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Case Law Details

Case Name : In re Tara Clinical Systems (CAAR Mumbai)
Appeal Number : CAAR/MUM/ARC/33&34/2024
Date of Judgement/Order : 04/03/2024
Related Assessment Year :

In re Tara Clinical Systems (CAAR Mumbai)

CAAR held that that the products in question i.e. ‘QDx Instacheck™ PCT’ with reader ‘QDx Instacheck™’ as a kit merit classification under CTH 3822, more specifically under CTI 3822 9090 of the First Schedule to the Customs Tariff Act, 1975 and the said products are covered under entry at Sr. No. 80 of Schedule-II of Notification No. 1/2017-IGST (Rate) dated 28th June 2017

FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI

M/s. Lara Clinical Systems, (having IEC No. AALFT6504F and hereinafter referred to as ‘the applicant’, in short) hied two applications (CAAR-l) for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR in short). The said applications were received in the secretariat of the CAAR, Mumbai on 26.06.2023 along with enclosures in terms of Section 2811 (I) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’ also). The applicant is seeking advance ruling on the classification “QDx Instacheck™ PCT” with reader “QDx Instacheck™” as a kit and the applicable IGST rate leviable under sub-section (7) of Section 3 of the Customs Tariff Act, 1975 for imports.

2. Applicant has stated as follows in their statement of relevant facts having a bearing on the question(s) raised enclosed with the CAAR-1 application:

2.1. The applicant intends to import the reagent named “QDx Instachcek™ PCT” with reader “QDx Instacheck1M” as a kit i.e., the kit would be imported as one product having both the components i.e., the test cartridge and reader for diagnosis purpose. The kit is a fluorescence immunoassay for quantitative measurement of procalcitonin (PCT) concentration in human whole blood/scrum/plasma for diagnosis of bacterial infection and sepsis. It is for in vitro diagnostic use only. In vitro means elsewhere outside a living organism i.e., this kit is not placed or used inside a human being’s body and therefore, these diagnostic reagents are not designed to be administered to the patients. Immunoassays are bioanalytical methods in which the quantitation of the analyte depends on the reaction of an antigen (analyte) and an antibody. One such immunoassay method is used in the product in question for diagnosis.

2.2. The reagent “QDx Instachcek™ PCT” works with the reader “QDx Instachcek™”. The components of QDx Instachcek™ PCT consists of the following:

  • Cartridge
  • ID Chip
  • Detection Buffer Tube.

2.3. The test uses a sandwich immunodetection method which is based on antibody-antigen reaction with fluorescence technology. This test is done as under:

  • The detector antibody in buffer binds to PCT in scrum sample and antigen antibody complexes are captured to another PCT antibody that has been immobilized on test strip as sample mixture migrates nitrocellulose matrix
  • Thus, the more PCT antigen in serum, the more antigen-antibody complexes accumulated on the test strip
  • Signal intensity of fluorescence on detector antibody reflects the amount of antigen captured and is processed by QDx Instachcek™ Reader to show PCT concentration in specimen.

2.4. Therefore, the main composition and essential characteristics of the product is Antigen/ Antibody. Anti-PCT antibody is the most significant component for the functionality of the product. It is fraction of animal blood and is antisera i.e., it is a blood scrum containing monoclonal antibodies against specific antigens. Monoclonal antibodies are specific immunoglobulins from selected and cloned hybridoma cells cultured in a culture medium.

The applicant has submitted brochure containing technical details of the products in question and the brief write-up of the immunoassay method.

