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2021 (1) TMI 373

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..... f Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 which covers Assistive devices, rehabilitation aids and other goods for disabled, specified in List 3 appended to this Schedule and the product Urine Collection Bag finds mention at Entry No.8 of List 3(E). The GST liability under the said entry is 5%(2.5% CGST and 2.5% SGST). We also find that Urine Collection Bag is an assistive device and that it would be covered under Entry No.257 of Schedule-I of the said notification, irrespective of the fact as to whether the said product is used for disabled people or otherwise. In this regard, since there are 2 separate entries available to the applicant falling under different Schedules of the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017. As per Rule 3 of the General Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, the heading which provides the most specific description shall be preferred to headings providing a more general description - In this case, it is found that the entry No.257 of Schedule-I of Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 provides a more specific description of the product manufac .....

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..... the Customs Tariff Act, 1975 has been adopted by Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 and the explanation appended to the above Notification reads as follows: (iii) Tariff item , sub-heading heading and Chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. 2.1. The applicant has further stated that accordingly, the appropriate classification as determined under the Customs Tariff Act, 1975 including on an application of the Chapter Notes and General Explanatory Notes, would apply for the purpose of levy of GST. As per Rule 3 of the General Rules for Interpretation of Import Tariff the heading that provides the most specific description shall be preferred to headings providing a more general description. Rule 3 reads as follows: Rule 3 When by applicati .....

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..... /2017-Central Tax (Rate) dated 28.06.2017 attracting GST at the rate of 5%. 3. The applicant has submitted letter dated 22.07.2020 vide which they have attached the following documents: (i) Doctor s opinion regarding usage of Urine Collection Bag (from 7 doctors). (ii) Photocopies of 2 invoices in respect of Urine Collection Bags. (iii) Catalogue of National Healthcare. (iv) Annexure-A showing list of raw materials used in manufacture of Urine Collection Bags. (v) Annexure-B containing flow chart regarding manufacture of Urine Collection Bags. (vi) Annexure-C showing use of Urine Collection Bags. (vii) Balance sheets for the financial years 2017-18 and 2018-19. 3.1 Doctors namely (i) Dr.V.K.Patel, Viral X-ray clinic, Ramol road, Ahmedabad (ii) Dr.Sahdevbhai N.Patel, Narayani Hospital, Deesa (iii) Dr.Suresh N.Thakker, Consultant Urologist and Andrologist, Patan (iv) Dr.Dhiraj R.Sharma, Aanchal Children Hospital, Bapunagar, Ahmedabad and (v) Dr.Vinay Sheth, Vatva General Hospital, Vatva, Ahmedabad have given the following opinion regarding usage of Urine Collection Bags: Urine Collection Bags are used as Assistive devices for bedridden .....

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..... pouch and corrugated box. As per the flow chart given by the applicant, the process of manufacture of Urine Collection Bags is as under: (i) Raw materials received from store. (ii) High frequency welding of PVC sheet. (iii) Bag screen printing by ink. (iv) Assembly of non return valve and outlet. (v) Welding of non reurn valve and outlet. (vi) Bag leak test by air. (vii) Tube, connector cover, hanger assembly with bag. (viii) Urine Collection Bag pouch packing. (ix) Urine Collection Bag pre inspection. (x) Urine Collection Bag sterilization. (xi) Secondary inspection and box packing. (xii) Transfer to finish goods supply for dispatch. 3.6 As per Annexure-C submitted by the applicant, the uses of Urine Collection Bag are as under: Urine Collection Bags are used as Assistive devices for bedridden patients. A Urine Collection Bag is a medical device used to empty the bladder when a patient is unable to do so naturally. Urine Collection Bags usually have a drainage bag to capture the urine. For bedridden patients, the bag may drape over the side of the bed. The bag can be emptied into the toilet as needed. Intermi .....

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..... olumn (3) to Entry No.257 of Schedule-I of the aforementioned Notification reads as Assistive devices, rehabilitation aids and other goods for disabled, specified in List 3 appended to this Schedule . He has stated that on a plain reading of entry at Serial No. E(8) of List 3 of Entry 257 of Schedule-I and General Entry at Serial No.218 of Schedule-II of Notification No.01/2017-Central Tax (Rate), it is evident that Urine collection bags are specifically covered under the entry at Serial No. E(8) of List 3 of Entry 257 of Schedule I, whereas the entry at Sr.No.218 of Schedule-II is a general entry that covers all instruments and appliances used in medical, surgical, dental or Veterinary sciences including scientigraphic apparatus, other electro medical and sight-testing instruments and the GST liability under the said heading is 12% (6% SGST + 6% CGST). We have also gone through the opinions given by the various doctors regarding usage of Urine Collection Bags which are as under: (a) Opinion of (i) Dr.V.K.Patel, Viral X-ray clinic, Ramol road, Ahmedabad (ii) Dr.Sahdevbhai N.Patel, Narayani Hospital, Deesa (iii) Dr. Suresh N.Thakker, Consultant Urologist and Andrologist, Patan .....

