PVC cushion mats for vehicles classified under HSN Code 39181090 not car accessories, GST rate 18%

The AAR Haryana ruled that PVC cushion mats for motor vehicles, cut to size from rolls without textile material, fall under HSN Code 39181090 (Chapter 39) rather than 87089900 (car accessories). The authority determined that cutting PVC rolls to customer specifications does not create a different product for classification purposes. Since the mats contain only PVC material with no textile/fabric content, they properly classify under Chapter 39 covering polymers and articles thereof. The applicable GST rate is 18%.

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Issues Involved:
1. Classification of PVC Cushion mats for motor vehicles.
2. Applicability of GST rate on PVC Cushion mats.
3. Impact of cutting PVC Cushion mats to size on their classification and tax rate.

Issue-wise Detailed Analysis:

1. Classification of PVC Cushion Mats for Motor Vehicles:
The applicant sought clarification on whether PVC Cushion mats, cut to size from rolls to fit vehicle floors, should fall under HSN Code 39181090/39041090 or 87089900. The applicant argued that these mats should be classified under HSN 3918 as "Floor Coverings of PVC" based on Rule 1 of the Rules of Interpretation of Customs Tariff. They referenced the Supreme Court judgment in C.C.E, Delhi-III Vs. Uni Products India Ltd., which held that car mats do not fall under Chapter 87 but rather under Chapter 39. The applicant also cited various judicial pronouncements supporting their view that the mats should be classified under Chapter 39.

2. Applicability of GST Rate on PVC Cushion Mats:
The applicant contended that the PVC Cushion mats should attract GST at the rate of 18% as specified in Notification No. 1/2017-Central Tax (Rate) and Notification No. 1/2017-State Tax (Rate). They pointed out that items classified under HSN 3918 attract a GST rate of 18%, whereas items under HSN 87089900 attract a GST rate of 28%. The Proper Officer's comments supported the applicant's view, stating that the mats, made entirely of PVC with no textile material, should fall under Chapter 39 and be taxed at 18%.

3. Impact of Cutting PVC Cushion Mats to Size on Their Classification and Tax Rate:
The applicant questioned whether cutting PVC Cushion mats to size would change their classification and tax rate. The Proper Officer noted that cutting the mats to size does not alter their fundamental nature or classification. The Authority for Advance Ruling (AAR) concluded that the PVC mats, even after being cut to size, remain classified under Chapter 39 and should be taxed at 18%.

Discussion and Finding:
The AAR reviewed the applicant's submissions, the comments of the Proper Officer, and relevant judicial precedents. It was observed that the PVC mats do not contain any textile material and are not handmade, thus falling under Chapter 39. The AAR relied on the Supreme Court judgment, which excluded car mats from Chapter 87 and classified them under Chapter 39. Consequently, the AAR ruled that the PVC Cushion mats should be classified under Chapter 39 and attract a GST rate of 18%.

Ruling:
1. The supply of PVC Cushion mats falls under Chapter 39 of the GST tariff rates, and the applicable rate of tax is 18% [9% CGST and 9% SGST].
2. The question of whether cutting the mats to size changes their classification was deemed not applicable as it does not alter their classification under Chapter 39.

Decided Accordingly.

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