TaxTMI 
TaxTMI 
2018 (12) TMI 1274
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....t of admissible input tax credit shall be made, unless the applicant or the appellant has been given an opportunity of being heard. 2. Under Section 103 (1) of the Act, this advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a) On the applicant who had sought it in respect of any matter referred to in sub-Section (2) of Section 97 for advance ruling; (b) On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. Under Section 104 (l) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-Section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. * * * * * * 1. The subject appeal has been filed under Section 10....
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....d of simple processes like CALIBRATION, TUMBLING etc. are also undertaken. But a stone SLAB generally do not need more than two processes before ready for selling into the market. After any kind of the process completed on a stone SLAB, the morphology doesn't change. The stone slab still remains a stone slab only, and no changes occur either in shape or in characteristic or in distinction. In essence both raw material and finished goods contain uniform Physical properties & chemical composition. After processing also our commodity still called STONE in general trade parlance. In other words, a "mineral" after processing remains a "mineral product" or "mineral substance" only and nothing more than that". 14.2 Questions on which advance ruling is required: A) In which Chapter the commodity called "Polished/Processed limestone slabs" falls ? B) Under which HSN Code the above commodity comes ? C) Can we put them under "Mineral substances not elsewhere specified or included" which is mentioned under HSN Code 2530 ? Or D) Can we retain them under any of the HSN Codes 2515/2516/2521 ? Or E) Can we retain them under HSN Code 25 with inaugural phrase of "Goods not mentioned elsew....
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....it don't do that process and sawn on blocks is mostly practiced in KOTA region of Rajasthan and also in Marble/Granite Industry worldwide. Whereas surface POLISH is a process which is performed on directly brought rough stone SLABs (minor mineral) of uneven thickness and it is called BUTTERMILK like material which we usually undertake in our small scale industries. The expenses incurred on a sawn TILE is higher than combined processes of POLISH & CUT done on a SLAB of same size. In economic terms also any of the two processes combined together cannot match a single process of SAWN which is allowed in written form under HSN Code 2516. Selling price wise and quality wise also there is a huge difference in these both varieties of stones and our cheap polish slabs are mostly used in low budget housing needs. These cheap quality Polish stones are also a last resort for a customer to select from. It is noteworthy to mention here that, Processed or Mirror Polished Marble/Granite SLABs have also not been taken out of Chapter 25 which is evident from the NOTIFICATION No. 41/2017 issued after GST Council's Guwahati meeting held on 10/11/2017. The rate of GST on these stones have been reduc....
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....re the competent authority by bringing small pieces of sample stones so that it will become easier for the authority to decide the HSN Code of our commodity on merits. Further clarifications if any will be submitted at the time of arguments. 3.2. The appellant filed additional submissions before the TSAAR vide a letter dated 05-01-201 8, as follows: "Our further humble submissions are mentioned herein below substantiating that Processed/Polished Limestone slabs cannot be taken out of Chapter 25: 1. A downloaded list (four in no.s) of Rough as well as Processed Kota, Marble and Granite stones exported to different countries from India under Chapter & HSN Code: 25 is enclosed here with as ANNEXURE-A1 as further proof substantiating that polish stone slabs have not been taken out of Chapter 25. 2. A bunch of newspaper clippings clearly stating that how GST/FITMENT Committee, of late, realized its mistake and expressing its concern having wrongly taken into consideration of EXCISE DUTY aspect, though more than 95% of industries in India are of small scale in nature. (See ANNEXURE-A2). But in our case of Tandur region almost 100% stone processing industries fall in SSI Category on....
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....f the product. It is very clear that "Polish" done on a stone slab is a process comes under mechanical or physical process by using simple machine and the shape and structure of stone slab still remaining stone slab only and not changed. (See ANNEXURE-A3). 8. Note 2(e) of Chapter 25 is also mentioning that "Chapter 25 does not cover mosaic cubes or the like of heading 6802", it does clearly mean that other products coming under 6802 can have a place in Chapter 25. (See ANNEXURE-A3). 9. Tandur rough stones are stones of less value in the market and the marketable quality of these stones is enhanced by polishing and cutting. But the substance of the material is not altered. The stone slab is made more presentable and attractive for the benefit of the end users of low cost housing needs and it cannot be said that the activity is a manufacturing activity. " 10. In the Hyderabad meeting of GST Council held on 9/09/2017, we saw that much complex processes like "Stone inlay work" (HSN Code 68), have been brought down to 12% from 28%, then POLISH process done on a directly brought rough slab is very less complex but much easy, in comparison to above mentioned. In fact Polish stone sl....
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...., the Authority (TSAAR) passed the impugned order, wherein (after briefly summarising facts, application-contents etc.), the submissions made by the applicant during personal hearing and the Authority's discussion/findings are recorded as follows: "...... 3. A personal hearing was held in this case and Mr. Rajgopal Sarda, Proprietor of M/S. Maheshwari Stone Supplying Co., Tandur have appeared for personal hearing on 27-01-2018 and explained the case, as under: a) That there are two kinds of stones available in limestone category. One is BLOCK and the other is SLAB. SAWN is a process performed on Block to derive uniform thickness TILES which are called a CREAM like material and their SSI unit do not do that process and sawn on blocks is mostly practiced in KOTA region of Rajasthan and also in Marble/Granite Industry worldwide._ b) That surface POLISH is a process which is performed on directly brought rough stone SLABs (minor mineral) of uneven thickness and it is called BUTTERMILK like material which they usually undertake in their small scale industries. The expenses incurred on a sawn TILE is higher than combined processes of POLISH & CUT done on a SLAB of same size. In eco....
