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TMI Blog2019 (10) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and all diagnostic reagents. The principle of ejusdem generis is applicable and reagents of the class of diagnostic reagents are covered under the entry no.80 of Schedule II of the said Notification. The contention of the applicant that there are two classes of goods covered under the said description, All diagnostic kits and reagents cannot be accepted for the reason that the words diagnostic is not just applicable to kits but also reagents . Hence it is very clear that commodities of HSN code 38220011, 38220012 and 38220019 which are for medical diagnosis are covered under the entry no. 80 of the Schedule II of the said Notification and not all laboratory reagents. The applicant also agreed that the goods he is dealing is not a diagnostic reagent but a laboratory reagent. The Prepared Laboratory Reagents or Pharmaceutical Reference standards (HSN 3822 00 90) which are not diagnostic reagents are not covered under Entry No.80 of Schedule II of Notification No. 1/2017 - Integrated Tax (Rate) dated 28.06.2017 and is covered under entry no.453 of Schedule III of Notification No. 1/2017 -Integrated Tax (Rate) dated 28.06.2017 and attracts IGST at 18%. - KAR ADRG 71/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of Prepared Laboratory Reagent and is a substance of known purity which is intended to be used exclusively for a specified analytical calibrating and referencing purposes. PRS is not used for detection or diagnosis and is not to be used as a drug as clearly stated on the label or accompanying certificate or literature. d. PRS is a reference analytical sample provided by the official pharmacopoeias required to be used by the pharmaceutical manufacturers to confirm their product quality standards in conformity with the respective monographs prescribed. These official reference standards are global in nature and are required to be used by drug manufacturers to ensure that the quality of the medicines produced by them are in conformity with the respective monographs prescribed by these official pharmacopoeias. The drug manufacturing companies use these PRS in their laboratory tests on all drug substances for determining the purity of medicine and identification and quantification of pharmaceutical impurities. e. The applicant states that presently, at the time of import, the applicant is classifying PRS as Prepared laboratory Reagent and have classified the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Tariff Item 3822 00 90 shall be covered under Entry No.80 of Schedule II to the Notification No. 1/2017- Integrated Tax (Rate) dated 28.06.2017 (as amended) which covers all diagnostic kits and reagents falling under Chapter 3822, and this subject to 12% rate of Integrated Tax. This application is being filed under the apprehension that the PRS imported and supplied by the applicant could be treated by the department as falling under Entry No.453 of Schedule III to the Notification No. 1/2017 -Integrated Tax (Rate) dated 28.06.2017 (as amended) which covered goods of any Chapter which are not specified in Schedule I, II, IV, V or VI and consequentially subject to higher rate of tax at 18%. 4. Regarding the grounds in support of the understanding of the applicant, that the imports as well as supply of Pharmaceutical Reference Standards under Tariff Item 3822 00 90, the applicant states as under: 4.1 Chapter 38 of the Customs Tariff Act, 1975 provides for classification of Miscellaneous Chemical Products . Chapter Heading 3822 covers Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, other than those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the specific diagnostic test to be performed or physical form (eg. presented on a backing or support). 4.4 The applicant argues that that in the instant case, the imported goods viz. Pharmaceutical Reference Standards ( PRS ) is a prepared laboratory reagent without a backing with a label and proper instructions for its use. 4.5 The applicant states that classification of goods covered under the First Schedule to the Customs Tariff Act is done as per the General Rules for Interpretation. Rule 1 to the GI Rules gives precedence to the Section or Chapter Notes while classifying a product. For the legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require. As per Rule 1 of GI Rules, classification is to be determined only on the basis of description of the heading, read with relevant Section and Chapter Notes. Further, in terms of Rule 3(a) of the GI Rules, the heading which provides the most specific description shall be preferred to headings providing a more general description. Therefore, in terms of Rule 1 read with Rule 3(a) of the GI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.9 Plain reading of both the communications from the competent authority to comment upon the issue seems to establish that intended use of Pharmaceutical Reference Standards are Chemicals (Reagents) substance of known purity which are intended to be used exclusively for a specified analytical, calibrating or referencing purpose and the same should be stated on the label and or accompanying certificate or literature. 