GST implication on non metals clad with precious metals

[Gautam Godhwani]

This is mainly a classification query. Chapter 71 of the Tariff deals with precious metals, but seems to cover only "precious metals or base metals clad with precious metals" at Note 1(b).

What would be the case for non metals clad with precious metals ? Such as wood clad with gold or silver ? By extension, what would be the HSN of wooden items covered with silver and sold as decorative pieces ? Given the fact that these items are sold only at jewelery shops as silver articles and the majority part of value is of silver only ?

Can the "essential nature" test, or for that matter the "commercial identity test" be used to classify the same under Chapter 71 and avail the benefit of a 3% tax rate ?

AI Summary

Tax classification of precious-metal clad goods: wooden items covered with silver depend on essential character and component predominance.
Classification of non metal articles clad with precious metals hinges on whether the precious metal imparts the essential character or commercial identity of the finished article, the predominance of value attributable to the precious metal, and any express exclusions in Chapter 71; application of GRI Rule 3(b) follows only after 3(a) is inapplicable, and composite supply considerations and technical evidence determine the correct heading and GST rate.