Pen tips and balls taxed at 18% under GST, not 12% as argued. Appeal dismissed.

The appellate authority upheld the ruling by the West Bengal Authority for Advance Ruling, confirming that pen tips and balls used in manufacturing ball point pens are taxable at 18% under GST Tariff Heading 9608 99 90. The appellant's argument that these items should be taxed at 12% like ball point pens was rejected, and the classification under the residuary sub-heading 9608 99 at 18% was deemed appropriate. The appeal was dismissed, and the original ruling was upheld.

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Issues Involved:
- Classification and tax rate of pen tips and balls used in manufacturing ball point pens under GST.

Issue-wise Detailed Analysis:

1. Classification and Tax Rate of Pen Tips and Balls:

The appellant, M/s. Shiva Writing Company Pvt. Ltd., filed an appeal against the ruling of the West Bengal Authority for Advance Ruling (WBAAR) regarding the classification and tax rate of pen tips and balls used in the manufacturing of ball point pens. The appellant sought clarification on whether these items are taxable at the rate of 12% under HSN Chapter Head 9608 or if a different rate applies.

2. Appellant's Arguments:

The appellant argued that the WBAAR had incorrectly classified pen tips and balls under HSN 9608 99 90, making them taxable at 18%. They contended that according to Notification No. 12/2017-CT, HSN codes should be mentioned only up to the first 4 digits on a tax invoice, implying that items should be classified at the 4-digit level unless specified otherwise. They stressed that as a manufacturer of ball point pens, the pen tips and balls should be taxable at 12%, the same rate as ball point pens, since these parts are exclusively used in ball point pens and not in fountain pens, which are taxed at 18%.

3. Respondent's Counterarguments:

The respondent countered that the appellant misinterpreted Notification No. 12/2017-CT, which pertains to the mentioning of HSN codes on invoices based on annual turnover and not the classification of goods. They further explained that ball point pens are classified under sub-heading 9608 10 at 12%, while refills for ball point pens fall under sub-heading 9608 60 at 18%. Tips and balls, being parts of both ball point pens and refills, do not have a specific 8-digit HSN code and thus fall under the residuary sub-heading 9608 99, taxable at 18%.

4. Examination and Conclusion:

Upon examination, it was observed that the appellant's interpretation of the notification for classification up to 4 digits was incorrect. The relevant chapter headings and descriptions were reviewed, confirming that ball point pens are classified under 9608 10 at 12%, and refills under 9608 60 at 18%. Tips and balls, being parts of refills, should be classified under the residuary sub-heading 9608 99, attracting an 18% tax rate. The cited judgment of the Hon'ble Customs, Excise and Gold Tribunal in Nalanda Pen Mfg. Co. Pvt. Ltd. vs. Collector of Central Excise was found inapplicable as it pertained to a period before the GST Act.

5. Final Decision:

The appellate authority found no infirmity in the ruling pronounced by the WBAAR, which classified pen tips and balls under GST Tariff Heading 9608 99 90, included under Sl.No. 453 of Schedule III of Notification No. 01/2017-Central Tax (Rate), making them taxable at 18%. The appeal was thus dismissed, and the original ruling was upheld.

Disposition:

The appeal was dismissed, and the original ruling by the WBAAR was upheld, confirming that pen tips and balls are taxable at 18% under HSN 9608 99 90.

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