TaxTMI 
TaxTMI 
2022 (3) TMI 1300
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....i, Tamil Nadu, 600 002. (hereinafter called the Applicant) is registered under the GST Vide GSTIN 33AADCL1959K1ZC. They have sought Advance Ruling on the following question: Whether the Cramp comfort patch are to be classified under Chapter Heading 3004 attracting 12% GST under serial no. 63 or Chapter Heading 3005 attracting 12% GST under serial no. 64 in Schedule II of Notification 01/2017 - Central Tax (Rate) dated 28 June 2017 and under Serial No: 63 or 64 of Schedule II of Notification G.O. (Ms) No. 62 (NO.II(2)/CTR/532(D-4)/2017) TNGST (Rate), dated 29.06.2017, if not what would be the appropriate classification and justification for such classification? The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The Applicant has stated that they are engaged in supply of various women wellness products such as sanitary pads, value kits which include various products, multipurpose pouch to fit daily essentials, liners and 'Cramp Comfort' which are heat patches for period pain, und....
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.... i. Wadding, gauze, bandages and similar articles (for example, dressings, adhesive plasters, poultices), ii. Impregnated or coated with pharmaceutical substances or put up in farms or packings for retail sale for medical, surgical, dental or veterinary purposes. They have stated that in order to merit classification under heading 3005, either of the below two conditions must be fulfilled. • The first condition is impregnated or coated with pharmaceutical substance. • The other condition required to be fulfilled is that the product should be put up in form or packing for medical, surgical, dental or veterinary purposes. 2.4 The applicants understanding on the description of goods under HSN 3005 is as below: Wadding, gauze, bandages and similar articles (for example, dressings, adhesive plasters, poultices), They have stated that the first part of the description emphasizes on the design of the product. They have referred to the following definitions as per the Oxford Dictionary - i. A 'wadding' is a soft material that you wrap around things to protect them. ii. A 'gauze' is a type of thin cotton cloth used for c....
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....(77) ELT 23 (SC)] • L.M.L. Ltd. vs. Commissioner of Customs [2010 (258) E.L.T. 321 (S.C.)] The Applicant has also relied upon the nomenclature and explanatory notes issued by the World Customs Organization (WCO) for HSN 3005 in this regard and stated that the description of goods classifiable under the heading 3005 as per Notification 01/ 2017 is pari-materia with the description mentioned by WCO 2.6 They have also stated that the term retail sale has not been defined in the GST law or rules. It is a well settled principle of interpretation of statute that the word not defined in the statute must be construed in its popular sense, meaning 'that sense which people conversant with the subject matter with which the statute is dealing would attribute to it'. It is to be construed as understood in common language. The applicant has relied on the decision of the Hon'ble Supreme Court in following cases: • Indo International Industries v. CST (1981) 47 STC 359. • Oswal Agro Mills Ltd. v. Collector of Central Excise [1993 (66) ELT 37]. • CCE v. Connaught Plaza Restaurant (P.) Ltd. [2014.152 taxmann.com 531, They have further draw....
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....ng the menstrual period. Although these ingredients are not directly called as pharmaceutical substances, the ingredients are used as a substance having therapeutic properties and hence construed as pharmaceutical substances. They have stated that Iron is an important mineral which has been used in various pharmaceutical substances. Similarly Vermiculite is a hydrous phyllosilicate mineral under goes significant expansion when hated, which is commonly called on 'clay mineral and constitutes a sub-group 'Phyllosilicate' and are widely used in the pharmaceutical industries as lubricants, desiccants, disintegrants, diluents, binders, pigments and opacifiers, as well as emulsifying, thickening, isotonic agents, and anticaking agents, and flavour correctors and carriers of active ingredients. A variety of minerals arc used as excipients. Excipients are inactive substances that serves as the vehicle or medium for a drug or other active substance. Excipients are largely used in pharmaceutical preparations because they have certain desirable physical and physico-chemical properties, such as high adsorption capacity, specific surface area, swelling capacity, and reactivity to acids. Phyllos....
