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2020 (1) TMI 795 - APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKAClassification of goods - import of PRS as ‘Prepared Laboratory Reagents’ - entry SI.No 80 of Schedule II of the GST rate N/N. 01/2017 IT (R) dated 28.06.2017 - Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the applicant - classified under Tariff Item 3822 00 90 of the Customs Tariff Act, 1975 - whether covered under Entry No. 80 of Schedule-II to Notification No 1/2017- Integrated Tax (Rate) dated 28th June 2017 attracting a levy of Integrated Tax at the rate of 12% or not? - challenge to AAR decision. HELD THAT:- In the instant case, there is no dispute that the Pharmaceutical Reference Standards imported by the Appellant are ‘Prepared laboratory reagents without a backing’ with a label and proper instructions for use - there are also an sample of the laboratory reagent wherein the label clearly indicates that it is for laboratory use only. It is also not in dispute that the correct classification of such laboratory reagents is Chapter Heading 3822 of the Customs Tariff. The dispute in this case is whether the description of the goods given against the entry SL.No. 80 of Schedule II applies to all reagents both diagnostic as well as laboratory reagents. When we read the description of the goods under Chapter Heading 3822 of the Customs Tariff together with the HSN Explanatory Notes for Heading 3822, we find that the said Heading covers prepared diagnostic or laboratory reagents and prepared laboratory reagents include not only diagnostic reagents, but also other analytical reagents used for purposes other than detection or diagnosis. Prepared laboratory reagents may be used in medical, veterinary, scientific or industrial laboratories, in hospitals, in industry, in the field or, in some cases. in the home - Further the reagents should be clearly identifiable as being for use only as diagnostic or laboratory reagents which must be clear from their composition, labelling, instructions for in vitro or laboratory use, indication of the specific diagnostic test to be performed or physical form (e.g., presented on a backing or support). The reagents referred to in the Heading 3822 of the Customs Tariff are both diagnostic and laboratory reagents. In the GST rate Notification No 01/2017, the entry SI.No 80 of Schedule II describes the goods under Chapter Heading 3822 as “All diagnostic kits and reagents”. This implies that all reagents falling under Chapter Heading 3822 are covered under the said entry SI.No 80 - the Heading 3822 of the Customs Tariff applies to both diagnostic and laboratory reagents. Therefore. the correct way to read the entry Sl.No 80 of Schedule II would be “au diagnostic kits and all reagents”. The interpretation given by the Authority for Advance Ruling that the entry I.No 80 covers only diagnostic kits and diagnostic reagents is not correct. The principle of ejusdem generic applied by the Authority in interpreting the entry SI-No 80 is misconstrued - the Fitment Committee which was mandated to recommend suitable GST rates for goods, have., after taking into consideration the indirect tax rates which were in existence, recommended a rate of 12% for “Diagnostic or laboratory reagents”. This recommendation has been implemented by entry Sl.No. 80 of Schedule II of Notification No. 01/2017 CT/IT(R) dated 28-06-2017. It is evident from the recommendations of the Fitment Committee that the legislative intent was to reduce the GST rate on all reagents from the rate which eras prevalent in the earlier tax regime. The principle of ejusdem generis has no application in this ease and all reagents which are covered under Heading 3822 would be covered under SI.No. 80 of Schedule II of the rate Notification. The Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the Appellant and classified under Tariff Item 3822 00 90 of the Customs Tariff Act, 1975 is covered under Entry No. 80 of Schedule-II to Notification No. 1/2017-Integrated Tax (Rate) dated 28th June 2017 attracting a levy of Integrated Tax at the rate of 12% - the ruling of AAR set aside - appeal allowed.
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