3. Applicant’s interpretation of law and/or facts, as the case may be, in respect of the aforesaid question(s) (i.e., applicant’s viewpoint and submissions on issues on which the advance ruling is sought):

3.1. The kit’s main ingredient is antibody, and it is a blood scrum containing monoclonal antibodies against specific antigens. Therefore, one may consider three classifications as under:

Tariff Item

Description
3822 Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, whether or not put up in the form of kits, other than those of heading 3006; certified reference materials
Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, whether or not put up in the form of Kits :
3822 19 Other :
382219 90 Other

Or

Note 2 of 30 of the Customs Tariff Act, inter alia, explains that “For the purposes of heading 3002 the expression “immunological products” applies to peptides and proteins (other than goods of heading 2937) which are directly involved in the regulation of immunological processes, such as monoclonal antibodies (MA13), antibody fragments, antibody conjugates and antibody fragment conjugates, interleukins, inteferons(IFN) chemokines and certain tumor necrosis factors (TNF), growth factors(Gb), hematopoietins and colony stimulating factors (CSF).
3002 Human Blood; Animal Blood Prepared For Therapeutic, Prophylactic Or Diagnostic Uses; Antisera, Other Blood Fractions And Immunological Products, Whether Or Not Modified Or Obtained By Means Of Biotechnological Processes; Vaccines, Toxins, Cultures Of Micro-Organisms (Excluding Yeasts) And Other Similar Products; Cell Cultures, Whether Or Not Modified
Antisera, other blood fractions and immunological products, whether or not modified or obtained by biotechnological processes:
300212 Antisera and other blood fractions
30021290 Other
Or
3006 Pharmaceutical Goods Specified In Note 4 To This Chapter
Chapter Note 4: Heading 3006 applies only to the following, which are to be classified in that heading and in no other heading of this Schedule-

(d) opacifying preparations for X-ray examinations and diagnostic reagents designed to be administered to the patient, being unmixed products put up in measured doses or products consisting of two or more ingredients which have been mixed together for such uses;

3.2. As informed in the facts, the kit is a fluorescence immunoassay for quantitative measurement of procalcitonin (PCT) concentration in human whole blood/serum/ plasma for diagnosis of bacterial infection and sepsis. It is for in vitro diagnostic use only. In vitro means elsewhere outside a living organism i.e., this kit is not placed or used inside a human being’s body, Therefore, it may be noted that the present case is not of diagnostic reagents designed to be administered to the patients. Therefore, the product in question is not classifiable under Chapter 1 heading 3006. Consequently, one needs to determine if the product in question is a diagnostic reagent falling under Chapter Heading 3822 or antisera falling under Chapter 1 heading 3002. having regard to recent changes in HSN Tariff with effect from 01.01.2022, Chapter Note I (ij) of Chapter 30 specifies that if it is a diagnostic reagents of heading 3822 then the same would not be covered under Chapter 30. Therefore, a question arises whether the present diagnostic reagents would fall under Chapter Heading 3822. At this juncture, it would be pertinent to note that if the product is a diagnostic reagent, has blood fraction and if it is specified in Chapter Heading 3822 then such specific classification would prevail over general classification such as Malaria considering Note 1 (ii) of Chapter Note of Chapter 30 read with Note 3 (a) of General Rules for interpretation of First Schedule to Customs Tariff Act, 1975 which governs classification of goods under Customs Law. However, if the diagnostic reagent has blood fraction but is not specifically covered under Chapter Heading 3822, the same would fall under Chapter Heading 3002. Further, the present case is a case of monoclonal antibodies and not of polyclonal antibodies. Also, as mentioned in the facts, the main composition and essential characteristics of the product is Antigen/ Antibody. Anti-PCT antibody is the most significant component for the functionality of the product. It is fraction of animal blood and is antisera i.e., it is a blood scrum containing monoclonal antibodies against specific antigens.

HSN Explanatory Notes Sixth Edition (2017) provides for ‘antisera’ falling under HSN 3002.12 which reads as under:

“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 pathologic bacteria and 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 “

In a similar case of Span Diagnostics Ltd. v. Commissioner of C. Ex., Surat 2007 (211) E.L.T. 521 (S.C.) Supreme Court observed in para 36 that Chapter Heading 3002 refers to ‘blood fractions’. Merely because the medium used is latex (rubber) or paper, will not bring the items under Chapter Heading 3822. Once an item is a blood fraction it falls under Chapter Heading 3002. The medium is irrelevant. The medium could be paper or rubber. The configuration of the product and the function are important.

