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2022 (11) TMI 389 - AAAR - GSTClassification of goods - CRP Test Kit - Hb1Ac Test Kit - classifiable under HSN Code 30.02 at Entry No.125 of List 1 of Sr. No 180 under Schedule-I of the Notification No.1/2017-Central Tax (Rate), dated 28.6.2017 as Agglutinating Sera or under HSN Code 38.22 at Sr. No 80 under Schedule-II of the Notification No.1/2017-Central Tax (Rate), dated 28.6.2017 as diagnostic kits and reagents? HELD THAT - The diagnostic kits can also be classified under the Chapter Heading 30.02 where the essential component of the kit to be classified is the one falling under the Chapter head 30.02. It is further provided under the aforementioned explanatory note that the common reaction occurring in such kits would inter alia include agglutination. As regards the provisions of the explanatory note to the Chapter Heading 30.02, it is observed here that the anti-human CRP antibody, i.e., antisera coated on the latex particles is the essential component of the impugned CRP Test Kit as discussed earlier and the reaction which occurs in the subject test kit is agglutination. Further, as has been discussed earlier, the essential character of the subject kit is given by the latex particles coated with antihuman CRP antibody, i.e., antisera, as it is the determining component for the agglutination which is the essentially the specificity of the test procedure. Therefore, the subject CRP Test Kit, being in the nature of a diagnostic kit for determining inflammation and infection in the human body, and satisfies all the conditions prescribed under the said explanatory note (E) to the Chapter heading 30.02, would aptly be covered under the Chapter Heading 30.02. The impugned product CRP Test kit is based on mice anti- CRP antibody / mice antisera and thus covered under Chapter 30.02 as it is specifically excluded from Chapter 38.22. Chapter Heading 30.02 is the default entry for diagnostic kits. If any product is covered by Chapter 30.02, then there is no need to visit Chapter 38.22. Whether the impugned product, i.e., CRP Test Kit, can be construed as agglutinating sera mentioned at SI. No. 125 of the List I appended to the Schedule I to the Notification No. 01/2017-C.T. (Rate) dated 28.06.2017, or not? - HELD THAT - It is not in dispute that the said impugned product works on the principle of agglutination where the latex beads coated with the antisera reacts with the CRP of the human blood sample resulting into agglutination, which ultimately leads to diagnosis of inflammation or infection in the human body with the help of spectrophotometer. In view of this, it is held that the impugned product, i.e., CRP Test kit, which has been held as antisera, and which works on the principle of agglutination for the medical diagnosis of infection and inflammation in the human body, can aptly be construed as agglutinating sera. Thus, the impugned product will fall under entry agglutinating sera at SI. No. 125 of the list I appended to the Schedule I to the Notification No 01/2017-C.T. (Rate) dated 28.06.2017. The said product, CRP Test Kit, will attract GST at the rate of 5% in terms of the entry at SI. No. 180 of Schedule I to the Notification No. 01/2017-C.T. (Rate) dated 28.06.2017. C lassification and rate of tax in respect of another impugned product Hb1Ac Test Kit - HELD THAT - In respect of the second impugned product, i.e., Hb1Ac Test Kit, it is seen that Hb1Ac Test Kit, much like the CRP Test Kit, is also a diagnostic kit having different components such as (i) Latex reagent, (ii) Buffered antibody reagent, (iii) Hemolysis Reagent, and (iv) Optional - Calibrator made from human blood, which works on the same principle of the agglutination as was the case with CRP Test kit. Further, as was the case with first impugned product, i.e., CRP Test kit, the principal component of the product under question is the antibody reagent, which is extracted from the antisera of the animals like mouse and goat, and which is primarily responsible for the agglutination process based on the interaction between the antibody and antigen, and which accounts for 75 % of the total cost of the impugned product. It is also seen that the impugned product under question is used for quantitative determination of hemoglobin A1c (HbA1c) in human blood and monitoring of glycemic control in diabetic patients. Thus, the impugned product is used as a diagnostic kit similar to that of CRP Test kit. The second impugned product, i.e., HbA1c, is very similar to the first impugned product, i.e., CRP Test kit, in terms of its constitutionality and functionality, and hence all the reasoning and rationale used for classification of the first impugned product, i.e., CRP Test kit, will apply mutatis-mutandis to the second impugned product, i.e., HbA1c, too. Thus, it is held that second impugned product, i.e., HbA1c, will be classified under the chapter heading 3002, and accordingly, will attract GST at the rate of 5%.
