2019 (7) TMI 1136 - AAAR - GST

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

In Re: M/s. Shiva Writing Company Pvt. Ltd.

The appellate authority upheld the ruling by the West Bengal Authority for Advance Ruling, confirming that pen tips and balls used in manufacturing ball ... Classification of goods - rate of tax - tips and balls, both being pen parts, used in manufacturing process of ball point pens - whether classified under HSN Chapter Head 9608 and taxable at the rate of 12% or not? - N/N. 12/2017-CentraI Tax dated 28.06.2017 (corresponding State Notification No. 1152-FT dated 29.06.2017) - challenge to ruling pronounced by the WBAAR. HELD THAT:- The Appellant’s interpretation of N/N. 12/2017-CentraI Tax dated 28.06.2017 (corresponding State Notification No. 1152-FT dated 29.06.2017) for classification of any item up to 4 digits and not beyond is on the wrong footing as the said Notifications were issued for mentioning of MSN codes on the invoice by the registered person depending on the Annual Turnover in the preceding financial year and hence not applicable in their present case. The ‘tips and balls of ball point pens’ are essentially ‘parts of refills’ and the refills are parts of ball point pens. “Ball point pens” are classified under Sub-heading no. 9608 10 attracting tax @ 12% while “Refills for ball point pens comprising the ball point and ink-reservoir” are classified under Sub-heading no. 9608 60 attracting tax @ 18%. Pen nibs and nib points as per HSN entry 9608 91 are very different from ball point tips and balls as used by the Appellant. Primarily ‘Tips and balls’ are part of refill, and since there is no specific Sub-heading allotted to these parts these should be classified under residuary Sub-heading as ‘Others- in 9608 99. attracting tax @ 18%. It is clear from the table in para 11 that the tips and halls dealt with by the Appellant fall under entry no. 453 of Schedule III. There is no infirmity in the ruling pronounced by the WBAAR - appeal dismissed - decided against appellant. 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.