In the present case, the kit is fluorescence immunoassay diagnostic kit. The test uses a sandwich immunodetection method which is based on antibody-antigen reaction with fluorescence technology. Anti-PCT antibody is the most significant component for the functionality of the product. It is fraction of animal blood and is antisera i.e. it is a blood scrum containing monoclonal antibodies against specific antigens. Therefore, the essential characteristics of the kit to be imported would be antisera which would fall under Tariff ID 30021290.

3.3. Classification of goods and GST rate structure for goods has been provided under Schedules I to VI vide Notification Nos. 1/2017-Integrated tax (Rate) dated 28th June, 2017. The extract of the relevant schedule entry is reproduced hereunder:

Schedule II- 12%

Sr. No.

Chapter/Heading/Sub-heading/Tariff item Description of goods
061. 3002 Animal blood prepared for therapeutic, prophylactic or diagnostic uses; antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes; toxins, cultures of microorganisms (excluding yeasts) and similar products

Therefore, on the basis of above discussion, since the product QDx Instacheck PCT is classified as antisera, one may consider GST @ 12% under Sr. No. 061 of Schedule II of Notification No. 1/2017-IGST (Rate) dated 28th June 2017. However, it shall be noted that if the product in question is Fluoro Enzyme Immunoassay Diagnostic kit, then it shall bear IGST rate of 5%. The extract of relevant entry of Notification No. 1/2017-IGST (Rate) dated 28th June 2017 is given hereunder:

Schedule I —5%

Sr. No. Chapter/Heading/Sub-heading/Tariff item Description of goods
180. 30 or any chapter Drugs or medicines including their salts and esters and diagnostic test kits, specified in List I appended to this Schedule

List I [S.No.180 of the Schedule I]

(84) Fluoro Enzyme Immunoassay Diagnostic kits

As provided in the brochure and write up, the product in question is fluorescence immunoassay diagnostic kit. Immunoassays are bioanalytical methods in which the quantitation of the analyte depends on the reaction of an antigen (analyte) and an antibody. One such immunoassay method is used in the product in question for diagnosis.

Therefore, the kit shall be liable to IGST rate of 5% considering it to be fluoro immunoassay diagnostic kit which has essential characteristics of antisera containing monoclonal anti-body used as diagnostic reagent.

4. The Jurisdictional Commissioncrate of Customs i.e. Air Cargo Complex, Mumbai responded to the application which is reproduced as under:

4.1. As per submissions made by the Applicant, QDx Instacheck™ PCT reagent is also accompanied with QDx Instacheck™ reader and to be imported as single unit for in-vitro diagnostic use only. further, as per the catalogue/Literature of “QDx Instacheck™ PCT” – it is consists of a ‘Cartridge’, an ‘ID Chip’ and a ‘Detection Buffer Tube’. Wherein all the components of reagent are having their individual importance and essential character of the kit is diagnosis and same will be determined by ‘Cartridge’, ‘ID Chip’, ‘Detection Buffer Tube’ and QDx Instacheck™ reader as a whole.

The detection buffer pre-dispensed in a tube contains fluorochrome-labeled anti-PCT antibodies, fluorescent-labeled anti chicken IgY, bovine serum albumin (BSA) as a stabilizer and sodium azide in phosphate buffered saline (PBS) as a preservative.

Therefore, it appears that goods under consideration are not reagent but accompanied with reader which are to be imported as a Diagnostic or Laboratory Reagents put up in the form of Kit. Therefore, the Applicant is relying only on one component of the reagent for classification, which appears to be incorrect because single component of the reagent couldn’t meet the requirements of the diagnosis and the essentiality of the diagnostic kit is governed by all the components as whole.

4.2. The classification is to be decided as per General Rules of Interpretation (GRI) of the Schedule-I of Customs Tariff Act, 1975. In the instance case Rule 1, read with Rule 3(a), is applicable. Rule 1 & Rule 3(a) of the General Rules of Interpretation is reproduced below:

“Classification of goods in this Schedule shall be governed by the following principles:

1. The titles of Sections, Chapters and sub-chapters are provided for case of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes…. “.

