TaxTMI 
TaxTMI 
2022 (11) TMI 389
X X X X Extracts X X X X
X X X X Extracts X X X X
....-400 016 ("hereinafter referred to as "the Appellant") against the Advance Ruling No GST-ARA-98/2019-20/B-72 dated 11.10.2021., pronounced by the Maharashtra Authority for Advance Ruling (hereinafter referred to as "MAAR"). BRIEF FACTS 3. M/s. Accurex Biomedical Private Limited having its corporate office at 212, Udyog Mandir, Bhagoji Keer Marg, Mahim West, Mumbai - 400016, is, inter-alia, engaged in the business of supply of various diagnostic reagents. The Appellant have obtained registration and holding valid registration certificate issued under CGST Act, 2017. 4. Out of the various range of products, the Appellant sought ruling in respect of the classification of the following two products:- (A) Turbilatex CRP Infinite (B) HbA1c Infinite In the above, the word "Infinite" is brand name of the Appellant. 5. (A) Infinite Turbilatex CRP 5.1 Infinite Turbilatex CRP (hereinafter referred to as "CRP Test Kit") is supplied by the Appellant under the brand name "Infinite". This product is meant for in-vitro diagnostic use only. Use or Purpose 5.2 CRP Test Kit is used for the quantitative determination of C-Reactive Protein (CRP) in human serum ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) Infinite HbA1c 22; (iii) Infinite HbA1c 20 and (iv) Auto Pure HbA1c 44. All the 4 sizes of the products have the same basic design, performance characteristics, effectiveness and intended use. The principle underlying usage of all the aforesaid products is also same. Because of similarity in the characteristics and usage of the above-mentioned products, hereinafter, the said products are collectively referred to as "HbA1c Test Kit". Use or Purpose 6.3 HbA1c Test Kit is used for the quantitative determination of hemoglobin A1c (HbA1c) in human blood and monitoring of glycemic control in diabetic patients. 6.4 HbA1c Test Kit contains the following components: Components Description R1 Latex reagent R2 Buffered antibody reagent R3 Hemolysis Reagent R4 Optional - Calibrator made from human blood 6.5 Principle on which the product is based. (i) HbA1c Test Kit is based on agglutination principle by antigen-antibody interaction to directly determine the HbA1c concentration in the whole blood. (ii) HbA1c assay is based on antigen-antibody interaction to directly determine the HbA1c concentration in whole blood. Total haemoglobin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (b) Under HSN Code 38.22 at Sr. No 80 under Schedule-II of the Notification No.1/2017-Central Tax (Rate), dated 28.6.2017 as "diagnostic kits and reagents". Advance Ruling passed by MAAR, Maharashtra 8. The MAAR held that CRP kit and Hb1Ac kit do not fall under HSN code 3002, whereas the same are covered by HSN Code 3822 based on the following observation:- (i) Entry No.125 of List 1 of Sr.No. 180 of Schedule I of Notification No. 1/2017-Central Tax (Rate), dated 28.6.2017, mentions the word "Agglutinating Sera". The said Entry does not mention the word 'diagnostic kits'. Whereas, there are other entries in the same List 1 wherein there is a specific mention of diagnostic kit. Therefore, "Agglutinating Sera" listed under Sr. No. 125 of List 1 of Schedule I covers agglutinating sera as an individual product and not as a diagnostic kit which works on the principle of "Agglutinating Sera". (ii) It was the submission of the Appellant that both CRP kit and Hb1Ac kit fall under HSN Code 30.02 since both products work on the principle of Agglutinating Sera. The Appellant have not substantiated their contention either with any detailed submissions on th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Sub-Heading ("CSH") 3002 and CSH 3822 read as under: Heading Codes Heading Description 3002 Human blood; animal blood prepared for therapeutic, prophylactic or diagnostic uses; antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes; vaccines, toxins, Cultures of micro-organisms (excluding yeasts) and similar products. 3822 Diagnostic or laboratory reagents on a backing, prepared diagnostic or Laboratory reagents whether or not on a backing, other than those of heading 3002 or 3006; 10.2 In view of above, it can be said that only those diagnostic/laboratory reagents (whether or not on a backing) which cannot appropriately be classified under CSH 3002 will fall under CSH 3 822.Therefore, it is to be examined whether the CRP Test Kits and Hb1Ac Test Kits in the instant case can be appropriately classified under CSH 3002.As can be seen from above, CSH 3002 covers, inter-alia, 'antisera and other blood fractions whether or not modified or obtained by means of biotechnological processes'. 10.3 To analyse the CSH 3002, reliance is placed on the Explanatory Notes to the Harmonize....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gnostic kits are classified here when the essential character of the kit is given by any of the products of this heading. Common reactions occurring in the use of such kits include agglutination, precipitation, neutralization, binding of complement, hem agglutination, enzyme-linked immunosorbent assay (ELISA), etc. Malaria diagnostic kits monoclonal antibodies to pLDI-1 (plasmodium lactate dehydmgenase) are for instance classified here. The essential character is given by that single component which governs to the greatest extent the specificity of the test procedure." [Emphasis supplied] 10.8 In the present case, antibodies used in CRP Test Kit supplied by the Appellant have been derived from Latex particles coated with anti-CRP antibody /mice antisera which is classifiable under CSH 3002. The essential component of the CRP Test Kit is R2 i.e., latex particles