TMI Blog2022 (11) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Further, as has been discussed earlier, the essential character of the subject kit is given by the latex particles coated with antihuman CRP antibody, i.e., antisera, as it is the determining component for the agglutination which is the essentially the specificity of the test procedure. Therefore, the subject CRP Test Kit, being in the nature of a diagnostic kit for determining inflammation and infection in the human body, and satisfies all the conditions prescribed under the said explanatory note (E) to the Chapter heading 30.02, would aptly be covered under the Chapter Heading 30.02. The impugned product CRP Test kit is based on mice anti- CRP antibody / mice antisera and thus covered under Chapter 30.02 as it is specifically excluded from Chapter 38.22. Chapter Heading 30.02 is the default entry for diagnostic kits. If any product is covered by Chapter 30.02, then there is no need to visit Chapter 38.22. Whether the impugned product, i.e., CRP Test Kit, can be construed as agglutinating sera mentioned at SI. No. 125 of the List I appended to the Schedule I to the Notification No. 01/2017-C.T. (Rate) dated 28.06.2017, or not? - HELD THAT:- It is not in dispute that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the first impugned product, i.e., CRP Test kit, will apply mutatis-mutandis to the second impugned product, i.e., HbA1c, too. Thus, it is held that second impugned product, i.e., HbA1c, will be classified under the chapter heading 3002, and accordingly, will attract GST at the rate of 5%. - MAH/AAAR/AM-RM/12/2022-23 - - - Dated:- 30-9-2022 - SHRI ASHOK KUMAR MEHTA, AND SHRI RAJEEV KUMAR MITAL, MEMBER Present for the Appellant: (i) Abhinav Thakur (ii) Hema Patel (Proceedings under Section 101 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) 1. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is made in respect of such dissimilar provisions , a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act. 2. The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [ hereinafter referred to as CGST Act and MGST Act ] by M/s. Accurex Biomedical Priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odies are coated on the latex particles, these latex beads act as carrier for the spectrophotometric detection of antigen CRP in human serum/plasma via reaction with agglutination sera coated onto the latex reagent. (iv) The essential component of the CRP Test Kit is R2 since it contains the antiserum. In fact, around 85% of the total cost of the CRP Test Kit is attributable to component R2. 5.5 Preparation of Working Solution. (i) Swirl the latex vial gently before use and prepare working solution by mixing RI and R2 in the ratio 9:1 as per the requirement. (ii) Lyophilized calibrator should be reconstituted by adding 1.0 ml of distilled or deionized water. Dissolve the contents of the vial by swirling gently to avoid the formation of foam. (iii) The Appellant does not supply directly mixed solution of RI and R2 since mixed solution i.e., CRP in serum is stable for 7 days at 2 - 8 C and for 3 months at -20 C. Hence, the shelf life of the product reduces if the Appellant supplies mixed solution of RI and R2 which is not commercially viable. Hence, the Appellant supplies R1 and R2 separately in the same kit. 6. (B) Infinite HbA1c 6.1 Infinite HbA1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e HbA1c Test Kit is attributable to component R2. 6.6 Preparation of Working Solution. (i) Dispense R3 into appropriately labelled tube. Add Hb1Ac in whole blood collected with EDTA which was collected as specimen. Mix well and allow to stand until lysis is evident. (ii) Prepare working solution by mixing RI and R2 in the ratio as per the requirement specified. Thereafter, conduct test on the specimen mixed with R3. (iii) The Appellant does not supply directly mixed solution of RI and R2 since mixed solution would be stable for 3 days only. Hence, the shelf life of the product reduces if the Appellant supplies mixed solution of RI and R2 which is not commercially viable. Hence, the appellant supplies RI and R2 separately in the same kit. (iv) Calibrators is used to analyze patient samples in accordance with the instructions outlined in Accurex HbA1c Reagent package insert by generating a calibration curve. The calibrators should be treated in the same manner as patient's specimens for the preparation of hemolysate. The values of calibrators are assigned by assaying against the material referenced to NGSP values. Application for Advance Ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2at Sr. No 80 under Schedule-II of the Notification No. 1/2017-Central