2023 (12) TMI 1272 - AAR - GST

Classification of goods - F-18 Products - classified under HSN 30063000, leviable to GST at the rate of 12%, in terms of entry no 65 of Schedule II of the Notification No 01/2017, Central Tax (Rate) issued under Central Goods and services Tax Act, 2017 or not - HELD THAT - It can be seen that F-18 products are essentially radioactive isotopes which are used in radiopharmaceutical imaging such as PET scanning. Although they are used as a pharmaceutical product for the diagnosis and detection of various diseases, 18F FDG and other 18F radiopharmaceutical products are compounds of the radioisotope 18F. Heading 2844 of the Tariff covers radioactive isotopes and their compounds. 18F-FDG being a compound of the radioisotope 18F, it would fall under the heading 2844 - Diagnostic reagents are chemicals used in laboratories to determine specific types of pathogens, metabolic abnormalities, physiological anomalies, and genetic diseases. They're relied upon by medical practitioners to make accurate diagnoses, and can be used in vivo or in vitro in order to detect certain diseases. The Section Note 1(A) specially stipulates that Goods answering to a description in heading 2844 are to be classified in the said heading only. F18 is a radioisotope and Fluorodeoxyglucose (18F-FDG) is a compound. The products being radioactive and compound of the radioisotope 18F, the same merits classification under heading 2844 only although it satisfies the condition mentioned in Chapter 30 i.e diagnostic reagent designed to be administered to the patient. The applicant has also submitted that medicaments are covered under Tariff heading 30 and that the same product has been classified under heading 3006 by some supplies. However, it may be appreciated that the classification of goods are to be guided by the provisions of law and Radioactive chemicals elements and radioactive isotopes are classifiable under ChSh 2844 only and nowhere else. The HSN classification and rate of tax applicable on the product under consideration is 2844 @ 18%.

Summary

Issues Involved:
1. Classification of F-18 Products under HSN 30063000.
2. Applicable GST rate for F-18 Products.

Summary:

Issue 1: Classification of F-18 Products under HSN 30063000

The applicant, engaged in the manufacture of radioactive compounds such as 18F-Fluorodeoxyglucose, 18F PSMA, and 18F DOPA, sought an advance ruling on whether these products would be classified under HSN 30063000, which is leviable to GST at the rate of 12% as per entry No 65 of Schedule II of Notification No 01/2017-CT (Rate). The applicant argued that their products are diagnostic reagents designed to be administered to patients, thus fitting the description under subheading 30063000. They supported their claim with various documents certifying the medical use of their products.

Issue 2: Applicable GST rate for F-18 Products

The Central Jurisdictional GST Officer submitted that the products should be classified under HSN 28444000, which specifies "Radioactive Chemical elements and Radioactive Isotopes," and are chargeable to GST at 18%. The Authority examined the submissions and noted that F-18 products are essentially radioactive isotopes used in radiopharmaceutical imaging, such as PET scanning. Despite their use in medical diagnostics, these products are compounds of the radioisotope 18F and should be classified under heading 2844, which covers radioactive isotopes and their compounds.

Discussion and Findings:

The Authority referred to the General Rules for Interpretation of the Harmonized System, noting that classification should be determined according to the terms of the headings and any relevant Section or Chapter Notes. Section VI of the Tariff, which covers products of the chemical or allied industries, states that goods described in heading 2844 are to be classified in that heading and no other. Since F-18 products are compounds of the radioisotope 18F, they fall under heading 2844, despite also fitting the description of diagnostic reagents under heading 3006.

Ruling:

1. Classification under HSN 30063000: The Authority ruled in the negative, stating that F-18 products do not classify under HSN 30063000.
2. Applicable GST Rate: The correct classification for F-18 products is under HSN 2844, with an applicable GST rate of 18% (9% CGST + 9% SGST).

This ruling is valid within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh, and subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.