coated with specific anti human CRP since without which reaction with CRP in the sample/ specimen could not take place and hence, quantitative determination of CRP in the human serum could not be determined. In fact, around 85% of the total cost of the CRP Test Kit is attributable to component R2. Thus, it is evident t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onic Gonadotropin (HCG)-in the urine of a pregnant lady as an indicator of pregnancy. Normally, a pregnant lady secretes HCG which is secreted through urine. To produce the antibody for HCG, which could ultimately be used as an indicator in the PTK, HCG, which is glycoprotein hormone is injected in measured doses in rabbits or Goats. Because of the immunological systems present in rabbits and goats, antibodies are produced in the blood of the rabbit or goat. After sufficient period of time, the antibody for HCG is extracted and is used in the PTKs. PTKs themselves may be of different varieties like in the form of liquid, in the form of strip of paper, in the form of antisera or anti body or anti HCG dispersed on membrane as coated, or in the form of test kit card where also antisera antibody for HCG is coated. The test line in the strip of paper or on the card is an antisera antibody for HCG." 11.3 In the above case, the assessee was clearing the pregnancy test kits under CSH 3002, whereas the department contended that the same would fall under CSH 3822 as "diagnostic or laboratory reagent". The Hon'ble Tribunal after analyzing the HSN Explanatory notes and the characteristi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l appeals is : Whether Beta Visipreg, Visipreg Strip, Pregnancy Test Card fall as "antisera" under Chapter Heading 30.02 of CETA (according to the assessee) or whether it falls under Chapter Heading 38.22 of CETA as "diagnostic or laboratory reagent" (as contended by the Department). 18. The above three products were cleared by the assessee as Pregnancy Test Kits (PTK). According to the assessee the above three products are for the detection of hCG hormones in urine, as a test for pregnancy. The three products are meant for in-vitro diagnostic use only. According to the assessee, Chapter Heading 30.02 covers antisera of all forms. 19. On the other hand, it was argued on behalf of the Department that although PTK was an antisera, the above three products were classifiable as diagnostic or laboratory reagents under Chapter Heading 38.22 as they were used exclusively in laboratory for diagnostic purposes. According to the Adjudicating Authority, Chapter Heading 30.02 applied only to crude antisera and since the above three products were refined antisera, they did not fall under Chapter Heading 30.02. ..... 21. As stated above, Chapter Headi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atory Note (E) to CSH 3002 diagnostic kits are classified under CSH 3002 when the essential character of the kit is given by any of the products of CTH 3 002. In the present case, CRP Test Kit and Hb1Ac Test Kit is nothing but antisera in the form of kit. Therefore, covered under CSH 3002. 12.4 The objection raised by the MAAR has been considered by various courts and it is consistently held that "antisera" under CSH 3002 would also cover kit which are derived from antisera. Reliance in this regard is placed on the decision of Span Diagnostics Ltd. Vs. CCE -2007 (211) ELT 521 (SC), wherein, in the context of another item of CSH 3002 i.e., "Blood Fraction", the Hon'ble Supreme Court at para 36 of the judgement held that "Once an item is a "blood fraction" it falls under Heading 30.02 of Central Excise Tariff & merely because medium used is latex (rubber) or paper, will not bring the items under Heading 38.22 ibid - Medium is irrelevant." The medium could be paper or rubber. Configuration of product and function are important for classification. 12.5 Further, the Hon'ble CESTAT in the case of J. Mitra & Co. Ltd. Vs. CCE -2002 (140) ELT 524 (T) after examining the HSN Ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mponent of the CRP Test Kit and hence, component R2 would constitute as 'Principal supply'. 13.7 Further, the essential component of the HbA1c Test Kit is component R2 i.e., Mouse anti-human HbA1c monoclonal antibody & Goat anti-mouse IgG polyclonal antibody (i.e., antisera) since without which reaction with Hb1Ac in the sample/ specimen could not take place and hence, quantitative determination of HbA1c in human blood would not be determined. In fact, around 75% of the total cost of the HbA1c Test Kit is attributable to component R2. Thus, it is evident that R2 is the predominant component of the Hb1Ac Test Kit and hence, component R2 would constitute as 'Principal supply'. 13.8 As per Section 8 of the CGST Act, the composite supply will be treated as the supply of the principal supply. Therefore, tax liability applicable to the principal supply would apply to the entire composite supply. 13.9 In view of the above, supply of kits being composite supply, tax rate applicable to the principal supply i.e., component R2 would apply to the entire amount charged towards supply of kits under consideration. 