TaxTMI 
TaxTMI 
TaxTMI 
2021 (3) TMI 140
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.... the same under Chapter Heading 3004 attracting 12 % GST Sl.No. Name of Product Composition 1 Isopropyl Rubbing Alcohol IP Isopropyl Alcohol IP 70% v/v Excipients: Purified water IP QS 2 Chlorhexidine Gluconate and Chlorhexidine Gluconate solution IP Isopropyl Alcohol solution 2.5% v/v Equivalent to 0.5% w/v of Chlorhexidine Gluconate Isopropyl Alcohol IP 70% v/v Purified water IP QS In view of the above, the applicant sought advance ruling in respect of the following question: Whether Isopropyl rubbing alcohol IP and Chlorhexidine Gluconate and Isopropyl Alcohol solution are to be classified under Chapter Heading 3004 attracting 12 % GST, and if not, what would be the appropriate classification and justification for such classification 3. BRIEF FACTS OF THE CASE: 3.1 The Applicant is a private limited company manufacturing and selling different pharmaceutical formulations comprising of Tablets, Capsules, Oral Liquids and Dry Syrups in India and also exporting to various countries across the globe. The Applicant ensures that all its products meet the quality standards as specified by WHO-GMP and ISO certifications. The Applicant is also functioning under licenses iss....
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....rnment of India, ( CDSCO in short), has, vide its letter dated 17.03.2020 issued in File No.DCGI/Misc/2020 (96), on the subject of "Monitoring of the quality standards of hand sanitizer as per Drugs and Cosmetics Act, 1940 and Rules made thereunder and expediting the licensing of manufacturers of such products", stated, among other things, that hand sanitizers are licensed under Drugs and Cosmetic Rules, 1945 and the standard of such products shall be as prescribed under the Second Schedule of the Drugs and Cosmetics Act, 1940 and rules made thereunder. The applicant furnished the copy of the said letter dated 17.03.2020 of the Central Drugs Standard Control Organization. The CDSCO has again, vide letter dated 18.03.2020 issued in File No.DCGI/Misc/2020 (96), addressed to all State and Union Territory Drug Controllers, directed that in view of present situation due to outbreak of COVID-19, and to meet the growing demand of hand sanitizer, all applications for grant of manufacturing license under the Drugs and Cosmetics Act, 1940 and rules made thereunder, for manufacturing of such products, are to be processed within three working days. The copy of said letter dated 18.03.2020 of t....
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....apter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). 4.4 It can be seen that in the notification 1/2017- CT (Rate) ibid, the description of goods stated against Chapter Heading 3004 under Schedule II at Sl.No.63 contain "Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, in forms or packings for retail sale." 4.5 While the GST Rate Schedule has given only the Chapter Heading, it is found in the Customs Tariff Act, 1985 under Chapter 30, tariff heading 3004 90 is a sub-classification "other", which has under it, a sub-classification against tariff item 3004 90 87, the description of which states "Antibacterial formulations, not elsewhere specified or included". 4.6 It can be seen that in the letter F.No.Z 25023/09/2018-2020-DCC(AYUSH) dated 2nd April, 2020, issued by the Advisor (Ay.) and Head, Drugs Policy Section, of the Ministry of Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homeopathy (AYUSH), on the subject of expediting the process for grant of approval/license/renewal of license for manufacturing of ASU immunity boosting heal....
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....other than those specified in Schedule C, C (1) and X. 4.8 It can also be seen that the Central Government, by the Gazette Notification No.S.O.2451(E) published on 27th July 2020, has in exercise of the powers conferred under Section 26B of the Drugs and Cosmetics Act, 1940, directed, inter-alia, that the drug, namely, hand sanitizer shall be exempted from the requirement of sale licence for its stocking or sale under the provisions of Chapter IV of the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945. 4.9 The Applicant submits that the definition of "drug" given under the Drugs and Cosmetic Act, 1940 in Section 3(b)(i), stipulates inter alia that: ""drug" includes- 5[(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes; "(emphasis supplied) 4.10 The fact that such a broad classification of "drug" cannot be ignored while considering the character of the product in question has been lai....
