Smoking cessation aid classification placed nicotine lozenge outside medicament entry and under chemical preparations

Nicotine Polacrilex Lozenge was held to be a nicotine replacement aid for smoking cessation, not a medicament for treating disease or illness, so it fell outside Chapter 30. Chapter Note 1(b) to Chapter 30 was applied to exclude preparations intended to help smokers stop smoking, and the phrase "such as" was treated as illustrative, extending the exclusion to lozenges. The product was also found not to be a food preparation under Chapter 21.06. As a chemical preparation of nicotine bound to resin, it was classifiable under Chapter Heading 38.24, with GST applicable accordingly. The advance ruling was affirmed.

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Issues: Whether Nicotine Polacrilex Lozenge is classifiable as a medicament under Chapter 30 of the Customs Tariff Act, 1975, or is excluded by Chapter Note 1(b) and classifiable under Chapter Heading 38.24, with GST liability accordingly.

Analysis: The product was found to be a nicotine replacement aid used to assist smokers to stop smoking and to reduce withdrawal symptoms, rather than a medicament for treating an illness or disease. Chapter Note 1(b) to Chapter 30 of the Customs Tariff Act, 1975 expressly excludes preparations such as tablets, chewing gum or patches intended to assist smokers to stop smoking, and the expression "such as" was treated as illustrative and not exhaustive, extending the exclusion to lozenges as well. The product was also held not to be a food preparation under Chapter 21.06. Since it is a chemical preparation consisting of nicotine bound to resin, it was held to fall under Chapter Heading 38.24, which is the appropriate entry for such stop-smoking aids under Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017.

Conclusion: The product is not classifiable under Chapter 30 as a medicament and is classifiable under Chapter Heading 38.24, attracting GST at 18%.

Final Conclusion: The appeal failed and the advance ruling classifying the product under Chapter Heading 38.24 was affirmed.

Ratio Decidendi: Preparations intended to assist smokers to stop smoking are excluded from Chapter 30 by Chapter Note 1(b) of the Customs Tariff Act, 1975 and, if not food preparations, are classifiable under Chapter Heading 38.24.

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