2018 (5) TMI 699 - AAR - GST

Classification of E-rickshaw Tyres under Tariff Heading 4011 and CGST Rate of 14%

In Re : Ceat Limited

The Authority for Advance Ruling (AAR) determined that 'E-rickshaw tyres' are classified under Tariff Heading 4011 and attract a CGST rate of 14%. The AAR ... Classification of goods - rate of tax - E-rickshaw tyres - What is the classification and rate of Central Goods and Service Tax leviable on the product 'E-rickshaw tyres'? Held that: - Three Wheeled Electric Motor Vehicle (known as E-Rickshaw in market) is a Motor Vehicle in Motor Vehicle Act also. It has to be registered with State Transport Authorities as a Motor Vehicle. Tyres and Tubes used in these Vehicles are Automobile Tyres and Tubes of size 300-12, 300-14, 90-90/12 and 3.75-12, which are duly prescribed as Automobile Tyres in Bureau of Indian Standards for Two and Three Wheeled Motor Vehicles IS 15627:2005. By no means the Tyres and Tubes cleared by them are Tyres and Tubes of Three Wheeled Powered Cycle Rickshaw - the Tyres cleared by these manufacturers attract a peak rate of 14% percent instead of 2.5% percent, as these Tyres and Tubes are meant for Electric Motor Vehicles (known as E-Rickshaw). The sizes of these tyres and tubes mentioned are also used widely in scooters and motorcycles. It is necessary to verify what duty these companies were paying in pre-GST. The product introduced by the appellant is with electric battery whereas the simple meaning of 'cycle' is a pedal driven, human powered, single track vehicle, having two wheels attached to a frame, one behind the other - the e-rickshaw is not within the sweep of the word 'bicycles' or 'cycle Rickshaw' and also does not appear to be in consonance with the legislative intent. When legislature has classified the product and put them under a different entries Entry 160 of schedule-I and Entry-46 of schedule-IV and being capable to be understood in common parlance as a different commercial commodity, the basis of the classification is not open to question. Moreover, the schedule entry 46 is very specific in nature and is considered for all pneumatic tyres, of rubber. The schedule entry is provided with the exclusion clause. Ruling:- The product is classified and covered by Tariff Heading 4011 and the rate of tax shall be at the rate of 14 percent under MGST ACT, 2017 and 14 percent under CGST ACT, 2017. Issues Involved:1. Classification of 'E-rickshaw tyres' under the GST regime.2. Determination of the applicable rate of Central Goods and Services Tax (CGST) on 'E-rickshaw tyres.'Detailed Analysis:1. Classification of 'E-rickshaw tyres' under the GST regime:The applicant, M/S Ceat Ltd., sought an advance ruling on the classification and rate of CGST applicable to 'E-rickshaw tyres.' The applicant has been clearing the product under Chapter Heading No. 4011, which covers 'New pneumatic tyres, of rubber.' The ambiguity arises because the term 'e-rickshaw tyres' is not explicitly mentioned in the Customs Tariff or GST Rate Schedules.The applicant argued that 'e-rickshaw tyres' should be treated similarly to 'three-wheeled powered cycle rickshaws' under the principle of ejusdem generis, which suggests that goods of the same kind should be treated similarly. However, the jurisdictional officer contended that 'three-wheeled powered cycle rickshaws' are different from 'e-rickshaws,' as the latter are motor vehicles under the Motor Vehicle Act and must be registered with State Transport Authorities.The Authority for Advance Ruling (AAR) noted that 'e-rickshaws' are distinct from 'three-wheeled powered cycle rickshaws' as they do not have pedals and are solely powered by an electric motor. The ruling cited the Supreme Court case of Delhi Kinetic Engineering Ltd. vs Collector of Central Excise, which clarified that a 'powered cycle rickshaw' refers to an ordinary cycle rickshaw with a motor or petrol engine fitted, not an auto-rickshaw or e-rickshaw.The AAR concluded that 'e-rickshaw tyres' do not fall under the category of 'three-wheeled powered cycle rickshaws' and should not be classified under the same heading.2. Determination of the applicable rate of CGST on 'E-rickshaw tyres':The applicant highlighted the ambiguity in the GST Rate Schedules, where Chapter Heading No. 4011 is covered by two separate entries:- Sl. No. 190 of Schedule-I, attracting CGST @ 2.5% for 'Pneumatic tyres or inner tubes, of rubber, of a kind used on/in bicycles, cycle-rickshaws, and three-wheeled powered cycle rickshaws.'- Sl. No. 46 of Schedule-IV, attracting CGST @ 14% for 'New pneumatic tyres, of rubber [other than of a kind used on/in bicycles, cycle-rickshaws, and three-wheeled powered cycle rickshaws; and Rear Tractor tyres; and of a kind used on aircraft].'The AAR determined that 'e-rickshaw tyres' do not fit into the exclusion clause of Sl. No. 46 of Schedule-IV. Therefore, they fall under the broader category of 'New pneumatic tyres, of rubber,' which attracts a CGST rate of 14%.Conclusion:The AAR ruled that 'E-rickshaw tyres' are classified under Tariff Heading 4011 and attract a CGST rate of 14% under both the Maharashtra Goods and Services Tax Act, 2017, and the Central Goods and Services Tax Act, 2017. The principle of ejusdem generis does not apply in this case, as 'e-rickshaws' and 'three-wheeled powered cycle rickshaws' are distinct categories of vehicles.