The European Court of Justice (ECJ) recently ruled on the classification of items of plastic used with medical products. When classifying goods it is a common to come across a tension between form (what an item is made from) and function (what does it do).
The case centred on the meaning of the term “parts and accessories” in Chapter 90.
Unomedical (case C 152/10) imported “plastic dialysis drainage bags intended exclusively for use with dialysers (artificial kidneys)” and “plastic urinary drainage bags intended exclusively for use with catheters”. The competing tariff headings were 9018 (including parts and accessories for medical instruments and appliances) which is free of duty and 3926 (articles of plastics) which attracts duty at 6.5%.The ECJ found that there was no definition of “parts and accessories” in Chapter 90. However, a previous ECJ Decision (Turbon International) had ruled on its meaning in relation to ink cartridges, stating “that the notion of ‘parts’ implies a whole for the operation of which a part is essential and that the notion of ‘accessories’ implies and interchangeable part designed to adapt a machine for a particular operation, or to increase its range of operations, or to perform a particular service relative to the main function of a machine”.
The ECJ in Unomedical first looked at the ‘part’ test and held that neither of the bags was indispensible for the functioning of those instruments or appliances and so not parts. “It is apparent that catheters do not depend on the presence of a urine drainage bag in order to function and, similarly, that dialysers do not depend on the presence of a drainage bag in order to carry out dialysis, since the process of cleansing the blood is complete at the time the time when the bag is used, the bag serving only to collect the liquid drained.”
They then looked at the ‘accessories’ test and held that neither of the bags was an accessory. It stated “those bags do not enable the instruments or apparatus to be adapted for a particular operation, nor do they increase the range of those operations, or enable them to perform a particular service connected to the main function. A drainage bag attached to a catheter has the sole purpose of collecting liquid drained after the catheter has itself fulfilled its own function, which is to drain the urine present in the bladder. For its part, the drainage bag for the dialyser does not enable that apparatus to perform operations other than that for which it is designed, namely that of cleansing blood”.
As such both bags were classified in tariff heading 39.26 (articles of plastic) and subject to duty at 6.5%.
We have been involved with classification of medical apparatus since the early 1990’s and have made successful applications for similar items to Chapter 90. Although this ruling is welcome in that it improves clarity, it also raises the bar and is likely to lead to the customs authorities across Europe looking closely at classification in this sector and taking a harder line on any new rulings. We expect a number of challenges to current customs classifications.
The decision also adds a greater level of certainty as to the test to apply for classifying parts and accessories across all business sectors. I would recommend you look at your own imports of any parts and accessories in light of this test as you can be sure the tax authorities will be using it on their next audit of your classifications.