Classification of "Tile Adhesive" and "Tile Grout" under Chapter Heading 3214 for GST at 28%

The Advance Ruling Authority classified "Tile Adhesive" and "Tile Grout" under Chapter Heading 3214 as non-refractory surfacing preparations, subject to a GST rate of 28% (14% CGST and 14% SGST). The authority considered the products as bonding agents for setting tiles, aligning with the description under Chapter 3214, despite the applicant's argument for a lower GST rate of 18%.

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Issues Involved:
1. Classification of "Tile Adhesive" and "Tile Grout" under GST.
2. Applicable GST rates for "Tile Adhesive" and "Tile Grout".

Detailed Analysis:

1. Classification of "Tile Adhesive" and "Tile Grout" under GST:

Applicant's Contention:
- The applicant, a manufacturer and dealer in paints and chemical-based products, including tile adhesives and grouts, seeks classification under Entry 97 of Schedule III of Notification No. 1/2017-Central Taxes (Rate) liable to CGST at 9%.
- The applicant argues that these products are non-refractory chemical-based preparations consisting of cement, sand, and polymers, and should fall under Chapter Heading 3824 as "Prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries."
- The applicant contends that the products do not fall under Entry 24 of Schedule IV (Chapter Heading 3214) which covers "Glaziers’ putty, grafting putty, resin cements, caulking compounds and other mastics; painters’ fillings; non-refractory surfacing preparations for facades, indoor walls, floors, ceilings or the like."

Authority's Observations:
- The authority examined the HSN Explanatory Notes and found that non-refractory surfacing preparations are covered under Chapter 3214, which includes preparations in powder form based on quartz and cement with small quantities of added plasticizers, used for setting wall or floor tiles.
- The authority noted that the products in question, including various types of tile adhesives and grouts, are used for setting tiles and therefore fall under the description of non-refractory surfacing preparations.
- The authority also considered that the products are not used as final visible surfaces but as bonding agents, which aligns with the description under Chapter 3214.

2. Applicable GST Rates for "Tile Adhesive" and "Tile Grout":

Applicant's Contention:
- The applicant argues for a GST rate of 18% (9% CGST and 9% SGST) under Chapter Heading 3824, claiming that the products are prepared binders and chemical preparations.
- The applicant emphasizes that the products are mixtures of cement, sand, and additives, and should be classified based on the material that gives them their essential character, which is cement.

Authority's Observations:
- The authority concluded that the products are correctly classifiable under Entry 24 of Schedule IV of Notification No. 1/2017-Central Taxes (Rate) dated 28.06.2017, liable to GST at 28% (14% CGST and 14% SGST).
- The classification under Chapter 3214 is supported by the fact that the products are non-refractory surfacing preparations used for setting tiles, as described in the HSN Explanatory Notes.

Order:
- The products in question, including various types of tile adhesives and grouts, are classifiable under Entry 24 of Schedule IV of Notification No. 1/2017-Central Taxes (Rate) dated 28.06.2017, and are liable to GST at 28% (14% each of CGST and SGST).

Conclusion:
The Advance Ruling Authority determined that the "Tile Adhesive" and "Tile Grout" products are correctly classified under Chapter Heading 3214 as non-refractory surfacing preparations and are subject to a GST rate of 28%.

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