"AAYUDH-MOSX" classified as mosquito repellent under tariff heading 38089191 by Authority for Advance Ruling (AAR)

The product "AAYUDH-MOSX" was classified as a mosquito repellent under tariff heading 38089191 by the Authority for Advance Ruling (AAR). It was determined that the product's market identity and common usage supported this classification over being considered an Ayurvedic medicament under a different heading. As a result, the product was subjected to a GST rate of 18% (CGST-9% + SGST-9%) in line with the specific classification provided.

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Issues Involved:
1. Classification of the product "AAYUDH-MOSX" under the appropriate tariff heading.
2. Determination of the applicable GST rate for the product.

Issue-wise Detailed Analysis:

1. Classification of the product "AAYUDH-MOSX" under the appropriate tariff heading:

The applicant, engaged in the manufacturing of an Ayurvedic mosquito repellent named "AAYUDH-MOSX," sought to classify the product under either tariff heading 30049011 (Ayurvedic Medicaments) or 38089191 (Mosquito Repellents). The product is made from natural plant extracts and certified by the Ayurvedic Department.

The applicant argued that "AAYUDH-MOSX" should be classified under heading 3004 as an Ayurvedic medicament due to its ingredients and therapeutic uses. They cited several case laws and research papers supporting the therapeutic properties of the ingredients used, such as Citronella oil and Lemongrass oil, which have been traditionally used as mosquito repellents.

However, the Authority for Advance Ruling (AAR) noted that the definitions in the Drugs and Cosmetics Act, 1940, cannot be mechanically applied to the GST law, which has a different objective of revenue collection. The AAR emphasized that the product is marketed, advertised, and sold as a mosquito repellent, not as a medicine prescribed by medical practitioners. The product is available over the counter and not restricted to sales in chemist shops.

The AAR applied the common parlance test and market identity test, concluding that the product is understood and used as a mosquito repellent. The specific tariff heading 38089191, which covers "Repellents for insects such as flies and mosquitoes," is more appropriate than the general heading 30049099 for medicaments.

2. Determination of the applicable GST rate for the product:

The AAR referred to Notification No.01/2017-Central Tax (Rate) dated 28.06.2017, which specifies the GST rates for various goods. The relevant entry under Heading 3808 covers insecticides, rodenticides, fungicides, herbicides, anti-sprouting products, plant-growth regulators, disinfectants, and similar products, including mosquito repellents.

The product "AAYUDH-MOSX" falls under the specific tariff heading 38089191 as a mosquito repellent. According to the notification, goods under this heading attract a GST rate of 18% (CGST-9% + SGST-9%).

Conclusion:

The AAR ruled that the product "AAYUDH-MOSX" is a mosquito repellent and is classifiable under Chapter Heading No. 38089191 of the Customs Tariff Act, 1985. Consequently, it attracts GST at the rate of 18% (CGST-9% + SGST-9%). The ruling emphasized the specific classification over the general one, aligning with the product's market identity and usage.

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