2018 (4) TMI 812 - AAR - GST

Classification of 'SIKA Block Joining Mortar' under GST Act: Key Ruling and Tax Implications

The case involved the classification of 'SIKA Block Joining Mortar' under HSN 3214 90 10 or 3824 50 90. The ruling determined that the product should be ... Classification under Tariff Heading 3214 - Residuary Heading 3824 (Not Elsewhere Specified) - Application of Explanatory Notes to the Harmonised System - Products usually put up in pasty or powdered form and hardening after application - Taxability under Schedule IV Notification No. 01/2017Classification under Tariff Heading 3214 - Classification under Tariff Heading 3824 - Application of Explanatory Notes to the Harmonised System - Classification of 'SIKA Block Joining Mortar' for purposes of the Customs Tariff Act, 1975 and consequent GST applicability. - HELD THAT: - The Authority examined the product's composition and mode of use: a ready-to-use grey cementitious, polymer-modified powdered mortar which is mixed with water, applied with a trowel to bond masonry units (AAC blocks, fly ash bricks) and hardens after application. The Explanatory Notes to the Harmonised System describe heading 3214 as covering preparations usually put up in pasty form or in powdered form made pasty by addition of a liquid, which harden after application and are applied with trowels or similar tools. Subheadings under 3214 include non-refractory surfacing preparations (3214 90 10) and a residuary subheading (3214 90 90) for other products sharing the heading's general characteristics. Given that the product satisfies these general characteristics - being a powdered preparation made pasty at use, applied with a trowel and hardening after application for bonding masonry units - it falls within heading 3214 and, more specifically, within the residuary tariff item 3214 90 90. Heading 3824 is a residuary heading for chemical products not elsewhere specified; a product already specified under heading 3214 cannot be classified under 3824. Prior orders cited by the applicant and other authorities were considered but none dealt specifically with 'Sika Block Joining Mortar', and the Authority relied on the product characteristics and the Explanatory Notes to determine the proper classification. [Paras 10, 11]'SIKA Block Joining Mortar' is classifiable under tariff item 3214 90 90 of the Customs Tariff Act, 1975 and is taxable under the specified entries in Schedule IV pursuant to the Notifications cited.Final Conclusion: The Advance Ruling holds that 'SIKA Block Joining Mortar' is classifiable under 3214 90 90 (and not under 3824), and is taxable under the relevant entries of Schedule IV as per Notification No. 01/2017-Central Tax (Rate) and the corresponding WBGST notification; the ruling remains subject to statutory provisions governing advance rulings. Issues: Classification of 'SIKA Block Joining Mortar' under HSN 3214 90 10 or 3824 50 90Issue 1: Classification under HSN 3214 90 10The Applicant sought an Advance Ruling on the proper classification of their product, 'SIKA Block Joining Mortar,' under HSN 3214 90 10. The product is described as a Grey Cement based non-shrink, self-curing water resistance mortar for fixing AAC Blocks, Concrete Blocks, Fly Ash Bricks, etc. The Applicant provided details of similar products classified under HSN 3824 50 90 by competitors. The CESTAT order directed a re-examination of the classification, emphasizing that products like cement, grout, and repair mortar may not fall under subhead 3214. However, the Commissioner (Appeals) in Goa classified a similar product under tariff item 3214 90 90. The CEGAT in Mumbai also classified ready-mix plasters under subhead 3214. The Applicant's product, 'SIKA Block Joining Mortar,' is a cementitious mortar modified with polymers, used for joining masonry units. The Explanatory Notes suggest that products under HSN 3214 90 10 include non-refractory surfacing preparations for various surfaces, which align with the characteristics of the Applicant's product.Issue 2: Classification under HSN 3824 50 90The Applicant also considered the classification under HSN 3824 50 90, which covers chemical products and preparations of the chemical industry. However, the ruling clarified that since the product is already specified under tariff item 3214 90 90, it does not fall under the residuary heading 3824. The decision ruled that 'SIKA Block Joining Mortar' should be classified under tariff item 3214 90 90, making it taxable under specific provisions of the CGST Act, 2017 and WBGST Act, 2017. The ruling is valid unless declared void under the relevant provisions of the GST Act.This comprehensive analysis of the judgment delves into the classification issues surrounding the product 'SIKA Block Joining Mortar' under different HSN codes, referencing legal precedents, Explanatory Notes, and specific characteristics of the product to arrive at a conclusive ruling on its proper classification under the Customs Tariff Act, 1975.