TMI Blog2020 (1) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar pro-visions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 2. The present appeal has been filed under section 100 of the Central Goods and Service Tax Act 2017 and Karnataka Goods and Service Tax Act 2017 (herein after referred to as CGST Act. 2017 and SGT Act, 2017) by M/s. Chromachemie Laboratory Private Limited, (herein after referred to as Appellant) against the advance Ruling No. KAR/ADRG 71/2019 Dated: 23 Sept 2019 = 2019 (10) TMI 871 - AUTHORITY FOR ADVANCE RULING, KARNATAKA . Brief Facts of the case: 3. The Appellant, is a leading organization engaged in new product development for the pharmaceutical, biopharmaceutical and food industries. The Appellant inter alia imports Pharmaceutical Reference Standards (hereinafter also referred to as PRS ) of various official pharmacopoeias like US Pharmacopoeia (USP), European Pharmacopeia (EDAM], British Pharmacopoeia (BP) and supplies them to all major pharmaceutical companies in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule II to the Notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017 means all diagnostic kits and diagnostic reagents ; that the principle of ejusdern generis is applicable and the reagents of the class of diagnostic reagents only are covered under the Entry under SI. No. 80 to Schedule II to the Notification No. 01/2017- Integrated Tax (Rate) dated 28.06.2017 and that the word diagnostic is applicable not just to kits but also to reagents ; that the commodities of HSN Code 3822 00 11, 3822 00 12 and 3822 00 19 which are for medical diagnosis are covered under the Entry under SI. No. 80 to Schedule II to the Notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017 and not all laboratory reagents; that the word and is a word of conjunction and it joins two goods kits and reagents and that they are with the common adjective of being diagnostic and hence joins two classes of goods diagnostic kits and diagnostic reagents ; that the goods of Chapter Heading 3822 other than diagnostic kits or diagnostic reagents are not covered under any specific entry of Schedule I or Schedule II or Schedule IV or Schedule V or Schedule VI of the Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents, other than diagnostic reagents of heading 30.02 or diagnostic reagents designed to be administered to the patient and blood grouping reagents of heading 30.06 ..Prepared laboratory reagents include not only diagnostic reagents, but also other analytical reagents used for purposes other than detection or dignosis. Prepared diagnostic and 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. 9.4. 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. 9.5. The Appellant reiterates that it is not in dispute that the product viz. Pharmaceutical Reference Standards is a Prepared Laboratory Reagent intended to be used exclusively for a specified analytical calibrating and referencing purposes and classifiable under Tariff Item 3822 00 90 of the Customs Tariff. The Appellant submits that the Government of India, on the recommendations of the GST Counc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the meaning of the term reagent is wide enough to encompass both the diagnostic reagents as well as prepared laboratory reagent; that the description All diagnostic kits and reagents includes the following types of reagents- (a) Diagnostic reagents on a backing; (b) Laboratory reagents on a backing; (e) Prepared diagnostic reagents on a backing, other than those of heading 3002 or 3006; (d) Prepared diagnostic reagents without a backing, other than those of heading 3002 or 3006: (e) Prepared laboratory reagents on a backing, other than those of heading 3002 or 3006; and (f) Prepared laboratory reagents without a backing, other than those of heading 3002 or 3006. 9.9. The Pharmaceutical Reference Standards imported by the Appellant is a 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 read as Ali diagnostic kits and reagents . Accordingly, the import and supply of Pharmaceutical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that applying the ratio of the relied upon decisions, the term Reagents in the entry Sl.No. 80 covers all types of reagents viz. diagnostic reagents. and laboratory reagents: prepared laboratory reagents as well. Furthermore, the word all makes it abundantly manifest and plain that the Entry herein includes all kinds of reagents. The Appellant further submits that the Central Board of Indirect Taxes Customs (Board) vide Circular F. No. 296/07/2017-CX.9 dated 15.06.2017 provided for a list of goods with reduced tax liabilities under GST regime in comparison to erstwhile combined indirect tax rates. As per the said Circular, for the majority of supplies of goods, the tax