Waterford firm wins tax appeal case for medical device

CMC Hygea claimed its product should be classified as a medical appliance with 0% rate of import duty

The device is used in hospitals, nursing homes and other healthcare settings to reduce the risk of cross-infection when bathing patients.

A Waterford-based medical technology company that developed a novel infection control product has successfully challenged a ruling by Revenue that the equipment was not a medical device and should be subject to a 6.5% import duty for sales outside the EU.

CMC Hygea, which is based in IDA Industrial Park in Waterford, claimed its breakthrough PathAguard ABLiS antimicrobial basin liner system should be classified as a medical appliance which carried a 0% rate of import duty.

The product is a combination of a basin with a disposable liner embedded with silver ion technology that kills 99.99% of all bacteria which can lead to Healthcare Associated Infections (HAIs).

The device is used in hospitals, nursing homes and other healthcare settings to reduce the risk of cross-infection when bathing patients.

Revenue had issued a Binding Tariff Classification in July 2017 that the product was classified under a heading for equipment covering plastic sanitary ware which carried a 6.5% rate of import duty.

Infection control policy

However, CMC Hygea, which counts the HSE and the NHS in the UK among its biggest customers, claimed the use of an easy clean method of bathing patients was beneficial to hospital staff and patients as part of infection control policy.

At a hearing of the Tax Appeals Commission, the company argued that Revenue was incorrect to classify its product as a standard plastic basin and that it should be categorised as a medical device.

Alternatively, CMC Hygea claimed it should be classified under a heading which pertains to mixed products for therapeutic use which also carried a 0% import duty rate.

Professor Ronnie Russell, an associate professor of microbiology at Trinity College Dublin and chairman of the HSE’s National Decontamination Advisory Group, who appeared as an expert witness evidence on behalf of CMC Hygea, said a study carried out in a Dublin hospital showed the firm’s basin liner system showed “definite potential for infection control in clinical usage”.

Prof Russell stated he was in no doubt the product was a medical device as HAIs were lethal in some cases.

A chartered engineer who provided expert evidence on behalf of Revenue said the silver ion technology was the differentiating feature of the basin but claimed its use was widespread in a range of industries.

Revenue also argued that disinfectant sprays and other cleaning equipment did not benefit from 0% import duty classification.

Different classification

In its ruling, the TAC accepted the evidence of Prof Russell that the basin liner system was a product that prevented the spread of infectious illnesses.

TAC commissioner, Lorna Gallagher, said that while the product might not be clearly identifiable as being for medical use, it was materially different from a standard washbasin for tariff classification purposes.

Ms Gallagher ruled the appropriate classification for CMC Hygea’s product was the one governing medical appliances.

The company was founded in 2010 by Michael Malone, a former paving contractor, who identified a need for better infection controls in healthcare settings after a close family member acquired a HIA in hospital.

Mr Malone subsequently researched and developed its registered basin liner system which combats the spread of pathogens such as MRSA and e coli.