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2021 (1) TMI 590 - AAR - GSTClassification of goods - Product Mosquito Repellent, Aayudh-Mosx - classifiable under Heading 30049011 or 38089191? - HELD THAT - The product in question i.e. AAYUDH-MOSX is a Ayurvedic mosquito repellent made from all-natural plant extracts and does not contain DEET (N, N-Diethyl-meta-toluamide). Said product is used for prevention of the body from being infected by the bite of the mosquitos. The applicant refers Section 3(a) of the Drugs and Cosmetics Act, 1940 defines Ayurvedic, Siddha or Unani drug . The definition of the Drugs and Cosmetics Act, 1940 having different object, purpose and scheme cannot be applied mechanically to GST law. The object of the GST Act is to raise revenue for which various products are differently classified in the Customs Tariff Act, as also applicable to GST - the applicant pitched the product in their sale material and advertisements as a mosquito repellent. Various mosquito repelling qualities are identified as defining characteristics of the subject goods in the market. Also, it is noted that the said product is not normally prescribed as a medicine by medical practitioner as a drug. There is no restriction on sales. The product is sold on demand at the counters in shops and establishments. Sales are not restricted to chemists/druggists alone. A perusal of the classification heading no. 38089191 shows that the product in question is a neat fit into the description of products laid down therein. No laboured process of reasoning is required since the heading No. 38089191, is clear as day light - invocation of the general entry called others by the applicant is clearly misconceived, since the product in question is covered by a specific description in the heading under which the product has been classified. Undoubtedly, the description under Heading No. 3808 91 91, i.e., Repellents 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 applicant themselves for the purposes of packing as well as advertisement and publicity - the product, AAYUDH-MOSX is not known in the market as an Ayurvedic medicine and the same is also not ordinarily prescribed by a Physician as a medicine for prevention of the body from being infected by the bite of the mosquitos. 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 Heading No. 3808 91 91 is most specific for the classification of the subject product. Thus, the product in question i.e. AAYUDH-MOSX , is a mosquito repellent used on the skin toward off mosquitoes and, hence, same is classifiable under Chapter Heading No. 3808 91 91 of the Customs Tariff Act, 1985 and not as a medicament under Heading No. 3004. AAYUDH-MOSX , being a mosquito repellent, attracts GST @18%, as per Sl. No. 87 of Schedule-III to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017.
Issues Involved:
1. Classification of the product "AAYUDH-MOSX" under the appropriate tariff heading. 2. Determination of the applicable GST rate for the product. Issue-wise Detailed Analysis: 1. Classification of the product "AAYUDH-MOSX" under the appropriate tariff heading: The applicant, engaged in the manufacturing of an Ayurvedic mosquito repellent named "AAYUDH-MOSX," sought to classify the product under either tariff heading 30049011 (Ayurvedic Medicaments) or 38089191 (Mosquito Repellents). The product is made from natural plant extracts and certified by the Ayurvedic Department. The applicant argued that "AAYUDH-MOSX" should be classified under heading 3004 as an Ayurvedic medicament due to its ingredients and therapeutic uses. They cited several case laws and research papers supporting the therapeutic properties of the ingredients used, such as Citronella oil and Lemongrass oil, which have been traditionally used as mosquito repellents. However, the Authority for Advance Ruling (AAR) noted that the definitions in the Drugs and Cosmetics Act, 1940, cannot be mechanically applied to the GST law, which has a different objective of revenue collection. The AAR emphasized that the product is marketed, advertised, and sold as a mosquito repellent, not as a medicine prescribed by medical practitioners. The product is available over the counter and not restricted to sales in chemist shops. The AAR applied the common parlance test and market identity test, concluding that the product is understood and used as a mosquito repellent. The specific tariff heading 38089191, which covers "Repellents for insects such as flies and mosquitoes," is more appropriate than the general heading 30049099 for medicaments. 2. Determination of the applicable GST rate for the product: The AAR referred to Notification No.01/2017-Central Tax (Rate) dated 28.06.2017, which specifies the GST rates for various goods. The relevant entry under Heading 3808 covers insecticides, rodenticides, fungicides, herbicides, anti-sprouting products, plant-growth regulators, disinfectants, and similar products, including mosquito repellents. The product "AAYUDH-MOSX" falls under the specific tariff heading 38089191 as a mosquito repellent. According to the notification, goods under this heading attract a GST rate of 18% (CGST-9% + SGST-9%). Conclusion: The AAR ruled that the product "AAYUDH-MOSX" is a mosquito repellent and is classifiable under Chapter Heading No. 38089191 of the Customs Tariff Act, 1985. Consequently, it attracts GST at the rate of 18% (CGST-9% + SGST-9%). The ruling emphasized the specific classification over the general one, aligning with the product's market identity and usage.
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