Tax (Rate), dated 28.6.2017 as diagnostic kits and reagents , attracting GST @ 12%. (v) Reagents of heading 38.22 may be put up in the form of kits consisting of other components, even if one or more components, when presented separately, would be classifiable under another heading. Examples of such include kits used for testing glucose in blood, etc. (vi) As per Sr. No. 7 of Notification No. 05/2021-Central Tax (Rate) dated 14.6.2021, the GST rate on certain products, including CRP (C-Reactive Protein), falling under Heading 38.22 has been reduced to 5%. This Notification was valid up to 30th September 2021. The above notification has been issued during the COVID-19 Pandemic situation in India vide which Government of India announced reduction in the GST rates on the specified items being used in Covid-19 relief and management till 30.9.2021. So, the rate of GST on CRP was reduced to 5% for that particular period only else the rate is higher at 12%. 9. Aggrieved by the MAAR's ruling dated 11.10.2021, the Appellant filed the present appeal, inter alia, on the following grounds, which are witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viruses, toxins or allergic phenomena, etc. Antisera are used against diphtheria, dysentery, gangrene, meningitis, pneumonia, tetanus, staphylococcal or streptococcal infections, snake bite, vegetable poisoning, allergic diseases, etc. Antisera are also used for diagnostic purposes, including in vitro tests. Specific immunoglobulins are purified preparations of antisera. [Emphasis supplied] 10.4 HSN Explanatory Notes to CSH 3002 states that antisera are obtained from the blood of humans or of animals which are immune or have been immunized against diseases or ailments, whether these are caused by pathogenic bacteria and viruses, toxins or allergic phenomena, etc. The antisera are, inter-alia, used for diagnostic purposes, including in vitro tests. 10.5 CRP Test Kit is in-turn used for the purpose of quantitative determination of C-Reactive Protein (CRP) in human serum for medical diagnosis of inflammation and infections. CRP Test Kit is based on agglutination principle between latex particles coated with specific anti-human CRP to determine CRP in the sample. CRP Test Kit is meant for in vitro diagnostic use. 10.6 HbA1c Test Kit is used for the quantitative determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Test Kit is attributable to component R2. Thus, it is evident that the essential character of Hb1Ac Test Kit is given by 'antisera' which is classifiable under CSH 3002. 10.10 In view of the above, it can be said that the said kits are nothing but antisera in the form of kit. The same can be supported by the fact that the CRP Test Kit and Hb1Ac Test Kit are used for diagnostic purposes i.e., detection of quantitative determination of CRP in human serum and HbA1c in human blood, respectively, and are prescribed for in vitro diagnostic use only. 11. Once the diagnostic/laboratory reagents found to be appropriately classifiable under CSH 3002, the same will ipso facto remain outside the coverage of the residuary CSH 3822. 11.1 It can be said that only those diagnostic/laboratory reagents which cannot appropriately be classified under CSH 3002 will fall under CSH 3822.As discussed in the paras supra, the subject kits under consideration are appropriately classifiable under CSH 3002 and hence, the same will ipso facto remain outside the coverage of the residuary CSH 3822. This view can be substantiated by the judgment of the various courts in the decisions discusse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluded from the coverage of Heading 38.22, which reads as under:- 38.22 3822.00 Diagnostic or laboratory reagents on a backing and prepared diagnostic or laboratory reagents whether or not on a backing, other than those of Chapter 30. Visipreg Strip and Preg Test Card , being anti-HCG antibody (from antisera) dispersed on membrane, will fit in with the description diagnostic or laboratory reagents on a backing while Beta Visipreg can appropriately be described as prepared diagnostic or laboratory reagents whether or not on a backing . Though these descriptions literally exist in Heading 38.22 only, products of either of these descriptions can possibly belong to Chapter 30 as well, which is obvious from the language of Heading 38.22 itself. Going by the terms of Heading 38.22, we find that only those diagnostic/laboratory reagents (whether or not on a backing) which cannot appropriately be classified under Heading 30.02can fall under Heading 38.22. The above three products having been found to be appropriately classifiable under Heading 30.02 in Chapter 30 will ipso facto remain outside the covera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply. If one reads Chapter Heading 38.22, it becomes clear that there could be diagnostic or laboratory reagents which could fall under Chapter Heading 30.02 and also under Chapter Heading 38.22. However, if a diagnostic or laboratory reagent like antisera falls under Chapter Heading 30.02 then it stands excluded from Chapter Heading 38.22. 