TMI Blog2022 (3) TMI 1300X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the product are Water absorber, Iron Powder, Activated charcoal, Vermiculite, Sodium chloride in specified doses, though the dosages of the components are not certified by any controlling agencies. The applicant has contended that product is for dysmenorrhea as a therapeutic use and the word Medicament should not have restricted meaning but include products for Therapeutic/Prophylactic use. There are many products which are naturally occurring and have therapeutic or prophylactic properties, when used in proper proportions and for particular time periods. The products like neem, turmeric, garlic etc.. all have medicinal value but the same is not considered as medicaments, when they are used as such, without subjecting to any chemical modification. Therefore, merely because a product possesses certain natural therapeutic/prophylactic properties, it cannot be said to fall under the classification of medicaments. In the case at hand, it is not established that the product has been classified as a device specified by the Central Government in any notification and therefore reliance on Section 3(b)(iv), to claim that the product is a Medicament do not help them. It is furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the same provisions under the Tamil Nadu Goods and Service Tax Act. M/s. Lagom Labs Private Limited, 715A, 7th Floor, Spencer Plaza, Mount Road, Anna Salai, Chennai, Tamil Nadu, 600 002. (hereinafter called the Applicant) is registered under the GST Vide GSTIN 33AADCL1959K1ZC. They have sought Advance Ruling on the following question: Whether the Cramp comfort patch are to be classified under Chapter Heading 3004 attracting 12% GST under serial no. 63 or Chapter Heading 3005 attracting 12% GST under serial no. 64 in Schedule II of Notification 01/2017 - Central Tax (Rate) dated 28 June 2017 and under Serial No: 63 or 64 of Schedule II of Notification G.O. (Ms) No. 62 (NO.II(2)/CTR/532(D-4)/2017) TNGST (Rate), dated 29.06.2017, if not what would be the appropriate classification and justification for such classification? The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of ₹ 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The Applicant has stated that they are engaged in supply of various women wellness products such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation 01/2017, wherein the description of goods under HSN 3005 falls under at 12% GST. They have extracted the details of description of goods under HSN 3005 viz, as below: i. Wadding, gauze, bandages and similar articles (for example, dressings, adhesive plasters, poultices), ii. Impregnated or coated with pharmaceutical substances or put up in farms or packings for retail sale for medical, surgical, dental or veterinary purposes. They have stated that in order to merit classification under heading 3005, either of the below two conditions must be fulfilled. The first condition is impregnated or coated with pharmaceutical substance. The other condition required to be fulfilled is that the product should be put up in form or packing for medical, surgical, dental or veterinary purposes. 2.4 The applicants understanding on the description of goods under HSN 3005 is as below: Wadding, gauze, bandages and similar articles (for example, dressings, adhesive plasters, poultices), They have stated that the first part of the description emphasizes on the design of the product. They have referred to the following definitions as per the Oxford Dictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s may be used as a guide for classification of goods: Collector of Central Excise, Shillong vs. Wood Craft Products Ltd. [1995 (77) ELT 23 (SC)] L.M.L. Ltd. vs. Commissioner of Customs [2010 (258) E.L.T. 321 (S.C.)] The Applicant has also relied upon the nomenclature and explanatory notes issued by the World Customs Organization (WCO) for HSN 3005 in this regard and stated that the description of goods classifiable under the heading 3005 as per Notification 01/ 2017 is pari-materia with the description mentioned by WCO 2.6 They have also stated that the term retail sale has not been defined in the GST law or rules. It is a well settled principle of interpretation of statute that the word not defined in the statute must be construed in its popular sense, meaning that sense which people conversant with the subject matter with which the statute is dealing would attribute to it . It is to be construed as understood in common language. The applicant has relied on the decision of the Hon ble Supreme Court in following cases: Indo International Industries v. CST (1981) 47 STC 359. Oswal Agro Mills Ltd. v. Collector of Central Excise [1993 (66) ELT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Cramp Comfort patch and these substances in the Cramp Comfort patch results in lowering abdomen pain relief during the menstrual period. Although these ingredients are not directly called as pharmaceutical substances, the ingredients are used as a substance having therapeutic properties and hence construed as pharmaceutical substances. They have stated that Iron is an important mineral which has been used in various pharmaceutical substances. Similarly Vermiculite is a hydrous phyllosilicate mineral under goes significant expansion when hated, which is commonly called on clay mineral