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2019 (3) TMI 1407 - AAR - GSTClassification of products - to be classified as Medicaments or not - whether the products are meant for therapeutic or prophylactic use - Applicant himself has labeled in the category of dietary/health supplements - whether classified under HSN 2106 or under HSN 3004? - Held that:- Classification refers to determination of the nature and character of the goods being supplied. The purpose of the exercise is to ascertain the applicability of any entry of the notifications issued under the GST Act, specifying the rate of tax or exemption from payment of tax - Explanation to the Rate Notification clearly mentions that Tariff item, subheading, heading and Chapter in the Rate Notification refer to those specified in the First Schedule to the Customs Tariff Act, 1975. For the purpose of interpreting the Rate Notification, so far as may be, the Rules of Interpretation, Section and Chapter Notes and the General Explanatory Notes to the Tariff Act may be applied. The term ‘Medicament’ is not defined in the GST Act or in the Tariff Act. The meaning and scope of ‘Medicaments’ and, more specifically, of HSN 3004 need, therefore, to be ascertained from judicial observations in this regard - In HSN 3004 the emphasis is on therapeutic or prophylactic uses. Even if a product is manufactured using ingredients and according to the formula prescribed in the Pharmacopeia, it should not be classified as a medicament under heading 3004 unless it is meant for therapeutic or prophylactic uses. Its curative or preventive value must be substantial, and the product must be manufactured primarily to control or cure a disease, and the consumers use it primarily for treatment, mitigation, cure or prevention of specific disease or disorder. The emphasis clearly, therefore, lies in the user’s perception of a particular product. If the user consumes the product primarily for cure from or treatment or mitigation of or for prevention of a disease or disorder, it should be treated as a medicament classifiable under HSN 3004. The products are being offered as food supplements and sometimes with specific declaration that they are not meant for use as medicine for treatment of any disease. Note 1(a) of Chapter 30 excludes food supplements from Chapter 30. These products are not, therefore, classifiable as medicament under HSN 3004 - Moreover, according to section 3(b) of the Drugs and Cosmetics Act, 1940, “drug” includes inter alia all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals. Section 18(c) of the said Act prohibits manufacture, stocking or sale of any drug without a license procured under the Act. The Applicant has failed to show any such license for the manufacture and sale of the products mentioned under Sl Nos. 2 to 13 of the above table. These products cannot, therefore, be lawfully offered to the consumers as medicines having therapeutic or prophylactic uses. The Application has been admitted for classification of the products mentioned in Table I of the Application that are labelled as dietary/health supplements - Products mentioned under Sl Nos. 2 to 13 are classifiable under HSN 2106, and taxable under Sl No. 23 of Schedule III of Notification No. 1/2017-CT (Rate) dated 28/06/2017 of the Centre (corresponding State Notification No. 1125-FT dated 28/06/2017), as amended vide Notification No. 41/2017-CT(Rate) dated 14/11/2017 (corresponding State Notification No. 2019-FT dated 14/11/20174).
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