11.5 Further, reliance is placed on the decision of the judgement of Hon'ble Tribunal in the case of Inter Care Ltd. Vs. CC - 1997 (89) ELT 545 (T). In this case, an 'agglutinating serum' imported under Preg Colour brand name was found to be pregnancy test kit based on antigen- antibody reaction (as in the instant case) and it was held to be classifiable under Customs Tariff sub-heading 3002.10 (antisera and other blood fractions). 12. Non-mention of the word kit after the word agglutinating sera under Sr. No. 125 of List 1 to Schedule I is irrelevant. It is settled legal position that antisera under CSH 3002 covers diagnostic kits which works on the principle of antisera/ agglutinating sera. 12.1 Sr. No. 180 of Schedule I - CGST rate 2.50% read as under: Sr. Chapter/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mainly three components. Out of the three components, one of the components is based on antisera, whereas other component is chemical/ calibrator. 13.2 Section 2(30) of the CGST Act defines 'composite supply' as under: 2(30) composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business , one of which is a principal supply ; [emphasis supplied] 13.3 Thus, 'composite supply' means a supply of two or more taxable supplies of goods or services or both which are:- naturally bundled; and supplied in conjunction with each other in the ordinary course of business and one of which is a principal supply. 13.4 Section 2(90) of the CGST Act defines 'principal supply' as under:- 2(90) principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14.1 As per MAAR, vide the said notification, the GST rate on certain products, including CRP (C-Reactive Protein), falling under Heading 38.22 has been reduced to 5%. This Notification was valid up to 30thSeptember 2021. The above notification has been issued during the COVID 19 Pandemic situation in India vide which Government of India announced reduction in the GST rates on the specified items being used in Covid-19 relief and management till 30.9.2021. As per MAAR, the rate of GST on CRP was reduced to 5% for that particular period only else the rate is higher at 12%. RESPONDENT'S SUBMISSIONS 15. The Jurisdictional Officer vide their letter dated 26.11.2021 have made the following submissions:- a) that on comparison of similar products like CRP and HbA1c supplied by other registered persons, it appeared that few registered person have confusion over the rate of tax like Beacon diagnostic private limited and tulip diagnostics(p) limited, who levy GST at 5% on supply of CRP, otherwise levy 12% of GST on supply of CRP and HbA1c; b) that HbA1c is haemoglobin Ale, and important diagnostic tool but not specified in list l appended to the schedule I. It is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n additional submissions dated 22.09.2022, wherein they reiterated their earlier written submissions with respect to the classification of the impugned products, including reference to the Supreme Court Judgment in the case Span Diagnostics Ltd. Vs. CCE - 2007 (211) ELT 521 (SC) DISCUSSIONS AND FINDINGS 18. We have carefully gone through the entire appeal memorandum containing the submissions made by the Appellant vis-a-vis the Advance Ruling passed by the MAAR, wherein the MAAR has held that CRP kit and Hb1Ac kit do not fall under HSN code 3002 as the same would be covered by HSN Code 3822. The MAAR has based its ruling on the finding that Entry No.125 of List 1 of Sr. No. 180 of Schedule I of Notification No. 1/2017-Central Tax (Rate), dated 28.6.2017, mentions the word Agglutinating Sera , which is not followed by the word 'diagnostic kits', whereas, there are other entries in the same List 1 wherein there is a specific mention of diagnostic kit. The MAAR has further observed that Agglutinating Sera listed under Sr. No. 125 of List 1 of Schedule I covers agglutinating sera as an individual product, and not as a diagnostic kit which works on the principle o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion principle between latex particles coated with specific anti-human CRP and CRP present in the human serum to determine CRP in the sample, which is detected by a spectrophotometer device. It is submitted by the Appellant that the essential component of the