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....gher than the entire material cost of Processed Limestone slab itself of same surface area. e) Hence, finally it was submitted that at any angle it is appropriate that their commodity called "Polished/Processed limestone slabs" should not be taken out from chapter 25. Therefore, in light of their submissions they request the advance ruling authority to declare that POLISHED or PROCESSED LIMESTONE SLABS comes under any of the HSN Codes of Chapter 25." 4. The applicant is seeking advance ruling in respect of classification of "processed/polished limestone slabs" and with a submission that the said goods are correctly classifiable under chapter 25 of the GST Tariff. 5. Before deciding the classification of goods for which advance ruling was sought it is fair on our part to go through the Rules for Interpretation of Customs tariff which was made applicable to GST Tariff and General rules for Interpretation of the schedule. As per these general rules for interpretation, the heading which provides the most specific description shall be preferred to headings providing a more general description. 6. As the applicant has presented their case with an argument that "processed/polished li....
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....in this subheading, the blocks and slabs which have been merely cut by sawing must bear discernible traces of the sawing (by wire strand or other saws) on their surfaces. 10. The heading 25.16 covers Granite, Porphyry, Basalt, sandstone and other monumental or Building stones, whether or not roughly trimmed or merely cut, by sawing or otherwise into blocks or slabs > The stones of this heading may be shaped or processed in the same ways as the stones of heading 25.15 (including building limestone or Portland stone) and that stones in shapes identifiable as road or paving setts, flagstones or curb stones are classified in heading 68.01 even if merely shaped or processed as specified in the text of this heading. 11. The heading 25.21 covers limestone flux and limestone and other calcareous rocks commonly used for the manufacture of lime or cement, not being building or monumental stone (heading 25.15 or 25.16). 12. Thus it is very clear from the above explanatory notes given for heading 25.15, 25.16 & 25.21 that stones which are roughly trimmed or merely cut by sawing or otherwise into blocks or slabs of a rectangular shape are classifiable in headings 25.15 or 25.16 and the blo....
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....ST Tariff. 15. The issue has been examined with reference to the provisions of the CGST/TGST Act, 2017 and the Rules made there under and the notifications issued till date; and the Advance Ruling is given as under: - "Polished/Processed limestone slabs" are correctly classifiable under heading 6802 of the GST Tariff. The application filed by M/S Maheshwari Stone Supplying Co., Tandur, Vikarabad, is disposed accordingly". IV: Appeal filed by the Appellant, Personal Hearing & Further submissions : 5.1. Against the above Advance ruling Order, the appellant filed the present appeal on the following grounds: "..We have received the copy of order no. 2/2018 of AAR on 17/04/2018 by regd. post which is enclosed here with as ANNEXURE-AAI. We are a tiny & SSI unit involved in processing of limestone slabs. In any of the processing activity at our unit, a rough stone slab brought as a raw material always remains a stone slab only even after processing and the morphology of slab doesn't change. Our small factory run for 6-8 hours a day for 5 days a week on average and our production capacity is not more than around 2000 square meters per month i.e. 4 to 12 thousand pieces of stone sl....
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.... category of "goods not mentioned elsewhere"? Our further submissions before this AAAR are here under: 1. We strongly raise our objections for the fact that why "Marble/Granite other than BLOCKS" mentioned under the GST column of Chapter 25 also shall not be called as "Worked monumental or building stone"? because other than Blocks means TILES/SLABS (in even thickness always) and they cannot be derived without bringing a BLOCK to a factory for splitting by subjecting to SAWN or CUT processes which are highly expensive than mere POLISH+SIZING combined together done on our Rough limestone slabs. If the AAR/GST is so particular about WORKED definition to be only interpreted for heading 6802, then why "Marble/Granite other than blocks" which are also WORKED have been given a place in Chapter 25 is our question? 2. The GST council while rolling it out said that they bring "Good things of great joy for small tax players." Can this AAAR explain us how good things of great joy can be brought for us when our processed stone's Tax rate which was 5% under VAT regime had suddenly been increased to 18% under GST as per AAR's ruling of classification of HSN 6802? 3. We are of the strong v....
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.... which are otherwise simply polished & cut and this activity would not change the morphology, character, name, description, purpose and usage of stone slabs to that of articles mentioned within the scope of heading 6802. Such processes would thus not take out their classification out of Chapter 25. As per Chapter Note 1 to Chapter 68. products of Chapter 25 are excluded from the scope of Chapter 68. Thus, the products which are otherwise classifiable under Chapter 25 are excluded from Chapter 68. 7. The processes such as CRUSHING, POWDERING of minerals have still been retained in Chapter 25 only, in-spite of the fact that such processes not only require huge power consumption but also require huge capital investment on plant & machinery. But 100% stone industries in Tandur are of tiny & SSI in nature and throwing a mineral product called processed limestone slab of these SSI units in high bracket of GST in the name of HSN classification will definitely kill this industry in longer run or create a kind of friction amongst the trading community and concerned department or give fake invoice selling mafias to crop up or create an unhealthy competition amongst the industrial fraternit....
