2019 (4) TMI 72 - AAR - GST

Tax Ruling: PVC Tufted Coir Mats taxed at 12% not 5% as per Customs Tariff Head

The Authority for Advance Rulings, Kerala, determined that PVC Tufted Coir Mats and Matting should be taxed at the standard rate of 12% as Carpets and ... Classification of goods - whether PVC Tufted Coir Mats and Matting can be fitted into low band of tax rate of 5% as Coir Mats and Matting or into standard band of tax rate of 12% as Carpets and other textile floor coverings? - Whether classifiable under Chapter Heading 5703 Carpets and other textile floor coverings, tufted, whether or not made up, sub heading 570390 - of other textile materials - as Tariff item 57039020 Carpets and floor coverings of coir or as Tariff item 57039090 Other? Held that:- The PVC compound in uniform and required thickness is fed into the conveyor belt. The coir yarn cut into Pile is thickly and uniformly embedded into the PVC compound. conveyor passes through the heating and cooling zones where the product is cured. After curing the product is conveyed to the shearing machine where shearing takes place and passed through the slitting machine where the product is cut lengthwise. With the hap of a take up device, the product is fed into the cross cutting station Where the product is cut standard size. In case of matting, after shearing the matting are rolled up using roller device. The whole process is fully automated. me coir as well as PVC chemicals used for the manufacture of tufted coir mats have equal importance. However, PVC and chemicals influences cost, quality on Inputs more than coir. Coir mats, mattings and floor coverings covered under HSN 5702, 5703 and 5705 are taxable @ 5% GST vide Notification No.1/2017-CT-Rate Dtd.28-06-2017 as amended by Notification No.34/2017-CT-Rate dtd. 13-10-2017. This classification covers only the commodities which are manufactured exclusively using coir fiber. If any, PVC or rubber or any other materials are stuffed on the textile of coir, which is used as floor mats or mattings, it will come under Customs Tariff Head 5703 90 go and it will be taxed @ 12% GST. Issues:1. Classification of PVC Tufted Coir Mats and Matting for tax rate determination.2. Classification under Chapter Heading 5703 for PVC Tufted Coir Mats and Matting.Issue 1:The applicant sought advance rulings on the tax rate classification of PVC Tufted Coir Mats and Matting. The applicant inquired whether these products could be classified under the low band tax rate of 5% as Coir Mats and Matting or the standard band tax rate of 12% as Carpets and other textile floor coverings. The applicant highlighted the manufacturing process involving PVC resin, DOP, dolomite filler, pigment, and coir yarn. The ruling clarified that if materials other than coir, such as PVC or rubber, are used in the manufacturing process, the products fall under Customs Tariff Head 5703 90 90 and are taxed at 12% GST.Issue 2:The second issue raised was regarding the classification of PVC Tufted Coir Mats and Matting under Chapter Heading 5703. The ruling determined that these products are classifiable under Customs Tariff Head 5703 90 90. The decision was based on the manufacturing process, which involved the embedding of coir yarn into PVC compound, curing, shearing, and cutting, with PVC and chemicals significantly influencing the cost and quality of the final products.In conclusion, the Authority for Advance Rulings, Kerala, clarified that PVC Tufted Coir Mats and Matting cannot be classified under the low band tax rate of 5% as Coir Mats and Matting but should be taxed at the standard rate of 12% as Carpets and other textile floor coverings. Additionally, the products were deemed classifiable under Customs Tariff Head 5703 90 90 based on the manufacturing process and material composition.