The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that no customs duty is applicable on the importation of pregnancy test kits, as these kits utilize “agglutinating sera” as their active component.
Rapid Diagnostics Pvt. Ltd., the respondent is a private company engaged in importing and trading medical diagnostic kits and related products. The company claimed the products were pregnancy diagnostic kits based on “agglutinating sera” and classified them under Tariff Heading ( CTH ) 3002 and availed a nil customs duty rate.
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The department initiated investigations due to suspicions that the term “agglutinating sera” was added to descriptions to claim exemptions unlawfully. Samples were sent for testing to AIIMS Biochemistry Department and the National Institute of Immunology, and reports confirmed the presence of agglutinating sera as the primary component.
The department issued show cause notices alleging that the products were complete pregnancy test kits, not agglutinating sera, and sought to deny exemption, impose penalties, and recover differential duty. The company argued that the essential character of the goods derived from agglutinating sera and defended their classification under CTH 3002 with valid exemption.
On appeal, the commissioner of customs granted basic customs duty exemption for the importation of “hCG Pregnancy Rapid Test Strip” and “hCG Pregnancy Rapid Test Cassette” under Serial Nos. 148 and 167 of Notifications No. 12/2012-Cus and 50/2017-Cus, respectively.
Aggrieved by this decision, the Department appealed the order before the CESTAT challenging the eligibility of “hCG Pregnancy Rapid Test Strip” and “hCG Pregnancy Rapid Test Cassette” for customs duty exemption.
The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) acknowledged that the essential character of the imported goods was derived from agglutinating sera, the active and indispensable component that enabled pregnancy detection.
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The tribunal observed that additional components like plastic casings and membranes were deemed passive components serving only to provide stability and shelf life. The Tribunal referenced the tribunal ruling in Inter Care Ltd. vs. Commissioner of Customs and the Supreme Court ruling in Span Diagnostics Ltd. vs. Commissioner of Central Excise which had upheld similar classifications for diagnostic kits relying on agglutinating sera.
Also based on test reports from AIIMS Biochemistry Lab and National Institute of Immunology, the tribunal held that the goods indeed contained agglutinating sera as the main component. The tribunal upheld the Commissioner’s classification and dismissed the department’s appeal.
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