2022 (6) TMI 696 - AAR - GST

U-bolts and Front Spring Bolts classified as nuts and bolts under CTH 7318, not motor vehicle parts

The AAR held that U-bolts and Front Spring Bolts, being steel fastening bolts known commercially as nuts and bolts, are classifiable under CTH 7318 ... Classification of goods - appropriate rate of GST - U-bolt - Front Spring Bolts - Spring Pins - covered under Chapter 73 or Chapter 87? - HELD THAT:- At Section XV the expression “parts of general use” has been defined to include (a) Articles of Headings 7307, 7312, 7315, 7317 or 7318 and similar articles of other base metal; and (b) Springs and leaves for springs, of base metal, other than clock or watch springs (Heading 9114) but in SECTION XVII the expression “parts” and “pans and accessories” has been excluded for Parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV). Further, a conjoint reading of the notes, suggest that the articles falling under Heading 7318 do not fall under the expression parts and parts and accessories of motor vehicles, Accordingly, the articles falling under 7318 will be covered exclusively under this category for tariff purpose. The heading 7318 includes all types of fastening bolts and metal screws regardless of shape and use, including U-bolts, bolt ends (i.e., cylindrical rods threaded at one end), screw studs (i.e., short rods threaded at both ends), and screw studding (i.e., rods threaded throughout) and find that as per the HSN explanatory notes, U-Bolt which is made of steel, is a type of bolt which is specifically covered under the CTH 7318, therefore, these are classifiable under the CTH 7318. Front Spring Bolt - HELD THAT:- The Front Spring Bolt in question, which is also made up of Steel, fulfils the description as given in the HSN explanatory note and is designed to engage a nut is also classifiable under CTH 7318. Spring Pins - HELD THAT:- Spring Pins manufactured and supplied by the applicant are made up of various types of steel and are in the nature of a spring and hence provided under the sub-heading “Other”, covered under the CTH 7320 which aptly covers springs and leaves for springs, of iron or steel. Accordingly, the Spring Pins are classifiable under Tariff Item 7320 90 20. Hon’ble Supreme Court of India in the case of G.S. AUTO INTERNATIONAL LTD. VERSUS COLLECTOR OF C. EX., CHANDIGARH [2003 (1) TMI 700 - SUPREME COURT] has held that the goods in question cannot but be regarded as parts of automobiles, it has to be held that they are suitable for use primarily with articles of Chapter Heading Nos. 87.01 to 87.05 It follows that the goods in question cannot be treated as falling under Chapter Heading No. 73.18 and that they can properly be classified under Chapter Heading No. 87.08 of the Central Excise Tariff Act, 1985. Since in the Commercial parlance the goods in question are known as Nuts and Bolts namely U-bolt, Front Spring Bolt, and Spring Pin and not by any other name and as held by Hon’ble Supreme Court that the Classification of goods is to be determined by commercial identity test and not by functional test i.e. as to how they are referred to in the market by those who deal with them, be it for the purpose of selling, purchasing or otherwise, they are to be classified as a generic product. Hence we are of the view that if the generic goods as known in commercial parlance find specific mention in a particular Tariff Head and is also not covered in exclusion clause in any chapter note; the classification of goods has to be determined by commercial identity test and not by functional test. Issues Involved:1. Classification of U-bolt, Front Spring Bolt, and Spring Pin.2. Applicable rate of tax for the aforementioned goods.Issue-wise Detailed Analysis:1. Classification of U-bolt, Front Spring Bolt, and Spring Pin:The applicant, a manufacturer and supplier of nuts, bolts, and springs, sought an advance ruling on the classification of U-bolt, Front Spring Bolt, and Spring Pin. The applicant argued that U-Bolt and Front Spring Bolt should be classified under Customs Tariff Heading (CTH) 7318, and Spring Pins under CTH 7320 90 20.The ruling examined the definitions and notes in SECTION XV - BASE METALS AND ARTICLES OF BASE METAL and SECTION XVII - VEHICLES, AIRCRAFT, VESSELS AND ASSOCIATED TRANSPORT EQUIPMENT of the GST Tariff. It was noted that 'parts of general use' include articles of Headings 7307, 7312, 7315, 7317, or 7318 and similar articles of other base metal. SECTION XVII excludes 'parts of general use' from being classified as parts and accessories of motor vehicles.The HSN explanatory notes to CTH 7318 specifically include U-Bolt, indicating that all types of fastening bolts and metal screws, including U-bolts, fall under this heading. Thus, U-Bolt and Front Spring Bolt, both made of steel, were classified under CTH 7318.For Spring Pins, the relevant entry under the Customs tariff was reviewed:- 7320: Springs and leaves for springs, of iron or steel- 7320 90: Other- 7320 90 20: Spring PinsSpring Pins, made of various types of steel and functioning as springs, were classified under Tariff Item 7320 90 20.2. Applicable Rate of Tax:The ruling referenced the Hon’ble Supreme Court's decision in G.S. Auto International Ltd. Versus CCE, Chandigarh, which emphasized that classification should be based on commercial identity rather than functional use. The goods in question are known in the market as nuts and bolts, specifically U-bolt, Front Spring Bolt, and Spring Pin.Following this principle and the precedent set by AAR, Haryana in M/s. Jamna Auto Industries Ltd., the ruling determined that:- U-Bolt and Front Spring Bolt made of steel fall under Tariff Heading 7318 15 00 and are taxable at 18%.- Spring Pin made of steel falls under Tariff Heading 7320 90 20 and is also taxable at 18%.Ruling:(i) U-Bolt and Front Spring Bolt made of steel are classified under Tariff Heading 7318 15 00 and are taxable at 18%.(ii) Spring Pin made of steel is classified under Tariff Heading 7320 90 20 and is taxable at 18%.