3 (a) The heading which provides the most specific description shall he preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

As per GRI Rule 1, Terms of the headings, Chapter Note and Section note decide the classification, forms of the headings & Noles relevant to the instant case are Ferms of the headings of 3002 & 3822 and Chapter Note l(ij) of Chapter 30. Same is reproduced below:

Terms of the headings of CTH 3002 inter-alia states that “HUMAN BLOOD; ANIMAL BLOOD PREPARED FOR THERAPEUTIC, PROPHYLACTIC OR DIAGNOSTIC USES; ANTISERA, OTHER BLOOD FRACTIONS AND IMMUNOLOGICAL PRODUCTS, WHETHER OR NOT MODIFIED OR OBTAINED BY MEANS OF BIOTECHNOLOGICAL PROCESSES; VACCINES, TOXINS, CULTURES OF MICRO-ORGANISMS (EXCLUDING YEASTS) AND *OTHER SIMILAR PRODUCTS; CELL CULTURES, WHETHER OR NOT MODIFIED;”. However, Chapter Note I (ii) to chapter 30 excludes “diagnostic reagents of heading 3822”.

Terms of the headings of CTH 3822 inter-alia states that “DIAGNOSTIC OR LABORATORY REAGENTS ON A BACKING, PREPARED DIAGNOSTIC OR LABORATORY REAGENTS WHETHER OR NOT ON A BACKING, WHETHER OR NOT PUT UP IN THE FORM OF KITS, OTHER THAN THOSE OF HEADING 3006; CERTIFIED REFERENCE MATERIALS”.

Also relevant explanatory notes to CTH 3822 are reproduced below:

The reagents of this heading should be clearly identifiable as being for use only as diagnostic or Laboratory reagents. This must he clear from their composition, labelling, instructions for in vitro or laboratory use, indication of the specific diagnostic test to he performed or physical form (e.g., presented on a backing or support).

Diagnostic kits based on reactions such as agglutination, precipitation, neutralization, binding of complement, haemagalutinalion, enzyme-linked immunosorbent assay (ELISA), etc are classified here. Malaria diagnostic kits, for example those based on monoclonal antibodies to pLDII (plasmodium lactate dehydrogenase), are also classified here.

The applicant has specifically mentioned in his application that the goods/kil under consideration will be used for diagnosis purpose. Further, applicant has also submitted that the diagnostic kit is based on monoclonal antibodies; thus, kit works on precipitin reaction (i.e. intraction of antigen with antibody heading to the production of antigen-antibody complexes).

4.3. In view of the above, the following emerges:

From the above discussions and applicant’s submissions, diagnostic reagents of heading 3822 are excluded by Chapter Note 1 (ij) to chapter 30 and DIAGNOSTIC or LABORATORY REAGENTS PUT UP IN THE FORM OF KIT is specifically included under 3822. Therefore, it appears that merit classification of QDx Instacheck™ PCT” with reader “QDx Instacheck™, when to be imported as a single unit, is to be 38229090.

When goods are classifiable under 3822 then IGST will be applicable @12% under sr. no. 80 of schedule 11 of IGST – All diagnostic kits & reagents. (Refer Para 10 of Circular No. 163/19/2021-GST Date: 6th October, 2021)

Para 10 of Circular No. 163/19/2021-GST Date: 6th October, 2021 is reproduced below:

10. All laboratory reagents and other goods falling under heading 3822:

10.1 Entry at S. No. 80 of Schedule II of Notification No. 1/2017-IGST (Rate) dated 28th June 2017 prescribes GST rate of 12% for “All diagnostic kits and reagents “.

10.2 . Representations have been received whether the benefit of concessional rate of 12%) would be available to laboratory agents and other goods falling under heading 3822.

