Classification of goods— In the instant case, the applicant M/s. IncNut Lifestyle Retail Private Limited is in the business of manufacturing hair oil, shampoos etc., some of which are cosmetics and others Ayurvedic medicaments. 

They have obtained AYUSH license for each of their product. They are desirous of ascertaining whether the products manufactured by them are cosmetics or medicaments.

Question raised for advance ruling—

Whether the products manufactured by him under the licences issued by AYUSH department of Government of Telangana and sold as Ayurvedic products fall under HSN No. 30.04 or under HSN 3304 of the GST Tariff?

The applicant contends that all the goods manufactured by them are sold as medicaments and therefore are eligible to be taxed as Ayurvedic medicaments i.e., under HSN ‘30049011’.

Held that—The products referred by the applicant are classified as medicament or cosmetic based on the following parameters:

a) Whether the product has a drug license; and

b) Whether the Composition of the product has medical ingredients; and

c) The function or purpose indicated in the label and literature of the product.

By applying the above parameters, the products which are used for care are treated as ‘Cosmetics’ and therefore taxed @9% CGST & SGST each; the products which are used for cure are treated as ‘Medicaments’ falling under Serial No. 63 of Schedule II taxable @6% CGST & SGST each.