TaxTMI 
TaxTMI 
2021 (4) TMI 930
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....einafter referred to as the "CGST Act" and the "KGST Act/ SGST Act" respectively) engaged in the distribution of Pharmaceutical Reference Standards from Pharmacopoeias like European Pharmacopoeia (EP), British Pharmacopeia (BP), Indian Pharmacopeia (IP), Japanese Pharmacopoeia (JP). The applicant is seeking advance ruling on the applicability of entry in Notification No. 01/2017-IT (R) for their product prepared laboratory reagents/ Pharmaceutical Reference Standards. 3. The applicant has sought advance ruling in respect of the following question: Whether the applicable entry for prepared laboratory reagents/ Pharmaceutical Reference Standards in the Notification No. 01/ 2017-IT (R) is Sr. No. 80 of Schedule II, attracting a levy of 12% or Sr. No. 453 of Schedule III attracting a levy of 18 %? 4. Admissibility of the application: The question is about "applicability of a notification issued under the provisions of this Act" and hence is admissible under Section 97(2)(b) of the CGST Act 2017. 5. The applicant furnishes some facts relevant to the issue: 5.1. The applicant plans to import and supply Prepared Laboratory Reagents/PRS. The applicant is a science-based organization ....
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....ility of rate of tax on import and supply of the Prepared Laboratory Reagent classifiable under Tariff Item 3822 00 90, in terms of in terms of the Rate Notification No. 01/2017-CT (R) dated 28.06.2017. 5.4 The applicant submits that the only entry in the Rate Notification which covers the goods falling under Chapter Heading 3822 being 'Diagnostic Kits and Reagents' is Entry No. 80 of Schedule-II, which provides for the rate of GST at 12%. The relevant entry reads as follows: Schedule-II -12% S. No. Chapter/ Heading/ Sub-heading/ Tariff item Description of Goods 80 3822 All diagnostic kits and reagents In the alternative, Entry No. 453 to Schedule-III, a residuary entry, provides applicable rate of GST @ 18% on all goods that are not specified in Schedule I, II, IV, V or VI. The relevant entry reads as follows: Schedule-III-18% S. No. Chapter/ Heading/ Sub-heading/ Tariff item Description of Goods 453 Any Chapter Goods which are not specified in Schedule I, II, IV, V or VI 5.5 In the above factual matrix, the applicant seeks clarity on whether the PRS classifiable under Tariff Item 3822 00 90 shall be covered under Entry No. 80 of Schedule II to Notificatio....
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....tory Notes - Sixth Edition (2017) Volume 2 - Sections VI - VIII - Chapters 29 -43] relates to Chapter Heading 38.22. Relevant portions of the HSN Explanatory Notes are extracted hereunder for ease of reference - "This heading covers diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents, other than diagnostic reagents of heading 30.02 or diagnostic reagents designed to be administered to the patient and blood grouping reagents of heading 30.06. It also covers certified reference materials. Diagnostic reagents are used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans; their functions based upon a measurable or observable change in the biological or chemical substances constituting the reagent. Prepared diagnostic reagents of this heading may be similar in function to those designed to be administered to patients (subheading 3006.30), with the exception that they are used for in vitro, rather than for in vivo, applications. Prepared laboratory reagents include not only diagnostic reagents, but also other analytical reagents used for purposes other than detection or diagnosis. Prepared diagnostic....
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....nce material are available only from the organizations with robust quality system viz. US Pharmacopoeia, British Pharmacopoeia, etc. The Reference Standard of the Organizations like United Standard Pharmacopoeia and British Pharmacopoeia instill confidence, as to that the products which are tested against the standard as laid down by these pharmacopeias would qualify to be used safely. On this background the goods imported by the main appellant are to be considered whether they are Pharmaceutical Reference Standards or otherwise. The phrase "Reference Standards" is not defined or described in Customs Act, 1962 or Customs Tariff Act that appeared to establish appropriate product description as early as in the year 2004, a particular reference seeking clarification on the description of "Pharmaceutical Reference Standards" was made to appropriate and competent authority in this matter, i.e., Drugs Controller General (India) under Directorate General of Health Services (Drug Division) who vide his letter reference No. X19014/10/ 04-D, dated 17-1 1-2004 stated as under :- .............................................. 7.8 Plain reading of the above letter from the Drugs Controller G....
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.... of Commissioner of Customs & Service Tax, Bangalore v. LGC Promochem India Pvt. Ltd. reported in 2018 (360) E.L.T. A173 (S.C.). 5.13 The description under Entry No. 80 of Schedule II of the Rate Notification reads as "All diagnostic kits and reagents". It is submitted that Entry No. 80 covers two types of goods: all diagnostic kits; and reagents. 5.14 The applicant submits that the meaning of the term 'reagent' is wide enough to encompass both the diagnostic reagents as well as prepared laboratory reagent. As per the HSN Explanatory Notes to Chapter Heading 38.22, the term `reagent' under Chapter Heading 3822 should be clearly identifiable as being for use only as diagnostic or laboratory reagents. It further provides that prepared laboratory reagents include not only diagnostic reagents, but also other analytical reagents used for purposes other than detection or diagnosis. Further, the HSN Explanatory Notes provides that reagents of this heading should be clearly identifiable as being for use only as diagnostic reagents or laboratory reagents which must be clear from their composition, labelling, instructions for in vitro or laboratory use, indication of the specif....
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....fic exclusion or qualification to the term 'reagent', both laboratory reagents and diagnostic reagents shall be covered under Entry 80 of Schedule II of the Rate Notification. 5.16 The applicant further relies on the ruling of the Appellate Authority for the Advance Rulings in the case of CHROMACHEMIE LABORATORY PVT. LTD. 2020 (34) G.S.T.L. 182 (App. A.A.R. - GST - Kar.) 5.17 Therefore, the applicant submits that due to the reasons cited above, the goods in issue i.e., 'Pharmaceutical Reference Standard' classified under Tariff Item 3822 00 90 to CTA is covered under the specific Entry No. 80 to Schedule-II of the Rate Notification which reads as "All diagnostic kits and reagents". Hence, vide this Entry, the intended import and supply of 'Pharmaceutical Reference Standard' would attract a levy of Integrated Tax at the rate of 12 per cent. VIRTUAL HEARING: PROCEEDINGS HELD ON 28-01-2021 6. Sri. Dayananda, Chartered Accountant and Duly Authorized Representative of the applicant appeared for personal hearing proceedings held on 28.01.2021 and reiterated the facts narrated in their application. FINDINGS & DISCUSSION 7. At the outset we would like to make ....