AAR Telangana classifies aluminium composite panels under HSN 7606 with 18% GST based on essential character from aluminium sheets

The AAR, Telangana classified aluminium composite panels (ACPs) under HSN 7606 rather than HSN 3920 or 7610, applying 18% GST (9% CGST + 9% SGST). The authority determined that ACPs derive their essential character from aluminium sheets rather than the polyethylene core, making them sandwich panels with combined aluminium thickness exceeding 0.2mm. The goods were found to be sheets requiring further processing before structural use, not ready-to-use structural components under HSN 7610.

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Issues Involved:
1. Classification of Aluminium Composite Panel/Sheet under HSN 3920, HSN 7610, or HSN 7606.
2. Applicable rate of SGST and CGST.

Summary:

Issue 1: Classification of Aluminium Composite Panel/Sheet
The applicant, M/s. Aludecor Lamination Private Limited, sought an advance ruling on whether Aluminium Composite Panel/Sheet (ACP) falls under HSN 3920, HSN 7610, or HSN 7606. The applicant argued that the product should be classified under HSN 3920 as "Plastic sheet laminated with Aluminium Sheets." However, the authority found that HSN 3920 pertains exclusively to plastic products that are "not reinforced, laminated, supported, or similarly combined with other materials," thus excluding ACP.

The applicant also proposed HSN 7610, which covers "Aluminium structures and parts of structures." The authority determined that ACP is not a structure or part of a structure but rather sheets used for cladding surfaces. Consequently, HSN 7610 was deemed inappropriate.

The authority concluded that HSN 7606, which includes "Aluminium plates, sheets, and strip, of a thickness exceeding 0.2 mm," is the most suitable classification for ACP. The decision was supported by the Tribunal's ruling in Commissioner of Customs (Imports), Chennai vs. ICP India Pvt. Ltd., which classified similar products under HSN 7606.

Issue 2: Applicable Rate of SGST and CGST
Given the classification under HSN 7606, the applicable rate of SGST and CGST for ACP is 9% each, totaling 18%. This classification aligns with the tariff headings and the essential characteristics of the product as aluminium-based, despite the presence of a plastic core.

Separate Judgments:
The members of the Authority for Advance Ruling expressed differing views on the classification issue. Sri S.V. Kasi Visweswara Rao opined that the product should fall under a residuary entry attracting 9% CGST and 9% SGST each. Conversely, Sri Sahil Inamdar classified the product under HSN 7606, also attracting 9% CGST and 9% SGST each. Due to the lack of uniform opinion, the application was referred to the Appellate Authority for Advance Ruling for the state of Telangana for a final decision.

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