and constitutes a sub-group Phyllosilicate and are widely used in the pharmaceutical industries as lubricants, desiccants, disintegrants, diluents, binders, pigments and opacifiers, as well as emulsifying, thickening, isotonic agents, and anticaking agents, and flavour correctors and carriers of active ingredients. A variety of minerals arc used as excipients. Excipients are inactive substances that serves as the vehicle or medium for a drug or other active substance. Excipients are largely used in pharmaceutical preparations because they have certain desirable physical and physico-chemical prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They have also submitted that the suppliers of similar products pertaining to various Chinese brands have listed the products under the heading 3005 on their website. In view of the aforementioned facts, they have submitted that the product Cramp Comfort should be classified under heading 3005. 2.8 The applicant has submitted the following facts to merit classification under the heading 3004 attracting 12% GST in terms of serial no. 63 in Schedule II of notification 01/ 2017 - central tax (rate) dated 28 June 2017. They have submitted that the product is currently sold under the HSN 3004 by them. The Heading 3004 of the Customs Tariff Act covers medicaments . The term medicament is not defined in the Customs Tariff Act. Thus, it is apposite to refer to the dictionaries to ascertain the natural meaning of expression medicament. The definition of the term medicament as obtained from various sources is as under:- The term medicament refers to a substance relating to medicine. The term medicine has been defined in Concise Oxford English Dictionary [12th Edition (2011) Oxford University Press, refer page 888] as practice of diagnosis, treatment or prevention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of heat patch containing iron chip and ibuprofen for primary dysmenorrhea: a randomized controlled trial. Authored by Navvabi Rigi S, Kermansaravi F, Navidian A, Safabakhsh L, Safarzadeh A, Khazaian S, Shafie S, Salehian T. Pregnancy Health Center, Zahedan University of Medical Sciences, Zahedan, Iran. The effects of local low-dose heat application on dysmenorrhea Dilek Coskuner Potur and Nuran Komurcil faculty of Health Sciences, Division of Nursing, Department of Obstetrics and Gynecology Nursing, Marmara University, Istanbul, Turkey Continuous low-level topical heat in the treatment of dysmenorrhea Akin MD, Weingand KW, Hengehold DA, Goodale MB, Hinkle RT, Smith RP - Health Quest Therapy and Research Institute, Austin, Texas, USA 2.9 In view of the above facts, the applicant has submitted that menstrual cramps called as Dysmenorrhea an illness or a disease are throbbing or cramping pains in the lower abdomen. Heat patches such as Cramp Comfort patches of Applicant works by relaxing the muscles in the uterus without increasing blood flow and ease the pain on during cramps. By using these heat patches, one can feel relief cramps up to 8 hours. Heat patches are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the expression prophylactic means a medicament intended to prevent diseases, a preventive medicine or course of action . Therefore, from the above, products qualifies as prophylactic product. Since the product is used to reduce pain caused by Dysmenorrhea and provide relief to the users, the product could be classified under the HSN 3004 9099 as other medicaments used for therapeutic use. This makes amply clear that any product which is intended to prevent against the diseases and has therapeutic properties is to be classified under chapter 3005 or 3004. The applicant had required a suitable ruling on the classification of the product under HSN 3004 or HSN 3005. 3.1 Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, the applicant was addressed through the Email Address mentioned in the application to seek their willingness to participate in a virtual Personal Hearing in Digital media. The applicant consented and the hearing was held on 09.11.2021. The Authorised representative Shri Harish Bindumadhavan Putti appeared for the hearing virtually and reiterated the written submissions. He stated that the ruling sought is on the classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Rate of Activation 30 minutes after exposure 7. Shelf life 2 years 8. Ingredients Iron powder, activated carbon, vermiculite, salt, water absorber 9. Front nonwoven GSM 105 +/- 15 10. Back nonwoven GSM 90 +/- 15 11. Nonwoven healing temperature 100 degree celsius 12. Front nonwoven grade PP, PE warmer grade 13. Back nonwoven grade PP, PE warmer grade 14. Glue type Hot melt base 15. Glue trade Pressure sensitive adhesive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a processed form of carbon that is very porous. This means it is covered in millions of tiny pores that can absorb surrounding minerals. In other words, it has the ability to soak up and trap the compounds it comes into contact with. For this reason it is used by the pharmaceutical industries to extract air particles and other compounds used for pharmaceutical substances. VERMICULITE CLAY 5-10 Vermiculite is an inert light-weight mineral that maintains an optimal moisture level for rusting of iron to occur. Vermiculite clay is widely used in the pharmaceutical industry as lubricants, desiccants, disintegrants, diluents, binders, pigments