In re Analytica Chemie Inc. (GST AAR Karnataka)
The Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the Appellant and classified under Tariff Item 3822 00 90 of the Customs Tariff Act, 1975 is covered under Entry No. 80 of Schedule-II to Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017 attracting a levy of Integrated Tax at the rate of 12%.
FULL TEXT OF THE ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
M/s. Analytica Chemie Inc., (hereinafter referred to as the ‘Applicant’), No. 488B, 4th Floor, Model Export Bhavan, 14th Cross, Peenya Industrial Area, Bangalore-560058, having GSTIN 29ABLFA4210C1ZV, have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 read with Rule 104 of CGST Rules 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules 2017, in GST form ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and KGST Act.
2. The Applicant is a Private Limited Company and is registered under the Goods and Services Act, 2017. The applicant has sought advance ruling in respect of the following question:-
Whether Entry No. 80 in Schedule II to the Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017 (as amended) is applicable for import as well as supply of “Prepared Laboratory Reagents / Pharmaceutical Reference Standards (PRS)” attracting a levy of Integrated Tax at the rate of 12% or Entry No.453 to Schedule III attracting a levy of Integrated Tax at the rate of 18%?
3. Admissibility of the application: The question is about “applicability of a notification issued under the provisions of this Act” and hence is admissible under Section 97(2)(b) of the CGST Act 2017.
4. BRIEF FACTS OF THE CASE:The applicant furnishes some facts relevant to the issue:
4.1 The Applicant states that they are science-based organization conceptualized to cater to the growinganalytical and regulatory requirement of the Pharmaceutical Industries and to provide solutions to the new challenges in separations and purifications faced in the Pharmaceutical and Research Institutions worldwide.
4.2 The applicant intends to import Pharmaceutical Reference Standards (hereinafter also referred to as ‘PRS’) from Pharmacopeias like European Pharmacopeia (EP), British Pharmacopeia (BP), Indian Pharmacopeia (IP), Japanese Pharmacopeia (JP) and supplies them to all major pharmaceutical companies in India.
4.3 PRS is in the nature of Prepared Laboratory Reagent and is a substance of known purity which is intended to be used exclusively for a specified analytical calibrating and referencing purposes. PRS is not used for detection or diagnosis and is not to be used as a drug as clearly stated on the label or accompanying certificate or literature.
4.4 PRS is a reference analytical sample provided by the official global pharmacopoeias required to be used by the pharmaceutical manufacturers to confirm their product quality standards in conformity with the respective monographs prescribed. These official reference standards are global in nature and 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 official pharmacopoeias. The drug manufacturing companies use these PRS in their laboratory tests on all drug substances for determining the purity of medicine and identification and quantification of pharmaceutical impurities.
4.5 The applicant states that PRS is classifiable as ‘Prepared Laboratory Reagent’ and is covered under Tariff Entry 3822 00 90 of the Customs Tariff Act, in line with the decision of Honhle CESTAT, Bangalore in the matter which is reported as LGC Promochem India Pvt. Ltd. v. Commissioner of Customs & Service Tax, Bangalore [2016 (340) E.L.T. 406 (Tri. – Bang.)]. This decision has been upheld by Hon Tile Supreme Court of India and reported in 2018 (360) E.L.T. A173 (S.C.).
4.6 The Applicant submits that the classification of PRS under Tariff Item 3822 00 90 is undisputed and the present application has not been filed for clarification with regard to the classification of PRS.
4.7 As mentioned supra, the applicant imports Pharmaceutical Reference Standards classifying it under Tariff Item 3822 00 90 of the CTA from various official pharmacopoeias like US Pharmacopoeia (USP), European Pharmacopeia (EDQM), British Pharmacopoeia (BP) and supplies it to major pharmaceutical companies in India while adopting the classification under the same Tariff Item 3822 00 90.
4.8 In the facts of the present case, the issue under consideration is the applicability of rate of tax on import and supply of the Prepared Laboratory Reagent classifiable under Tariff Item 3822 00 90, in terms of in terms of the Rate Notification.
4.9 It is submitted that the only entry in the Rate Notification which covers the goods falling under Chapter Heading 3822 being ‘Diagnostic Kits and Reagents’ is Entry No. 80 of Schedule-II, which provides for the rate of GST at 12%. The relevant entry reads as follows:
Schedule-II -12%