10.3 Heading 3822 covers “Diagnostic or Laboratory Reagents, Certified Reference Materials etc. “.

10.4 The issue was placed before the GST Council and on its recommendations, it is clarified that the intention of this entry was to prescribe GST rate of 12% to all goods, whether diagnostic or laboratory regents, falling under heading 3822.

10.5 It is accordingly clarified that concessional GST rate of 12%) is applicable on all goods falling under heading 3822, vide Entry at S. No. 80 of Schedule II of Notification No. 1/2017-IGST (Rate) dated 28th June 2017.

5. A personal hearing in the matter was conducted on 20.02.2024 in office of the CAAR, Mumbai. During the personal hearing the authorized representatives of M/s. ‘Fara Clinical Systems., CA Jayesh M Gogri and CA Payal Shah contended that the subject product name is “QDx Instacheck” with different parameters. They explained the components of the products which mainly constitute Detector Tube: Antibodies mainly from animal Serum, Cartridge, Detection buffer/stabilizer, Capillary Tube. The product in question is to be used in diagnose/detect TSH/other ingredients in the blood to detect the disease/infection/disorders etc. ‘They further contended that the said goods merit classification under Customs Item-30021290. They also relied upon Customs Notification 50/2017 Sr. No. 166 A List-84 and GST Notification/Central Tax 1/2017 Sr. No. 180 entry No. 84. They also filed additional submissions and referred case law in the matter of Span Diagnostics Limited vs CCE Surat and COEN Bharat Ltd vs CCE Vadodara in support of their claim. The department in their written submission contended that the subject goods should fall under CTI-38229090. The applicants have put their views against the department contention in their submission dated 20.02.2024 and submitted a copy of product description QDx Instachcek TSI I & PCI’ for clarification. Nobody appeared from department for said Personal hearing either online or in person.

6. The contents of the additional submissions dated 20.02.2024 submitted by the applicant during the Personal hearing is as under:

  • The Pack Insert of Diagnostic Kit provides as under:

COMPONENTS AND REAGENTS

The detection buffer pre-dispensed in a tube contains fluorochrome-labeled anti-PCT antibodies, fluorescent-labeled anti chicken IgY, bovine serum albumin (PSA) as a stabilizer and sodium azide in phosphate buffered saline (PBS) as a preservative” In the present case, elements of blood derived from animal origin, are incorporated in the reagent with other stabilizing chemicals. Animal blood has various elements such as RBC, WBC, Platelets (3 cell types) & plasma (waler content) containing proteins, antibodies, antigens etc. Extract of blood derived from animal origin are purified & used in these assays & not the modified extract. As a normal human body resistance to infection process, the antigen (foreign party/microorganism) when enters the human body, the body develops antibodies to fight with such antigen. In the diagnostic kit, animal blood extracts are used and the buffer, which has these extracted antibodies (referred as primary antibodies) is mixed with the patient blood (supposed to be containing antigen) and is put in the well of the assay (a hole in the diagnostic kit). Thereafter, the antigen-antibody complex is created. This complex then travels on the nitrocellulose membrane paper in the test assay (diagnostic kit) where the bonded primary antibody with the antigen (complex) further binds specifically to the secondary antibody. This secondary antibody is also attached with a molecule which can emit light or develop colour for detecting and measurement.

  • There are 4 methods for measuring these antigen antibody reactions also known as “immunoassays”, depending upon the molecule that is bonded on the secondary antibody:
    • Enzyme Immunoassay (EIA) or Enzyme-linked immunosorbent assay (ELISA) -colour developed using Substrate- enzyme reaction.
    • Radio Immunoassay (RIA)- using Radioactive isotopes.
    • Fluoro Immnoassay (FIA)- using fluorescence emitting molecule.
    • Chemiluminescence immunoassay (CLIA)- using chemically illuminating molecules.
  • Out of all 4 types above, there is no method which would use fluoro as well as enzyme technology together.
  • Further, Chapter Note 2 of Chapter 30 reads as under:

“For the purposes of heading 3002, the expression “immunological products” applies to peptides and proteins (other than goods of heading 2937) which are directly involved in the regulation of immunological processes, such as monoclonal antibodies (MAB), antibody fragments, antibody conjugates and antibody fragment conjugates, interleukins, interferons (IFN), chemokines and certain tumor necrosis factors (TNF), growth factors (GF), hematopoietins and colony stimulating factors (CSF)”

The present case is of “antisera, other blood fractions and immunological products, whether or not modified or obtained by means of biotechnological processes”

In view of the above, we request you to pass a suitable Advance Ruling that the kit shall be classified under Chapter 3002 and shall be liable to IGST rate of 5% considering it to be fluoro immunoassay diagnostic kit.

