TaxTMI 
TaxTMI 
2020 (11) TMI 527
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....M, Hosur Road, Electronic City, Bangalore 560100(herein after referred to as Appellant) against the advance Ruling No. KAR/ADRG 31/2020 Dated: 4^th May 2020 = 2020 (5) TMI 222 - AUTHORITY FOR ADVANCE RULING, KARNATAKA. Brief Facts of the case: 3. The Appellant is registered as a public company under the Companies Act, 1956. The Appellant has GST registrations for its SEZ unit bearing GSTIN 29AAGCB0811M2ZM for its office situated at Plot No 2 and 3, Phase IV BIA, Bommasandra Industrial Area, Jigani Link Road, Bangalore - 560100(hereinafter referred to as "Biocon SEZ" or "SEZ unit"). Further, the Appellant has a separate registration for its unit in the DTA bearing GSTIN 29AAACB7461R1ZZ located at 20th KM, Hosur Road, Electronic City, Bengaluru, Karnataka 560100 (hereinafter referred to as "Biocon DTA" or "DTA unit"). 4. The Appellant is engaged in manufacturing of generic active pharmaceutical ingredients (APIs), novel biologics, biosimilar insulins and antibodies. In the present case, the SEZ unit of the Appellant manufactures "Micafungin Sodium" and sells the same as bulk drug to third party DTA units, who in turn use it for injections. Entry No. 180 of Schedule I of Rate....
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.... in the manufacture of a drug product and that, when used in the production of a drug, becomes an active ingredient of the drug product. They submitted that the United States Food and Drug Administration Regulations defines "bulk drug" as any substance that is represented for use in a drug and that, when used in the manufacturing, processing, or packaging of a drug, becomes an active ingredient or a finished dosage form of the drug, but the term does not include intermediates used in the synthesis of such substances. 7.3. The Appellant relied on the case of In Re: Laurus Labs Ltd. 2018 (13) GSTL 472 (AAR-GST) = 2018 (6) TMI 460 - AUTHORITY FOR ADVANCE RULING-ANDHRA PRADESH, which has been passed in reference to Pharmaceuticals products in the form of bulk drug, held to be covered under List 1 under Sl. No. 180 of Schedule Ito Notification No.1/2017-C.T. (Rate) and taxable at 5% GST. They submitted that in the present case, it is clear that Micafungin Sodium cleared as bulk drugs by the Appellant to its customers, is still covered as a 'drug' under List 1 under Sl. No. 180 of Schedule Ito Notification No. 1/2017-C.T. (Rate) and thereby, taxable at 5% GST. They also relied on the ....
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....nd medicines, referred to in Sl. 80(A) of Notification No. 21/2002-Cus. include their salts & esters as well. Therefore, the Notification No. 21/2002-Cus., Sl. 80(A), covers not only drugs or medicines specified in list 3 but also their salts & esters. 7.5 The Appellant also states that for sale of "Micafungin sodium" to be covered under Serial No. 114 of the list specified under Entry No. 180 of the Rate Notification as "Micafungin Sodium for Injection", such bulk drugs should be utilized for injection; that in the present case, Micafungin Sodium supplied by the Appellant would be used by the recipient customers to manufacture formulations or vials of Micafungin Sodium; that these vials would be labelled as "Micafungin Sodium for Injection" as per the nomenclature requirement. They submitted a declaration given by their customer M/s Crenza Pharmaceuticals Pvt Ltd holding that the Micafungin Sodium procured from the Appellant will be used solely for Micafungin Injection. They also submitted that the U.S. Food & Drug Administration has also acknowledged that Micafungin Sodium is administered in the form of injection only and in no other form. They also drew attention to the appro....
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....submissions, the Appellant pleaded that the impugned order deserves to be set aside. PERSONAL HEARING 8. The appellant was called for a virtual personal hearing on 6th October 2020 but they sought an adjournment. Accordingly, the Appellants were called for another virtual hearing on 14th October 2020. 8.1. The hearing on 14th October 2020 was conducted on the Webex platform following the guidelines issued by the CBIC vide Instruction F.No 390/Misc/3/2019-JC dated 21^st August 2020. The Appellant was represented by their Advocates Shri. Harish Bindumadhavan and Ms Disha Gursahaney who explained that the Appellant is engaged in the manufacture of active pharmaceutical ingredients in the form of bulk drugs. One such bulk drug is Micafungin Sodium which is manufactured at their SEZ unit. The same is cleared to the DTA unit and from the Appellant's DTA unit it is cleared to third party customers. 8.2. The Appellant explained that the drug, Micafugin Sodium is an antibiotic and is used for anti-fungal treatment. It is always used for invasive treatment and is administered intravenously in the form of an injection. The Appellant drew attention to the approval given by the CDSC....
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....missions he pleaded that the product Micafungin Sodium is eligible for GST rate of 5% in terms of SI.No 180 of Schedule I as the product supplied by the Appellant is listed at SI.No 114 of List I to the Schedule I. Accordingly, he prayed that the appeal be allowed DISCUSSIONS AND FINDINGS 9. We have gone through the records of the case and considered the submissions made by the Appellant in the grounds of appeal as well as at the time of the virtual personal hearing. 10. The short point for determination is whether the product "Micafungin Sodium" supplied by the Appellant is eligible for the benefit of GST rate of 5% in terms of entry No. 180 of Schedule Ito Rate Notification No 01/2017 IT (R) / CT (R) dated 28-06-2017. The relevant extract of the Notification is reproduced below: Schedule I - 5% S.No. Chapter /Heading / Sub-heading / Tariff item Description of goods 180 30 or any Chapter Drugs or medicines including their salts and esters and diagnostic test kits, specified in List 1 appended to this Schedule List 1 appended to Schedule Imentions the following item at Sl.No 114 (114) Micafungin sodium for injection. 11. A reading ....
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....ng of the term 'bulk drug' means a licenced product which is manufactured for use as an active pharmaceutical ingredient. In this case, Micafungin Sodium is the sodium salt form of the antifungal drug Micafungin which is used in the treatment of internal fungal infections. It is the active pharmaceutical ingredient in the manufacture of the drug "Mycamine" which is the brand name for the antifungal injection. We find that the Central Drugs Standards Control Organisation (CDSCO), the authority which approves new drugs in India, has granted approval for the drug "Micafungin Sodium for Injection" of strength 50mg and 100mg, for the treatment of patients with candidemia, acute disseminated candidiasis, abscess and esophageal candidiasis, etc. The approval given is for the drug which is to be administered only as an injection.Therefore, although Micafungin Sodium is a bulk drug, its use can be only by way of injection as there is no statutory approval given for using the drug in any other form. 14. We also take note of the U.S Pharmocopeia Nomenclature Guidelines which specifies how the established names for drugs are created. The relevant extract dealing with the nomenclature for in....