TMI Blog2019 (8) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... -Carboxycthelene. The said item does not fall under the Heading 3004. Accordingly it is not covered under Serial number 63 of Schedule 11 of Notification No.01 /2017-Central Tax (Rate) dated 28.06.2017 - The Chapter Notes and Explanatory Notes provide that preparation intended to assist smokers to stop smoking shall be covered by heading 21.06 or 38.24. We find that Chapter 21 deals with Miscellaneous edible preparations and heading 21.06 deals with food preparations not elsewhere specified or included. The instant product basically consists of nicotine which is not an edible / food preparation. Therefore the only alternative left for the classification of the instant product is chapter heading 38.24. Thus, the instant product, Nicotine Polacriliex Lozenge, is rightly classifiable under the heading 38.24. Accordingly the product is covered under Serial number 97 of Schedule III to Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 and attracts GST at the rate of 18%. - Advance Ruling No. KAR ADRG 18/2019 - - - Dated:- 7-8-2019 - Harish Dharnia, Member (Central Tax) and Dr. Ravi Prasad M.P., Member (State Tax) ORDER UNDER SUB-SECTION (4) OF SECTIO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icted smokers who wish to give up or reduce smoking habit. When a person intakes tobacco products, there are various harmful chemicals which go inside the human body in addition to nicotine which cause life threatening diseases. 4.3 The primary usage of nicotine in tobacco products is its stimulant effect which acts a contributing factor to the addictive properties of tobacco smoking. In other words, presence of nicotine in tobacco contributes towards addiction of a particular person to smoke tobacco. However in NCT, the primary ingredient nicotine is present in a non-harmful quantity. 4.4 They also stated that the NCT when taken in prescribed quantum, provides the body with adequate nicotine intake; however there is a gradual decline in the dependency of the body on Nicotine. Given this, the harmful effects of smoking tobacco are nullified by taking NCT. The NCT of 2 mg dosage is available as an over the counter product, whereas NCT of 4 mg dosage would be available only pursuant to a prescription from a medical practitioner. 4.5. The applicant submits that their product is classifiable under chapter heading 3004 and claims the applicable rate of 12% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduct i.e Nicotine Polacrilex gum . PERSONAL HEARING: / PROCEEDINGS HELD ON 21.05.2018 18.07.2018. 5. The Applicant authorized Sri Abhi Parakh, Charted Accountant and the said authorized representative appeared for personal hearing proceedings on 21.05.2018. The representative explained the nature and use of their product (NCT) and stressed that their product is a tablet and not gum; it merits classification under heading 3004 and hence attracts 12% GST, in terms of Notification 01/2017 supra; it docs not fall under Serial No. 41 Schedule III of the said notification which attracts 18% GST. The applicant also requested time for submission of additional documents. 5.1 Further, the authorized representative, during the next personal hearing held on 18.07.2018 submitted the following additional documents, while reiterating their earlier submissions,- Under taking statement of correction in the words of ARA-01 application ie Narcotic chewing Tablets to be read as Nicotine Polacrilex Lozenge (NPL) Screen shot of payment of balance of I NR 50 though cash balance available in electronic cash ledger. Sample co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,Karnataka vide their letter dated DCD/MFG/CR-770/16-17 dated 22-02-2017 has permitted them to manufacture Nicotine Polacrilex Lozenge 2 mg and 4 mg (frost mint), Tartrazine and brilliant Blue FCF colours and also 2 mg and 4 mg(rip cherry), colour being Ponceau 4R. 6.6 We find that Nicotine is an alkaloid present in tobacco leaves and it can also be obtained by synthesis. It is a colourless liquid, which turns brown when exposed to air, having a characteristic penetrating odour. It is a strong base, toxic, forms crystalline salts and can be used as a fungicide and insecticide for plants, as per the Explanatory Notes to the heading 29.39 at Sr. (G) of the Harmonised Commodity Description and Coding System. Further, the instant product is a chemical preparation made out from Nicotine and poly acrilix acid (carboxylic acid) having IUPAC name of Poly 1-Carboxycthelene. 6.7 The Applicant claims the classification of their product under heading 30.04 and the resultant benefit of entry No.63 of Schedule-II of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017, effective from 01.07.2017. However, the Explanatory Notes, of the Harmonised Commodity Description ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule 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. Accordingly we make a reference to the Section Notes and Chapter Notes of the relevant Chapters of the Customs Tariff and also the corresponding Explanatory Notes. 7.5 The applicant contends that their product is a medicament and hence is covered under Chapter Heading 3004. We find that Chapter 30 is titled 'Pharmaceutical Products'. We have further gone through the Chapter Notes. Chapter Note 1 lists out products not covered under Chapter 30 of the Tariff. There are eight categories of products listed therein which are not covered under Chapter 30. We find that entry no. (b) in this list reads as follows:- (b) Preparations, such as tablets, chewing gums or patches (transdermal systems), intended to assist smokers to stop smoking (heading 2106 or 3824); 7.6 Now we also go to the Explanatory Note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have therapeutic or prophylactic properties still they can be excluded from the scope of the Heading 30.04, as in the case of the said Aqueous distillates or aqueous solutions of essential oils and preparations. Therefore, the applicant's contention on this ground is not maintainable. 7.9 The aforesaid analysis enables us to effectively answer the question raised by the applicant. The answer is that the said item does not fall under the Heading 3004. Accordingly it is not covered under Serial number 63 of Schedule 11 of Notification No.01 /2017-Central Tax (Rate) dated 28.06.2017. 7.10 The Chapter Notes and Explanatory Notes provide that preparation intended to assist smokers to stop smoking shall be covered by heading 21.06 or 38.24. We find that Chapter 21 deals with Miscellaneous edible preparations and heading 21.06 deals with food preparations not elsewhere specified or included. The instant product basically consists of nicotine which is not an edible / food preparation. Therefore the only alternative left for the classification of the instant product is chapter heading 38.24. 8. In view of the foregoing, we pass the following ..... X X X X Extracts X X X X X X X X Extracts X X X X
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