TaxTMI 
TaxTMI 
2021 (7) TMI 264
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.... 4th Phase, Peenya Industrial Area, Bengaluru 560058 (herein after referred to as Appellant) against the Advance Ruling order No. KAR ADRG 07/2021 dated: 26th February 2021. Brief Facts of the case: 3. The Appellant is engaged in the manufacture and sale of different pharmaceutical formulations comprising of tablets, capsules, oral liquids and dry syrups in India and also export the same to various countries across the globe. The Appellant manufactures the following two products at a large scale primarily to combat the situation arising on account of pandemic COVID-19: a) Isopropyl rubbing alcohol IP (Composition- Isopropyl Alcohol IP 70% v/v Excipients: Purified water IP QS) b) Chlorhexidine Gluconate and Isopropyl Alcohol solution (Composition: Chlorhexidine Gluconate solution IP 2.5% v/v equivalent to 0.5% w/v of Chlorhexidine Gluconate Isopropyl Alcohol IP 70% v/v Purified water IP QS) The Appellant has been manufacturing the above said products for a significant period of time and the products were classified under the HSN 3808 upon which the levy of GST was 18%. However, it is the Appellant's understanding that the said goods would fall under HSN 3004 with a GST ra....
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....is has been specifically stated in their publication "WHO Guidelines on Hand Hygiene in Health Care". The relevant portion reads as follows: "Use of alcohol-based hand-rub as the preferred means for routine hand antisepsis in all other clinical situations described in items D(a) to D(f) listed below if hands are not visibly soiled. If alcohol-based hand-rub is not obtainable, wash hands with soap and water. They submitted that the products in question are undoubtedly anti-infective in nature and hence the same would qualify as a product used for prophylactic use and in turn merits classification as Medicament under Chapter Heading 3004. 6.3. They drew attention to the Tariff entry 3808 of the Customs Tariff and the explanatory Notes to emphasis that the disinfectants referred in Chapter Heading 3808 are agents that destroy or irreversibly inactivate undesirable bacteria, viruses or other micro-organisms, generally on inanimate objects; that the use of the phrase 'generally on inanimate objects' also indicates the intention to include only such items which are used as cleaning agents on non-living objects and if they are used on living objects, they would not qualify as ....
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.... (DGFT) vide Notification No 08/2015-2020 dated 01-06-2020, has prohibited the exports of products under 4 headings viz; 3004, 3401, 3402 and 380894; that the products covered under HSN 3401 and 3402 are primarily soap, organic surface-active products which are used for washing the skin, whether in the form of bars, cream or otherwise; that the said description does not match the product in question supplied by the Appellant; that the products covered under the Heading 3808.94 are Insecticides, Rodenticides, Fungicides, Herbicides, Disinfectants and other similar products which are not intended for contact with human skin; that since the product supplied by the Appellant is intended for human skin contact, the said HSN cannot be made applicable to the same. Therefore, the Appellant submitted that the alcohol-based Hand Sanitizers are classifiable under Heading 3004 and it is the intention of the DGFT to identify the same as Medicaments. 6.6. The Appellant submits that in the efforts to combat the ongoing COVID-19 pandemic, many variants of Hand Sanitizer were manufactured and distributed. However, with an intention to manufacture and distribute inexpensive and effective products, ....
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....h particular and appropriate indications, method of application and recommended dose is mentioned. They submitted that the lower Authority has rightly pointed out that the main activity of the disinfectant is to disinfect surfaces; that the human skin cannot be considered to be a `surface' per se for the use of the above-mentioned disinfectants as they are harmful by nature which causes skin damage and so the product in question cannot be identified to be a disinfectant in respect of application on human skin. 6.8. The Appellant submits that in the case of Commissioner of Sales Tax vs S.S Balsara Hygiene Products Ltd - 1986 UPTC 367 -, the Court has held that Odomas is a medicament as it prevents several dangerous diseases and infections caused by mosquito bites and that it is a medicament though it does not cure the disease since it is a preventive measure; that it also held that the manufacturing of this commodity was also controlled by the authorities under the Drugs and Cosmetics Act, 1940 and hence it lends support to the assessee that it is used like a medicine. Hence they submitted that as the product in question is also being manufactured under the control of the autho....