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..... CGST Act, 2017 ) and corresponding Notifications issued under the Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the GGST Act, 2017) and the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the IGST Act, 2017) OR Serial No.218 of Schedule-II of the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 attracting GST rate of 12%. 8. On going through the submissions given by the applicant as well as the documents submitted by them, we find that they have mentioned that the product Urine collection bag manufactured and supplied by them, which are for the disabled would be correctly classifiable under Entry No.257 in Schedule-I of NotificationNo.01/2017-Central Tax (Rate) dated 28.06.2017as there is a specific entry of their product at Sr.No.8 of List 3 to Schedule-I instead of Entry No.218 of Schedule-II of the said Notification which is a general entry. 9. In order to determine the classification of the product Urine collection bags , we will be first required to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 containing the headings, sub-headings as well as the rates of Central Tax GST appli .....

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..... can be confirmed that the Urine collection bags is indeed a device which can be used in the field of medical sciences only. We are therefore required to find out whether the said product falls under the Heading 9018 or otherwise. In order to examine this aspect, we would be required to go through the Heading 9018 as appearing in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), which reads as under: 9018 INSTRUMENTS AND APPLIANCES USED IN MEDICAL, SURGICAL, DENTAL OR VETERINARY SCIENCES, INCLUDING SCIENTIGRAPHIC APPARATUS, OTHER ELECTROMEDICAL APPARATUS AND SIGHT-TESTING INSTRUMENTS Electro-diagnostic apparatus (including apparatus for functional exploratory examinations or for checking physiological parameters): 9018 11 00 -- Electro-cardiographs 9018 12 -- Ultrasonic scanning apparatus: 9018 12 10 --- Linear ultrasound scanner 9018 12 90 --- Other 9018 13 00 -- Magnetic resonance imaging apparatus 9018 14 00 -- Scientigraphic apparatus 9018 19 -- Other: 9018 19 10 --- Electro encephalographs 9018 19 20 --- Echo cardiograph 9018 19 90 --- Other 9018 20 00 - Ultra-violet or infra-red ray apparatus .....

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..... illators 9018 90 95 ---- Fibrescopes 9018 90 96 ---- Laproscopes. 9018 90 97 ---- Vetrasonic lithotripsy instruments 9018 90 98 ---- Apparatus for nerve stimulation 9018 90 99 ---- Other 10.2 Also, the explanatory notes to the Harmonized Commodity Description and Coding System with respect to Sub-heading 9018 (which contains an illustrative list of all the products falling under the sub-heading No.9018) and may help us in understanding the products covered under the said heading are described thereunder. Portions of notes pertaining to Dental instruments and appliances and Veterinary instruments and appliances have not been described, as Urine collection bags would not, by any stretch of imagination, be covered under these headings. Further, parts and accessories have also not been described as they pertain to objects like electro-diagnostic ultrasonic scanning apparatus (SH-9018.12), electro-diagnostic magnetic resonance imaging apparatus (SH-9018.13) and electro-diagnostic apparatus (SH-9018.14). The explanatory notes read as under: This heading covers a very wide range of instruments and appliances which in the vast majority of cases are use .....

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..... It should also be noted that a number of the instruments used in medicine or surgery (human or veterinary) are, in effect, tools (e.g. hammers, mallets, saws, chisels, gouges, forceps, pliers, spatula, etc.), or articles of cutlery (scissors, knives, shears etc.). Such articles are classified in this heading only when they are clearly identifiable as being for medical or surgical use by reason of their special shape, the ease with which they are dismantled for sterilisation, their better quality manufacture, the nature of the constituent metals or by their get-up (frequently packed in cases or boxes containing a set of instruments for a particular treatment: childbirth, autopsies, gynaecology, eye or ear surgery, veterinary cases for parturition etc.. The instruments and appliances classified here may be equipped with optical devices; they may also make use of electricity, either as motive power or for transmission, or as a preventive, curative or diagnostic agent. This heading also covers instruments and appliances operated by laser or other light or photon beam processes and ultrasonic instruments and appliances. INSTRUMENTS AND APPLIANCES FOR HUMAN MEDICINE AND SURGERY: .....