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.... to various Chinese brands have listed the products under the heading 3005 on their website. In view of the aforementioned facts, they have submitted that the product Cramp Comfort should be classified under heading 3005. 2.8 The applicant has submitted the following facts to merit classification under the heading 3004 attracting 12% GST in terms of serial no. 63 in Schedule II of notification 01/ 2017 - central tax (rate) dated 28 June 2017. They have submitted that the product is currently sold under the HSN 3004 by them. The Heading 3004 of the Customs Tariff Act covers 'medicaments'. The term 'medicament' is not defined in the Customs Tariff Act. Thus, it is apposite to refer to the dictionaries to ascertain the natural meaning of expression 'medicament. The definition of the term 'medicament as obtained from various sources is as under:- • The term 'medicament' refers to a substance relating to medicine. The term 'medicine' has been defined in Concise Oxford English Dictionary [12th Edition (2011) Oxford University Press, refer page 888] as practice of diagnosis, treatment or prevention of a disease; and • In the case of Sujanil Chemo Industries v.....
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....rofen for primary dysmenorrhea: a randomized controlled trial. Authored by Navvabi Rigi S, Kermansaravi F, Navidian A, Safabakhsh L, Safarzadeh A, Khazaian S, Shafie S, Salehian T. Pregnancy Health Center, Zahedan University of Medical Sciences, Zahedan, Iran. • The effects of local low-dose heat application on dysmenorrhea - Dilek Coskuner Potur and Nuran Komurcil faculty of Health Sciences, Division of Nursing, Department of Obstetrics and Gynecology Nursing, Marmara University, Istanbul, Turkey • Continuous low-level topical heat in the treatment of dysmenorrhea Akin MD, Weingand KW, Hengehold DA, Goodale MB, Hinkle RT, Smith RP - Health Quest Therapy and Research Institute, Austin, Texas, USA 2.9 In view of the above facts, the applicant has submitted that menstrual cramps called as Dysmenorrhea an illness or a disease are throbbing or cramping pains in the lower abdomen. Heat patches such as Cramp Comfort patches of Applicant works by relaxing the muscles in the uterus without increasing blood flow and ease the pain on during cramps. By using these heat patches, one can feel relief cramps up to 8 hours. Heat patches are thin, comfortable and easy t....
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....phylactic means a "medicament intended to prevent diseases, a preventive medicine or course of action''. Therefore, from the above, products qualifies as prophylactic product. Since the product is used to reduce pain caused by Dysmenorrhea and provide relief to the users, the product could be classified under the HSN 3004 9099 as other medicaments used for therapeutic use. This makes amply clear that any product which is intended to prevent against the diseases and has therapeutic properties is to be classified under chapter 3005 or 3004. The applicant had required a suitable ruling on the classification of the product under HSN 3004 or HSN 3005. 3.1 Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, the applicant was addressed through the Email Address mentioned in the application to seek their willingness to participate in a virtual Personal Hearing in Digital media. The applicant consented and the hearing was held on 09.11.2021. The Authorised representative Shri Harish Bindumadhavan Putti appeared for the hearing virtually and reiterated the written submissions. He stated that the ruling sought is on the classification and applicable rate ....
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....er grade 13. Back nonwoven grade PP, PE warmer grade 14. Glue type Hot melt base 15. Glue trade Pressure sensitive adhesive • The Cramp Comfort (heat) patches are used to reduce the lower abdomen pain caused by Dysmenorrhea a medical symptom observed during the menstrual period. The heat patches are used for treating physical and mental illness caused due to the medical condition called Dysmenorrhea. The natural ingredients such as iron, vermiculite clay are minerals used as therapeutic materials are construed as pharmaceutical substances providing relief to the pain caused due to Dysmenorrhea. • The Cramp comfort patch is biodegradable and the pouch consists of iron powder, salt activated carbon and vermiculite clay. The patch is also water absorbent. The iron powder and other ingredients are contained in a blended nonwoven material that has specific permeability characteristics. If the pouch admits more oxygen, the reaction occurs more quickly. • The chemical and medicinal purpose of each ingredient used in the product is described as under: Ingredient Concentration ran....
