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2020 (1) TMI 882 - AAAR - GSTClassification of goods - Odomos - whether classified under Chapter 38 of Customs Tariff Act and is classified under HSN 3808 91 91 or otherwise? - challenge to AAR decision. Whether the order passed by the Authority for Advance Ruling is illegal and not sustainable because the authority ignored the comments submitted by the department in response to the Application filed by the Applicant? - HELD THAT - The ruling has been given by the AAR by way of a speaking order and there is no evidence that it has been passed in an arbitrary manner. Therefore, the impugned Order passed by the Authority cannot be held unsustainable on this ground. Whether the impugned order is illegal as the same has not followed the binding precedent for the same product as decided by Hon'ble Allahabad High Court in the case of COMMISSIONER OF SALES TAX VERSUS BALSARA HYGIENE PRODUCTS LTD. 1985 (12) TMI 366 - ALLAHABAD HIGH COURT ? - HELD THAT - We have gone through the cited judgment of the Hon'ble High Court in the case of M/s. Balsara Hygiene Products Ltd. and observe that it was passed in the context as to whether the said product fell within the ambit of Entry No. 29 of Notification No.ST-II-5785/X-10(1)-80-U.P. Act XV /48-Order-81, dated 7-9-1981 issued under Section 3A of the U.P. Sales Tax Act, 1948. As far as the third issue raised by the Applicant is concerned, i.e., that the order of the AAR was based on extraneous considerations, we observe that the appellant has failed to detail such alleged extraneous consideration, nor do we find anything in the impugned order which may give rise to such an inference. We, therefore, disregard this ground, apparently being an unsupported and vague charge. Classification of product Odomos? - HELD THAT - Undoubtedly, the description under Heading No. 3808 91 '91, i.e., Repellants for insects such as flies, mosquito is far more specific as compared to the description under the other heading under consideration, i.e., Heading No. 3004 90 99 which is Other (meaning medicaments other than all those explicitly specified in the other sub-headings of Heading No. 3004). Evidently, the latter heading is a residual classification while the former is specific and conforms to the description of the goods adopted by the appellants themselves for the purposes of packing as well as advertisement and publicity. The Hon'ble Supreme Court also, in their judgment in the case of HPL CHEMICALS LTD. VERSUS CCE, CHANDIGARH 2006 (4) TMI 1 - SUPREME COURT , have held that specific heading is preferable over residuary heading for classification. Therefore, in terms of the aforesaid rules for interpretation, Heading No. 3808 91 91 will prevail over 3004 90 99 . The appellant declare prominently on the packing of the goods under reference that it is mosquito repellent cream . The advertisement and publicity of these goods is also done as a mosquito repellent. It would also not be out of place to mention that the appellant's own website www.dabur.com, describes Odomos as a 'mosquito repellent' - the market identity in common parlance of the subject goods is as a mosquito repellent and their usefulness in preventing mosquito borne diseases (again derived from their characteristic quality of being a mosquito repellent) is of a subsidiary/ supplementary nature. Also, the substance DEET is mentioned in the schedule to the Insecticides Act, 1968 as an insecticide and by corollary, its improved version, i.e., NNDB would also be an insecticide. In this context, it is pertinent that mosquito repellents are classified at Heading No. 3808 91 91 of the Customs Tariff as a subcategory of insecticides. Thus, this again indicates that even by applying the yardstick of chemical composition, Heading No. 3808 91 91 is most specific for the classification of the subject product. All the factors relevant for classification under the Customs Tariff lead to the classification of the Applicants' product Odomos under Heading No. 3808 91 91 , be it the rules for interpretation of the said Tariff, the common parlance test, its chemical composition or its usage and way of working. Hence, Odomos is a mosquito repellent and has to be classified under Chapter Heading 3808 91 91 of the Customs Tariff Act. The ruling of AAR upheld.
Issues Involved:
1. Legality and sustainability of the Advance Ruling Order. 2. Consideration of binding precedent by the Authority for Advance Ruling. 3. Allegation of extraneous considerations influencing the ruling. 4. Correct classification of the product "Odomos" under the Customs Tariff Act. Detailed Analysis: 1. Legality and Sustainability of the Advance Ruling Order: The Applicant contended that the Authority for Advance Ruling ignored departmental comments in their decision-making process. However, the appellate authority observed that the ruling was passed after due consideration of the submissions from the departmental representative. The comments from stakeholders are not binding, and the authority is required to apply the facts diligently to the issue at hand. The ruling was given by way of a speaking order, and there was no evidence of arbitrariness. Thus, the order cannot be deemed unsustainable on this ground. 2. Consideration of Binding Precedent: The Applicant argued that the ruling did not follow the precedent set by the Hon'ble Allahabad High Court in the case of M/s. Balsara Hygiene Products Limited, which classified the product as a medicament. The appellate authority noted that the cited judgment was in the context of a notification under the U.P. Sales Tax Act, which included insecticides and pesticides within the broader category of medicines and pharmaceutical preparations. The judgment did not specifically address the relative merits of classifying the product as a medicament versus a mosquito repellent. Therefore, the ruling by the Authority for Advance Ruling, classifying the product under Heading No. 3808 91 91 as a mosquito repellent, was not in defiance of the cited judgment. 3. Allegation of Extraneous Considerations: The Applicant alleged that the ruling was based on extraneous considerations but failed to provide details or evidence to support this claim. The appellate authority found no basis for this allegation in the impugned order and disregarded it as an unsupported and vague charge. 4. Correct Classification of "Odomos": The primary issue was the correct classification of "Odomos" under the Customs Tariff Act. The Applicant had previously classified the product as a mosquito repellent under Chapter Heading 3808 before the advent of GST. The product's composition and intended usage had not changed, and it was marketed and advertised as a mosquito repellent cream. The General Rules for the Interpretation of Import Tariff stipulate that the heading providing the most specific description should be preferred. Heading No. 3808 91 91, "Repellants for insects such as flies, mosquito," is more specific than Heading No. 3004 90 99, "Other medicaments." The appellate authority also noted that the product is regulated under the "Drugs and Cosmetics Act, 1940," but this does not automatically classify it as a medicine. The active ingredient NNDB is an improved version of DEET, which is listed as an insecticide under the "Insecticides Act, 1968." The product's market identity in common parlance is as a mosquito repellent, and it is not typically prescribed as a medicine by registered medical practitioners. Therefore, the product's classification under Heading No. 3808 91 91 was upheld. Ruling: The appellate authority upheld the ruling in Order No. 25, dated 20-2-2019, of the Authority for Advance Ruling, stating that "Odomos is well covered under Chapter 38 of Customs Tariff Act and is classified under HSN 3808 91 91."
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