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TMI Blog2018 (5) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... he outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- "ANNEXURE 1 - STATEMENT OF FACTS (1) The Applicant is a company engaged in the business of manufacturing of fludeoxyglucose F 18. also commonly called FDG, radiopharmaceutical used in the medical imaging modality positron emission tomography (PET). The Applicant has secured renewal of the license to operate a medical cyclotron from Atomic Energy Regulatory Board (AERB) for plant located at Plot No D/37-1, TTC MIDC, Turbhe, Navi Mumbai - 400703 (Exhibit "A"). (2) The Applicant currently operates the medical cyclotron, as per prescribed regulations of the Atomic E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinued to discharge the GST liabilities under the Chapter Heading 2844 4000 till date. (6) There are currently about 15-20 medical Cyclotrons operating in various government and private establishments and closest one of them being operated from Radiation Medicine Centre, B.A.R.C., Tata Memorial Centre Annexe, Mumbai which is operated by the Board of Radiation and Isotope Technology, Department of Atomic Energy, Government of India. The Applicant has come across legal infirmity or mis-appreciation of facts or wrong invocation of statutory provisions or mis-interpretation of law or non-standard approach across the manufacturers for classification of same product FDG under the relevant chapter heading at these various government and private establishments. " ANNEXURE 2 - APPLICANT'S VIEW POINT AND SUBMISSIONS ON ISSUES ON WHICH THE ADVANCE RULING IS SOUGHT 1. "The Classification informed by the department and as followed by some of the manufacturers of FDG, under Chapter Sub-Heading 2844 of the Central Excise Tariff, with regard to medicament and pharmaceutical product manufactured by the applicant, suffer with certain anomalies, which has crept in due to non-appreciation of v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceutical products (whether ready to use diagnostic or/and therapeutic) as referred to in 2 above and their likes are to be classified under Chapter Subheading 2844 of the Central Excise Tariff Act, 1985, suffers with legal infirmity, mis-appreciation of facts and wrong invocation of statutory provisions. Here, the Applicant would like to bring to your kind notice, the following clarificatory provisions of the Central Excise Statute read with the relevant portions of HSN Explanatory Notes and legal pronouncements by Judiciary, if any, in support of our averment that FDG are pharmaceuticals and shall merit classification under Chapter 30. more precisely under Chapter Sub-headings 3006 3000. To substantiate the above, the Applicant further submit that :- 3.1 It is an established fact that chemicals used as pharmaceuticals can be of inorganic or/and of organic nature. It does not mean therefore that they all shall merit classification under Chapter 28 & 29 only and not under Chapter 30, which has been specifically carved out for chemical pharmaceuticals, by makers of the law. Our above averment gets legal sanctity, support and substantiation by the following :- 3.1 (i) attention is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be administered to the patient (e.g. those for carrying out tests on blood. Urine etc., samples taken from a patient or for use as laboratory reagents) are excluded; they fall in the headings appropriate to the materials of which they are made (e.g. Chapter 28, Chapter 29 or heading 30.02 or 38.22). (c) the FDG (F-18 based injectable products) are meant for organ/tissue imaging. The product is also administered in measured doses to the patients and are used for diagnosis in oncology, neurology and cardiology. Therefore the product need to be classified under CETSH 3006 3000 (Technical literature for FDG is attached as Exhibit B). 5. The Applicant further say that the interpretation of the Applicant also coincides with the interpretation of the Board of Radiation and Isotope Technology (BRIT), Department of Atomic Energy, Government of India who is operating the oldest medical cyclotron in the country at Radiation Medicine Centre, B.A.R.C., Tata Memorial Centre Annexe, Mumbai. The Director of Bhabha Atomic Research Centre is designated chairman of BRIT and Joint Secretary (I&M), Department of Atomic Energy are amongst the designated members of BRIT. Enclosed as Exhibit D is the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of providing healthcare services. 7 Copies of Advance Ruling Application/orders if any obtained under the provisions of Central Excise, Service Tax and Sales Tax and their present status. None 8 Copy of Show Cause Notices / Adjudication orders in respect of Central Excise or Service Tax if any issued during Last Five years. The applicant has not been served with any show cause notices/ adjudication orders. Thyrocare Technologies Limited (Unregistered Dealer), the holding company engaged in the business of production of FDG in earlier financial years have been issued summons u/s 14 of the central excise act and the holding company has complied with the relevant regulations by payment of the applicable duties, with interest and penalty for the period. The applicant has also simultaneously during the course of the proceeding, voluntarily ensured to comply with the provisions of the central excise by payment of the central excise duty, interest and penalty. 