7. I have taken into consideration all the materials placed on record in respect of the subject goods including the submissions made by the applicant during the course of personal hearing. I have gone through the response received from the Customs Commissionerate i.e. Air Cargo Complex, Mumbai and the rebuttal to that filed by the applicant. I therefore proceed to decide the present applications regarding classification of “QDx Instacheck™ PCT” with reader “QDx Instacheck™” as a kit on the basis of the information on record as well as the existing legal framework having bearing on the classification of the products in question under the first schedule of the Customs Tariff Act, 1975 and the applicable rates of IGST for imports thereof.

8. I have gone through the brochure containing Technical details of the products in question. Test Procedure as mentioned in the said brochure is reproduced below for ready reference:

[Single mode]

1. Transfer 150 μl of the human whole blood/scrum/plasma/control sample using a transfer pipette to the tube containing the detection buffer.

2. Close the lid of the detection buffer tube and mix the sample thoroughly with the detection buffer by shaking the tube about 10 times.

3. Pipette out 75 μl of this sample mixture from the detection buffer tube and dispense it into the sample well on the test cartridge.

4. For scanning the sample-loaded test cartridge, insert it into the test cartridge holder of the QDx Instacheck™ Reader. Ensure proper orientation of the test cartridge before pushing it all the way inside the test cartridge holder. An arrow has been marked on the test cartridge especially for this purpose.

5. Press “Select’ button on the QDx Instacheck™ Reader to start the scanning process.

6. QDx Instachcek Reader will start scanning the sample-loaded test cartridge after 12 minutes.

7. Read the test result on the display screen of the QDx Instachcek™ Reader.

[Multi mode]

1. Transfer 150 pl of the human whole blood/scrum/plasma/control sample using a transfer pipette to the tube containing the detection buffer.

2. Close the lid of the detection buffer tube and mix the sample thoroughly with the detection buffer by shaking the tube about 10 times.

3. Pipette out 75 μL of this sample mixture from the detection buffer tube and dispense it into the sample well on the test cartridge.

4. Leave the sample-loaded test cartridge at room temperature for 12 minutes.

5. For scanning the sample-loaded test cartridge, insert it into the test cartridge holder of the QDx Instachcek Reader. Ensure proper orientation of the test cartridge before pushing it all the way inside the test cartridge holder. An arrow has been marked on the test cartridge especially for this purpose.

6. Press ‘Select’ button on the QDx Instachcek Reader to start the scanning process.

7. QDx Instachcek™ Reader will start scanning the sample-loaded test cartridge immediately.

8. Read the test result on the display screen of the QDx Instachcek™ Reader.

From the above mentioned test procedures it is amply clear that without the use of QDx Instachcek™ Reader diagnosis is not possible. Further, to achieve the purpose i.e. to find out the PCT concentration in specimen/the patients’ blood samples QDx Instachcek™ Reader is an indispensable component in the said diagnosis Kit and without QDx Instachcek™ Reader this Kit is not complete or self-contained. ‘Select’ button on the QDx Instachcek Reader is to be pressed to start the scanning process and furthermore, the test result will be read from the display screen of the QDx Instachcek™ Reader. Therefore, without QDx Instachcek™ Reader scanning of the sample and getting the result for further study is unimaginable and futile. Detection buffer tube, test cartridge and QDx Instachcek™ Reader have to be used collectively to achieve the purpose of diagnosis be it single mode or multi-mode test procedures.

