TaxTMI 
TaxTMI 
TaxTMI 
2022 (3) TMI 1300
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.... 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, under the brand name 'Nua'. They have stated that ....
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....or 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 covering and protecting wounds. iii. A 'bandage' is a long narrow piece of cloth used for tying around a par....
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....natory 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 drawn inference from the case of M/s. Shanti Surgicals Private Limited vs. Joint Commissioner [2009 (3) TMI 868]. They have stated that the retail packs of the product Cramp Comfort are not re-packed before be....
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....utical 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. Phyllosilicates are commonly used as excipients in the pharmaceutical industries. Phyllosilicates are clay minerals of the Vermiculite group. Therefore, iron and vermiculite clay are accepted minerals in the produc....
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....erit 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. CCE 2005 taxmann.com 842 (SC) (Full Bench. 3 Judges), the Apex Court held that the term refers to a product comprising of two or more constituents which have been mixed or compounded together for therapeutic or prophylactic use. The above definitions reveal that 'medicaments' include substances of pr....
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....skuner 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 to use. Lower abdomen cramp forms the cause of disease called Dysmenorrhea. The Applicant further relied on HSN Explanatory Notes of Chapter Heading 3004 wherein it is clear that this heading covers medicaments consisting of mixed or unmixed products, provided they are:- In packings for retail sale for therapeutic or prophylactic use. This refers to products (f....
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.... 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 of the product 'Cramp patch'. He stated that the packaging of the product consists of measured doses of ingredients i.e. iron powder, activated carbon, vermiculite, salt, water absorber, for external therapeutic use and merits classification under CTH 3004. In respect of merits for seeking classification under CTH3005, the authorized representative stated that the product being....
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.... 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 ranges (in %) Chemical purpose Medicinal purpose IRON POWDER 50-60 Iron powder is used instead of a chunk of iron as the large surface area of the fine powder greatly speeds up the oxidation reaction. Chloride ions in salt act as catalysts to further accelerate the oxidation. In the presence of Chloride ions, the formation of a more porous form of rust is favored. The use of high purity iron has made it possible to produce active pharmaceuticals ingredients and bulk drugs. The iron powders act as a reducing agent in pharma reaction. All t....
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.... 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 Tribunal decision & CTH 3824 in their submissions, they stated that their product cannot be covered under CTH 3824; the individual components are used in Pharma Industry as 'Medicaments' and it is for transdermal application, requiring no license under 'Drug and Cosmetics Act. They were asked to substantiate with legal provisions that their product is a medicament, put up with ingredients in 'measured doses', and do not require approval/license under Drugs & Cosmetics Act. They were asked to furnish the Manufacturer's Invoice/ Import invoice for the product. When asked whether any Inv....
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....ge 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 out on the aspect of abdomen pain relief during the menstrual cycle in women. Cramp Comfort patches are thus essentially items used for prophylactic purpose which in other words means preventive treatment or medicine. * Regarding clarification as to the applicant has obtained a license Under Drugs and Cosmetics Act 1940. In this regard, the applicant has submitted that there is no mandate for all the drugs/medicines to obtain license under the Drugs and Cosmetics Act 1940. Further the Cramp Comfort patches are those product which does not require prescription from the general physician or a chemist or any Registered medical practitioner. The product is a non-prescriptio....
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....herefore, 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 classification of product under the specific HSN Code. Also, grant of license obtained under other statutory enactment other than Indirect tax laws neither alters the nature and medicinal use of the product nor determines right the classification under HSN code 3004 or 3005 of the CGST Act 2017 and TNGST Act 2017 * The Cramp comfort patches consists of the composition as under: composition/contents of the product* Chemical Name CAS No: *Concentration/Concentration ranges (wt%)) Water absorber 7732-18-5 30-40 Iron Powder 7439-89-6 50-60 Activated charcoal 7440-44-0 5-10 Vermiculite 1318-00-9 5-10 Sodium chloride 7647-14-5 1-5 * *This product consists of the non-woven fabric and the heating element. Exact concentrations ....
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....nal 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. Further, the applicant's product may be classified under heading 3005. On perusal of the product details it is appears that the applicants' product is not a sanitary pad which are classified under heading 9619. From the pictorial details given by the applicant in their website it is not clear whether their product is made of non-woven fabric which consist of adhesive layer on one side and any other material to transform heat to the body such, to determine classification as per constituent material. They have stated that to decide whether the product falls under 3005 or 9619 or any heading physical inspection of the product along with technical literature is required. 6. We have considered the application filed by the applicant, samples and various submissions made by them as well as the comments of the State and Central T....
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....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 product is classified under HSN 3005 in the invoice raised by Lagom Labs, Mumbai on the applicant. Thus it is seen that the applicant has not furnished any invoice for the supply of the product made by them. The Lagom Labs Mumbai has classified under HSN 3005 while supplying to the applicant. The products are classified under HSN 3824 by the Vendor of the products to Lagom Labs, Mumbai. The applicant during the hearing dated 09.11.2021 has submitted that they are they are currently classifying the product under the heading 3004. Thus it is seen that the product stands classified under CTH 3824; CTH 3004; CTH 3005. It is the view of the applicant that the product merits classification under CTH 3004 in as much as the product is for therapeutic/prophylactic use or under CTH 3005, 'as similar articles' in as much as the product is an adhesive patch with impregna....
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....ssive 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) In packings for retail sale for therapeutic or prophylactic use. This refers to products (for example, sodium bicarbonate and tamarind powder) which, because of their packing and, in particular, the presence of appropriate indications (statement of disease or condition for which they are to be used, method of use or application, statement of dose, 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 he 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. On the other hand, even if no indications are given, unmixed products are to be regarded as being put up for retail sale for therapeutic or prophylactic use if they are put up in a form clearly specialised for such....
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....cial 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)(iv), to claim that the product is a 'Medicament' do not help them. It is further seen that the applicant claims the product to be a drug as per Section 3(b) (i), considering the material part of the said section to be 'substances intended to be used for or in the treatment'. It is their claim that the predominant use of the product is to alleviate the pain in the abdomen caused due to Dysmenorrhea and therefore to be considered as a 'drug'. Section 3(b)(i) of the Drugs and Cosmetics Act 1940 states that 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' From the above, it is evident that the substances intended to be used for treatment of a disorder is a 'drug' as per this provision....
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....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 submitted that the product should fall within the ambit of 'similar articles' as the product is designed as a patch of non-woven fabric that emits heat to soothe and relax muscles during menstrual cramps. In the instant case, the active ingredients of the product are Water absorber, Iron Powder, Activated charcoal, Vermiculite, Sodium chloride which are not pharmaceutical substance, but claimed by the applicant that the product are used for therapeutic purposes. The product is put up in forms for retail sale for prophylactic uses. 7.6 Further, the applicant has made reference to the judgment issued in the case of PFIZER CONSUMER HEALTHCARE VS THE COMMISSIONERS FOR HER MAJESTY S REVENUE AND CUSTOMS, wherein the Commission Implementing Regulation (EU) 2016 classified the Pfizer's product Thermacare under CN code 3824 90 96 and the First Tier Tribunal referred the question to Court of Justice of the European Communities (CJEU). It is seen that the reference made by the First Tier Tribunal stands answered by CJEU vide the Judgment of the court S....