9 Cases of violation of Central Excise / Service Tax if any booked during Last Five years. There are no any such violations of central excise/ service tax provision by the applicant apart from the mentioned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes and chapter notes then apparently there is no ambiguity or confusion for classification as thus - Sr. N Extracts of the Chapter Note/ Chapter Heading, etc. Our comments 1 SECTION VI - PRODUCTS OF THE CHEMICAL OR ALLIED INDUSTRIES NOTES 1. (A) Goods (other than radioactive ores) answering to a description in heading 2844 or 2845 are to be classified in those headings and in no other heading of this Schedule. (B) Subject to paragraph (A) above, goods answering to a description in heading 2843, 2846 or 2852 are to be classified in those headings and in no other heading of this Section. 2. Subject to Note 1 above, goods classifiable in heading 3004, 3005, 3006, 3212, 3303, 3304, 3305, 3306, 3307, 3506, 3707 or 3808 by reason of being put up in measured doses or for retail sale are to be classified in those headings and in no other heading of this Schedule. The highlighted portion of Section Note 2 implies that those chemical products, which qualify to be classified under Chapter 30 (Heading 3004 etc.) are not required to be classified as chemical under Chapter 28 or 29. Further to support the fact that FDG are put up in measured doses and are supplied in packings for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -18. Anyhow the atomic number of fluorine is 9 and mass number is 18. Now reading both the section notes and chapter notes together, the intention of the legislature is to carve out those chemicals that are used as medicament or pharmaceutical product and include those under Chapter 30. 3 CHAPTER 30- Pharmaceutical Products NOTES 3. for the purposes of heading 3003 and 3004 and of Note 4(d) to this chapter the following are to be treated (a) as unmixed products: (1) unmixed products dissolved in water: (2) all goods of Chapter 28 or 29; and (3) simple vegetable extracts of heading 1302. merely standardised or dissolved in any solvent; (b) as products which have been mixed: (1) colloidal solutions and suspensions (other than colloidal sulphur); (2) vegetable extracts obtained by the treatment of mixture of vegetable materials; and (3) salts and concentrates obtained by evaporating natural mineral waters. The chapter note to Chapter 30 further implies that for the purpose of deciding the classification of a pharmaceutical product under the headings mentioned and for the purpose of Note 4(d) [discussed separately further], any unmixed product dissolved in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the diagnostic reagents (including microbial diagnostic reagents) covered by the heading are those administered by Ingestion, Injection, etc. Diagnostic reagents not designed to be administered to the patient (e.g. those for carrying out tests on blood. Urine etc., samples taken from a patient or for use as laboratory reagents) are excluded; they fall in the headings appropriate to the materials of which they are made (e.g. Chapter 28, Chapter 29 or heading 30.02 or 38.22). (c) the FDG (radiopharmaceutical consisting of F-18 radioactive component - based injectable products) are meant for organ/tissue imaging. The product is also administered in measured doses to the patients and are used for diagnosis in oncology, neurology and cardiology. For deciding whether a product is 'medicament', following principles are relevant - (1) presence of pharmaceutical ingredients that have therapeutic or prophylactic or curative properties is relevant and proportion of medicaments is not decisive (2) even if a product is sold without a prescription of medical practitioner, it may be medicament (3) people who actually use such product must understand it to be medicament and (4) its prima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued in 1993 apparently differs from the context in which the present application is filed and the clarification is sought from the AAR. Nevertheless as mentioned in our statement above, the products of chemicals and allied industries are classified vide Section VI under Chapter 28 to 38 CETA. Chapter 30 has been specifically carved out for chemical pharmaceuticals, by makers of the law. As sighted in our application and mentioned in the table below, due to the different classification being followed by registered dealers under GST, there is abnormality due to higher rates being charged by the applicant and the same is not in the interest