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..... Therefore it can indisputably be seen that hand sanitizers are understood and recognized by the Government of India as that which requires license to manufacture as drugs under the prevalent Drugs and Cosmetic Act, 1940 and the rules made thereunder, and but for the exemption issued under the Gazette Notification No.S.O.2451(E) published on 27th July 2020 as stated supra, would also have required a sale licence for its stocking or sale. 4.12 It is also a pertinent fact that Section Note 2 of Section VI of the Customs Tariff Act, 1975, stipulates that, "Subject to Note 1 above, goods classifiable in heading 3004, 3005, 3006, 3212, 3303, 3304, 3305, 3306, 3307, 3506, 3707 or 3808 by reason of being put up in measured doses or for retail sale are to be classified in those headings and in no other heading of this Schedule." (Emphasis supplied). 4.13 Further, the certificates issued by a technical expert, Shri. V.L. Hambar, M. Pharm, former Deputy Drugs Controller, Drugs Control Department, Government of Karnataka certifying that Isopropyl rubbing Alcohol I.P is used as a Hand Sanitizer and that it has a number of uses such as, as a skin disinfectant, as natural bactericidal treatme....
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....Desk Dictionary 579 (1993) defines it as "guarding from or preventing the spread or occurrence of disease or infection"; Mosby's Dictionary 1284 (4th ed. 1994) defines it as a biologic, chemical, or mechanical agent that prevents the spread of disease." 4.17 It is further pertinent to note that the Apex Court has, in its decision in CCE, Calcutta v. Sharma Chemical Works, 2003-TIOL-33-SC-CX = 2003 (4) TMI 102 - SUPREME COURT, held that merely because a product is sold over the counter without prescription does not take away its status of being a medicament. In Megdhoot Gram Udyog SewaSansthan v. CCE, Lucknow, 2004-TIOL-103-SC-CX = 2004 (10) TMI 93 - SUPREME COURT, it has been held that a product may be medicinal without having been prescribed by a medical practitioner. 4.18 The Apex Court in M/s. O.K. Play (India) Ltd v CCE, Delhi III, Gurgaon, 2005-TIOL-18-SC-CX-LB = 2005 (2) TMI 114 - SUPREME COURT, has held that it is important to bear in mind that functional utility, design, shape and predominant usage have also got to be taken into account while determining the classification of an item. 4.19 In Naturalle Health Products (P) Ltd v. CCE, Hyderbad, 2003-TIOL-19-SC-CX = 20....
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.... mean reference to the corresponding similar provisions in the KGST Act. 6.2. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made by Sri. Ajayan T.V, Authorized Representative during the virtual personal hearing. We also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts & the applicant's interpretation of law. 6.3 On verification of the nature of the activity carried out by the applicant it was observed that the applicant is a private limited company manufacturing and selling different pharmaceutical formulations comprising of tablets, capsules, oral liquids and dry syrups in India and also exporting to various countries. 6.4 We find that the applicant has emphasized the licenses issued by the office of Drugs Controller for the state of Karnataka, letter dated 02.04.2020 issued by Ministry of AYUSH (directing licensing authorities to issue licenses expediously), a letter dated 18.03.2020 of Central Drugs Standard Control Organisation (directing to dispose the licensing applications within 3 working days) and a notification dated 27.07.2020 which exempt....
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....assified under the same head. But the Chapter Note 1 to the Chapter 38 clearly states that this Chapter does not cover medicaments (Heading 3003 or 3004). Hence, it is be decided whether the product in question is covered under HSN 3003 or 3004 or not. HSN 3004 reads as under: "Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in the forms of packings for retail sale, including Ayurvedic, Unani, Siddha, homoeopathic or bio-chemical systems medicaments, put up in retail sale". 6.7 It is clear from the above, for a goods to be covered under HSN 3004, the goods so supplied should be for "therapeutic use" or for "prophylactic use". It is seen that the agent would be called a therapeutic agent only if it has a curative effect against a disease. Since the product in question is not used for treatment of an already prevalent disease in a patient, the same cannot be said to have a therapeutic use. 6.8 Further, according to Oxford Dictionary, the term "prophylactic" has the following meaning: "Protecting a....
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....e, etc.) are clearly intended for sale directly to users (private persons, hospitals, etc.) without repacking, for the above purposes. These indications (in any language) may be given by label, literature or otherwise. However, the mere indication of pharmaceutical or other degree of purity is not alone sufficient to justify classification in this heading. From the above also, it is clear that sanitizers are not available as measured doses or in forms of tablets, ampoules etc. Therefore, it is not classifiable under Heading 3004. 6.10. HSN 3003 reads as under: "Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of two or more constituents which have been mixed together for therapeutic or prophylactic use, not put up in measured doses or in forms or packings for retail sale, including Ayurvedic, Unani, Siddha, homoeopathic or bio-chemical systems medicaments". Even here, the same logic which is applicable to HSN 3004 applies here and it cannot be said to be for therapeutic or prophylactic use and hence cannot be included in HSN 3003. 6.11 Coming to the meaning of Disinfectants, Disinfectants are those goods used for disinfection. The disinfect has the mea....