TMI Blog2021 (3) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... prophylactic use . It is seen that the agent would be called a therapeutic agent only if it has a curative effect against a disease. Since the product in question is not used for treatment of an already prevalent disease in a patient, the same cannot be said to have a therapeutic use. Meaning of Disinfectants - HELD THAT:- Disinfectants are those goods used for disinfection. The disinfect has the meaning to get rid of infection or cleanse by destroying infecting micro-organisms especially by chemical means. Disinfectant is any substances that is used to kill germs, such as viruses, bacteria, and other microorganisms that can cause infection and disease. Further as per the common parlance also, the Alcohol based hand sanitizers are never classified as Medicaments. People buy hand sanitizers as an alternative to soap and for disinfecting purpose. In the present case, it is seen that the alcohol-based hand sanitizers, as the name itself suggests is to sanitize the hands and disinfect them and hence cannot be covered under Medicaments - The goods covered under heading 3808 are covered entry no. 87 of Schedule III of Notification No.01/2017 - Central Tax (Rate) dated 28.06. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et the quality standards as specified by WHO-GMP and ISO certifications. The Applicant is also functioning under licenses issued by the Office of the Drugs Controller for the State of Karnataka which are valid up to 31-03-2023. They enclosed the copy of letter No. DCD/MFG/SR-1467/17-18 dated 22 Feb 2019 , issued in this regard by the Additional Drugs Controller Licensing Authority. 3.2 The applicant obtained the permission to manufacture the products mentioned at para 2 supra, as there is considerable requirement for hand sanitizers due to the present pandemic of covid-19. The letter No.DCD/MFG/CR-760/19-20 dated 18 May 2020 issued in this regard by the Additional Drugs Controller Licensing Authority is attached . The Applicant is proposing to manufacture and supply the products at SI.No.1 and 2, across India. A flowchart of the manufacturing process is attached. All the ingredients of the products are listed under the Indian Pharmacopeia. The products of the aforestated composition as given in the table above, proposed to be manufactured and supplied by the Applicant, are known in common parlance as Hand Sanitizers. 3.3 The applicant furnished the copy of letter F. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereunder, for manufacturing of such products, are to be processed within three working days. The copy of said letter dated 18.03.2020 of the Central Drugs Standard Control Organization is furnished. Further, by the Gazette Notification No.S.0.2451(E) published on 27th July 2020, the Central Government has in exercise of the powers conferred under Section 26B of the Drugs and Cosmetics Act, 1940, directed, inter-alia, that the drug, namely, hand sanitizer shall be exempted from the requirement of sale licence for its stocking or sale under the provisions of Chapter IV of the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945. The copy of the said Gazette Notification No.S.O.2451(E) published on 27th July 2020 is furnished by the applicant. 3.5 The copies of the certificates issued by a technical expert, Shri. V.L. Hambar, M. Pharm, former Deputy Drugs Controller, Drugs Control Department, Government of Karnataka certifying that Isopropyl rubbing Alcohol I.P is used as a Hand Sanitizer and that it has a number of uses such as, as a skin disinfectant, as natural bactericidal treatment, to kill fungus and viruses and to reduce skin infection risks and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 2020, issued by the Advisor (Ay.) and Head, Drugs Policy Section, of the Ministry of Ayurveda, Yoga Naturopathy, Unani, Siddha and Homeopathy (AYUSH), on the subject of expediting the process for grant of approval/license/renewal of license for manufacturing of ASU immunity boosting healthcare products and sanitizers, addressed to all State/Union Territory Licensing Authorities and Drug Controllers of AYUSH, after stating that Regulatory and Quality Control provisions for the manufacturing of Ayurvedic, Siddha and Unani drugs/medicines under the Drugs and Cosmetics Act, 1940 and Rules thereunder are enforced by the State/Union Territory Licensing Authorities and Drug Controllers appointed by the State/UT Government; and after further stating that due to COVID 19 outbreak the need for public use of ASU based immunity boosting products for healthy people and hand sanitizers has been significantly emphasized and their demand has increased manifold, it was directed, inter-alia, that all the State AYUSH Licensing Authorities and Drug Controllers are to complete the licensing/approval/renewal process expeditiously. 4.7 It can also be seen that the Central Drugs Standard Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes; (emphasis supplied) 4.10 The fact that such a broad classification of drug cannot be ignored while considering the character of the product in question has been laid down in the decision in BPL Pharmaceuticals Ltd v. CCE, Vadodara, 2002-TIOL-63-SC-CX = 1995 (5) TMI 98 - SUPREME COURT . In the said decision, while deciding upon the classification of a product called Selsun Shampoo , in para 29 the Supreme Court observed thus: 29. We cannot ignore the above broad classification while considering the character of the product in question. Certainly, the product in question is not intended for cleansing, beautifying, promoting attractiveness or altering appearance. On the other hand it is intended to cure certain diseases as mentioned supra. 