TaxTMI 
TaxTMI 
2021 (7) TMI 265
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....mer Care & Lighting Division, 6th Floor, No 8, 7th Main Road, 80ft Road, Koramangala 1st Block, Bangalore, 560034 (herein after referred to as Appellant) against the Advance Ruling order No. KAR ADRG 08/2021 dated: 26th February 2021. Brief Facts of the case: 3. The Appellant is engaged in the manufacture of toilet soaps, LED bulbs and fittings, other toiletries and other consumer products and manufacturing and marketing Hand sanitizer at a large scale at their various factories primarily to combat the situation arising on account of pandemic COVID-19. The Appellant is currently manufacturing and marketing the Alcohol-based n=hand sanitizer and charging GST at 180/0 under HSN 3808.94. However, it is the Appellant's understanding that the said goods would fall under HSN 3004 with a GST rate of 12%. 4. In order to obtain a clarification regarding their understanding, the Appellant approached the Authority for Advance Ruling (AAR) seeking a ruling on the following question: "What is the appropriate classification of the hand sanitizer for the purpose of GST? What is the applicable rate of GST?" 5. The AAR vide its order KAR ADRG No 08/2021 dated 26th February 2021 held as ....
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....hand-rub is not obtainable, wash hands with soap and water. They submitted that the product in question is 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 emphasise 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 disinfectants as they are in the nature of medicaments; that it is clarified in the explanatory notes that disinfectants referred in Chapter 3808 are used in hospitals for cleaning walls, etc or sterilising instruments; that the disinfectants having the essential character of medicaments, including veterinary medicaments are to be classified under the ....
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....cription 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, the Appellant had obtained the requisite license from the Drugs Control Department under the Drugs and Cosmetics Act, 1940 for manufacturing the alcohol-based hand sanitizer which is an approved drug; that they had been granted a fresh manufacturing license in this regard; that subsequently, the Ministry of Health and Family Welfare had issued a Notific....
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.... 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 authorities under the Drugs and Cosmetics Act, 1940 and that the chemical composition is also as per the prescribed proportions as per the Indian Pharmacopoeia 2018, the hand sanitizer can be classified under Heading 3004. 6.9. In view of the above, the Appellant submits that the appropriate classification for alcohol-based hand sanitizer would be under Headi....
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....d 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 of 12 days 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. The proviso to Section 100(2) empowers this Authority to condone the delay in filing the appeal by another period of 30 days. In this case, the Appellant received the order of advance ruling on 05.03.2021. The statutory due date for filing an appeal against the ....
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.... 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 recommended and acknowledged method of hand hygiene. 12. Chapter 3004 of the Customs Tariff covers medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses. Though the terms 'therapeutic and prophylactic' have not been defined in either the Customs Tariff or the GST law, a common understanding of the term 'therapeutic' is treatment of a disea....
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....ued a license under the Drugs and Cosmetics Act, 1940 for the manufacture and sale of `alcohol-based hand sanitizer'. 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 product is a drug and therefore to be considered as a medicament. The term 'drug' which is defined in Section 3(b) of the said Drugs & Cosmetics Act includes not only medicines but also any substance which is used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals. While all medicines are drugs, all drugs are not medicines. There are a number of substances/materials/products which are regulated by the Drugs Act though they are not used or recognized as medicines. The hand sanitizer manufactured by the Appellant contains ....
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....er Heading 3004 as claimed by the Appellant. 14. Having concluded that the product Alcohol-based hand sanitizer is not classifiable under Chapter Heading 30.04, we move on to determine the Chapter Heading under which the product 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 medicaments under heading 30.03 and 30.04. The products under Heading 38.08 are divided into the following groups: (a) Insecticides (b) Fungicides (c) Herbicides, anti-sprouting products, plant growth regulators; and (d) Disinfectants The Explanatory Notes to the HSN Heading 38.08 states that disinfectants are agents which destroy or irreversibly inactivate undesirable bacteria, viruses or other micro-organisms, generally on inanimate objects. It is also stated that this group includes sanitizers, bacteriostats and sterilisers. The Appellant has contended that this description of disinfectants in the Explanatory Notes to Heading 38.08 indicates that the sanitizers mentioned therein are those which are used on inanimate objects where contact with the skin is not involved; that since the impugned ....
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....p 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 also attempted to advance his case by claiming support from the DGFT Notification dated 6-5-2020 which prohibits the export of Alcohol-based hand sanitizers falling under ITC HS Codes 3004, 3401, 3402 and 3808.94. It is their claim that Chapter Headings 34.01 and 34.02 pertains to soaps and other organic surface-active products used for washing the skin and Chapter Heading 3808.94 covers insecticides and disinfectants generally used on inanimate surfaces; that the product manufactured by them does not fit into the description of any of the above three Headings and hence Chapter Heading 30.04 is the most appropriate heading which covers alcohol-based hand sanitizers. At the outset, we state that a DGFT Notification is not an authority for determining the classification of goods under GST law. Classification of goods is to be determined ba....