories for CRRT and APD machines are classifiable under CTH 9018.
• The applicable IGST rate is 12%, not 18%.
• No further payment of IGST, confiscation, or penalties are warranted.

Implications for Importers and the Medical Devices Industry

This decision provides clarity and legal certainty for importers of medical equipment and their parts:

1. Consistent Classification: Parts and accessories for medical devices should be classified under CTH 9018 when they are suitable for use solely or principally with such devices.
2. Lower IGST Rate: Eligible imports benefit from the concessional 12% IGST rate, reducing costs for healthcare providers and patients.
3. Binding Precedent: The Tribunal’s reliance on Supreme Court-upheld precedent ensures uniform application across similar cases.

Conclusion

The Baxter India Private Limited case is a landmark in the interpretation of customs classification for medical equipment in India. It reinforces the importance of departmental clarifications and judicial precedents in resolving classification disputes, ultimately benefiting the healthcare sector by ensuring fair and predictable tax treatment for essential medical imports.

Source: CESTAT Mumbai

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