Plastic automotive components classified as "parts of general use" under Note 2 Section XV, merit heading 3926 classification

AAR Maharashtra ruled that plastic automotive components including door handles, brackets, housing, washers, gaskets, stators, and glove box locks are classified as "parts of general use" under Note 2 to Section XV. These items, despite being designed for motor vehicles, must be classified according to their constituent material rather than as automobile parts. Since all components are made of plastic, they merit classification under heading 3926 instead of automobile-specific headings. The ruling clarifies that parts of general use retain their material-based classification even when identifiable with specific vehicle applications.

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Issues Involved:
1. Classification of goods under GST.
2. Applicable rate of Goods and Services Tax (GST) for specific products.

Issue-wise Detailed Analysis:

1. Classification of Goods under GST:

The applicant, M/s. Nexture Technologies Private Limited, sought an advance ruling on the classification of the following products:
- Door-handle of motor vehicles.
- Plastic fittings for motor vehicle doors (bracket, housing, bracket housing, stator, gasket).
- Glove box locking.

The applicant contended that these goods should be classified under Entry at S. No. 111 of Schedule III of Notification No. 1/2017-Central Tax (Rate), which pertains to "plastics and articles of other materials of headings 3901 to 3914," and are thus exigible to central tax at the rate of 9% (total GST rate of 18%).

The applicant argued that the impugned goods fall under Chapter 39 of the Customs Tariff Act, specifically under Heading 3926 which covers "Other articles of plastics and articles of other materials of headings 3901 to 3914." They further asserted that these goods are parts of general use and hence should not be classified under Heading 8708, which covers "Parts and accessories of motor vehicles of headings 8701 to 8705."

The jurisdictional officer, however, contended that the goods should be classified under Heading 8708, which would subject them to a higher GST rate of 28%.

2. Applicable Rate of Goods and Services Tax (GST):

The applicant's interpretation was that the goods should be taxed under the lower rate applicable to Heading 3926, while the jurisdictional officer argued for the higher rate applicable to Heading 8708.

Observations and Findings:

The Authority for Advance Ruling (AAR) examined the relevant chapters and notes of the Customs Tariff Act and the Harmonized System of Nomenclature (HSN). The key points considered were:

- Parts of General Use: As per Note 2 to Section XV of the HSN, parts of general use include items such as door handles, fittings, and mountings for vehicle coachwork. These items, even if specifically designed for use in automobiles, are classified according to their constituent material if they fall under the definition of parts of general use.

- Constituent Material: The goods in question are made of plastic and are manufactured using PVC granules. The classification should therefore be based on the material composition, which in this case is plastic.

- Relevant Headings: The AAR referred to Heading 3926 for plastics and articles thereof, and Heading 8708 for parts and accessories of motor vehicles. The AAR concluded that the goods in question (door handles, brackets, housings, gaskets, stators, and glove box locking) are parts of general use made of plastic and should be classified under Heading 3926.

Conclusion:

The AAR ruled that the products in question are classifiable under Heading 3926 of the GST Tariff as articles of plastic. Consequently, they are subject to the GST rate applicable to that heading, which is 18% (9% central tax and 9% state tax).

Order:

The AAR concluded that the goods mentioned (door handles, plastic fittings for motor vehicle doors, and glove box locking) are classifiable under Chapter 3926 and will be taxable at the GST rate applicable to that heading.

Citation:

2019 (7) TMI 1334 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA

Date:

Mumbai, dt. 01-06-2019

Note:

This summary maintains the privacy of the parties involved and focuses on the legal terminology and significant phrases from the original judgment.

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