of the ultimate beneficiary, given the general principle that where there are two competitive headings in Tariff, heading beneficial to assessee should be adopted Tariff item Description of Goods Unit IGST Rate after transition to GST 2844 40 00 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 kg. 18% 3006 30 00 Opacifying preparation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission, as reproduced verbatim, could be seen thus- "Question (1) (i):- The product fludeoxyglucose or 'FDG' cannot be classified under Chapter 30063000 as the same is rightly classified under Chapter Sub Heading 28444000. The relevant Section Note of Section VI of Central Excise Tariff Act, 1985 is extracted below 1. (A) Goods (Other than radioactive ores) answering to a description in heading 2844 or 2845 are to be classified in those headings and in no other heading of this Schedule. (B) ...................... 2. Subject to Note 1 above, goods classifiable in heading 3004, 3005, 3006, 3212, 3303, 3304, 3305, 3306, 3307, 3506, 3707 or 3808 by reason of being put up in measured doses or for retail sale are to be classified in those headings and in no other heading of this Schedule. (ii) The description of goods under Chapter Sub Heading 28444000 is as under:- "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" (iii) The product fludeoxyglucose -FI8 manufactured b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Point (5):- No Comments Annexure-2 - Applicant's view points and submission on issues on which the advance ruling is sought Point (1 to 2):- No Comments Point (3)(i) Applicant has contended that the Department view of classification of subject goods under chapter sub heading 44 suffers from legal infirmity, mis-appreciation of facts and wrong invocation of statutory provisions. However, the contention applicant is factually incorrect and devoid of any merit and deserves to be dismissed. The applicant relied on Note 2 of Section VI of CETA 1985 in support of his contention. However, Note 2 of Section VI of CETA 1985 has to be read in Juxtaposition and subject to Note 1 of Section VI. It is clear from the contents and detailed explanation of Note 2 given in Section VI Note that the goods mentioned in Note 1 (A) i.e goods falling under Chapter 2844 or 2845 will not be classified under any other heading irrespective of the products being put up in measured doses or for retail sale. Hence the product falling under chapter 2844 or 2845 are to be classified in those heading only and no other heading of the Schedule. Accordingly the products falling under chapter Sub Heading 284440 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading of this schedule. Accordingly, the products falling under Chapter Sub Heading 28444000 merit classification in Chapter 28 only. (c) The Explanatory notes from Harmonized Commodity Description and Coding System. Vol-1, relating to chapter heading 28.44 in para III (c) (2) mentions as under: "(2) Compounds of radioactive isotopes referred to under (III) (B) above Artificial radioactive isotopes and their compounds are used : (a)............................... (b) In medicine, e g for diagnosing or treating certain diseases (cobalt 60. iodine 131, gold 198. phosphorous 32 etc " (c) .................... D) ............................. In view of the specific mention of its use in medicine for diagnostic or treatment purpose in the Explanatory note of chapter subheading 2844 of Harmonized Commodity Description and Coding System, the applicant's claim regarding their product being a Diagonstic reagents and hence liable to be classified under chapter - heading 3006 is devoid of merits. Point (4) (i):- The contention of the Applicant that the product falls under Chapter Sub Heading 30063000 is not correct. It is clear from the contents and detailed explanation of Note 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the product be classified under Tariff Heading 3006. Sh. M. V. Gholap, Assistant Commissioner (AC), Belapur GST Division-II attended the hearing on dt.30.01.2018. L. Meena, AC, Belapur GST Division-Ill, the concerned officer and Sh. R. V. Salaskar, Superintendent were present during the hearings on dt.07.02.2018 and dt.15.02.2018. 05 OBSERVATIONS We have gone through the facts of the case. The issue put before us is the classification of the product 'Fludeoxyglucose' or 'FDG'. It has been queried as to whether the impugned product can be classified under Chapter 3006 3000 of the Central Excise Tariff Act, 1985. We have seen the invoices issued by the applicant wherein the product "18F-FDG (Fluorodeoxyglucose)"is mentioned as falling under the HSN Code of 28444000 and attracting GST @18%. The applicant has also submitted the invoice issued by the Board of Radiation and Isotope Technology wherein the product "FDG 18" is shown as falling under HSN Code 30063000" and attracting GST @12%. The reason to mention the aforesaid is the applicant's humble plea during hearing to clear the controversy surrounding the classification so as