Furthermore, the last point of ‘Warnings and Precautions’ mentioned in the said brochure submitted by the applicant as exhibit reads thus:

“QDx Instachcek™ PCT will provide accurate and reliable results subject to the following conditions:

“QDx Instachcek™ PCT should be used only in conjunction with QDx Instachcek™ Reader”.

Thus the above brochure itself endorses that, without the component i.e. QDx Instachcek™ Reader getting accurate and reliable results is not possible.

9. At the outset of presenting the facts, the applicant has submitted that they intend to import the reagent named “QDx Instacheck™ PCT” with reader “QDx Instacheck™” as a kit i.e., the kit would be imported as one product having both the components i.e., the test cartridge and reader for diagnosis purpose. From plain reading of these submissions of the applicant it is quite obvious that the applicant’s argument that the main composition and essential characteristics of the product is Antigen/Antibody does not seem to be a complete fact. Moreover, the applicant itself has contended that as provided in the brochure and write up, the product in question is fluorescence immunoassay diagnostic kit to get the subject goods classified under Sr. No. 180 of Schedule-I of IGST Notification, 2017. From these submissions of the applicant it is observed that the applicant is presenting the self-defeating arguments as to get the goods in question classified under heading 3002 of the Custom Tariff Act, 1975 the applicant is contending that said goods are diagnosis reagents and on the other hand applicant is contending that the said goods are a diagnosis Kit to argue that only 5% IGST is leviable on the said goods.

10. I have gone through the contention of the concerned Jurisdictional Customs Commissionerate i.e. Air Cargo Complex, Mumbai and I am of the view that their contention is well grounded in facts. The applicant is presenting confusing arguments and the said Commissionerate has elaborated their contention very well without any confusion. 1 concur with the submission of the said Commissionerate that essential character of the subject goods is their being a diagnosis kit while all the components of reagent having their individual importance. The subject goods are put up in the form of a Kit.

11. The Customs Tariff is aligned, up to the 6-digit level, with the Harmonized System of Nomenclature (HSN’) issued by the World Customs Organization (‘WCO’). The HSN Explanatory Notes released by the WCO aid in the interpretation of the Headings of the Tariff and may be used as a safe guide for the same. It has been held so by the Supreme Court in the case of Collector of Customs, Bombay v. Business Forms Ltd. Thr. O.L., 2002 (142) E.L.T. 18 (S.C.).

The classification of the goods under the Customs Tariff is governed by the principles as enumerated in the General Rules of Interpretation (‘GRI’) set out in the First Schedule to the Customs Tariff Act, 1975 (‘Tariff). In view of the Rule 1 & Rule 3(a) of the General Rules of Interpretation to answer the question of classification of the products under consideration asked by the applicant, provisions of the relevant Section or Chapter Notes and Sub-Notes or explanatory notes are to be interpreted considering that the goods in question comprise “Reagent”, however, they are put up in the form of Kit which gives essential character to the products. Sections and Chapter Notes have been given statutory backing and have been incorporated at the top of each Section / Chapter.

Explanatory notes to heading 3822 explains that this heading covers diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, whether or not put up in the form of kits, including blood grouping reagents, other than diagnostic reagents designed to be administered to the patient of heading 30.06.

The reagents of this heading should be clearly identifiable as being for use only as diagnostic or Laboratory reagents. ‘This 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).

Diagnostic kits based on reactions such as agglutination, precipitation, neutralization, binding of complement, haemagglutination, enzyme-linked immunosorbent assay (ELISA), etc, are classified here. Malaria diagnostic kits, for example those based on monoclonal antibodies to pLDII (plasmodium lactate dehydrogenase), are also classified here.

From the above discussed test procedures elaborated in the product brochure it is observed that the reagents of the goods in question are not designed to be administered to the patient, furthermore, they are for in vitro diagnostic use only. Therefore, by virtue of Note 4 to Chapter 30 the product in question is not classifiable under Chapter I heading 3006. Further, the applicant has submitted that the kit’s main ingredient is antibody, and it is a blood scrum containing monoclonal antibodies against specific antigens.

