Classification of Crumb Rubber under GST Tariff: Authority rules under Heading 4004, 18% GST rate

The Authority for Advance Ruling determined that crumb rubber/granule is classifiable under Heading 4004 and is subject to a GST rate of 18% (9% CGST and 9% SGST/UTGST or 18% IGST). This decision was based on the nature of the product being derived from waste rubber, particularly used tires. The ruling aligns with the provisions of the GST Tariff Act and ensures consistency with the product's characteristics.

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Issues Involved:
1. Classification of Crumb Rubber/Granule under the Harmonized System of Nomenclature (HSN).
2. Applicable GST rate for Crumb Rubber/Granule.

Issue-wise Detailed Analysis:

1. Classification of Crumb Rubber/Granule under the HSN:
The applicant, M/s. Green Rubber Crumb Private Limited, sought an advance ruling on the classification of crumb rubber/granule, specifically whether it falls under HSN 4002 or 4004. The applicant contended that crumb rubber/granule, even if manufactured from waste/used tyres, is a finished product and should be classified under HSN 4002. They supported their argument with several documents, including a clarification from the Ministry of Environment, Forest & Climate Change (MOEF), which stated that rubber crumbs or granules made from used tyres are considered products rather than waste.

The Authority for Advance Ruling examined the submissions and documents provided by the applicant, including import and sales invoices, and found inconsistencies. The invoices submitted by the applicant classified the product under HSN 4004, which pertains to waste, parings, and scrap of rubber, and powders and granules obtained therefrom.

The Authority referred to the explanatory notes of Chapter 40 of the GST Tariff Act, which covers rubber and articles thereof. They noted that HSN 4002 covers synthetic rubber and mixtures in primary forms, plates, sheets, or strips, which does not align with the form of crumb rubber/granule. Conversely, HSN 4004 includes waste, parings, and scrap of rubber and powders and granules obtained from such waste, which accurately describes the crumb rubber/granule produced from used tyres.

2. Applicable GST Rate for Crumb Rubber/Granule:
The Authority determined that the crumb rubber/granule falls under HSN 4004, which attracts a GST rate of 18% (9% CGST and 9% SGST/UTGST or 18% IGST). This classification is based on the nature of the product being derived from waste rubber, specifically used tyres, which are not usable as such due to wear and tear.

Conclusion:
The Authority for Advance Ruling concluded that crumb rubber/granule is classifiable under HSN 4004 and is liable to GST at the rate of 18%. The decision aligns with the provisions of the GST Tariff Act and the explanatory notes for Chapter 40, ensuring that the classification and applicable tax rate are consistent with the nature of the product.

Order:
Crumb rubber/granule is classifiable under Heading 4004 and is liable to GST @18% (9% each of CGST & SGST/18% IGST).

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