to have a uniform tax discharge b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urgical wound closure; sterile laminaria and sterile laminaria tents; sterile absorbable surgical or dental haemostatics; sterile surgical or dental adhesion barriers, whether or not absorbable : 3006 10 10 --- Sterile, surgical catgut and similar sterile suture materials (including sterile absorbable surgical or dental yarns) and sterile tissue adhesives for wound closure 3006 10 20 --- Sterile laminaria and sterile laminaria tents, sterile absorbable surgical or dental haemostatics, sterile surgical or dental adhesion barriers, whether or not absorbable 3006 20 00 - Blood grouping reagents 3006 30 00 - Opacifying preparations for X-ray examinations; diagnostic reagents designed to be administered to the patient 3006 40 00 -- Dental cements and other dental fillings; bone reconstruction cements 3006 50 00 - First-aid boxes and kits 3006 60 - Chemical contraceptive preparations based on hormones, or other products of heading 2937 or on spermicides: 3006 60 10 --- Based on hormones 3006 60 20 --- Based on other products of heading 2937 3006 60 30 --- Based on spermicides 3006 60 70 - Gel preparations designed to be used in human or veterinary medicin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use within 12 hours of preparation. * www.aerb.gov.in/index.ohp/english/regulatorv-facilities/radiation-facilities/application-in-medicine/medical-cyclotron Medical Cyclotron - A cyclotron is a machine used to make relatively short lived radioisotopes (radioactive atoms) that can be used for medical imaging and research. * http://news.chinatungsten.com/en/tungsten-information/97193-ti-I2449 Tungsten is used as shielding material in radiation medicine. It always uses tungsten container when transporting fluorodeoxyglucose, whose high energy makes the fluoro-18 lead container unusable. 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. 18F-FDG can be used to assess glucose metabolism in the heart, lungs, and brain. FDG-PET can be used for cancer diagnosis, staging and treatment mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F and atomic number 9 and is the most electronegative element. It belongs to group 17 of the periodic table, the so-called halogens. Fluorine typically exists as a diatomic molecule at room temperature. There are 18 isotopes known of fluorine, but only 1 (19F) is stable. Most of the radioactive isotopes have a very short half-life, mostly <1 min. Only the radioisotope 18F has a longer half-life of around 110 min and is clinically used FIGURE 10.23). 18F is a positron-emitting radioisotope and is used in radiopharmaceutical imaging such as PET scanning. Two compounds, namely fluorodeoxyglucose (18F-FDG) and derivatives of 18F choline, are under intense clinical investigation and/or use. 18F-FDG is a glucose derivative that contains a radiolabel (18F) at the 2' position replacing the hydroxyl group. 18F-FDG is administered intravenously and is used as an assessment of problems with glucose metabolism, especially in the brain, often associated with epilepsy and in cancer. Areas where an increased absorption of 18F-FDG are visible correlate to areas where an increased glucose metabolism is present.b 18F-FDG is distributed around the body similar to glucose and is cleared renal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und, we see the Customs Tariff 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". Thus, the Heading 2844 covers radioactive isotopes and their compounds. 18F-FDG being a compound of the radioisotope 18F, it would fall in this Heading 2844. However, it has been argued that the impugned product being a chemical pharmaceutical, falls in the Heading 30.06. Since the whole gamut of the arguments revolve around the Harmonized Commodity Description and Coding System Explanatory Notes (HSN), we may now look at the relevant portion of the said Notes thus - SECTION VI - PRODUCTS OF THE CHEMICAL OR ALLIED INDUSTRIES NOTES 1. (A) Goods (other than radioactive ores) answering to a description in heading 28.44 or 28.45 are to be classified in headings and in no other heading of the Nomenclature. (B) Subject to paragraph (A) above, goods answering to a description in heading 28.43, 28.46 or 28.52 are to be classified in those headings and in no other heading of this Section. 