East African (India) Overseas ., In re

The applicant, a pharmaceutical manufacturer, previously classified both toilet soap and medicated toilet soap under HSN 3401 and paid GST at 18%. Following Notification 09/2025-CT (Rate), a concessional 5% rate was introduced for "Toilet Soap (other than industrial soap) in the form of bars, cakes, moulded pieces or shapes" under HSN 3401. The applicant sought to determine if their medicated soaps also qualified for this lower rate.

The Jurisdictional Officer argued that medicated soaps are distinct therapeutic products used for specific skin conditions rather than general hygiene. They are typically manufactured under drug licenses and contain active medicinal ingredients like ketoconazole or cetrimide

Discussion and Findings

• HSN Structure: Heading 3401 specifically lists "Medicated toilet soaps" under tariff item 3401 11 10. General "Toilet Soap" is most appropriately classified under tariff item 3401 11 90

• Tariff Differences: The concessional 5% rate in Schedule I (Entry 251) refers specifically to "Toilet Soap" and excludes industrial soaps.

• Exclusion of Medicated Soap: Medicated toilet soaps serve specialized medical purposes and cannot be equated with general-purpose bathing soaps.

• Applicable Entry: Since medicated soaps are not mentioned in Entry 251 of Schedule I, they fall under the residual Entry 66 of Schedule II, which covers soaps "other than toilet soap"

The Uttarakhand AAR ruled as follows:

1. Classification: Medicated Toilet Soap is classifiable under HSN tariff item 3401 11 10.

2. GST Rate: The product is covered under Serial No. 66 of Schedule II of Notification No. 09/2025-CT (Rate). It attracts GST at the rate of 18% (9% CGST and 9% SGST).

3. Revised Rate Applicability: The 5% rate under Sl. No. 251 of Schedule I applies only to Toilet Soaps under Tariff Item 3401 11 90