The classification of medical products in the sence of the Combined Nomenclature (CN) by customs often causes importers to shake their heads. Even goods clearly used for medical purposes are often not treated by customs as medical products duty-free, but, depending on the material, are subject to high customs duties like normal goods made of plastic or metal. Our many years of experience with companies importing medical devices shows that they often pay import duties that are too high. The reason for this is usually that customs are not sufficiently informed of the characteristics of the goods which are decisive for classification. We sensitize our clients to observe the decisive rating criteria and illuminate these to the customs authorities.
Procedure of O&W in the classification of medical devices
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O&W has successfully established the classification of its head positioning systems and their consumables as medical products and parts thereof for a large medical technology company. Customs initially denied that the goods were identifiably used to prevent and treat a disease and classified them as plastic goods
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O&W has represented an importer of X-ray flat panel detectors in and out of court against customs. The X-ray flat panel detectors convert incident X-rays into visible light, which is then recorded by a CMOS sensor. The question was whether these goods should be classified as parts of X-ray equipment or as television cameras
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O&W advised a company on the tariff classification of ventilating hoses. The decisive factor here was whether the concrete hoses were recognizable as respiratory hoses or whether they could also be used for other purposes and should therefore be classified according to their material
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O&W has successfully contested a subsequent collection of customs duties for a traditional company for medical products because Zoll itself used an incorrect goods number for urine collection bags for years. The ECJ has already ruled for comparable goods that the urine collection bags are not medical devices in the sense of the Combined Nomenclature but goods made of plastic. Several customs offices of our client nevertheless confirmed to her that the tariff number she used was correct. The tax court confirmed that the mistakes of the customs authorities establish a protection of confidence for our client.
Medical products in the sense of the Combined Nomenclature
At best, many importers do not understand the idea of customs for medical devices or medical technology. Although the entrepreneur knows for sure and can also prove that his goods are used exclusively in a hospital and have a corresponding approval and certification from the competent authorities, customs still allocates 12% for ordinary plastic goods. The reason for this is that importers and customs authorities assume different definitions for medical devices. While the actual use for medical purposes is usually decisive for the entrepreneur, the provisions of the Combined Nomenclature are decisive for customs.
For the purposes of tariff classification, the customs authorities may take into account only the objective characteristics of the imported goods themselves, as described in the customs tariff. In addition to the binding wording of a tariff heading, Customs also uses the explanatory notes on the Combined Nomenclature and the classification opinions of the World Customs Organisation (WCO) as an aid to interpretation.
The intended use of a product is only relevant if the Combined Nomenclature or the explanations consider it to be decisive. In addition, the intended use of a product must be identifiable on the basis of its objective characteristics. It is therefore not enough to explain to customs how the goods are used. Rather, it must be stated on the basis of which characteristics of the goods they are recognizable to be used for a medical purpose.
Definition of customs duties for medical devices
Depending on the type of goods, medical devices can be classified under different tariff numbers of the customs tariff. Many of the medical devices are covered in chapter 90. For example, respiration apparatus are placed in position 9019, orthopaedic devices in position 9021 and X-ray apparatus in position 9022.
The most controversial position is often 9018 for many different medical instruments and appliances.
Based on the explanatory notes on the Combined Nomenclature, a medical device within the meaning of heading 9018 is essentially requires:
- the handling of the goods by doctors, surgeons, dentists, veterinarians, midwives, etc. in their professional practice
- either to make a diagnosis, prevent a disease, treat it, perform an operation, etc.
If customs considers either of these two conditions not to be fulfilled, they usually classifies the goods according to their physical characteristics. The explanatory notes expressly exclude many medical devices, such as sterile cutgut, hygienic or pharmaceutical products, etc., from classification under heading 9018, as they are already included in other headigs of the customs tariff.
For classification as a medical device, it is therefore essential to explain to customs that the goods are used by medical personnel to prevent or treat a disease, to diagnose or perform an operation, etc.
Classification of parts and accessories for medical devices
The classification of parts and accessories of medical devices is particularly difficult. Since the judgment of the European Court of Justice (ECJ) in the”Unomedical” case at the latest, customs have interpreted the terms “parts” and “accessories” very restrictively. Both terms are defined by customs as follows:
- “Part” presupposes that there is a whole existence for whose function this part is indispensable.
- “Accessory” means that it is an interchangeable device which makes an appliance suitable for carrying out a particular task, expands its possible uses or enables it to carry out a special task related to its main function.
In its judgment “Unomedical”, the European Court of Justice ruled that a collection bag for dialysis machines is neither a part nor an accessory for a dialysis machine. Similarly, a urine collection bag is neither a part nor an accessory for a catheter. According to the ECJ, both a dialysis machine and a catheter work without a collection bag.
The classification as an accessory fails because the bags do not expand the possible uses of the main product or make it suitable for a particular job. The main functions of the catheter (to drain urine) and dialysis machine (to clean the blood) are already fulfilled when the bags are used.
To convince customs of a classification as part or accessory of medical products, it is therefore necessary to identify the functions of the main product and demonstrate to what extent the imported part or accessory supports these functions.
Accuracy pays off – pay attention to detail
You know your goods best. Customs doesn’t know them. It is therefore up to you to present and explain your goods to customs. If possible, you should highlight every detail that speaks in favour of a medical application.
Especially in the case of medical devices, the differences between customs duties are sometimes enormous. Companies can therefore save significant amounts of customs duties on industrial goods imports over the years and thus remain competitive with their competitors.
On the other hand, importing a medical device can cause considerable problems if you cannot explain to customs afterwards how to justify your classification practice. There is a regular risk of criminal proceedings for tax evasion.
O&W Attorneys at Law will assist you in classifying your medical devices. Together we direct the focus of customs on the crucial details of your goods.
Dieser Artikel wurde am 13. August 2018 erstellt. Die fachliche Zweitprüfung hat Rechtsanwalt Dr. Tristan Wegner durchgeführt.