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....deficiencies of sodium and chloride ions and in the prevention of muscle cramps WATER 30-40 ABSORBER The heat patches emit heat (so its atoms vibrate really fast) and touch it to the abdomen which is something colder (whose atoms are vibrating more slowly). Then as the atoms in the hotter object vibrate, they'll hit the atoms in the colder object, and make them start vibrating more. As this happens, the hotter object cools down, and the cooler object warms up. This is how, say, water in a pot on a stove absorbs heat: the stove heats up the bottom of the pan, and that heat is conducted into the water in the pot. Water is also the lubricant that helps in the smooth movement of our joints and allows their surfaces to slide and glide with minimal friction. 4.1 Further, as the applicant requested for another hearing they were given another opportunity to be heard in digital mode on 20.01.2022. The Authorised Representatives Shri Harish Bindumadhavan Putti and Shri Neil Killawala appeared for the hearing virtually and reiterated their earlier submissions. They stated that presently they are classifying under CTH 3004. When asked about the reference to the 'First Tier Tribu....
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.... mosquitoes; ii........... iii........... iv. such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from to time by the Central Government by notification in the Official Gazette, after consultation with Board; • The applicant has submitted that the definition of 'drugs' in section 3 (b) is comprehensive enough to take in not only medicines but also substances intended to be used for or in the treatment of diseases of human beings or animals. The expression "substances" must be something that possess medicinal usage other than medicines which are used for treatment. The part of the definition which is material for the present case is ''substances intended to be used for or in the treatment". The appropriate meaning of the "substances" in the section is ''things". The articles had to possess those qualities which are utilised in the treatment of diseases. The predominant use of cramp comfort patches are to alleviate the pain in the abdomen caused due Dymenorrhea and its specific purpose has been abundantly sought to be made....
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....ategory of medicines. The medicines which do not fall under the category of schedule H, H1, and X can be given without prescription through pharmacists and drugstores. • Rule 65 of the Drugs and Cosmetics Rules, 1940 specified in certain schedules such as Schedule H and H1 or Schedule X are required to be sold (by' retail) in accordance with the prescription of a registered medical practitioner and, in the case of substances specified in certain schedules such as Schedule X, the pharmacists are required to keep a copy of the prescription for a period of two years. In contrast, OTC drugs are not defined a distinct category of drugs. Though not regulated separately, OTC drugs are still categorised as a "drug" and, therefore, the manufacture, import and sale of OTC drugs is regulated under the Drug and Cosmetics Act, 1940 and Drug and Cosmetics Rules. • Therefore, there is no such drug license obtained under Drug and Cosmetics 1940 by the applicant for the sale of cramp comfort patches. The applicant has further submitted that grant of drug license under drug and cosmetics Act 1940 is not mandatory pre-requisite condition under the GST Tariffs for classificat....
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.... arise to the State and Central Exchequer (the rate of Tax will be same @ 12%), even if the product is classified under HSN 3005 serial Number 64. Hence, in view of the above facts the product Comfort patch may be classified under HSN 3005 as per serial Number 64 in schedule H of Notification 01/2017-Central Tax (Rate) dated: 28.06.2017 and Serial No. 64 of Schedule II of Notification G.O. (Ms) No.62 (No.II(2)/ctr/532(D-4)/2017) TNGST (Rate), dated: 29.06.2017 or else the above product may also be classified under HSN 96190090 which includes the products like sanitary towels (pads) or sanitary napkins, tampons, napkins and napkin liners for babies and clinical diapers, which are also Taxable at 12% of GST (CGST 6% and SGST 6%) in this case also No revenue loss may arise to the Government. 5.2 The Central Jurisdictional authority has stated that there is no pending proceedings in respect of the applicant on the questions raised. They have further opined that the applicant's product cannot be classified under the heading 3004 as it is clear from the Notification 01/2017 Ct(rate) that only medicaments used for therapeutic or prophylactic purposes are covered under the heading. Furt....
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....y to manage their menstrual discomfort/ secondary dysmenorrhea. The applicant has furnished the technical write-up of the product and the following tax invoices: i. Tax invoice number 100698617 dated 11.05.2021 raised by Lagom Labs Maharashtra, on Sweta Jha and the product is classified under the heading 30049099 ii. Tax invoice raised by Pantheon Pharchem vide No. W/RET/0047/20-21 dated 13.12.2020; W/RET/002/21-22 dated 04.04.2021 & W/RET/0069/21-22 dated 31.10.2021 on Lagom Labs, Mumbai. In all these invoices the product, 'Bluheat NUA heat patch (pack of 3); Bluheat NUA Heat Patch (Loose) is classified under the heading HSN 3824 iii. Invoice no: BTOTMN/012_21-22 dated' 12.11.2021 raised by Lagom Labs Pvt Ltd Maharashtra on Lagom Labs Pvt Ltd, Tamil Nadu, the product, 'Heat Patch-(Pack of 3)' is classified under the heading 3005 1090 On perusal of the above invoices furnished by the applicant, it is seen that the product 'Bluheat NUA heat Patch' is received by Lagom Labs, Mumbai, wherein the classification of the product is HSN 3821. The invoice raised on the ultimate consumer by the Lagom Labs Mumbai, classify the product under HSN 3004 and the produ....