Moreover, the applicant has submitted (at para 6 above) that there are four methods of measuring antigen-antibody reactions also known as Immunoassay, depending upon the molecule that is bonded on the secondary antibody; that are:

  • Enzyme Immunoassay (EIA) or Enzyme-linked immunosorbent assay (ELISA) -colour developed using Substrate- enzyme reaction.
  • Radio Immunoassay (RIA)- using Radioactive isotopes.
  • Fluoro Immnoassay (FIA)- using fluorescence emitting molecule.
  • Chemiluminescence immunoassay (CLIA)- using chemically illuminating molecules.

It is to underline that the principle behind the Immunoassay test is the use of an antibody that will specifically bind to the antigen of interest. If we go through the explanatory notes the heading 3822, it is very categorically explained as below:

Diagnostic kits based on reactions such as agglutination,precipitation, neutralization, binding of complement, haemagglutination, enzyme-linked immunosorbent assay (ELISA), etc, are classified here. Malaria diagnostic kits, for example those based on monoclonal antibodies to pLDII (plasmodium lactate dehydrogenase), are also classified here “.

The process applied in this mechanism as can be seen in para 2.3 above, the applicant has contended the lest uses a sandwich Immunodetection method which is based on antibody antigen reaction with fluorescent technology and the detector antibody in buffer binds to PCT in scrum sample. Hence, the diagnostic Kit having mechanism of ‘binding of complement‘ are correctly covered under chapter heading 3822.

I find that there are specific tariff entries for prepared diagnostic reagent whether or not put up in the form of kits meant for certain diseases viz. malaria and zika, blood grouping and pregnancy test. All other prepared diagnostic or laboratory reagent whether or not put up in the form of kits are covered under residuary tariff item 3822 9090.

12. I have gone through the Notification No. 1/2017-IGST (Rate) dated 28th June 2017 and the Circular No. 163/19/2021-GST dated 06.10.2021 issued by Tax Research Unit regarding clarification of GST rates & classification of goods based on the recommendations of the GST Council wherein it is clarified that concessional GST rate of 12% is applicable on all the goods falling under heading 3822, vide entry at Sr. No. 80 of Schedule-Il of Notification No. 1/2017-IGST (Rate) dated 28th June 2017 . Notification No. 1/2017 ibid covers ‘All diagnostic Kits and reagents’ under heading 3822 at Sr. No. 80 of its Schedule-II.

13. I have gone through the case laws relied upon by the applicant. In the case of Span Diagnostics Ltd. Vs. Commissioner of C.Ex., Surat in 2007 (211) E.L.T. 521 (S.C) the issue before the Honourable Supreme Court was regarding the classification of monoclonal antibodies under heading 3002 or under heading 3005. However, it is observed that in the case in hand issue is regarding the classification of a complete diagnostic kit and not about only one of its component i.e. Anti-PCT antibody.

In the case of COEN Bharat Ltd. Vs. Commissioner of C.Ex. Vadodara in 2007 (217) E.L.T. 165 (SC) the issue before the Honourable Supreme Court was whether the Hot Air Generator is classifiable as “Air Heaters” under heading 7322 or under heading 8419 of the Central Excise Tariff Act 1985. However, it is observed that the goods in question i.e. the diagnostic kit containing monoclonal antibodies is not mentioned specifically under heading 3002. further I find that there is a plethora of cases in which the apex court has held that HSN explanatory notes are a safe guide in the matter of classification.

I find that the case laws relied upon by the applicant to support their arguments are not germane to the case in hand.

14. On the basis of foregoing discussions and findings, I rule that the products in question i.e. “QDx Instacheck™ PCT” with reader “QDx Instacheck™” as a kit merit classification under CTH 3822, more specifically under CTI 3822 9090 of the First Schedule to the Customs Tariff Act, 1975 and the said products are covered under entry at Sr. No. 80 of Schedule-II of Notification No. 1/2017-IGST (Rate) dated 28th June 2017

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