incidence approved by the GST Council would be much lower than the erstwhile combined indirect tax rates levied Ion account of Central Excise duty rates embedded Central Excise duty rates / Service Tax post-clearance embedding, VAT rates or weighted average VAT rates, cascading of VAT over excise duty and tax incidence on account of CST, Octroi, Entry, Tax, etc.] by the Centre and States. The Appellant submits that the list of such supplies, where the GST incidence would be lower than the erstwhile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ■ In Re: M I Materials India Pvt. Ltd. 2018 (15) G.S.T.L. 423 (A.A.R. - GST) = 2018 (7) TMI 1493 - AUTHORITY FOR ADVANCE RULING - MAHARASHTRA ■ In Re: Gopal Gireesh 2018 (13) G.S.T.L. 469 (A.A.R. GST) = 2018 (6) TMI 705 - AUTHORITY FOR ADVANCE RULINGS, KERALA 9.15. The Appellant submits that the Entry SI.No 80 of Schedule II under the Notification has been incorrectly interpreted by the Authority in the impugned Ruling, The impugned Ruling further applies the principle of ejusdem generis to conclude that the reagents of the class of diagnostic reagents are only covered under the Entry under SI. No. 80 to Schedule II to the Rate Notification which is incorrect. 9.16. The Appellant submits that all the Notifications must be interpreted strictly. It is further submitted that no one is at liberty to add or modify the words of the entry while interpreting the scope of the notification. This has also been laid down by the Hon ble Supreme Court in the following cases: Saraswati Sugar Mills v. Commissioner of C.Ex., Delhi-Ill, 2011 (270) E.L.T. 465 (S.C.) = 2011 (8) TMI 4 - SUPREME COURT , Hotel Leela Venture Ltd. v. Commissioner of Cus. (Gen.), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 IT(R) and shall not fall under the residual entry of SI.No 453 to Schedule III of the said rate Notification. DISCUSSION FINDINGS; 11. We have gone through the records of the case and considered the submissions made by the Appellant in their grounds of appeal, at the time of personal hearing as well as in their additional submissions. 12. The limited point for determination by us is regarding the interpretation of the entry SI.No 80 of Schedule II of the GST rate Notification No. 01/2017 IT (R) dated 28.06.2017. The undisputed facts are that the Appellant is a science-based organization catering to the analytical and regulatory requirements of the manufacturing industries. They are the Authorized distributors of the US Pharmacopoeia Reference Standards and Publications and are also distributors of Reference Standards from other Pharmacopoeias. They import Pharmaceutical Reference Standards and supply them to major pharmaceutical companies in India. 13. Pharmaceutical Reference Standards 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 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. 15. With the introduction of GST, the GST Council has fitted the various goods under four tax slabs - 5%, 12%. 18% and 28%. Rate Notifications No 01/2017 dated 28-06-2017 were issued under CGST, SGST and IGST Acts whereby the various goods were categorized under different Schedules and each Schedule carried a different rate of tax. The Notification lists out the following Schedules for levy of Integrated Tax (i) 5 per cent. in respect of goods specified in Schedule I. (ii) 12 per cent. in respect of goods specified in Schedule II, (iii) 18 per cent. in respect of goods specified in Schedule III, (iv) 28 per cent. in respect of goods specified in Schedule IV. (v) 3 per cent. in respect of goods specified in Schedule V, and (vi) 025 per cent. in respect of goods specified in Schedule VI. Explanation (iii) to the Rate Notification provides that tariff item , sub-heading heading and Chapter shall mean respectively a tariff item, sub-heading, heading a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eagents falling under Chapter Heading 3822 are covered under the said entry SI.No 80. As mentioned earlier. 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 . To limit the term reagents in the rate Notification as being applicable only to diagnostic reagents is an incorrect interpretation. When the Heading 3822 of the Customs Tariff clearly has within its fold reagents which are both diagnostic as well as laboratory reagents on a backing and prepared diagnostic and laboratory reagents with or without a backing. the use of the single word reagents in the entry Sl.No 80 of Schedule II should be understood as a generic word encompassing all the reagents mentioned under Heading 3822 of the Customs Tariff. 18. 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 rule of ejusdem generis applies when (1) the statute co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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