7.10 On perusal of the records, we find that the appellant had shown that the imported products, which had label and certificate of analysis from United States Pharmacopoeia convention indicating that Pharmaceutical Reference Standards is as per the standard laid down by them. It has to be noted that Pharmaceutical Reference Standards which are accompanied by the certificate issued by US Pharmacopoeia are distinctive product and gets classified under laboratory chemical or under Chapter Heading 3822 read with Chapter Notes of Chapter 38 as reproduced hereinabove. The conclusion that can be reached is that Pharmaceutical Reference Standard cannot be classified as certified Reference Materials and consequently not extending the scope of applicability of notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Rate Notification. 5.1 The applicant submits that the only entry in the Rate Notification which covers all diagnostic kits and reagents falling under Chapter Heading 3822 is entry no.80 of Schedule II which provides for IGST Rate at 12% and the relevant entry reads as under: Schedule II- 12% S.No. Chapter/Heading/Sub-heading/ Tariff Item Description of Goods 80 3822 All diagnostic kits and reagents As submitted by the applicant, Chapter 38 of the Customs Tariff Act deals with classification of Miscellaneous Chemical Products . Chapter Heading 3822 relates to Diagnostic or Laboratory reagents on a backing, Prepared diagnostic or laboratory reagents whether or not on a backing, other than those of heading 3002 or 3006; certified reference materials. Prepared laboratory reagent is covered under the Chapter Heading 3822 of the Customs Tariff Act. 5.2 The applicant submits in view of the HSN Explanatory Notes discussed supra, Prepared Laboratory Reagents include - Diagnostic reagents Other analytical reagents used for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted by the applicant is prepared laboratory reagents without a backing, other than those of heading 3002 or 3006 with a proper labelling and appropriate instructions for its use and is covered under (f) supra and thus consequentially covered under the term reagent in Entry No.80 of Schedule II of the Rate Notification which reads as All diagnostic kits and reagents . Accordingly, the import and supply of Pharmaceutical Reference Standard would attract a levy of Integrated Tax at the rate of 12%. 6.5 The applicant also states that the expression and used in the term all diagnostic kits and reagents is conjunctive and therefore the term reagent is a separately identified term. The applicant submits that the term and has been used in the entry no.80 as a conjunctive term to separate the words all diagnostic kits and reagents . Therefore the term reagents has to be treated as a separate word whose identity shall be separate from the word preceding it. The applicant refers to the following decisions in support of the claim that the term should be understood in a conjunctive sense: a. Commissioner of Central Excise, Panchkula v. Kulcip Medicines (P) Ltd re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evied on the manufacture and sale of Pharmaceutical Reference Standards classified under Tariff Item 3822 00 90 was approximately 18% in case of intra-state sale: and 14.5% in case of interstate sale . Hence the intention of the Central Government was to lower the tax incidence on the specified goods in the GST regime and hence the only possible rate of tax in the GST regime can thus be 12%. 8. The applicant submits since the Pharmaceutical Reference Standards are liable to tax at 12% by virtue of being covered under entry no.80 of Schedule II for the reasons stated above, they cannot be covered under the general entry no.453 of Schedule III attracting a tax of 18%. In support of this the applicant has cited various judgements of the Courts. 9. FINDINGS DISCUSSION: We have considered the submissions made by the applicant in their application for advance ruling as well as the additional submissions made by Sri. Shivadass, Advocate, during the personal hearing. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts. At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.No. Chapter/Heading/ Sub-heading/ Tariff Item Description of Goods 80 3822 All diagnostic kits and reagents The entry means all diagnostic kits and reagents of Heading 3822 are covered under the entry 80 above. The issue here is not whether the PRS is a reagent or not as it is very clear that the same is a reagent. The issue is whether it is a diagnostic reagent or not. 9.4 The description of the entry 80 reads all diagnostic kits and reagents means all diagnostic kits and all diagnostic reagents. The principle of ejusdem generis is applicable and reagents of the class of diagnostic reagents are covered under the entry no.80 of Schedule II of the said Notification. The contention of the applicant that there are two classes of goods covered under the said description, All diagnostic kits and reagents cannot be accepted for the reason that the words diagnostic is not just applicable to kits but also reagents . Hence it is very clear that commodities of HSN code 38220011, 38220012 and 38220019 which are for medical diagnosis are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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