CRP Test Kit is the latex particles coated with the anti -CRP antibody, which is nothing but antiserum, and is primarily responsible for the initiation of the reaction. It leads to agglutination and the ultimate diagnosis of the inflammation and infection, if any. It is further submitted that around 85% of the total cost of the CRP Test Kit is attributable to the latex particles coated with the anti-human CRP antibody, i.e., antisera. The Appellant has further submitted that the said anti human CRP antibody coated on the latex beads for the quantitative determination of CRP present in the human blood samples are nothing but the antisera drawn from mice. 21.2 On the basis of above reasoning, the Appellant has contended that since the essential component of the subject CRP Test kit is the antisera extracted from mice sera, which is being used for the diagnostic purposes, the entire CRP Test Kit can aptly be construed as antise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, even if one or more components are separate chemically defined compounds of Chapter 28 or Chapter 29, synthetic colouring matter of heading 32.04 or any other substance which, when presented separately, would be classifiable under another heading. Examples of such kits are those for testing glucose in blood, ketones in urine, etc., and those based on enzymes. However, diagnostic kits having the essential character of products of heading 30.02 or 30.06 (e.g., those based on monoclonal or polyclonal antibodies) are excluded whether or not on a backing other than those of heading 3002 or 3006. 21.5 The impugned product CRP Test kit is based on mice anti- CRP antibody / mice antisera and thus covered under Chapter 30.02 as it is specifically excluded from Chapter 38.22. Chapter Heading 30.02 is the default entry for diagnostic kits. If any product is covered by Chapter 30.02, then there is no need to visit Chapter 38.22. 22.1 The Appellant have further submitted that the said impugned product, CRP Test Kit, will not be classified under the Chapter Heading 3822 attributable to its description which categorically excludes the diagnostic or laboratory reagent falling under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under the Chapter Heading 30.02, therefore, the said impugned product, i.e., CRP Test Kit, will not be classified under the Chapter Heading 38.22. 23. Now, we proceed to decide the moot issue as to whether the impugned product, i.e., CRP Test Kit, can be construed as agglutinating sera mentioned at SI. No. 125 of the List I appended to the Schedule I to the Notification No. 01/2017-C.T. (Rate) dated 28.06.2017, or not. In this regard, it is not in dispute that the said impugned product works on the principle of agglutination where the latex beads coated with the antisera reacts with the CRP of the human blood sample resulting into agglutination, which ultimately leads to diagnosis of inflammation or infection in the human body with the help of spectrophotometer. In view of this, it is held that the impugned product, i.e., CRP Test kit, which has been held as antisera, and which works on the principle of agglutination for the medical diagnosis of infection and inflammation in the human body, can aptly be construed as agglutinating sera. 24.1 The MAAR in the impugned order has observed that the Entry No. 125 of List 1 appended to the Notification No.1/2017-Central Tax (Rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule I to the Notification No 01/2017-C.T. (Rate) dated 28.06.2017. The said product, CRP Test Kit, will attract GST at the rate of 5% (CGST @ 2.5%+SGST@2.5%) in terms of the entry at SI. No. 180 of Schedule I to the Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 26. We will now proceed to examine the classification and rate of tax in respect of another impugned product Hb1Ac Test Kit. 26.1 As per the product literature and the submissions made by the Appellant in respect of the second impugned product, i.e., Hb1Ac Test Kit, it is seen that Hb1Ac Test Kit, much like the CRP Test Kit, is also a diagnostic kit having different components such as (i) Latex reagent, (ii) Buffered antibody reagent, (iii) Hemolysis Reagent, and (iv) Optional - Calibrator made from human blood, which works on the same principle of the agglutination as was the case with CRP Test kit. Further, as was the case with first impugned product, i.e., CRP Test kit, the principal component of the product under question is the antibody reagent, which is extracted from the antisera of the animals like mouse and goat, and which is primarily responsible for the agglutination process based on the interac ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