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....rble Company Pvt. Ltd. Vs Commissioner of Central Excise & ST., Vapi in 2013(11) TMI 384 - CESTAT Ahmedabad delivered in Nov 2013, where it was held that Polished Marble/Granite cannot be taken out of Chapter 25. 13. The ruling of AAR will put our low cost processed stones under much higher bracket rate of GST without considering the selling price and other phenomena. Hence almost all kinds of stones whether low cost or luxurious after processing will now have to suffer GST @ 18% (under HSN Code 68) including much lower category and cheaper stones like of our processed LIMESTONE SLABS. By doing so the AAR had put all verities of EGGS into one basket without considering the ground realities and real facts. They have not at all differentiated prevailing huge Rate gap & luxury class material in Domestic Market while classifying. They have also not taken into consideration the actual facts that under previous VAT & EXCISE regime, how much overall Revenue was being collected by the Govt, on each finished unit of these cheaper quality stones in Domestic sales? They have failed to see that our stones were not Excisable Goods nor suffering any kind of Service Tax previously. 14. Al mos....
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....porate houses, where as no benefits had been passed on to consumers. On the other hand if GST Council fix the rate of Tax on all kinds of low cost processed limestone slabs (produced from RAW slabs only and not to be confused produced from BLOCKS) in India to 5%, then also it may not amount to a decrease of INR 500 Crores per annum, though in actual terms it is not at all a decrease because under VAT regime our finished product was also charged only 5%. 17. From the above statement of point 16, at one end GST Council by reducing a TAX base unnecessarily has bringing loss to itself, where as small businessmen like us have been treated very unfairly by increasing GST to 360% in the name of classification of HSN 6802. We are unable to understand the modus operandi being adopted by GST Council/Fitment committee in fixing the rates of GST for commodities more so in such a circumstances where they themselves are telling that "GST brings good things of great joy for small tax players"!!! In the name of classification of HSN code 6802, if the GST Council/Fitment Committee/AAR want to throw us in the GST bracket of on par with highly expensive and luxurious category stones such as Marble/....
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.... cuts into slabs or tiles and does all other activities thereafter such as POLISHING & SIZING etc. But in our case no such activity is undertaken. Our job is very simple; to bring rough stone slabs and brush polish it's one of the suitable surface, without changing the shape, structure of the stone slab. Therefore the AAR had failed to notify that the reliance placed by them in defining heading 6802 apply only when processes specified therein are undertaken for conversion of blocks into slabs or tiles only. 22. On harmonious reading of Note 1 and Note 6 of Chapter 25 of CET and in view of the opening qualifying phrase Except where the context or Note 4 to this Chapter otherwise requires, used in Note 1 and 'sizing' and 'polishing' being specifically included in Note 6, the inference is obvious that even after the natural stone slabs are subjected to the said processes, the final product would remain classified under Chapter 25; > that, further, the said Chapter Note 1 does not state nor it can be interpreted to mean that the said processes carried out by us on natural stone slabs would amount to manufacture. 23. On harmonious reading of contents of paragraph no. 9 of AAR's said....
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.... Gold Tribunal-Delhi, in the matter of: Madhusudan Ceramics vs Collector of Central Excise on 13 November, 1990. (Can be searched in Google bar). (Equivalent citations: 1992 (37) ECC 86, 1991 ECR 206 Tri Delhi, 1991 (53) ELT 90 Tri Del). = 1990 (11) TMI 244 - CEGAT, NEW DELHI With reference to the above, our further submissions are as under: 1. While referring to paragraph no. 14 of ORDER No. 02/2018 of AAR in ANNEXURE-AAI, the AAR while classifying our GOODS had relied upon HCDCS alone but in the above appeal under citation no. 2 the contention of the appellant (who were succeeded with relief) was that HCDCS cannot be relied upon for the classification of GOODS. It is only the Tariff that can be relied upon for the purpose of classification. Therefore the said order of AAR is liable to be quashed and our appeal is to be allowed with relief as asked for. Therefore it is very clear from the above statement, that even if Customs Tariff taken into consideration though without our admission of the fact (Since Excise Tariff is genuine), then also Chapter note 1 of Chapter 25 is allowing mechanical processes such as CRUSHING, GRINDING / LAVIGATING etc. on minerals in crude form to be....
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....pter 25 of Customs tariff only. 1. Kindly differentiate between a BLOCK & a SLAB as raw material undergoing the various processes. Slabs/Tiles derived from a Block come under manufacturing (shape is changed) activity, where as a rough stone slab undergone Polish or cutting processes cannot be equated to manufacturing because after undergoing those processes still it remains a stone slab only (no shape change). 2. The AAR in their judgment relied on non-statutory aspects such as HCDCS, giving description of only heading of HSN (without connecting them to Chapter note), exploring explanatory notes and interpretative rules etc. instead of first exhausting the remedy of Chapter note 1 of Chapter 25 under Customs Tariff Act. In their verdict the AAR have not at all touched note 1 of Chapter 25. 3. There is a sequence to be followed for AAR in the following manner: First connect heading of 2515/2516 with Note 1 of Chapter 25 under Customs Tariff. If still any ambiguity persists in classification of GOODS, then move on to interpretative rules and then explanatory notes. But the AAR have directly gone into second & third option without going into Note 1 of Chapter 25 of Customs Tariff....