and opacifiers, as well as emulsifying, thickening, isotonic agents, and anticaking agents, and flavour correctors and carriers of active ingredients. SALT 1-5 Sodium Chloride is used as a catalyst in the reaction that accelerates the exothermic reaction, meanwhile, the activated carbon s role is to store the heat generated by the iron powder. This mixture generates a larger amount of heat compared to that of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lia, stated that:- The Advance Ruling Authorities directed the applicant to furnish the following data: a. Whether the applicant is granted the license under Drug and Cosmetic Act, 1940 b. Whether the ingredients are added into the patch in doses? c. Copy of the import invoices d. Copy of the job work/manufacturer s In response to the aforesaid information sought, the applicant has submitted the following details: Cramp Comfort patches fall under the purview of drugs in terms of Drugs and Cosmetics Act, 1940 The Cramp Comfort patches sold by them fall very much within the definition of drugs and cosmetics Act 1940, under Section 3 (b)(iv) of the Drugs and Cosmetics Act 1940 and in the absence of any provision in the CGST Act 2017 and TNGST Act 2017 to the contrary it was to be accepted that the said product may be drugs within the meaning of the Act. The applicant submits that the definition of drug under the Section 3(b) of the Drug and Cosmetic Act; 1940 includes as under: i. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave established regulations for their use. In India, till date there are no guidelines for licensing of OTC medicines. There is no separate category allotted for OTC medicines in India and the drugs which do not come under the prescription medicines schedule are generally sold as over-the-counter medicines. the medicines are listed under different schedules in the Drugs and Cosmetics Act and Drugs and Cosmetics Rule. Drugs listed in Schedules H, H1, and X should carry a label stating that these drugs are to be sold by retail only on prescription of a registered medical practitioner. The listed in Schedule G (mostly antihistamines) must carry a mandatory text on label stating, Caution: it is dangerous to take this preparation except under medical supervision. In this regard the applicant has submitted that certain important drug categories such as diuretics and aminosalicylates, sulfasalazine, mesalamine) are not included under any drug schedule creating a confusion for pharmacists whether to sell these drugs as OTC or prescription medicines. The term OTC is used for the way drugs are used (self medication without prescription or allowed to be sold by pharmacists without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proprietary trade The applicant has furnished copies of Invoices from Vendor named M/s. Pantheon Pharmchem, Palghar, Maharashtra Copies of Invoices from the Applicant to the branch entity M/s. Lagom Labs Pvt Ltd-TMN located in Tamilnadu 5. 1 The State Jurisdictional Authority who has the administrative Jurisdiction over the applicant has furnished the following comments: The Comfort patch is to be classified under Chapter Heading 3005 attracting 12% GST under Serial No. 64 more than the Chapter Heading 3004 attracting 12% GST under serial No.63 in schedule II of Notification 61/2017 - Central Tax (Rate) dated: 28.06.2017. The reasons stated for the above view is that as per the documents submitted by the dealer, the ingredients such as Iron, Vermiculite clay, activated Carbon and Salt are filled in a triangle shaped patch made of non-woven fabric which consists of an adhesive layer on one side. The Comfort patch is used to reduce pain during the Menstrual Period. It is also further stated that, these above points mostly related to Chapter Heading 3005 attracting 12% GST under serial No. 64 (which includes wadding, gauze, bandages and similar articles impregnat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant is engaged in supply of various women wellness products such as sanitary pads, value kits which includes cramp comfort which are heat patches for period pain. The Cramp Comfort patches are air activated and emits heat upon contact with the atmosphere. It relaxes muscles and ensures smooth passage of blood flow during the monthly cycle. These products arc available to purchase online at www.nuawoman.com as well as other e-commerce platforms such as www.Amazon.in etc. They have sought Advance Ruling on the following question: Whether the cramp comfort patch are to be classified under Chapter Heading 3004 attracting 12% GST under Sl.No.63 or Chapter Heading 3005 attracting 12% GST under Sl.No.64 in Schedule II of Notification 01/2017-CT(rate) dated 28th June 2017 and under S1.No.63 or 64 of Schedule II of Notification G.O.(Ms) No.62[No.II(2)/CTR/532(D-4)/2017] TNGST(Rate) dated 29.06.2017, if not what would be the appropriate classification and justification for such classification. The issue raised before us is to determine the classification of the product cramp comfort being supplied by the applicant and therefore, admissible before this authority for consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnated pharmaceutical substance. 