2021 (4) TMI 930 - AAR - GST

Classification of goods - prepared laboratory reagents/ Pharmaceutical Reference Standards - correct classification is Notification No. 01/ 2017-IT (R) is Sr. No. 80 of Schedule II attracting a levy of 12% or Sr. No. 453 of Schedule III attracting a levy of 18 %? HELD THAT - The facts of the case are identical to the ruling passed by this authority in the case of IN RE M/S. CHROCHEMIE LABORATORY PVT. LTD., 2019 (10) TMI 871 - AUTHORITY FOR ADVANCE RULING, KARNATAKA , wherein it was ruled that Entry. No. 80 of Schedule II to Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 is not applicable to prepared laboratory reagents - The Karnataka Appellate Authority of Advance Ruling, while disposing the appeal filed by M/s. Chromachemie Laboratory Pvt. Ltd., has set aside the aforesaid ruling in IN RE M/S. CHROMACHEMIE LABORATORY PRIVATE LIMITED 2020 (1) TMI 795 - APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA . The Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the Appellant and classified under Tariff Item 3822 00 90 of the Customs Tariff Act, 1975 is covered under Entry No. 80 of Schedule-II to Notification No. 1/2017-Integrated Tax (Rate), dated 28th June, 2017 attracting a levy of Integrated Tax at the rate of 12%.

Summary

Issues Involved:
1. Classification of Pharmaceutical Reference Standards (PRS) under the Customs Tariff Act.
2. Applicability of GST rate under Notification No. 01/2017-IT (R) for PRS.

Issue-wise Detailed Analysis:

1. Classification of Pharmaceutical Reference Standards (PRS) under the Customs Tariff Act:

The applicant, engaged in the distribution of Pharmaceutical Reference Standards (PRS), sought clarity on the classification of PRS under the Customs Tariff Act. PRS are described as prepared laboratory reagents intended exclusively for analytical, calibrating, and referencing purposes, not for detection, diagnosis, or use as drugs. The classification under Tariff Item 3822 00 90 was supported by the decision in LGC Promochem India Pvt. Ltd. v. Commissioner of Customs & Service Tax, Bangalore, which was upheld by the Supreme Court. The ruling classified PRS as prepared laboratory reagents under Chapter Heading 3822 of the Customs Tariff Act.

2. Applicability of GST rate under Notification No. 01/2017-IT (R) for PRS:

The applicant sought an advance ruling to determine whether PRS should attract a GST rate of 12% under Entry No. 80 of Schedule II (covering "All diagnostic kits and reagents") or 18% under Entry No. 453 of Schedule III (a residuary entry for unspecified goods). The applicant argued that PRS, as prepared laboratory reagents, should fall under Entry No. 80 of Schedule II, attracting a 12% GST rate. They emphasized that the term "reagent" in Entry No. 80 is broad enough to include both diagnostic and laboratory reagents, supported by the HSN Explanatory Notes and previous rulings.

Findings and Discussion:

The authority considered the submissions and noted the similarity with the case of M/s. Chromachemie Laboratory Pvt. Ltd., where it was ruled that Entry No. 80 of Schedule II applies to all diagnostic kits and reagents, including laboratory reagents. The Karnataka Appellate Authority for Advance Ruling clarified that the phrase "All diagnostic kits and reagents" encompasses the entire range of diagnostic and laboratory reagents under Heading 3822, and the legislative intent was to apply a 12% GST rate to all such reagents. The principle of ejusdem generis was deemed inapplicable as the general term "All" precedes the specific enumeration.

Ruling:

The Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the applicant, classified under Tariff Item 3822 00 90 of the Customs Tariff Act, 1975, are covered under Entry No. 80 of Schedule-II to Notification No. 1/2017-Integrated Tax (Rate), attracting a levy of Integrated Tax at the rate of 12%.