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....Certain other submissions are also made by referring to newspaper reports/clippings, GST-captions/slogans, effects of the higher rate on small scale units, employment-aspects, etc. 8.2. We find that such submissions/contentions cannot merit consideration in the present proceedings before this forum since (i) the basis / rationale and reasoning in fixing quantum of levy @ 28% (or 18% as subsequently reduced), is a policy-decision of the Government(s) / statutory GST Council, which cannot fall for examination/consideration in the realm of appeal proceedings under the statute and are beyond the scope/domain of powers of this Authority being a creature of the statute; (ii) the newspaper reports, press releases, slogans, purported economic effects of the rate of tax, do not constitute legal or tenable material/grounds for determining classification of goods - which has to be purely based on statutory grounds i.e, based on relevant Tariff entries, Notes and Rules for interpretation as applicable to the issue on hand. Accordingly, we propose to consider only the legally relevant grounds raised by the appellant against the impugned order. The same are dealt at appropriate places/portions ....
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.... as "the Acts" - read as follows: "9. Levy and collection. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent. , as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person". 10.3. Notification No. 1/2017-CT (Rate) dated 28 June, 2017, effective from 1st July, 2017, issued by the Central Government notified the rates of Central Tax for goods, as specified in Schedules I to VI thereto. The said Notification was issued by the Central Government in exercise of the powers conferred by subsection (1) of section 9 of the Act, on the recommendations of the Council. 10.4. Entries in the above-said Notification (as amended), relevant for the issue on hand (including those referred by appellant), read as follows: SCHEDULE I - 2.5% S.No. Chapter/ Heading/Sub-heading/ Tariff item Description of Goods (1) (....
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....and foliage, etc.; other ornamental goods essentially of stone] 16{except the items covered in Sl.No. 123 in Schedule I} SCHEDULE IV - 14% (all these entries later omitted, as indicated below in footnotes) S.No. Chapter/Heading/Sub-heading/Tariff item Description of Goods (1) (2) (3) 1716. 2515 12 20, 2515 12 90 Marble and travertine, other than blocks 1817. 2516 12 00 Granite, other than blocks 1970. 6802 20All goods of marble or granite [other than Statues, statuettes, pedestals; high or low reliefs, crosses, figures of animals, bowls, vases, cups, cachou boxes, writing sets, ashtrays, paper weights, artificial fruit and foliage, etc.; other ornamental goods essentially of stone]" 10.5. The Notification contains an Explanation, relevant portion thereof being as under: "Explanation. - For the purposes of this notification, - .......... (iii) "Tariff item "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), includ....
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.... levy of GST since:- (i) the Central Excise Tariff Act, 1985 or the Notes therein have not been made applicable for GST-classification/rates. On the contrary, it is specifically the Customs Tariff and Headings, Notes therein which have been made applicable for interpretation of the GST (rates) Notifications. (ii) Levy of GST is on the taxable event of 'supply' of goods (or services or both) and not on/in relation to/with regard to the concept/aspect 'manufacture'. The questions of whether or not processes undertaken amount to 'manufacture' or whether it entails change in the characteristics of the products such as nature / description / usage etc., , are not germane for determining the classification of the goods, unless such an aspect is indicated in or made a relevant/integral part of Tariff entries/Chapter Notes etc. In the Customs Tariff. 12.1. Another set of grounds/contentions put forth by appellant in this context, are that the HSN (Harmonised System of Nomenclature) Notes have no legal backing or support and hence, reference to the same by the lower Authority is not correct / not tenable. Reliance in this regard was also placed on the decision of Hon'ble Tribunal in the ....
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....t's contentions against consideration of HSN Explanatory Notes for deciding the subject issue. 13. However, we find force and validity in the appellant's contentions vide letter dated 12-6-2018 that the lower Authority has directly referred to HSN explanatory Notes etc., without first analysing the Heading-description(s) and relevant Notes in Chapter 25 and in fact has not at all touched the Note I to Chapter 25. As indicated by us earlier, the lower Authority, in the given context involving classification issue, ought to have considered and analysed the relevant Tariff-headings, Chapter Notes and then in the event of doubt/ambiguity or for further guidance referred to HSN notes; however has not done so. As mentioned supra, we would be addressing the issue comprehensively in the following paragraphs. 14.1. Reverting to the issue in dispute as to the classification of subject goods, the relevant extracts of Chapter 25 of the First Schedule to the Customs Tariff Act, 1975 (hereinafter referred to as Customs Tariff / First Schedule, in short); the Headings 251 5, 251 6, 2521 and 2530 (cited by appellant) as well as Chapter 68 i.e, Heading 6802, along with the relevant Chapter Notes,....