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....ol based hand sanitizers are classifiable under 4 different headings and not only under 3808.94. He submitted that the sanitizer mentioned in Chapter Heading 3808.94 refers to the disinfectant which is not used on animate objects and not in contact with the skin. He also placed reliance on several decisions of the Supreme Court to buttress the argument that the impugned products manufactured by the Appellant are correctly classifiable as a `medicament' under Chapter Heading 3004. DISCUSSIONS AND FINDINGS 8. We have gone through the records of the case and considered the submissions made by the Appellant in their grounds of appeal, the additional submissions as well as the submissions made at the time of personal hearing. 9. The Appellant has sought for condonation of delay in filing the present appeal citing the reason that there was a delay in communicating the advance ruling to the concerned department and also that the authorised signatory was himself under quarantine. In terms of Section 100(2) of the CGST Act, every appeal to this Authority should be filed within a period of 30 days from the date on which the Advance Ruling order is communicated to the aggrieved party.....
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....ion, the active ingredient alcohol immediately denatures proteins effectively neutralising certain types of micro-organisms. According to the World Health Organization (WHO), alcohol-based hand sanitizers have an excellent property of inactivating certain viruses, bacteria and fungi. Alcohol-based hand sanitizers have been in use for many decades but its use has mostly been restricted to medical settings such as hospitals and healthcare facilities. However, the onset of the COVID-19 pandemic has popularised the use of hand sanitizer and made it into a household name. This is primarily on account of the WHO guidelines stating that hand hygiene is the primary measure proven to be effective in preventing the spread of the COVID-19 virus. The WHO has also issued guidelines for improving hand hygiene practices and this includes the use of alcohol-based hand rubs/sanitizers to be used for 20-30 seconds when hands are not visibly dirty. In line with these guidelines, various governments around the world, including India, have promoted the use of ethyl alcohol or isopropyl alcohol-based hand sanitizers for hand hygiene. In the current pandemic scenario, the use of a hand sanitizer is a rec....
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....be considered as a `medicaments' classifiable under Chapter Heading 3004. We have also gone through the judicial decisions relied upon by the Appellant in support of their claim for classification of the impugned products as medicaments. We are however unable to appreciate the relevance of the said decisions since the nature and use of the products in those decisions have no similarity or likeness to the alcohol-based hand sanitizers. 13. The Appellant has laid much stress on the fact that they have been issued a license under the Drugs and Cosmetics Act, 1940 for the manufacture and sale of 'Isopropyl Rubbing Alcohol and Chlorhexidine Gluconate and Isopropyl Alcohol solution'. The primary objective of the Drugs & Cosmetics Act is to ensure that the drugs and cosmetics sold in India are safe, effective and conform to the quality standards as prescribed in the Second Schedule of the said Act. Regulation under the Drugs Act does not ipso facto mean that the product automatically becomes a medicine. They have also relied on the Notification dated 27.07.2020 issued by the Ministry of Health and Family Welfare to advance their argument that the impugned products are drugs a....
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....n India and published in the International Journal of Current Research and Review on the 'Knowledge and awareness on the role of hand sanitizer in prevention of COVID-19'. The survey conducted among a cross section of people from different age groups showed that almost 79% were aware that hand sanitizer is used for maintaining good hand hygiene and to prevent the spread of disease during the Covid pandemic. Therefore, applying this test of common parlance and the fact that the impugned products do not have any therapeutic or prophylactic properties, we hold that the alcohol-based hand sanitizers viz. Isopropyl Rubbing Alcohol and Chlorhexidine Gluconate and Isopropyl Alcohol solution, cannot be classified as a medicament under Chapter Heading 3004 as claimed by the Appellant. 14. Having concluded that the product Isopropyl Rubbing Alcohol and Chlorhexidine Gluconate and Isopropyl Alcohol solutionis not classifiable under Chapter Heading 30.04, we move on to determine the Chapter Heading under which the said products can be classified. Chapter Heading 38.08 of the Customs Tariff covers a range of products intended to destroy pathogenic germs and which do not qualify as medi....
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....is an alternative to soap. We clarify that hand sanitizers do not serve as a replacement for through handwashing with soap and water. Instead, the alcohol-based hand sanitizers are thought to bring the consumers some of the benefits of handwashing when washing hands with soap and water is not practical in certain settings. In fact, alcohol-based hand sanitizers are usually preferred to handwashing with soap in occupational health care setting and in community settings. They are faster, more efficient and easier on the skin than repeated handwashing with soap and water. However, hand sanitizers are not suitable for all settings. They are not recommended for use on hands that are soiled with visible amounts of dirt or grease and are also found to be ineffective at removing some kinds of pathogens. In such instances, handwashing with soap and water is the recommended method to clean hands. Therefore, we disagree with the lower Authority's observation that hand sanitizer is an alternative to soap. Both 'hand sanitizer' and 'soap and water' are recommended methods in hand hygiene practices and each method is effective in certain situations. 16. The Appellant has als....