F-18 products classified as radioactive isotopes under HSN 2844 attracting 18% GST despite pharmaceutical use

AAR UP ruled that F-18 products are radioactive isotopes used in radiopharmaceutical imaging and PET scanning. Despite being used as pharmaceutical diagnostic reagents, these products are compounds of radioisotope 18F and must be classified under HSN 2844 per Section Note 1(A), which mandates exclusive classification under this heading for goods answering to heading 2844 description. The products attract 18% GST rate under heading 2844, not 12% under HSN 30063000 as claimed by the applicant.

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Issues Involved:
1. Classification of F-18 Products under HSN 30063000.
2. Applicable GST rate for F-18 Products.

Summary:

Issue 1: Classification of F-18 Products under HSN 30063000

The applicant, engaged in the manufacture of radioactive compounds such as 18F-Fluorodeoxyglucose, 18F PSMA, and 18F DOPA, sought an advance ruling on whether these products would be classified under HSN 30063000, which is leviable to GST at the rate of 12% as per entry No 65 of Schedule II of Notification No 01/2017-CT (Rate). The applicant argued that their products are diagnostic reagents designed to be administered to patients, thus fitting the description under subheading 30063000. They supported their claim with various documents certifying the medical use of their products.

Issue 2: Applicable GST rate for F-18 Products

The Central Jurisdictional GST Officer submitted that the products should be classified under HSN 28444000, which specifies "Radioactive Chemical elements and Radioactive Isotopes," and are chargeable to GST at 18%. The Authority examined the submissions and noted that F-18 products are essentially radioactive isotopes used in radiopharmaceutical imaging, such as PET scanning. Despite their use in medical diagnostics, these products are compounds of the radioisotope 18F and should be classified under heading 2844, which covers radioactive isotopes and their compounds.

Discussion and Findings:

The Authority referred to the General Rules for Interpretation of the Harmonized System, noting that classification should be determined according to the terms of the headings and any relevant Section or Chapter Notes. Section VI of the Tariff, which covers products of the chemical or allied industries, states that goods described in heading 2844 are to be classified in that heading and no other. Since F-18 products are compounds of the radioisotope 18F, they fall under heading 2844, despite also fitting the description of diagnostic reagents under heading 3006.

Ruling:

1. Classification under HSN 30063000: The Authority ruled in the negative, stating that F-18 products do not classify under HSN 30063000.
2. Applicable GST Rate: The correct classification for F-18 products is under HSN 2844, with an applicable GST rate of 18% (9% CGST + 9% SGST).

This ruling is valid within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh, and subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.

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