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of <h1>Car seat covers classified as motor vehicle accessories, subject to higher tax rate.</h1> <h3>In Re: M/s. Saddles International Automotive & Aviation Interiors Private Limited,</h3> In Re: M/s. Saddles International Automotive & Aviation Interiors Private Limited, - 2021 (54) G. S. T. L. 464 (A. A. R. - GST - A. P.) Issues Involved:1. Classification of 'Car Seat Covers' under HSN 9401.2. Applicability of SI.No.435A of Schedule IV of Notification No.1/2017-Central Tax (Rate) to 'Car Seat Covers'.Detailed Analysis:Issue 1: Classification of 'Car Seat Covers' under HSN 9401The applicant, M/s. Saddles International Automotive & Aviation Interiors Private Limited, is engaged in the manufacture of car seat covers and sought clarification on the appropriate classification of their product under the GST regime. They argued that 'seat covers' should be classified under HSN 9401, which pertains to seats and parts thereof, asserting that seat covers are integral to the functionality and completion of car seats.The applicant cited various judicial precedents and explanatory notes to support their claim that seat covers should be considered as essential parts of seats. They emphasized that seat covers contribute to the comfort, protection, and overall functionality of car seats, thus meriting classification under HSN 9401.However, upon examination, the Authority for Advance Ruling (AAR) determined that 'seat covers' do not qualify as essential parts of seats but rather as accessories. The AAR differentiated between 'parts' and 'accessories' by defining 'parts' as integral to the completion of an article or equipment, while 'accessories' enhance the functional value without being essential. The AAR concluded that seat covers are designed for protection and comfort, making them accessories rather than essential parts of seats.Issue 2: Applicability of SI.No.435A of Schedule IV of Notification No.1/2017-Central Tax (Rate) to 'Car Seat Covers'The applicant also sought clarification on whether the entry at SI.No.435A of Schedule IV of Notification No.1/2017-Central Tax (Rate), which pertains to seats and parts thereof, is applicable to car seat covers. They argued that if seat covers are classified under HSN 9401, they would benefit from a reduced tax rate of 18% as per the amended notification No.41/2017-Central Tax (Rate) dated 14.11.2017.The AAR, however, ruled that the entry at SI.No.435A is not applicable to car seat covers. Instead, the correct classification for car seat covers falls under HSN 8708, which pertains to parts and accessories of motor vehicles. This classification attracts a higher tax rate of 28% (CGST+SGST). The AAR referenced previous classifications under the pre-GST regime and clarificatory circulars issued by CBEC, which consistently classified car seat covers as accessories under heading 87.08.Conclusion:The AAR concluded that car seat covers are classified under HSN 8708 at Serial No.170 under Schedule IV of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017, attracting a tax rate of 28% (CGST+SGST). The entry at SI.No.435A of Schedule IV of the Notification No.1/2017-Central Tax (Rate) is not applicable to car seat covers.
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