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....ite : 2516 11 00 -- Crude or roughly trimmed kg. 2516 12 00 -- Merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape kg. 2516 20 00 -- Sandstone kg. 2516 90 - Other monumental or building stone : 2516 90 10 --- Pakur stone kg. 2516 90 20 --- Stone boulders kg. 2516 90 90 --- Other kg. 2521 LIMESTONE FLUX; LIMESTONE AND OTHER CALCAREOUS STONES, OF A KIND USED FOR THE MANUFACTURE OF LIME OR CEMENT 252100 - Limestone flux; limestone and other calcareous stones, of a kind used for the manufacture of lime or cement : 2521 00 10 --- Limestone flux (L.D., below 1 % SiO 2) kg. 2521 00 90 --- Other kg. 2530 MINERAL SUBSTANCES NOT ELSEWHERE SPECIFIED OR INCLUDED 2530 10 - Vermiculite, perlite and chlorites, unexpanded : 2530 10 10 --- Vermiculite kg. 2530 10 20 --- Perlite kg. 2530 10 90 --- Others (including powder) kg. 2530 20 00 - Kieserite , epsomite (natural magnesium sulphates ) kg. 2530 90 - Other : 2530 90 10 --- Meerschaum (whether or not ....
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....g. 6802 29 00 -- Other stone kg. - Other : 6802 91 00 -- Marble, travertine and alabaster kg. 6802 92 00 -- Other calcareous stone kg. 6802 93 00 -- Granite kg. 6802 99 00 -- Other stone kg. 14.2. The Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975 (also referred in the Explanation to Notification No. 1/201 7- Central Tax (Rate) dated 28.06.201 7), read as follows: "GENERAL RULES FOR INTERPRETATION OF THE SCHEDULE Classification of goods in this Schedule shall be governed by the following principles: The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall al....
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.... by nature uneven in thickness ranging from 15 to 35 mm (or so) are brought to their processing unit and one of the suitable surfaces is polished with simple table polish machine. Further, it is cut to square or rectangle shape on a table cutting machine. Some other kind of simple processes like CALIBRATION, TUMBLING etc. are also undertaken". (unquote). (2) It is pertinent to note that appellant's description of activities is that apart from polishing and cutting, "some other simple processes like tumbling, calibration etc., are also undertaken". What is 'tumbling' or 'calibration' have not been detailed / explained by appellant21. Further, usage of word "etc." as indicated above, denotes further or other processes (i.e, in addition to those specified in application/appeal), which however have not been disclosed / described or specified, either in the application or the appeal. Appellant's description of goods as "polished / processed limestone slabs" - as given in the question framed for advance ruling - in itself bears elements of vagueness / imprecision. That is, while the pre-fixed term 'polished' denotes process of 'polishing' undertaken, the word 'processed' is generalised ....
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....hat POLISHING is nothing but mechanical process of GRINDING/LA VIGATING done on the surface of rough limestone slab with application of physical force by a labour through a simple polishing machine...". "our job is nothing but to bring rough limestone slabs which are in crude form and perform polish & cut processes on them which are all nothing but comes under Mechanical processes. Polishing on a rough slab is nothing but grinding only". Accordingly, and in the absence of any other material to the contrary on record, it is considered that only mechanical grinding is undertaken as the method of polishing in respect of goods in question. (ii) Cutting is described as mechanical cutting of rough slabs into square/rectangular shapes; appellant's description thereof in their application (para 3.1 under Nature of activity) is (quote) "cut it to square or rectangle shape on a table cutting machine". And in their submissions vide letter dated 12-5-2018, it has been described as: (quote) "..Even CUTTING of sides of a Stone slab is possible only with the application of physical force of a labour against a cutting wheel of a simple machine." (iii) However, as stated above, appellant has n....
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....ticles of stone" which is not applicable to them as they do not prepare/produce any articles. In this regard, we find that the very first Rule I in Rules for Interpretation (as cited supra) specifies clearly that "titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes.......". Hence, the above contention of appellant is not tenable. 18.1. On referring to the relevant Chapters and the Tariff entries, which have been reproduced earlier, it is seen that: a) The goods 'limestone slabs'- either with description as such or with the attributes 'polished' or 'processed' - do not per se figure in any of the entries in / under Headings 251 5/251 6/2521 /2530 under Chapter 25 or Heading 6802. b) It is by the description of nature of goods i.e., Calcareous monumental or building stone, that limestone falls under Heading 2515, if apparent specific gravity thereof is 2.5 or more. (Meaning of "Calcareous" as per standard dictionaries and also in common and technical understanding25 is "mostly or partly composed of calcium carbon....
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.... the goods in question are either limestone flux (which is chiefly employed as a flux in iron and steel industry26) or of the kind used in the manufacture of lime or cement. On the other hand, it is specifically stated by the appellant that the impugned goods are for use in (quote) 'low budget housing needs' (unquote). Hence, classification of the subject goods under Heading 2521 does not arise. f) Heading 2530, reading 'mineral substances not elsewhere specified or included' is a residual entry of the Chapter 25, applicability of which would arise only and only if classification under other headings/subheadings of the said Chapter is ruled out. In the present case, the broad dispute is whether the goods fall under Chapter 25 or under Chapter 68; and if the former is found to be correct, only headings 2515 / 251 6 would be applicable, since specifically covering limestone, as detailed above. Hence, Heading 2530 is also found to be not applicable and not relevant. 18.2. As such, the issue narrows down to classification of the subject goods either under Chapter 25 (i.e, Headings 2515 or 251 6, as detailed supra) or under Chapter 68, Heading 6802 in particular. If the goods fall und....
