Appellate Authority Confirms GST Rates for 'Zip Rolls' as Parts of Slide Fasteners

The Appellate Authority upheld the classification of 'Zip Rolls' as "Parts of Slide Fasteners" under Tariff Item 9607 20 00. Regarding the applicable Goods and Services Tax (GST) rates, it confirmed 18% GST from 01.07.2017 to 30.09.2019 and 12% GST from 01.10.2019 onwards for 'Zip Rolls.' The appeal by The Roll Company was rejected, affirming the GAAR's ruling in Advance Ruling No. GUJ/GAAR/R/39/2020 dated 03.07.2020.

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Issues Involved:
1. Classification of 'Zip Rolls' under the appropriate tariff heading.
2. Applicable rate of Goods and Services Tax (GST) on 'Zip Rolls'.

Issue-wise Detailed Analysis:

1. Classification of 'Zip Rolls':

Manufacturing Process and Description:
The manufacturing process of 'Zip Rolls' involves several steps, including the creation of polyester tape and cord with teeth, stitching these components together, interlocking the strips to form zipper rolls, and subjecting the rolls to calendaring and dyeing processes. The 'Zip Rolls' are supplied in continuous lengths and can be cut to required sizes by buyers.

Appellant’s Argument:
The appellant argued that 'Zip Rolls' should be classified as "Slide Fasteners" under Chapter Heading 9607, relying on the Harmonized System of Nomenclature (HSN) and previous classifications under Central Excise Tariff. The appellant contended that 'Zip Rolls' meet the definition of "Slide Fasteners" as they consist of two narrow strips of textile material fitted with scoops, which can interlock by means of a slider.

GAAR’s Ruling:
The Gujarat Authority for Advance Ruling (GAAR) classified 'Finished Zippers' as "Slide Fasteners" under Chapter Heading 9607.11 but classified 'Zip Rolls' and 'Sliders' as "Parts of Slide Fasteners" under Chapter Heading 9607.20. This classification resulted in different GST rates for these products.

Appellate Authority’s Findings:
The Appellate Authority examined the relevant Chapter Heading 9607 and the Explanatory Notes of HSN. It noted that "Slide Fasteners" are described as consisting of two narrow strips of textile material fitted with scoops that interlock by means of a slider. Since 'Zip Rolls' are supplied without sliders, they do not meet the complete definition of "Slide Fasteners" and instead fit the description of "Parts of Slide Fasteners" as "narrow strips of any length mounted with chain scoops."

Conclusion:
The Appellate Authority upheld the classification of 'Zip Rolls' under Tariff Item 9607 20 00 as "Parts of Slide Fasteners."

2. Applicable Rate of Goods and Services Tax (GST) on 'Zip Rolls':

GST Notifications:
The relevant GST notifications were examined to determine the applicable rates:
- Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 initially classified "Slide Fasteners and parts thereof" under Sl. No. 446 of Schedule-III, attracting 18% GST.
- Notification No. 18/2018-Central Tax (Rate) dated 26.07.2018 amended the classification, placing "Slide Fasteners" under Sl. No. 231B of Schedule-II with 12% GST, while "Parts of Slide Fasteners" remained under Sl. No. 446 of Schedule-III with 18% GST.
- Notification No. 14/2019-Central Tax (Rate) dated 30.09.2019 further amended the classification, including "Slide Fasteners and parts thereof" under Sl. No. 231B of Schedule-II, attracting 12% GST from 01.10.2019.

Appellant’s Argument:
The appellant argued that 'Zip Rolls' should be classified under the entry for "Slide Fasteners" and be subject to 12% GST for the period from 27.07.2018 to 30.09.2019.

Appellate Authority’s Findings:
The Appellate Authority confirmed that 'Zip Rolls' being "Parts of Slide Fasteners" were correctly classified under Sl. No. 446 of Schedule-III, attracting 18% GST from 01.07.2017 to 30.09.2019. From 01.10.2019 onwards, 'Zip Rolls' were covered under Sl. No. 231B of Schedule-II, attracting 12% GST.

Conclusion:
The Appellate Authority upheld the GAAR's ruling on the applicable GST rates for 'Zip Rolls,' confirming the rates as 18% from 01.07.2017 to 30.09.2019 and 12% from 01.10.2019 onwards.

Final Decision:
The appeal filed by The Roll Company was rejected, and the Advance Ruling No. GUJ/GAAR/R/39/2020 dated 03.07.2020 was confirmed to the extent appealed.

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