2021 (10) TMI 204 - AAR - GST

Classification of Aluminium Composite Panel/Sheet under HSN Code 7606 and Applicable Tax Rate Determination

The case involved the classification of Aluminium Composite Panel/Sheet under the appropriate HSN Code and the determination of the applicable tax rate ... Classification under Harmonized System Nomenclature - Classification of composite goods - Essential character test - Predominant material versus essential character - HSN 7606 - HSN 3920 - HSN 7610 - Rate of GST on goodsClassification under Harmonized System Nomenclature - Classification of composite goods - HSN 3920 - HSN 7606 - HSN 7610 - Essential character test - Predominant material versus essential character - Aluminium Composite Panel/Sheet is classifiable under HSN Code 7606 and not under HSN Code 3920 or HSN Code 7610. - HELD THAT: - The Authority examined the composition and manufacturing process of the impugned Aluminium Composite Panel (ACP) - a sandwich panel with a polyethylene core laminated on both sides with thin aluminium foil - and the stated uses of the product. Chapter heading 3920 relates to articles of plastic and is inapplicable where the product is plastic laminated with aluminium sheets which do not fall within the description of articles of plastics under that heading. Heading 7610 covers aluminium structures and parts thereof; the applicant's submissions and uses did not establish that the ACP is itself an aluminium structure or part of a structure. Applying the essential character approach and relevant precedents, the Authority observed that the aluminium lamination imparts the essential user characteristics (such as cladding, protective and aesthetic properties) and that the aluminium layer thickness in the product falls within the scope of aluminium plates/sheets exceeding 0.2 mm. Having rejected classification under 3920 and 7610 for the reasons above, the Authority held the product to be covered by HSN 7606 (aluminium plates, sheets and strip of thickness exceeding 0.2 mm). [Paras 5]Subject product is classifiable under HSN Code 7606.Rate of GST on goods - HSN 7606 - The rate of GST applicable on the Aluminium Composite Panel/Sheet classified under HSN 7606 is 18% (9% CGST and 9% SGST). - HELD THAT: - Having classified the impugned goods under HSN 7606, the Authority applied the GST tariff rate applicable to that heading. The record and the HSN/SAC tariff position show that goods under the relevant heading attract GST at 18%. The Authority therefore directed levy at the combined rate of 18%, apportioned as 9% CGST and 9% SGST. [Paras 5]Rate of tax is 18% (9% CGST and 9% SGST).Final Conclusion: The Advance Ruling holds that Aluminium Composite Panel/Sheet is classifiable under HSN 7606 and is taxable at 18% GST (9% CGST and 9% SGST). Issues Involved:1. Classification of Aluminium Composite Panel/Sheet under appropriate HSN Code.2. Determination of the applicable rate of tax under SGST and CGST Acts.Issue-wise Detailed Analysis:1. Classification of Aluminium Composite Panel/Sheet under appropriate HSN Code:The applicant, M/s. Aludecor Lamination Private Limited, sought to determine whether their product, Aluminium Composite Panel/Sheet (ACP Sheets), should be classified under HSN Code 3920, 7606, or 7610. The ACP Sheets are described as 'Plastic sheet laminated with Aluminium Sheets,' consisting of a non-toxic polythene core laminated with thin aluminium sheets on both sides.The jurisdictional officer submitted that the ACP Sheets should be classified under HSN Code 7606, which covers 'Aluminium plates, sheets and strip, of a thickness exceeding 0.2 mm,' and carries a tax rate of 18%. The officer argued that HSN Code 3920 pertains to plastic sheets not reinforced or laminated with other materials, which does not apply to ACP Sheets as they are laminated with aluminium. HSN Code 7610 pertains to aluminium structures and parts thereof, which also does not fit the description of ACP Sheets.The authority reviewed the manufacturing process and use cases of the ACP Sheets, noting that the product is used in various industries such as construction, railways, signage, shipbuilding, furniture, and automobiles. The essential user characteristics of the product, such as protection from heat and water, are attributed to the aluminium lamination rather than the plastic core.The authority referred to the decision in Commissioner of Customs (Imports), Chennai vs. ICP India Pvt. Ltd (2018), where it was held that similar products are classified under HSN Code 7606. The authority concluded that the ACP Sheets should be classified under HSN Code 7606, as they are primarily aluminium products with a thickness exceeding 0.2 mm.2. Determination of the applicable rate of tax under SGST and CGST Acts:The applicant also sought clarification on the applicable rate of tax for ACP Sheets under the SGST and CGST Acts. The jurisdictional officer and the authority both confirmed that the tax rate for products classified under HSN Code 7606 is 18%, with 9% each under CGST and SGST.Conclusion:The authority ruled that the Aluminium Composite Panel/Sheet is covered under HSN Code 7606. Consequently, the applicable rate of tax for the ACP Sheets under both the SGST Act and the CGST Act is 18% (9% each under CGST and SGST).