2021 (7) TMI 538 - AAR - GST

Classification of coir-backed mats under GST: ruling on applicable rate and Tariff Sub-Heading

In Re: M/s. United Rubber Industries

The case involved the classification of mats, mattings, and floor coverings of coir backed by PVC, rubber, latex, etc., and determining the applicable ... Classification of goods - Mats, Mattings and Floor Covering of Coir, if backed by PVC, Rubber, Latex etc - would would fall under Tariff Headings 5702, 5703 and 5705 at SI. No.219 of Schedule - I of N/N. 1/2017-CGST (Rate) dated 28.06.2017? - HELD THAT:- It is an undisputed fact that the exposed surface when in use of the Mats, Mattings and Floor coverings of coir backed by PVC, Rubber, Latex etc manufactured by the applicant is coir a textile material. Therefore, the product is appropriately classifiable under Chapter 57 of the Customs Tariff Act. Heading and the sub-heading of Chapter 57 under which the product falls - HELD THAT:- The Heading 5702 covers carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up including “Kelem”, “Schumacks”, “Karamanie” and similar hand-woven rugs and the sub-heading 5702 20 covers floor coverings of coconut fibres (coir) which includes coir mats, carpets and other rugs. However, the product manufactured by the applicant cannot be classified under 5702 20 as it does not include coir mattings / carpets with PVC or rubber backing - The Heading 5705 covers other carpets and other textile floor coverings whether or not made up and hence the product of the applicant does not fall under 5705 - On the basis of the descriptions of the headings and the relevant chapter notes the product of the applicant is appropriately classifiable under Tariff Sub-Heading 5703 90 90 of the Customs Tariff Act. Whether the product will attract GST at the rate of 5 % as per SI No. 219 of Schedule I or GST at the rate of 12 % as per SI No. 144 of Schedule II of N/N. 01/2017 Central Tax (Rate) dated 28.06.2017? - HELD THAT:- The entry at SI No. 219 of Schedule I of the notification refers to the coir mats, mattings, floor coverings etc that are exclusively made up of coir fibres. In the instant case though the exposed surface of the mats / mattings I floor coverings manufactured and supplied by the applicant are of coir it is backed by PVC I Rubber etc and the manufacturing process involves use of technologically advanced machines for providing the backing using PVC, Rubber Compound, Chemicals etc and the PVC / Rubber Compound and chemicals have equal importance as that of coir - the products cannot be considered to fall, under the description of Coir mats, matting, floor covering mentioned in SI No. 219 of Schedule 1 but appropriately falls within the description of Carpets and other textile floor coverings, tufted, whether or not made up mentioned in SI No. 144 of Schedule II of the N/N. 01/2017 Central Tax (Rate) dated 28.06.2017. Thus, Mats, Matting and Floor Covering of Coir backed by PVC, Rubber, Latex etc are appropriately classifiable under Tariff Sub- Heading 5703 90 90 of First Schedule of the Customs Tariff Act, 1975 and attracts GST at the rate of 12% as per entry at SI No. 144 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. Issues Involved:1. Classification of mats, mattings, and floor coverings of coir backed by PVC, rubber, latex, etc.2. Applicable rate of GST for these products.Detailed Analysis:Classification of Mats, Mattings, and Floor Coverings of Coir Backed by PVC, Rubber, Latex, etc.Applicant’s Argument:- The applicant manufactures mats, mattings, and floor coverings of coir, which are sometimes backed by PVC, rubber, latex, etc.- These products are classified under headings 5702, 5703, and 5705 based on the manufacturing process.- The products are known as coir products in the market, irrespective of the backing material.- The applicant contends that these should fall under Tariff Headings 5702, 5703, and 5705 at SI. No. 219 of Schedule - I of Notification No. 1/2017-CGST (Rate) dated 28.06.2017, within the 5% tax net.Jurisdictional Officer’s Argument:- The officer states that the applicant has not yet started manufacturing but proposes to engage in it.- The manufacturing involves both coir and materials like PVC, rubber, latex, which are equally important.- Coir mats backed by these materials cannot be considered purely coir mats and should be classified under Customs Tariff head 5703 90 90, taxable at 12%.Authority’s Analysis:- Chapter 57 of the Customs Tariff Act covers carpets and other textile floor coverings.- Note 1 to Chapter 57 defines these products as those where textile materials serve as the exposed surface.- The applicant’s products have coir as the exposed surface, thus falling under Chapter 57.- The headings in Chapter 57 are based on the manufacturing process and the nature of textile material used.- The applicant’s products, backed by PVC, rubber, etc., are appropriately classifiable under Tariff Sub-Heading 5703 90 90.Applicable Rate of GSTAuthority’s Analysis:- SI No. 219 of Schedule I of Notification No. 01/2017 CT (Rate) dated 28.06.2017 refers to coir mats, mattings, and floor coverings exclusively made of coir fibers, taxable at 5%.- SI No. 144 of Schedule II of the same notification covers carpets and other textile floor coverings, tufted, whether or not made up, taxable at 12%.- The applicant’s products, though having coir as the exposed surface, are backed by PVC, rubber, etc., and involve advanced manufacturing processes.- Therefore, these products do not fall under SI No. 219 of Schedule I but under SI No. 144 of Schedule II, attracting a 12% GST rate.Conclusion:Ruling:- Mats, mattings, and floor coverings of coir backed by PVC, rubber, latex, etc., are classifiable under Tariff Sub-Heading 5703 90 90 of the Customs Tariff Act, 1975.- These products attract GST at the rate of 12% (6% CGST + 6% SGST) as per entry at SI No. 144 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017.