2018 (7) TMI 388 - AAR - GST

Classification of goods - Rate of GST - Lyophilizers-Machinery for the plant - Machinery meant for manufacturing life saving drugs - applicant is in strong belief that Lyophilizers i.e. Machinery for Plant manufactured by the applicant fall under Entry No.320 of schedule III by following the amendment carried over to it by N/N. 41/2017- Central Tax(rate) dated 14.11.2017. Held that - The process of Lyophilization, is defined as a freeze-drying process that removes water from a product after it is frozen and placed under a vacuum. It is a low temperature dehydration process which involves freezing the product, lowering pressure, then removing the ice by sublimation. Freeze drying results in a high quality product because of the low temperature used in processing - the application of the process of lyophilization is found not only in pharmaceutical industry, but also in various other industries - On examination of the process of Lyophilization, it is found that the goods Lyophilizers are classifiable under Tariff heading 84198990 as per the Section notes to Section XVI and Chapter notes to Chapter 84 of the Customs tariff. As the rules for interpretation of Customs Tariff Act, 1975 was made applicable to GST Tariff, the goods Lyophilizers are classifiable under heading 8419 of the GST Tariff. As per S.No.320 to Schedule - III of the Notification No. 41/2017 dated 14.11.2017, Machinery, plant or laboratory equipment, whether or not electrically heated (excluding furnaces, ovens and other equipment of heading 8514), for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilizing, pasteurizing, steaming, drying, evaporating, vaporizing, condensing or cooling, other than machinery or plant of a kind used for domestic purposes; instantaneous or storage water heaters, non-electric other than Solar water heater and system falling under heading 8419 of the GST Tariff have been brought under Schedule-III of the Notification, notifying the rate of central tax as 9% as per G.O.Ms No. 250, Revenue (CT-II) Department, Dt. 21-11-2017. As the goods Lyophilizers are classifiable under the heading 8419 of the GST Tariff, the rate of central tax applicable is 9% only. Ruling - The tax rate leviable on supply of Lyophilizers falling under the tariff heading 8419 of the GST Tariff is 9% CGST 9% SGST.

Summary

Issues: Rate of tax applicable on Lyophilizers under chapter heading 8419 as on 15.11.2017.

Analysis:
1. The applicant sought an advance ruling on the rate of tax applicable for Lyophilizers under chapter heading 8419 as of 15.11.2017.
2. The applicant highlighted that Lyophilizers are machinery used in the pharmaceutical industry for manufacturing life-saving drugs, falling under HSN Code 8419.
3. Initially, from 01.07.2017 to 14.11.2017, GST was paid at 14% as Chapter heading 8419 was not notified for a lower rate. However, as of 15.11.2017, the rate reduced to 9% as per Notification No. 41/2017-Central Tax(rate).
4. The applicant argued that Lyophilizers fall under Entry No.320 of schedule III post the amendment by Notification No.41/2017, hence eligible for the 9% tax rate.
5. The ruling authority examined the classification of Lyophilizers under Tariff heading 84198990 and found them classifiable under heading 8419 of the GST Tariff.
6. As per Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017, Lyophilizers under heading 8419 attract a 9% CGST + 9% SGST tax rate.
7. The ruling was given in favor of the applicant, M/s Lyophilization Systems India Private Limited, Hyderabad, with the tax rate of 9% CGST + 9% SGST applicable on the supply of Lyophilizers under heading 8419 of the GST Tariff.