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....Chapter Note, we find as follows: (a) Headings 2515 and 251 6, both contain similar phrase "whether or not roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape". There are two processes / stages mentioned in this description i.e, (i) roughly trimmed or (ii) cut, by sawing or otherwise, into blocks/slabs of rectangular/square shapes. (b) The phrase 'roughly trimmed' is not defined in the Chapter/Tariff/Schedule. However, the same is explained in Chapter 25 of the Harmonised System of Nomenclature (HSN) Notes as follows: "Roughly-trimmed" stone is stone which has been very crudely worked after quarrying, to form blocks or slabs, still having some rough, uneven surfaces. This working involves removing superfluous protuberances by means of hammer or chisel-type tools „.28 (c) The appellant has not claimed/stated that their products qualify to be 'roughly trimmed' i.e., superfluous protuberances are removed by means of hammer or chisel-type tools. On the contrary, it is admitted position that they are undertaking 'calibration', which as seen, is a mechanical process of obtaining approximate uniformity in thickne....
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....5, by virtue of (i) the word 'levigated' - which, as per Oxford dictionary, has been taken from Latin word LEVIGAT, and the literal meaning of the same is "made smooth, polished'; or (ii) Polishing is nothing but 'grinding' the surface of the slab (and therefore covered by the word 'ground' used in the Chapter Note); or (iii) the words/phrase 'mechanical or physical process' would apply to the activity of polishing undertaken by them, as the same was undertaken without changing the structure of the product. 20.2. Above contentions have been examined. It is observed as follows: A. With regard to the word 'levigated': (i) On referring to standard dictionaries29, the meaning of 'levigate' (indicated as 'archaic') is found to be given as "to reduce (a substance) to a fine powder or smooth paste". It is further mentioned that the origin of the word is in mid-1 6th century: from Latin levigat- 'made smooth, polished', from the verb levigare, from levis 'smooth'. Other dictionaries Collins, Merriam Webster etc., also show the meaning of the word, as verb, to be 'reducing / grinding to a smooth, fine powder', while indicating its origin/etymology to be linked to Latin word meaning 'p....
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....'ground' as used in the specific context of Chapter 25 only denotes the state/process of being reduced to lesser size / finer particles / powders etc; and not with the connotation of 'polishing' or 'polished' state of goods. There is no usage of the said word 'ground' in the Chapter/Headings denoting the meaning of 'polished'. C. With regard to the phrase "other mechanical or physical process': (i) The phrase 'other mechanical or physical process' appearing in Note 1 to Chapter 25, as seen, is not an independent / stand-alone phrase, but used in conjunction with the earlier words/phrases which qualifies it. For ready reference, the said Chapter Note, is again reproduced as under: "1. Except where their context or Note 4 to this Chapter otherwise requires, the headings of this Chapter cover only products which are in the crude state or which have been washed (even with chemical substances eliminating the impurities without changing the structure of the product), crushed, ground, powdered, levigated, sifted, screened, concentrated by flotation, magnetic separation or other mechanical or physical processes (except crystallization), but not products that have been roasted, calcined....
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.... the specified words 'washed.. ,crushed, ground, powdered... concentrated". (iv) A different construction or interpretation that the phrase "other mechanical or physical processes" is to be considered independently and allowing various other processes (such as 'polishing', tumbling or calibration, as in the instant case), would render the further phrase in the Chapter Note "but not products subjected to processing beyond that mentioned in each heading", as redundant/otiose. Such interpretation or construction is therefore impermissible as per settled legal principles of interpretation. Hence, appellant's contention that their goods would be covered by Chapter Note I by virtue of the phrase 'or other mechanical or physical processes', is not based on correct appreciation of the said Note; and hence, not tenable. 20.3. From the above, it therefore emerges that the meaning / interpretation sought to be canvassed by appellant for the words 'levigated', 'ground' and 'other mechanical or physical process' appearing in Chapter Note 1, do not find sustainability or legal support, as analysed supra. 20.4. It follows from the above discussion that the processes of 'polishing', 'tumbling' ....
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.....03 V chamotte earth (heading 25.08), plasters (heading 25.20), quicklime (heading 25.22) and hydraulic cements (heading 25.23). (2) Specify conditions or processes which are admissible in those cases in addition to those allowed generally under Note 1 to this Chapter. For example, witherite (heading 25.11), siliceous fossil meals and similar siliceous earths (heading 25.12) and dolomite (heading 25.18) may be calcined; magnesite and magnesia (heading 25.19) may be fused or calcined (dead-burned (sintered) or caustic-burned). In the case of dead-burned (sintered) magnesia, other oxides (e.g., iron oxide, chromium oxide) may have been added to facilitate sintering. Similarly the materials of headings 25.06, 25.14, 25.15, 25.16, 25.18 and 25.26 may be roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape. When products are classifiable in heading 25.17 and any other heading of this Chapter, they are to be classified in heading 25.17. The Chapter excludes precious or semi-precious stones of Chapter 71. . . . . . . . . . . . . 25.15 Marble, travertine, ecaussine and other calcareous monumental or bui....