4.11 Thus, the letter F.No.Z 25023/09/2018-2020-DCC(AYUSH) dated 2nd April, 2020, issued by the Advisor (Ay.) and Head, Drugs Policy Section, of the Ministry of Ayurveda, Yoga Naturopathy, Unani, Siddha and Homeopathy (AYUSH), on the subject of expediting the process for grant o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.13 Further, the certificates issued by a technical expert, Shri. V.L. Hambar, M. Pharm, former Deputy Drugs Controller, Drugs Control Department, Government of Karnataka certifying that Isopropyl rubbing Alcohol I.P is used as a Hand Sanitizer and that it has a number of uses such as, as a skin disinfectant, as natural bactericidal treatment, to kill fungus and viruses and to reduce skin infection risks and also certifying that Chlorhexidine Gluconate and Isopropyl Alcohol solution is used as a Hand Sanitizer and has antimicrobial activity; which are attached clearly evidence that the hand has sanitizers perform a recognized function of being antimicrobial, that is to say, they are intended to remove disease causing microorganisms and to prevent the onset of a disease. 4.14 Therefore, given that the subject products are understood in common parlance as Hand Sanitizers which perform a recognized function of being antimicrobial in that they are to be used to prevent the onset of diseases that are caused by viruses such as COVID-19 and other germs and bacteria, the trade also recognizes these Hand Sanitizers in commercial parlance as a product intended to remove disease causi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Play (India) Ltd v CCE, Delhi III, Gurgaon, 2005-TIOL-18-SC-CX-LB = 2005 (2) TMI 114 - SUPREME COURT , has held that it is important to bear in mind that functional utility, design, shape and predominant usage have also got to be taken into account while determining the classification of an item. 4.19 In Naturalle Health Products (P) Ltd v. CCE, Hyderbad, 2003-TIOL-19-SC-CX = 2003 (11) TMI 69 - SUPREME COURT it has been held by the Apex Court that when there is no definition of any kind in the relevant taxing statute, the articles enumerated in the tariff schedules must be construed as far as possible in their ordinary or popular sense, that is, how the common man and persons dealing with it understand it. 4.20 As discussed supra, the Hand Sanitizers, whether alcohol based or alcohol free, are recognized commercially as a preventive medicament or substance intended to remove disease causing microorganisms/bacteria and to prevent the onset of a disease. The Applicants are therefore of the view that the Hand Sanitizers being manufactured by the Applicant, would attract the description against tariff item 3004 90 87 which states Antibacterial formulations, not elsewh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the applicant has emphasized the licenses issued by the office of Drugs Controller for the state of Karnataka, letter dated 02.04.2020 issued by Ministry of AYUSH (directing licensing authorities to issue licenses expediously), a letter dated 18.03.2020 of Central Drugs Standard Control Organisation (directing to dispose the licensing applications within 3 working days) and a notification dated 27.07.2020 which exempted hand sanitizers from the requirement of sale license for stocking or sale under the provisions of Chapter IV of the Drugs and Cosmetic Act, 1940 and the Drugs and Cosmetic Rules, 1945. We find that the above information is not relevant to decide the issue of classification of hand sanitizers as per discussion which follows. 6.5 For the purpose of classification of Hand Sanitizer for the purpose of GST and the applicable rate of GST, it is to be noted that hand sanitizers are used to disinfect the skin surfaces from microbes and viruses. Disinfectants are frequently used in hospitals, dental surgeries, kitchens, and bathrooms to kill infectious organisms. Drug is defined in Section 3 (b) of the Drugs and Cosmetic Act, 1940 as drug includes- [(i) all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s so supplied should be for therapeutic use or for prophylactic use . It is seen that the agent would be called a therapeutic agent only if it has a curative effect against a disease. Since the product in question is not used for treatment of an already prevalent disease in a patient, the same cannot be said to have a therapeutic use. 6.8 Further, according to Oxford Dictionary, the term prophylactic has the following meaning: Protecting against or tending to prevent a disease . The term prophylaxis has the meaning Treatment intended to prevent disease . The good in question, no doubt is used as an alternative to soap, it cannot be said to have a prophylactic use in COVID Infection as the goods are not specific to COVID-19 infection. The same cannot be compared with Polio drops or covaxin, wherein the Polio drops have a prophylactic use in preventing Polio myelitis disease or covaxin helps in preventing COVID -19 infection. Such a thing cannot be said of the goods in question as it is not specific to any disease. Hence the goods in question cannot be covered under HSN 3004. 6.9. Further, as per explanatory notes to HSN of WCO, Heading 3004 is given as below: This h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prophylactic use, not put up in measured doses or in forms or packings for retail sale, including Ayurvedic, Unani, Siddha, homoeopathic or bio-chemical systems medicaments . Even here, the same logic which is applicable to HSN 3004 applies here and it cannot be said to be for therapeutic or prophylactic use and hence cannot be included in HSN 3003. 6.11 Coming to the meaning of Disinfectants, Disinfectants are those goods used for disinfection. The disinfect has the meaning to get rid of infection or cleanse by destroying infecting micro-organisms especially by chemical means. Disinfectant is any substances that is used to kill germs, such as viruses, bacteria, and other microorganisms that can cause infection and disease. Further as per the common parlance also, the Alcohol based hand sanitizers are never classified as Medicaments. 6.12 The applicant has taken support of the CCE Calutta vs Sharma Chemical Works (2003 (154) ELT 328)] = 2003 (4) TMI 102 - SUPREME COURT to state that mere fact of product being sold across the counters and not under Doctor's prescription, does not by itself lead to a conclusion that it is not a medicament. We have not adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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