2018 (5) TMI 855 - AAR - GST

Classification of goods - Fludeoxyglucose or FDG - classifiable under Chapter 3006 3000 of the Central Excise Tariff Act, 1985 or otherwise - Whether chemicals used as pharmaceuticals that are inorganic or/ and of organic nature shall merit classification only under Chapter 28 & 29 and not under Chapter 30 which has been specifically carved out for chemical pharmaceuticals by makers of law? - rules of interpretation. Held that - Fluorodeoxyglucose is a fluoro derivative of 2-deoxyglucose, usually referred to as 18F-FDG or FDG. FDG is most commonly used in positron emission tomography (PET) medical imaging equipment. After injecting FDG into the patient, the PET scanner can construct an image that reflects the distribution of the FDG in vivo. Then, the nuclear medicine physician or radiologist evaluates these images to make a diagnosis of various medical health conditions - In addition, FDG-PET also has been used for the diagnosis of Alzheimer s disease. In the field of nuclear medicine, compound 18F-FDG, besides its important use in cardiology and neurology, it also exhibits cancer tissues that can be detected by conventional methods, or correct the misdiagnosis of these diseases. 18F is a radioisotope AND fluorodeoxyglucose (18F-FDG) is a compound. And since all point to the impugned product being a compound of the radioisotope 18F, the Tariff Heading which covers the situation is Heading 2844 which is for radioactive chemical ELEMENTS AND RADIOACTIVE ISOTOPES (INCLUDING THE FISSILE OR FERTILE CHEMICAL ELEMENTS AND ISOTOPES) AND THEIR COMPOUNDS; MIXTURES AND RESIDUES CONTAINING THESE PRODUCTS . Heading 2844 covers compounds of radioactive isotopes - 18F is a radioisotope AND fluorodeoxyglucose (18F-FDG) is a compound. And since all point to the impugned product being a compound of the radioisotope 18F, the Tariff Heading which covers the situation is Heading 2844 which is for radioactive chemical ELEMENTS AND RADIOACTIVE ISOTOPES (INCLUDING THE FISSILE OR FERTILE CHEMICAL ELEMENTS AND ISOTOPES) AND THEIR COMPOUNDS; MIXTURES AND RESIDUES CONTAINING THESE PRODUCTS . Heading 2844 covers compounds of radioactive isotopes - there is no iota of doubt that the impugned product, a compound of the radioisotope 18F, is covered by the Heading 2844. Even if the compounds of radioactive isotopes may have uses in medicine, they fall in Heading 2844 only. We very determinedly feel that we need not enter into any discussion or any case law as to what would be a medicament and the properties thereof. The Tariff item 28444000 reads Radioactive elements and isotopes and compounds other than those of sub-heading 2844 10, 2844 20 or 2844 30; alloys, dispersions (including cermets), ceramic products and mixtures containing these elements, isotopes or compounds; radioactive residues . Hence, the impugned product would fall in the aforesaid Tariff item Ruling - The product Fludeoxyglucose1 or FDG is not classifiable under Chapter 3006 3000 of the Central Excise Tariff Act, 1985 or the Customs Tariff Act, 1975 (51 of 1975). A product is to be classified as per the Tariff, Rules of interpretation and other provisions in respect of classification as applicable. The question is of a very general nature and is not for classification of any specific product. In view thereof, this question cannot be entertained under the provisions of section 98 of the GST Act.

Issues Involved:
1. Classification of 'Fludeoxyglucose' or 'FDG' under Chapter 3006 3000 of the Central Excise Tariff Act, 1985.
2. Classification of chemicals used as pharmaceuticals under Chapters 28 & 29 versus Chapter 30.

Issue-Wise Detailed Analysis:

Issue 1: Classification of 'Fludeoxyglucose' or 'FDG'
The applicant, engaged in manufacturing FDG, sought clarification on whether FDG should be classified under Chapter 3006 3000 of the Central Excise Tariff Act, 1985. The applicant argued that FDG, being a radiopharmaceutical used in PET imaging, should be classified under Chapter 30, specifically under sub-heading 3006 3000, which covers diagnostic reagents designed to be administered to patients.

The applicant's contention was based on the following points:
1. FDG is a pharmaceutical product used for medical purposes, thus meriting classification under Chapter 30.
2. Note 2 of Section VI of CETA 1985 states that goods classifiable under specific headings like 3004, 3005, 3006, etc., by reason of being put up in measured doses or for retail sale, should be classified in those headings and not under any other heading.
3. FDG meets the criteria of HSN explanatory notes for Chapter 30, which include diagnostic reagents administered to patients.

The concerned officer, however, argued that FDG should be classified under Chapter 2844 4000, which covers radioactive chemical elements and isotopes and their compounds. The officer cited:
1. Section Note 1(A) of Section VI of CETA 1985, which mandates that goods falling under heading 2844 or 2845 should be classified in those headings only.
2. The product FDG is a radioisotope obtained through a cyclotron and fits the description under Chapter 2844 4000.
3. HSN explanatory notes clarify that radioactive isotopes and their compounds, including those used in medicine, fall under heading 2844.

The Authority for Advance Ruling (AAR) observed that FDG is a compound of the radioisotope 18F and thus falls under heading 2844, which covers radioactive isotopes and their compounds. The AAR noted that:
1. General Note 1 of Section VI specifies that radioactive chemical elements and their compounds are classified under heading 2844, even if they could fall under other headings.
2. The diagnostic reagents covered by heading 3006 are those administered to patients, but radioactive isotopes and their compounds remain classified under heading 2844.

Judgment:
The AAR concluded that FDG is not classifiable under Chapter 3006 3000 of the Central Excise Tariff Act, 1985. Instead, it falls under heading 2844 4000.

Issue 2: Classification of Chemicals Used as Pharmaceuticals
The applicant queried whether chemicals used as pharmaceuticals that are inorganic or organic should be classified only under Chapters 28 & 29 and not under Chapter 30, which is specifically for chemical pharmaceuticals.

The AAR noted that the classification of every product is distinct and should be determined based on the applicable provisions, rules of interpretation, and specific product characteristics. The question posed was of a general nature and not specific to any particular product, making it unsuitable for advance ruling under section 98 of the GST Act.

Judgment:
The AAR did not entertain the general question regarding the classification of chemicals used as pharmaceuticals under Chapters 28 & 29 versus Chapter 30, as it did not pertain to a specific product.

Order:
1. FDG is not classifiable under Chapter 3006 3000 of the Central Excise Tariff Act, 1985.
2. The general question on the classification of chemicals used as pharmaceuticals was not entertained under section 98 of the GST Act.

← Previous Next →