2024 (2) TMI 645 - AAR - GST

Classification of goods - HSN code - rate of GST - Sterilization Reels and Pouches manufactured - to be classified under Chapter 39 of the CGST Tariff or under Chapter 30 of the CGST Tariff? - HELD THAT - The applicant is a ISO 13485, ISO 11607 and CE certified company and manufactured micro barrier sterilization reels and pouches use by medical devices companies, Pharmaceutical Industries and Hospitals. From the plain reading for the explanatory notes and the section notes it can be said that the product under consideration is neither for medical, surgical, dental or veterinary purposes nor it is the product put up for retail sale. It is the product for use in packing of medical equipment and for end use at institutional level and not for retail sale or retail packing - Therefore, the heading 3005 is ruled out for the product under consideration. Whether the product can be classified under HSN code 39239090? - HELD THAT - The product under consideration is not excluded under the explanatory notes to the heading 39.23 and the product is squarely covered under the sub-heading 39.23.90 - On going through the Tariff item 39.23.90.20, it is observed that the description is Asecptic bags . The term Aseptic is commonly known as the state of being free from disease causing micro-organisms. There are two categories of asceptic medical and surgical. General asceptic fields are used when key parts can be easily protected using a combination of micro-critical fields and non-touch technique. Examples of general asceptic fields include sterile dressing packs, IVC starter kits etc. Therefore, the product manufactured by the applicant i.e sterilization reels and pouches may be classifiable under Tariff item 39.23.90.20. However, the product manufactured by the applicant is Sterilization reels and pouches and therefore the product is not limited to Asceptic Bags as specified in Tariff item 39.23.90.20. But the applicant is manufacturing sterilization products which safely fall under residual Tariff item i.e Others of 39.23.90.90.

Summary

Issues Involved:
1. Classification of goods and/or services.
2. Correct HSN code for Sterilization Reels and Pouches.
3. Applicable GST rate for Sterilization Reels and Pouches.

Summary:

1. Classification of Goods and/or Services:
The applicant, an ISO 13485, ISO 11607, and CE certified company, manufactures micro barrier sterilization reels and pouches used by medical devices companies, Pharmaceutical Industries, and Hospitals. The issue raised is admissible under Section 97(2)(a) of the CGST Act 2017.

2. Correct HSN Code for Sterilization Reels and Pouches:
The applicant sought clarification on whether their product falls under HSN Code 300590 (GST at 12%) or HSN Code 39239090 (GST at 18%). The product is not medical equipment but packing material that keeps medical equipment sterilized until use. According to the Customs Tariff Act, 1975, heading 30.05 includes items like wadding, gauze, bandages, etc., impregnated or coated with pharmaceutical substances or put up in forms or packings for retail sale for medical, surgical, dental, or veterinary purposes. The product does not meet these criteria as it is not for retail sale but for institutional use. Therefore, heading 30.05 is ruled out.

The product falls under heading 39.23, which covers articles for the conveyance or packing of goods, of plastics. The product is classified under sub-heading 39.23.90. The applicant's product, sterilization reels and pouches, is not limited to "Aseptic Bags" under Tariff item 39.23.90.20 but falls under the residual Tariff item "Others" of 39.23.90.90.

3. Applicable GST Rate for Sterilization Reels and Pouches:
The correct rate of GST for Sterilization Reels and Pouches under HSN code 39239090 is 18% (CGST @9% and SGST @9%).

Ruling:
1. The HSN code to be used for Sterilization Reels and Pouches is 39239090.
2. The correct rate of GST is 18% (CGST @9% and SGST @9%).

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