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2020 (10) TMI 1292 - AAR - GSTClassification of goods - rate of tax - Topical Antiseptic Solution/Topical Antiseptic Hand Sanitiser - classifiable under HSN code 3004 90 87 (medicament) or 3808 94 00 (disinfectant)? - HELD THAT - Heading 3808 under the Customs Tariff Act, 1975 also covers the goods of the same description as provided under entry no. 87 except with the condition that such goods shall be put up in forms or packings for retail sale or as preparations or articles. Further Rule 1 of rules for the interpretation provides that the classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes - although the term disinfectants appears to be limited to agents which are generally applied on inanimate objects, it also includes sanitizers expressly. Therefore the ambit of the terms used in the heading 3808 extends to even those goods such as sanitizers which are applied on the human hands and not just on an inanimate objects. The Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, HYDERABAD VERSUS M/S SARVOTHAM CARE LTD. 2015 (8) TMI 250 - SUPREME COURT has held that suggestion that shampoo should be used once a week and on other days, normal shampoos may be used, showed it was to be used like medicine, unlike other normal Shampoos. It was more so as it was not used for cleaning hair. Hence, shampoo was classifiable as medicine under sub-heading 3003.10 of Central Excise Tariff and not under sub-heading 3305.99 ibid as preparation for use on hair'. Even sanitizers are manufactured based on formulations Ethanol 70% (v/v) or Isopropyl alcohol 75% (v/v), Chlorhexidine Gluconate Solutuion Ip 2.5% v/v and Sanitizers can aid in the prevention of the human ailment in the form of COVID-19 disease; it does not qualify as medicaments because for the goods in question to be treated as medicament , it should cure or prevent a specific ailment. Goods which are meant for general hygiene or well-being of a person which may incidentally lead to the prevention of a host of illnesses or ailments cannot be considered as a medicament. It is for this reason that goods like soaps, ordinary shampoos, etc. are not treated as medicaments. The World Customs Organization has also classified the Hand Sanitizer under HSN 3808.94.
Issues Involved:
1. Classification of 'Topical Antiseptic Solution/Topical Antiseptic Hand Sanitiser' under HSN code 3004 90 87 (medicament) or 3808 94 00 (disinfectant). 2. Rate of tax payable on 'Topical Antiseptic Solution/Topical Antiseptic Hand Sanitiser' under CGST Act, 2017 and UPGST Act, 2017. Detailed Analysis: Issue 1: Classification of 'Topical Antiseptic Solution/Topical Antiseptic Hand Sanitiser' The applicant, a manufacturer and wholesaler of pharmaceuticals and nutraceuticals, sought to determine whether their product, 'Topical Antiseptic Solution/Topical Antiseptic Hand Sanitiser,' should be classified under HSN code 3004 90 87 (medicament) or 3808 94 00 (disinfectant). Applicant’s Argument: - The product is intended for use by health professionals and the general public for antiseptic cleaning, particularly in medical settings. - The composition includes Chlorhexidine Gluconate and Ethanol, both of which are recognized antiseptic agents. - Disinfectants are generally understood to be used on inanimate objects, whereas antiseptics are used on living tissues. - The product is labeled and used in a manner consistent with medicinal products, specifically for prophylactic use to prevent infection. Jurisdictional Officer’s Opinion: - The product should be classified under HSN 3808 94 00 as a disinfectant, with a GST rate of 18%. Authority’s Findings: - The term "disinfectants" under HSN 3808 includes agents that destroy or inactivate bacteria, viruses, or other microorganisms, generally on inanimate objects, but also includes sanitizers. - The Ministry of Finance has clarified that hand sanitizers attract GST at the rate of 18%. - Medicaments are defined as preparations for the treatment or prevention of human or animal ailments. However, products meant for general hygiene, which may prevent a host of illnesses, are not considered medicaments. - The product does not qualify as a medicament because it is used for general hygiene rather than treating or preventing a specific ailment. Conclusion: The 'Topical Antiseptic Solution/Topical Antiseptic Hand Sanitiser' is classifiable under HSN code 3808 94 00 (disinfectant). Issue 2: Rate of Tax Payable The applicant sought to determine the applicable tax rate for the product under the CGST Act, 2017, and the UPGST Act, 2017. Relevant Notifications: - Notification No. 1/2017-Central Tax (Rate) dated 28-Jun-2017 specifies the rates for various goods. - Entry No. 87 of Schedule III specifies a rate of 18% for disinfectants and similar products. - Entry No. 63 of Schedule II specifies a rate of 12% for medicaments. Authority’s Findings: - Based on the classification under HSN 3808 94 00, the product falls under entry no. 87 of Schedule III, attracting a GST rate of 18%. - This rate comprises 9% CGST and 9% SGST. Conclusion: The CGST rate on 'Topical Antiseptic Solution/Topical Antiseptic Hand Sanitiser' is 9%, and the SGST rate is also 9%, making a total GST rate of 18%. Ruling: 1. The 'Topical Antiseptic Solution/Topical Antiseptic Hand Sanitiser' is classifiable under HSN code 3808 94 00. 2. The CGST rate on 'Topical Antiseptic Solution/Topical Antiseptic Hand Sanitiser' is 9%, and the SGST rate is 9%, totaling an 18% GST rate. This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103 (2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.
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