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....0 when in the crude state). (c) Stones identifiable as mosaic cubes or as paving flagstones, even if merely shaped or processed as specified in the text of this heading (heading 68.02 or 68.01 respectively). Subheading 2515.11 For the purposes of this subheading, "crude" refers to blocks or slabs which have been merely split along the natural cleavage planes of the stone. Their surfaces are often uneven or undulating and frequently bear marks of the tools used to separate them (crowbars, wedges, picks, etc.). This subheading also covers unshaped stone (quarrystone, rubble) obtained by breaking out rocks from the quarry face (using picks, explosives, etc.). They have uneven, broken surfaces and irregular edges. This type of stone often bears the marks of quarrying (blast holes, wedge marks, etc.). Unshaped stone is used for the construction of dykes, breakwaters, road foundations, etc. The subheading also includes waste of irregular shape arising from the actual extraction or from subsequent working (quarry stones, waste from sawing, etc.), but only if large enough to be used for cutting or construction. Otherwise it is classified in heading 25.17. "Roughly-trimmed " stone is ....
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....onnotation i.e, it is not required/necessary that all these processes have to be undertaken; any one or more of the processes if undertaken would attract application of the said explanation. The list of these mentioned processes, is also not exhaustive as seen from "etc." appearing after "chamfered". 22.2. In view of the above, as per HSN notes also, slabs which have been 'polished', tumbled and/or calibrated WOUld be covered by exclusions detailed in both General Note to Chapter 25, as well as the Heading Note to Heading 2515. 23. Based on the above detailed analysis, we find that in sum, the goods in question, limestone slabs, have admittedly been subjected to processes of 'polishing' (including tumbling) and calibration, in addition to being cut to rectangular/square shapes. The said processes, except that of cutting, are not among those specified either in the Heading description or the Chapter Note 1, for an eligible classification under Chapter 25. Hence, classification of the subject goods under Chapter 25 i.e, specific Headings 2515 /2516 remains precluded by virtue of description in said Headings as also Chapter Note 1 Note 1 to Chapter 25 makes fulfilment of the s....
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....en Note 6 was introduced in Chapter 25, with specific reference to headings 251 5 and 251 6, by deeming the processes of cutting or sawing or sizing or polishing or any other process for converting of stone blocks into slabs or tiles, as amounting to manufacture). For the period post 1-3-2006, in view of Chapter Note 6, the activity of converting blocks into slabs with the processes of, inter-alia, polishing was held to be amounting to 'manufacture'; and the goods classified under Chapter 25. Thus, in view of the specific Chapter Note incorporated in the Central Excise Tariff, process of 'polishing' came to be included in Chapter 25, which was accordingly considered by the Hon'ble Tribunal. It is pertinent to note that the words "or polishing" in the above said Note 6 to Chapter 25, were omitted by the Finance Act, 2012. 24.4. We therefore find that the aforesaid decisions were rendered in totally different context i.e, Central Excise duty levy which is on 'manufacture', coupled with existence of Chapter Notes deeming 'polishing' to be manufacture in a given period; and further the decisions therein, were based on specific facts of cases vis-d-vis certain applicable clarifications....
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....one, plaster, cement, asbestos, mica or similar materials Notes... ... (Chapter Notes similar to that in Chapter 68 of Customs Tariff Schedule referred earlier hence not reproduced). GENERAL This Chapter covers : (A) Various products of Chapter 25 worked to a degree beyond that permitted by Note 1 to that Chapter. (B) The products excluded from Chapter 25 by Note 2 (e) to that Chapter. (C) Certain goods made from mineral materials of Section V. (D) Goods made from certain of the materials of Chapter 28 (e.g., the artificial abrasives). Some of the goods in category (C) or (D) may be agglomerated by means of binders, contain fillers, be reinforced, or in the case of products such as abrasives or mica be put up on a backing or support of textile material, paper, paperboard or other materials. Most of these products and finished articles are obtained by operations (e.g., shaping, moulding), which alter the form rather than the nature of the constituent material. Some are obtained by agglomeration (e.g., articles of asphalt, or certain goods such as grinding wheels which are agglomerated by vitrification of the binding material); others may have been hardened in autoclaves (sa....
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....es), dressed with the pick, bushing hammer, or chisel, etc., furrowed with the drag-comb, etc., planed, sand dressed, ground, polished, chamfered, moulded, turned, ornamented, carved etc. The heading therefore includes not only constructional stone (including facing slabs) worked as above, but also articles such as..... Stone slabs forming the tops of articles of furniture (sideboards, washstands, tables, etc.) are classified in Chapter 94 Articles of worked monumental or building stone are usually obtained from the stones of heading 25.15 or 25.16, but may also be obtained from any other natural stone except slate (e.g., quartzite, dolomite, flint, steatite). Steatite, for example, is used for industrial structural work where resistance to heat or chemical corrosion is required (e.g., in recuperative furnaces). It is also used in paper pulping and chemical plant. The heading also covers small prepared mosaic cubes and the like of marble, etc., for various floor or wall coverings, etc., whether or not backed with paper or other materials. It further includes artificially coloured granules, chippings and powder of marble or of other natural stones (including slate) (e.g., for sh....
