2020 (9) TMI 586 - AAR - GST

Classification of goods - rate of tax - Micro-manipulator system which is Itracytoplasmic Sperm Injection (ICSI) with ejaculated, epidymal or testicular spermatozoa used in Assisted Reproductive Technology Procedures - HELD THAT - In the instant case, as submitted by the applicant, the micromanipulators are used to carry out the procedure of invitro fertilization (IVF) under a microscope. From a plain reading of the procedure of IVF described by the applicant in his submission (please refer para-4), it appears that the entire procedure needs precision and perfection for which a microscope with extremely powerful objective lenses and high magnification would be required. As per the explanatory notes mentioned above, the Compound Optical Microscope consists of an objective designed to produce a magnified image, an eyepiece which further magnifies the observed image, has a provision to illuminate the object from below (by means of a mirror illuminated by a light source) and a set of condenser lenses which directed the beam of light onto the object. Thus, the micromanipulator would be rightly classified under the head Compound Optical Microscope falling under Sub-heading 9011. The said product would be rightly classifiable as Surgical microscope (Tariff item No.90118000) under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) covered under the Sub-heading Compound optical microscopes, including those for photomicrography, cinephotomicrography or microprojection. Whether the product micromanipulator finds mention under sub-heading 9018 for which we would be required to go through the sub-heading 9018 as appearing in the First Schedule to the Customs Tariff Act, 1975? - HELD THAT - We have gone through the above explanatory notes to the Harmonized Commodity Description and Coding System with respect to Sub-heading 9018 (which covers all the products falling under the sub-heading No.9018). We have also gone through the entire list of all the instruments/apparatus/appliances listed therein covered under the Sub-heading No.9018. The product micromanipulator does not find mention in the said list. Now, since micromanipulator does not appear in the list of instruments/apparatus/appliances listed above, it can be safely concluded that the said product is not classified/ classifiable under Sub-heading No.9018 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). Thus it cannot be inferred on the basis of a general entry in the Sub-heading Instruments and appliances used in medical science that a product which the applicant construes as an instrument/ appliance used in the field of medical science should find a specific entry within that sub-heading - thus, the product micromanipulator is rightly classified under the Sub-heading 9011 - Compound optical microscopes, including those for photomicrography, cinephotomicrography or microprojection. Thus, micromanipulator system falls under the Tariff item No.9011 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). The same is covered under Entry No.184 of Schedule-IV of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 upto 14.11.2017 and covered under Entry No.411F of Schedule-III of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 (as amended) from 15.11.2017 onwards. The rate of GST applicable would be 28% upto 14.11.2017 and 18% GST with effect from 15.11.2017.

Summary

Issues Involved:
1. Classification of the 'Micro-manipulator System' under the appropriate tariff heading.
2. Determination of the applicable GST rate for the 'Micro-manipulator System.'

Issue-wise Detailed Analysis:

1. Classification of the 'Micro-manipulator System':

The applicant sought clarification on whether the 'Micro-manipulator System' used in Assisted Reproductive Technology Procedures should be classified under tariff heading 9018 or 9011. The applicant argued that the system falls under HSN 9018 globally, which includes "Instruments and appliances used in medical, surgical, dental, or veterinary sciences," and not under HSN 9011, which covers "Compound optical microscopes."

The applicant described the 'Micro-manipulator System' as a device used to physically interact with a sample under a microscope, requiring precision unachievable by the unaided human hand. The system is essential for Intracytoplasmic Sperm Injection (ICSI) procedures in IVF technology, involving various components like micromanipulators, micro injectors, and an inverted microscope.

The applicant cited several judicial precedents emphasizing that a specific entry should prevail over a general one. They argued that the 'Micro-manipulator System' should be classified under CH-9018 as it is primarily an instrument used in medical science, with the microscope being a mere component aiding the primary function.

However, the ruling authority examined the sub-headings 9011 and 9018 in detail. The authority noted that a micromanipulator cannot function without a microscope, making the microscope an essential component. The authority referred to explanatory notes under HSN 9011, which includes microscopes used for various specialized purposes, including surgical microscopes. The authority concluded that the 'Micro-manipulator System' is essentially a surgical microscope, as its primary function involves precision and magnification necessary for IVF procedures.

Thus, the ruling authority determined that the 'Micro-manipulator System' should be classified under tariff heading 9011, specifically under 'Compound optical microscopes.'

2. Determination of the Applicable GST Rate:

The ruling authority referred to Notification No.01/2017-Central Tax (Rate) dated 28.06.2017, which lists the applicable GST rates for various goods. Initially, 'Compound optical microscopes' under heading 9011 were listed under Entry No.184 of Schedule-IV, attracting a GST rate of 28% (14% SGST + 14% CGST).

However, the notification was amended by Notification No.41/2017-Central Tax (Rate) dated 14.11.2017, which moved 'Compound optical microscopes' to Entry No.411F of Schedule-III, reducing the GST rate to 18% (9% SGST + 9% CGST) effective from 15.11.2017.

Conclusion:

The ruling concluded that the 'Micro-manipulator System' is classifiable under Tariff item no.9011 of the First Schedule to the Customs Tariff Act, 1975. The applicable GST rate is 28% (14% SGST + 14% CGST) up to 14.11.2017 and 18% (9% SGST + 9% CGST) from 15.11.2017 onwards.