Issues Involved:
1. Classification of CRP Test Kit and HbA1c Test Kit. 2. Applicable GST rate for CRP Test Kit and HbA1c Test Kit. Detailed Analysis: 1. Classification of CRP Test Kit and HbA1c Test Kit: CRP Test Kit: - Product Description: CRP Test Kit, branded as "Infinite," is used for the quantitative determination of C-Reactive Protein (CRP) in human serum for medical diagnosis of inflammation and infections. It contains Buffer Reagent (R1), Latex Reagent (R2), and Calibrator Lyoph Serum Vial (R3). - Principle: The kit works on the agglutination principle where latex particles coated with specific anti-human CRP react with CRP in the sample, causing agglutination detectable by a spectrophotometer. - Essential Component: The essential component is R2 (latex particles coated with specific anti-human CRP), which constitutes around 85% of the total cost and is crucial for the test's specificity. HbA1c Test Kit: - Product Description: HbA1c Test Kit, branded as "Infinite" or "Auto Pure," is used for quantitative determination of hemoglobin A1c (HbA1c) in human blood and monitoring glycemic control in diabetic patients. It contains Latex reagent (R1), Buffered antibody reagent (R2), Hemolysis Reagent (R3), and an optional Calibrator (R4). - Principle: The kit works on the agglutination principle by antigen-antibody interaction to determine HbA1c concentration. - Essential Component: The essential component is R2 (Mouse anti-human HbA1c monoclonal antibody & Goat anti-mouse IgG polyclonal antibody), which constitutes around 75% of the total cost and is crucial for the test's specificity. Advance Ruling by MAAR: - MAAR ruled that both CRP and HbA1c kits do not fall under HSN code 3002 but under HSN code 3822 as "diagnostic kits and reagents," attracting GST @ 12%. Appellant's Grounds of Appeal: - The appellant argued that both kits should be classified under Chapter Sub-Heading 3002 as "Agglutinating Sera," citing the essential character given by antisera components. - They referenced Explanatory Notes to the Harmonized Commodity Description and Coding System of CSH 3002 and judicial precedents, including the Supreme Court judgment in Span Diagnostics Ltd. Vs. CCE, which held that diagnostic kits with essential components classifiable under CSH 3002 should be classified under CSH 3002. Appellate Authority's Findings: - CRP Test Kit: The essential component, R2, is antisera derived from mice, which falls under CSH 3002. The kit works on agglutination, a common reaction in diagnostic kits classified under CSH 3002. - HbA1c Test Kit: Similar to the CRP Test Kit, the essential component, R2, is antisera derived from mouse and goat, falling under CSH 3002. The kit also works on agglutination. 2. Applicable GST Rate for CRP Test Kit and HbA1c Test Kit: Appellate Authority's Decision: - Both CRP Test Kit and HbA1c Test Kit are classified under Chapter Heading 3002. - As per entry at SI. No. 180 of Schedule I to Notification No. 01/2017-C.T. (Rate) dated 28.06.2017, read with entry at SI. No. 125 of List I appended to Schedule I, the applicable GST rate is 5% (CGST @ 2.5% + SGST @ 2.5%). Conclusion: - The appeal was allowed, setting aside the MAAR order. Both CRP Test Kit and HbA1c Test Kit are classified under Chapter Heading 3002 and attract GST at the rate of 5%.
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