2. Subject to Note 1 above goods classifiable in he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erapeutic purposes is classified in heading 30.04 and not in heading 25.03 or 28.02. and dextrin put up for retail sale as a glue is classified in heading 35.06 and not in heading 35.05. * CHAPTER 28-NOTES 6. Heading 28.44 applies only to : (a) Technetium (atomic No. 43), promethium (atomic No. 61), polonium (atomic No.84) and all elements with an atomic number greater than 84; (b) Natural or artificial radioactive isotopes (including those of the precious metals or of the base metals of Sections XIV and XV), whether or not mixed together; (c) Compounds, inorganic or organic, of these elements or isotopes, whether or not chemically defined, whether or not mixed together; (f) Radioactive residues whether or not usable. The term "isotopes", for the purposes of this Note and of the wording of headings 28.44 and 28.45, refers to: - individual nuclides, excluding, however, those existing in nature in the monoisotopic state; - mixtures of isotopes of one and the same element, enriched in one or several of the said isotopes, that is, elements of which the natural isotopic composition has been artificially modified. The term "isotopes", for the purposes of this Note and of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontain in glass ampoules, in hollow platinum needles, in stainless steel tubes, etc., which are packed in anti-radiation metal outer containers (generally of lead), the choice of the thickness of which depends on the degree of radioactivity of the isotopes. In accordance with certain international agreements, a special label must then be affixed to the container, giving particulars of the isotope contained therein and its degree of radioactivity. * CHAPTER 30 - NOTES 4. Heading 30.06 applies only to the following, which are to be classified in that heading and in no other heading of the Nomenclature: (d) Opacifying preparations for X-ray examinations and diagnostic reagents designed to be administered to the patient, being unmixed products put up in measured doses or products consisting of two or more ingredients which have been mixed together for such uses; * HEADING 30.06 - NOTES (6) Opacifying preparations for X-ray examinations and diagnostic reagents designed to be administered to the patient, being unmixed products put up in measured doses or products consisting of two or more ingredients which have been mixed together for such uses. The opacifying preparations are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... studied by using radioactive isotopes, thus enabling the diagnosis of different disease states. Broadly, we can divide the various compounds used as diagnostic agents into four major classes as : A. Inorganic and organic compounds used directly. B. Dyes and stains specifically for use in end point or initial rate colorimetry. C. Radioactive tracers. D. Culture-media chemical-basic constituent being Agar. ......................................................................................... (C) Radioactive Tracers 9,10 Name and Symbol Form Use (Diagnostic) Americium 241 Am Encapsulated source In bone mineral analyzer. Cobalt 60Co and 57Co Radioactive Vitamin B12 For absence of intrinsic factor (P.A.) or defect in absorption (sprue). Metabolic studies. Fluorine 18 F Sodium fluoride (reactor produced) Bone scan https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3478111/ Fuorine-18 is one of the several isotopes of fluorine that is routinely used in radiolabeling of biomolecules for PET; because of it positron emitting property and favorable half-life of 109.8 min. The biologically active molecule most commonly used for PET is 2-deoxy-2-18F-fluoro-B-D-glucose ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointments may have to be cancelled or altered. We have referred to many an informative articles to understand the dispute at hand. We have seen above that 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. And it has been specifically provided that - * All radioactive chemical elements and radioactive isotopes, and compounds of such elements and isotopes (whether inorganic or organic, and whether or not chemically defined), are classified under heading 28.44, even though they could also fall under some other heading of the Nomenclature. * Goods (other than radioactive ores) answering to a description in heading 28.44 or 28.45 are to be classified in those headings and in no other heading of the Nomenclature. * The Heading 2844 itself acknowledges the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30. 05, 30.06, 32.12, 33.03, 33.04, 33.05, 33.06, 33.07, 35.06, 37. 07 or 38.08 by reason of being put up in measured doses or for retail sale, are to be classified in those headings notwithstanding that they could also fall in some other heading of the Nomenclature. While reading this Note, we cannot forget the words in the bracket and which are "other than those described in heading 28.43 to 28.46 or 28.52". Here also, exception is made to goods falling in Heading 28.44. Therefore, 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. 18F-FDG is a radioactive compound (Essentials of Inorganic Chemistry: For Students of Pharmacy, Pharmaceutical Sciences and Medicinal Chemistry' by K.ATJA A. STROHFELDT - Chapter 10 - Radioactive Compounds and Their Clinical Application) and We are guided by the Notes which unambiguously make it clear that - * Heading 2844 covers radioactive isotopes and their compounds. 18F-FDG being a compound of the radioisotope 18F, it would fall in this Heading ..... X X X X Extracts X X X X X X X X Extracts X X X X
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