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..... luding ambyloscopes, retinoscopes, skiascopes, strabometers, keratometers, keratoscopes, eye measurement meters designed to measure the distance between the pupils, trial cases (of lenses) and trial frames (for carrying the trial lenses), optometric scales, test charts. However, optometric scales and charts on paper, paperboard or plastics, used for colour perceptions are excluded. (Chapter 49). This heading also covers electrically heated compresses for the eyes, and electromagnets designed for removing metallic particles from the eyes. (D) Ear instruments e.g. auriscopes . However tuning forks, whether or not for medical use are excluded (heading 92.09). (E) Anaesthetic apparatus and instruments (Face masks, face-piece harness, intratracheal tubes etc.). (F) Instruments for nose, throat or tonsel treatment : clamps (for straightening the nasal cartilage); transimullation apparatus (for sinuses and nasal fossae); tonsilotones, guillotines; direct laryngoscopes, laryngeal brushes etc. (G) Pharyngeal, oesophageal, stomach or tracheotomy instruments: oesophagoscopes, bronchoscopes, stomach pumps, intubation tubes etc. (H) Urinary canal or .....

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..... use (heading 94.05). (IV) SCINTIGRAPHIC APPARATUS: These are apparatus which scans parts of the body and creates image of an organ or record of it s functioning. It includes apparatus incorporating a scintillation counter the data from which is converted into analogue signals for the purpose of making medical diagnosis (e.g. gamma camera, scintillation scanner). (V) OTHER ELECTRO-MEDICAL APPARATUS: This heading also covers electro-medical apparatus for preventive, curative or diagnostic purposes, other than X-ray etc. apparatus of heading 90.22. This group includes: (1) Electro-diagnostic apparatus which include: (i) Electro-cardiographs (apparatus, which by means of currents produced by contractions of the cardiac muscles, records heart movements as electrocardiograms.). (ii) Phonocardiographs (specially designed to register heart noises as phonocardiograms; they may also be used as electrocardiographs). (iii) Cardioscopes (used in conjunction with the two preceding instruments to enable simultaneous observation of cardiograms and phonocardiograms) (iv) Rheocardiographs (electrical apparatus for measuring changes .....

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..... s. (8) Actinotherapy apparatus: These employ radiations within, or more generally, just outside, the visible spectrum (infra-red, ultra-violet) for treatment of certain diseases or for diagnostic purposes (special lighting to reveal skin diseases). This apparatus generally incorporates lamps though infra-red apparatus may be fitted with heating resistances or heating panels with reflectors. (9) Artificial incubators for babies: Basically these consist of a transparent cubicle of plastics, electrical heating equipment, safety and warning devices, and oxygen and air filtering and regulating apparatus. In most cases they are mounted on a trolley and have built-in baby scales. Cases containing electrodes or other devices for use with the apparatus described above are also included in this group. This heading also excludes prenatal listening apparatus for non-medical use of heading 85.18 (see the explanatory notes to that heading). 10.4 We have gone through the above explanatory notes to the Harmonized Commodity Description and Coding System with respect to Sub-heading 9018, which also contains an illustrative list of the instruments/apparatus/ appliances l .....

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..... . List 3 reads, as under: List 3 [See S.No.257 of the Schedule I] (A) (1) Braille writers and braille writing instruments (2) Hand writing equipment Braille Frames, Slates, Writing Guides, Script Writing Guides, Styli, Braille Erasers (3) Canes, Electronic aids like the Sonic Guide (4) Optical, Environmental Sensors 20 (5) Arithmetic aids like the Taylor Frame (arithmetic and algebra types), Cubarythm, Speaking or Braille calculator (6) Geometrical aids like combined Graph and Mathematical Demonstration Board, Braille Protractors, Scales, Com- passes and Spar Wheels (7) Electronic measuring equipment, such as calipers, micrometers, comparators, gauges, gauge blocks Levels, Rules, Rulers and Yardsticks (8) Drafting, Drawing aids, tactile displays (9) Specially adapted clocks and watches (B)(1) Orthopaedic appliances falling under heading No. 90.21 of the First Schedule (2) Wheel chairs falling under heading No. 87.13 of the First Schedule (C) Artificial electronic larynx and spares thereof (D) Artificial electronic ear (Cochlear implant) (E) (1) Talking books (in the form of cassettes, di .....

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..... edule. Also, on going through the submission of the applicant dated 22.07.2020 vide which they have submitted the list of raw materials used in the manufacture of Urine Collection Bags, the flow chart showing the manufacturing process of the Urine Collection Bags, catalogue of the company showing the medical devices manufactured and supplied by them as well as the Balance Sheets for the financial years 2017-18 and 2018-19, we find that they are involved in the manufacture and supply of a number of medical devices which also includes Mechanical Urine Bags (Urine Collection Bags). Further, on going through the opinion of the doctors with regard to the usage of the Urine Collection Bags, it is found that the Urine Collection Bags manufactured and supplied by the applicant are: (i) used as assistive devices for bedridden patients and is a medical device used to empty the bladder when a patient is unable to do so naturally. (ii) used in patients in whom there is case of retention of urine after catheterization (iii) used in post-operative cases where patient requires 1-3 days rest in bed after catheterization (iv)used in patients where there is obstruction in urinar .....

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..... ired to refer to Rule 3 of the General Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), which reads as under: 3. When by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as the criterion is applicable. (c) When goods canno .....

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