13.10 In the present case, component R2 in both CRP Tes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....17) New GST Rate (GST council held on 11th June, 2017) 3822 All diagnostic kits and reagents 18% 12% f) that the GST rate applicable on supply of HbA1c and CRP is @12% i.e. (6% CGST and 6% SGST). Personal Hearing 16. The personal hearing in the matter was conducted on 16.09.2022 in virtual mode via Video Conferencing, which was attended by Mr. Abhinav Thakur and Ms. Hema Patel on behalf of the Appellant. Shri Thakur reiterated the earlier submissions made while filing the present appeal. He contended that the products under consideration namely CRP Test Kit and Hb1Ac Test Kit, are correctly classifiable under Chapter Sub-Heading 3002 attributable to the "Agglutinating Sera" enumerated at Entry No.125 of List 1 of Sr. No 180 of Schedule-I to the Notification No.1/2017-Central Tax (Rate), dated 28.6.2017. In support of his contention, he referred to the Explanatory Notes in which the meaning and scope of Antisera have been dealt with. He further referred to the Explanatory Note (E) to Chapter Heading 30.02 which states that Diagnostic kits are classified here when the essential character of the kit is given by any of the products of this heading. The sai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... being reproduced hereunder: Antisera are obtained from the blood of humans or of animals which are immune or have been immunised against diseases or ailments, whether these are caused by pathogenic bacteria and viruses, toxins or allergic phenomena, etc. Antisera are used against diphtheria, dysentery, gangrene, meningitis, pneumonia, tetanus, staphylococcal or streptococcal infections, snake bite, vegetable poisoning, allergic diseases, etc. Antisera are also used for diagnostic purposes, including in vitro tests. Specific immunoglobulins are purified preparations of antisera. 20.1 Thus it is clear that sometimes body cannot produce its own antibodies. So antigens of the pathogenic organism (bacteria, virus, etc.) is introduced into an animal body to produce antibodies. Then the antibodies created in the animal are extracted & introduced them into human body. These are known as antisera. 21. Now, we would like to examine the constitution, working principles, and functionalities of the impugned products, i.e., CRP Test Kit and Hb1Ac Test Kit, as per the product literature submitted by the Appellant. 21.1 According to the product literature pertaining to CRP Test ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the greatest extent the specificity of the test procedure." 21.3 Thus on perusal of the above explanatory note, it is clear that the diagnostic kits can also be classified under the Chapter Heading 30.02 where the essential component of the kit to be classified is the one falling under the Chapter head 30.02. It is further provided under the aforementioned explanatory note that the common reaction occurring in such kits would inter alia include agglutination. As regards the aforesaid provisions of the explanatory note to the Chapter Heading 30.02, it is observed here that the anti-human CRP antibody, i.e., antisera coated on the latex particles is the essential component of the impugned CRP Test Kit as discussed earlier and the reaction which occurs in the subject test kit is agglutination. Further, as has been discussed earlier, the essential character of the subject kit is given by the latex particles coated with antihuman CRP antibody, i.e., antisera, as it is the determining component for the agglutination which is the essentially the specificity of the test procedure. Therefore, the subject CRP Test Kit, being in the nature of a diagnostic kit for determining inflammation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... There is nothing like crude antisera and refined antisera. In the present case, even according to the Department, PTK is an antisera, however, according to the Department, PTK is a refined antisera. As stated, antisera falls under Chapter Heading 30.02. In the circumstances, "antisera" is covered by Chapter Heading 30.02 and since it is covered by that Heading, Chapter Heading 38.22 will not apply. If one reads Chapter Heading 38.22, it becomes clear that there could be diagnostic or laboratory reagents which could fall under Chapter Heading 30.02 and also under Chapter Heading 38.22. However, if a diagnostic or laboratory reagent like antisera falls under Chapter Heading 30.02 then it stands excluded from Chapter Heading 38.22." 22.3 After applying the ratio of the aforesaid judgment of the Hon'ble Supreme Court, it is observed that CRP Test Kit, the impugned product, whose principal component is the latex particles coated with the anti-human CRP antibody obtained from the mice antisera, will aptly be construed as antisera. Accordingly, it will be classified under the Chapter Heading 30.02, and not under the Chapter Heading 38.22 owing to its description wherein it is cate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said observations made by the MAAR in as much as it is adequately clear from the plain reading of the HSN explanatory note that "antisera" covered under Chapter heading 3002 can be used for diagnostic purposes, including in vitro tests, which works on the principle of agglutination. It is further observed that List 1 appended to the Schedule-I to the Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 enumerates only the medicines, drugs, and the diagnostic kits as mandated under the description of entry at SI. No. 180 of the Notification No. 01/2017-C.T. (Rate). Since it is beyond doubt that the agglutinating sera cannot be construed as medicine or drug, therefore, the same is bound to be considered in the nature of diagnostic kit. Therefore, the observation of the MAAR that the agglutinating sera mentioned under the said list 1 is an individual product and cannot be construed as diagnostic kit is not correct. 24.3 The MAAR had deduced that since the GST rate on certain products, including CRP (C-Reactive Protein), was reduced to 5% as per Sr. No. 7 of Notification No. 05/2021 -Central Tax (Rate) dated 14.6.2021, and the notification was in operation up to 30.9.2021, the rate....