2019 (2) TMI 1914 - AAR - GST

Ruling: 'Odomos' Classified as Mosquito Repellent, Not Medicament

The ruling determined that the product 'Odomos' is classified as a mosquito repellent under Chapter 38 of the Customs Tariff Act, 1975, specifically under ... HSN classification under the Customs Tariff Act - medicaments - prophylactic use - insecticides and products intended to repel pests - interpretation of HSN Explanatory NotesHSN classification under the Customs Tariff Act - medicaments - prophylactic use - interpretation of HSN Explanatory Notes - insecticides and products intended to repel pests - Classification of the product 'Odomos' for GST purposes - whether classifiable as a medicament under Chapter 30 (HSN 3004) or as an insecticide/repellent under Chapter 38 (HSN 3808). - HELD THAT: - The Authority examined the product's composition, mode of action and packaging, the HSN Explanatory Notes and the notified tariff interpretation rules. The applicant contended that Odomos, containing NNDB as an active ingredient, is a preparation put up for retail sale with prophylactic effect against mosquito-borne diseases and thus falls within the scope of 'medicaments' (Chapter 30, heading 3004). The Authority noted that 'medicaments' include products of therapeutic or prophylactic use when put up for retail sale, but it must apply the Rules and Explanatory Notes of the First Schedule to the Customs Tariff Act for classification under the GST notification. The Authority considered the explanatory note to heading 38.08 which covers products intended to destroy or repel pests, and which expressly includes products that achieve results 'by odour.' Odomos operates by interfering with mosquito olfactory detection when applied to skin, producing an odour-based effect that makes conditions unattractive to mosquitoes. The Authority also observed that earlier judicial decisions relied upon by the applicant arose under different statutory schemes (sales tax) and different assessment paradigms and therefore were not determinative for classification under the GST regime which adopts the Customs Tariff interpretation. Applying the statutory scheme and HSN Explanatory Notes, the Authority concluded that Odomos is of the character of products intended to repel pests and is therefore classifiable under Chapter 38 (heading 3808) rather than as a medicament under Chapter 30.Odomos is classified under Chapter 38 of the Customs Tariff Act and specifically under HSN 38089191 as a product intended to repel pests.Final Conclusion: The Advance Ruling holds that Odomos is not classifiable as a medicament under Chapter 30 but is a product intended to repel pests and is classified under Chapter 38 (HSN 38089191) for the purposes of GST. Issues Involved:1. Classification of the product 'Odomos' under the GST Act.2. Determination of whether 'Odomos' qualifies as a medicament or as a mosquito repellent.Issue-Wise Detailed Analysis:1. Classification of the product 'Odomos' under the GST Act:The applicant, M/s. Dabur India Ltd., sought an advance ruling for the classification of their product, 'Odomos'. The product is a cream applied to the skin to provide protection from mosquitoes. The applicant argued that 'Odomos' should be classified under Chapter Heading 3004 as a medicament due to its therapeutic or prophylactic properties. They cited the presence of NNDB as an active ingredient, which interferes with mosquitoes' olfactory receptors, preventing them from detecting and biting humans. The applicant also referenced previous court decisions, including CST vs. Balsara Hygiene Products Ltd., where 'Odomos' was classified as a medicament.2. Determination of whether 'Odomos' qualifies as a medicament or as a mosquito repellent:The applicant contended that 'Odomos' should be classified as a medicament under Chapter Heading 3004, which includes products for therapeutic or prophylactic use. They argued that 'Odomos' prevents diseases transmitted by mosquitoes, thus qualifying as a prophylactic substance. The applicant also highlighted that 'Odomos' is manufactured and sold under a license granted under the Drugs and Cosmetics Act, 1940.However, the Authority for Advance Ruling (AAR) examined the classification under the relevant provisions of the Customs Tariff Act, 1975. The AAR noted that Chapter Heading 3808 covers products intended to repel pests, including mosquitoes. The explanatory notes to Chapter 38.08 specify that products achieving their results by odour, such as 'Odomos', fall under this heading. The AAR also referenced the Supreme Court's decision in ICPA Health Products Ltd. (P) Ltd. v. CCE, Vadodara, which defined 'prophylactic' as a medicament intended to prevent diseases.The AAR concluded that 'Odomos' does not have therapeutic properties and is intended to repel mosquitoes, not prevent diseases directly. Therefore, 'Odomos' should be classified under Chapter 38.08 of the Customs Tariff Act, 1975, as a mosquito repellent.RULING:'Odomos is well covered under Chapter 38 of the Customs Tariff Act and is classified under HSN 38089191.'This ruling clarifies that 'Odomos' is classified as a mosquito repellent and not as a medicament under the GST Act.