7.2 In terms of explanation (iii) and (iv) to Notification No. 1/2017 - Central Tax (Rate) dt. 28-06-2017, tariff heading, sub-heading, heading and chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 and the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall be applied for the interpretation and classification of goods. Further HSN being a reliable source based on which Customs Tariff is structured, gives a detailed description of the products classified under a particular heading. Considering all the submissions, the competing CTH headings 3004 or 3005 under which classification is sought is discussed below: 7.3 The entries related to CTH3004 are examined as under: Tariff Item Description of goods 3004 MEDICAMENTS (EXCLUDING GOODS OF HEADING 3002, 3005 OR 3006) CONSISTING OF MIXED OR UNMIXED PRODUCTS FOR THE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, even if no indications are given, unmixed products are to be regarded as being put up for retail sale for therapeutic or prophylactic use if they are put up in a form clearly specialised for such use. From the above explanatory notes to heading 3004, it is seen that for a product to be classified under heading 3004 the following conditions are to be satisfied: The product should be a Medicament : 1. Consisting of mixed or unmixed products for therapeutic/Prophylactic use. 2. Put up in measured doses in the form of transdermal administration systems which are generally put up in the form of self-adhesive patches for retail sale and not classifiable as medical adhesive plasters under CTH 3005. 7.4 In the instant case, the applicant s product Cramp Comfort works by self-heating and for pain relief during the menstrual cycle for women. The product just relieves the pain in the abdomen caused due to menstrual cycle. From the submissions of the applicant, it is seen that the active ingredients used in the product are Water absorber, Iron Powder, Activated charcoal, Vermiculite, Sodium chloride in specified doses, though the dosages of the components are not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing preparations applied on human body for the purpose of repelling insects like mosquitoes From the above, it is evident that the substances intended to be used for treatment of a disorder is a drug as per this provision. In the case at hand, the treatment for secondary dysmenorrhea are non-steroidal anti inflammatory drugs(NSAIDs) and the product helps only in reducing the pain and has not been established to be a recommended treatment for the disorder. If the potential of the product to be used as medicament is not clear or established then it cannot be classified under the heading 3004. In this connection, it is pertinent to note that the West Bengal Appellate Authority for Advance Ruling in the case of ESKAG PHARMA Pvt Ltd has observed that being prescribed by medical practitioners for a limited period use or sold by pharmacists are not sufficient for the products in question to be classified as Medicaments as per HSN classification in the light of the current Regulations laid down by FSSAI , while classifying a food supplement meant for therapeutic purposes. In view of the above it is evident that the product is not a Medicament and therefore do not merit clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r prophylactic uses. 7.6 Further, the applicant has made reference to the judgment issued in the case of PFIZER CONSUMER HEALTHCARE VS THE COMMISSIONERS FOR HER MAJESTY S REVENUE AND CUSTOMS , wherein the Commission Implementing Regulation (EU) 2016 classified the Pfizer s product Thermacare under CN code 3824 90 96 and the First Tier Tribunal referred the question to Court of Justice of the European Communities (CJEU). It is seen that the reference made by the First Tier Tribunal stands answered by CJEU vide the Judgment of the court Seventh Chamber on 20.03.2020, wherein the CJEU referring the HSN 3004,3005 and 3824 in connection with heat patches manufactured and supplied by Pfizer has held as under: 49. Thus, in so far as the adjective medical refers to the term medicine and that term may generally be understood, inter alia, as a science to prevent, detect and treat illnesses or injuries, it is appropriate to consider that goods specifically designed to prevent, detect or treat illnesses or injuries relate to medical purposes within the meaning of heading 3005 of the CN. 50 In the present case, that applies to the products covered by Implementing Regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Tariff is aligned with the HSN. Further, on perusal of the invoices furnished by the applicant, as mentioned in para supra the applicant s product is currently classified under HSN 3005 which is evident from the invoice raised in November 2021. 8.1 Having decided the classification as CTH 3005, the applicable rate for the product is as per Sl.No.64 of Schedule-II of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017, which is as follows: SI.No: HSN code Description of goods Applicable CGST rate CGST SGST IGST 64 3005 Wadding, gauze, bandages and similar articles (for example, dressings, adhesive plasters, poultices), impregnated or coated with pharmaceutical substances or put up in forms or packings for retail sale for medical, surgical, dental or veterinary purposes 6% 6% 12% 9. In view of the above, we rule as under: RULING The product Comfort patch is to be classified under HSN 3005 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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