2022 (1) TMI 1108 - AAR - GST

Classification of goods - rate of GST - Dry Powders containing Protein Powder with Vitamins Minerals - whether the product merits classification under HSN 3004 50 or not - HELD THAT - The product namely Dry Powder Containing Protein Powder with Vitamins Minerals under the name Protowits is being manufactured by the applicant after obtaining the Licence from drug controlling Licensing Authority (Mfg.) of Uttarakhand. As per said Licence bearing no. 1/UA/SC/P-2001 aforesaid product has been licensed to be manufactured by the applicant being drugs specified in Schedule C and C(l) excluding those specified in Schedule X to the Drugs Cosmetics Rules 1943. But on perusal of said Schedule C and C(1) we find that product containing protein is not mentioned in the said schedules. The applicant has further claimed that the product approval has been granted in terms of Entry Serial No. 138 of the FDC (Fixed Dose Combination) List dated 12.07.2018 under Category C of the Drugs Cosmetics Act. On going through the said FDC list it is found that SI. No. 138 of the said list does not cover the product which contains all the ingredients - the product namely Protowits is not being manufactured as per FDC list. Sub-heading nos. 3004 50 10 and 3004 50 20 cover Haematinic and Erythropoietin preparations and Preparations of minerals and their supplements respectively and sub-heading nos. 3004 50 31 to 3004 50 90 cover only Preparations of vitamins as described under these sub-headings. There is no mention of any substance which contains protein in any form. However protein concentrates and textured protein substances are covered under chapter heading no. 2106. Thus the product Dry Powder Containing Protein Powder with Vitamins Minerals being manufactured by the applicant under the name Protowits is a Food supplement which is fit to be classified under HSN code 2106 with 18% GST rate.

Summary

Issues Involved:
1. Classification and Rate of Applicable GST on the product "Dry Powders containing Protein Powder with Vitamins & Minerals."

Detailed Analysis:

Issue 1: Classification and Rate of Applicable GST on the Product

Applicant's Submissions:
1. The applicant is engaged in the manufacture and supply of pharmaceutical formulations/nutraceuticals and has obtained the necessary drug and FSSAI licenses.
2. The product in question, "Dry Powders containing Protein Powder with Vitamins & Minerals," is manufactured under a drug license and labeled for "Prophylactic Use Only."
3. The applicant contends that the product should be classified under HSN 3004, which pertains to medicaments for therapeutic or prophylactic uses, and should be taxed at 12% GST.
4. The applicant references a similar ruling by the Himachal Pradesh Authority for Advance Ruling, which classified a similar product under HSN 3004.

Jurisdictional Officer's Views:
1. The product does not meet the Fixed Dose Combination criteria as laid out in Entry Serial No. 138 of the FDC list.
2. Comparable products like Calcimax D and Threptine, which are used for prophylactic and therapeutic purposes, are taxed at 18% GST.
3. The product in question lacks specific details about its therapeutic or prophylactic uses and is considered a health supplement, subject to 18% GST.

Authority's Discussion and Findings:
1. The product is manufactured under a drug license, but protein is not mentioned in Schedule C and C(1) of the Drugs & Cosmetics Rules, 1943.
2. The product does not conform to Entry Serial No. 138 of the FDC list, which does not cover all the ingredients present in the applicant's product.
3. The product lacks specific details about its therapeutic or prophylactic uses, even though it is labeled for "Prophylactic Use Only."
4. The classification under HSN 3004 is not appropriate as it does not cover substances containing protein. Instead, protein concentrates and textured protein substances are classified under HSN 2106.

Ruling:
The product "Dry Powders containing Protein Powder with Vitamins & Minerals" manufactured by the applicant is classified as a food supplement under HSN 2106 and is subject to 18% GST.