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....s tablets, ampoules (for example. re-distilled water, in ampoules of 1.25 to 10 cm3, for use either for the direct treatment of certain diseases, e.g., alcoholism, diabetic coma or as a solvent for the preparation of injectible medicinal solutions). Capsules, cachets, drops or pastilles, medicaments in the, form of transdermal administration systems, or small quantities of powder, ready for taking as single doses for therapeutic or prophylactic use. The heading also includes measured doses in the form of transdermal administration systems which are generally put up in the form of self-adhesive patches (usually rectangular or round) and which are applied directly to the skin of patients. The active substance is contained in a reservoir which is closed by a porous membrane on the side entering into contact with the skin. The active substance released from the reservoir is absorbed by passive molecular diffusion through the skin and passes directly, into the bloodstream. These systems should not be confused with medical adhesive plasters of heading 30.05. The heading applies to such single doses whether in bulk, in packings for retail sale, etc.; or (b....
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....ave medicinal value but the same is not considered as medicaments, when they are used as such, without subjecting to any chemical modification. Therefore, merely because a product possesses certain natural therapeutic/prophylactic properties, it cannot be said to fall under the classification of medicaments. The applicant vide their submissions dated 11.02.2022 has contended that their product fall very much within definition of drugs under Section 3(b)(iv) of the Drugs and Cosmetics Act,1940 and in the absence of any provision defining 'Medicaments' in the GST Act 2017 to the contrary it is to be accepted that the said product may be "drugs" within the meaning of the Act. Sec 3 (b)(iv) of the Act provides that devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from to time by the Central Government by notification in the Official Gazette, after consultation with Board; In the case at hand, it is not established that the product has been classified as a device specified by the Central Government in any notification and therefore reliance on Section 3(b....
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....TERINARY PURPOSES 300510 - Adhesive dressings and other articles having an adhesive layer : 30051010 --- Adhesive guaze 30051020 --- Adhesive tape 30051090 --- Other Explanatory Notes to HSN 3005 states as follows: This heading covers articles such as wadding, gauze, bandages and the like, of textile, paper, plastic, etc., impregnated or coated with pharmaceutical substances (counter-irritant, antiseptic, etc.) for medical, surgical, dental or veterinary purposes, These articles include wadding impregnated with iodine or methyl salicylate, etc., various prepared dressings, prepared poultices (e.g., linseed or mustard poultices), medicated adhesive plasters, etc. They may be in the piece. in discs or in any other font'. From the above explanatory notes to Heading 3005 it is evident that the heading covers i. wadding, gauze, bandages and similar articles (for example dressings, adhesives, plasters, poultices) impregnated or coated with pharmaceutical substances for medical uses; ii. various medicated adhesive plasters, etc which may be in the piece, in discs or in any other form. The applicant has submit....
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.... there is nothing in the file to suggest that those products are mainly aimed at bringing about aesthetic improvements, which is an indication capable of establishing that they are not intended for medical use (see, to that effect, judgment of 4 March 2015, Oliver Medical, C-547/13, EU:C:2015:139, paragraph 52). 53 As regards, in the third place, whether the products covered by Implementing Regulation 2016/1140 can be considered as 'similar articles' to 'wadding, gauze (or] bandages' within the meaning of heading 3005 of the CN, the Commission contests this and submits that the general purpose of the goods classified in that heading is to treat sores or wounds, while the goods at issue in the main proceedings themselves display warnings that they should not be applied to the skin for the purpose of dressing wounds, bruises or swelling. 54 This argument cannot be accepted. The fact that those goods should not be used in some cases does not call into question the finding that they, are intended to treat sores or wounds. 55 Consequently, the products covered by Implementing Regulation 2610/1140 fall within heading 3005 of the CN and thus, as is apparent from....