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....te, specifies that the heading covers stone in the forms produced by stone mason, sculptor etc.„( here again, usage of word "etc.", shows that the same is not exhaustive to restrict it to products made by a stone mason or sculptor only). (x) Stone of any shape, including slabs, which may or may not be in the form of finished articles but which have been, among others, 'polished' is also covered in the heading. Herein again, the list of processes i.e., bossed, dressed with the pick, bush-hammer, chisel Polished, chamfered, turned... is not exhaustive, as evident from the multiple usage of "etc." therein. Also, the enumeration of processes is not cumulative so as to require that all the processes should be undertaken on a given product/slab. Any one or more of the processes, if undertaken, would attract application of this note, as evident from the sentence-construction and in the given context. 28.2. On applying the above analysis and criteria to the subject goods i.e, polished / processed limestone slabs, it emerges that: (a) The goods have been subjected to processes of polishing, tumbling and calibration, which are beyond those specified in Chapter 25, notwithstanding th....
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....ed below:- (a) The appellant has made repeated references that the goods Marble and Granite - blocks/slabs- have been kept in Chapter 25. It was further urged that by the very description of the said goods, without any prefix or adjective also, these would include polished varieties and hence, the same analogy would apply to the goods limestone slabs. On examining, we find that in the Central Tax Rate Notification, the goods Marble and Granite are mentioned by description in certain entries, with the classification under Chapter 25 (Headings 2515 or 251 6, as the case may be) with reference to specific subheading / Tariff Item Number. However, the description against said sub-heading numbers, is given with a qualification/restriction as 'blocks' or 'other than blocks'. The same corresponds to the fact that Marble and Granite, by the said names, are specified in the Headings 2515, 251 6 respectively; and again in respect of certain specific sub-headings. Appellant's argument that by mere description, the words 'marble' or 'granite' in the Notification would include polished, is only an assumption; since no such indication is given in the Notification or the Tariff. In factt if He....
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....ken out of Chapter 25. Similarly that crushing, powdering of minerals are expensive and capital / power-intensive activities still allowed in Chapter 25. However we find that these aspects are extraneous and do not constitute relevant factors for determining the classification of goods, which can only be based upon the applicable entries in the Tariff-Schedule. The parameters of high investment, huge cost of production, capital intensive nature of industry, high / complex processes etc., do not figure in the statutory criteria for determination of classification of goods, for GST-levy purposes; and as such cannot be of any relevance. (c) It has further been contended that 'as per rules of HSN Code', the appellant has to mention only two digits, whereas the Authority has considered 4-digit or 6-digit classification which are not relevant to them. We find that this contention of the appellant is also not in proper appreciation of the facts and statutory provisions. Classification of goods, as per the GST-Notifications, merits to be determined by considering the relevant entries, Notes in the Customs Tariff Schedules, which provide for upto 8-digit classification, at the ultimate spe....
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....ssification of the subject goods is found to be determinable based on the Heading-description and relative Chapter Notes (read with HSN Explanatory Notes, where necessary as above), the same remains covered by Rule 2 of the Rules for Interpretation, supra. Consequently, need for invoking subsequent Rules 3 to 4 of the said Rules, does not arise. 32. In sum, and having regard to the questions framed in the appellant's application for Advance Ruling and for the reasons cited at para 8.3 supra, we render the rulings, question-wise as follows: Sl.No. Question framed for Advance ruling Ruling (by this Appellate Authority) A) In which Chapter the commodity called "Polished / Processed limestone slabs" falls ? The commodity "Polished/Processed limestone slabs" falls under Chapter 68 of the First Schedule to the Customs Tariff Act, 1975; for reasons detailed above. B) Under which HSN Code the above commodity comes ? The commodity comes under Chapter Heading 6802 (Tariff Item No. "6802 92 00 - Other calcareous stone") of the Schedule. C) Can we put them under 'Mineral substances not elsewhere specified or included" which is mentioned under HSN Code 2530? The goods Polished/ Pro....
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....llant for Advance Ruling, and consequently this appeal pertain to only the classification under specified headings. The said questions, as framed, do not require ruling with regard to applicable rates of GST for the subject goods. Accordingly, the issue is considered w.r.t. the appropriate classification of the subject goods. Needless to state, rates of GST applicable on subject goods would be consequential as per the relevant Notification-entries as applicable. 8. Under the scheme of GST, for every Central Tax (Rate) Notification issued, a corresponding Notification is issued by State under respective State GST Act. As such, the references hereinafter are made by citing the relevant Central Tax Rate Notifications and entries therein; which would also constitute a reference to the corresponding Notification issued under TGST Act, 2017. Appellant, in their grounds/submissions also having referred to only the Central Tax Rate Notifications and not State Notifications, this enables ease of reference and appreciation of the discussion/findings. 9. Substituted w.e.f. 27 July, 2018 vide (A) (ii) of Notification No.18/2018-Central Tax (Rate) dated 26 July, 2018. Prior to substitution, t....
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....ferred/emphasised/highlighted by appellant, without any further reference to tumbling or calibration which are only mentioned in the description of 'nature of activity involved'). 22. This Order would not be applicable in case of any difference / deviation, in respect of the one or more of above facts/aspects, which has not been brought on record by appellant in the present proceedings, in view of provisions vide sub-Section (2) of Section 103 and sub-Section (1) of Section 104 of the Acts. 23. https://En.wikipedia.org 24. www.pavingexpert.com 25. https://en.wikipedia.org 26. HSN Explanatory Notes to Heading 25.21 refers. 27. The phrase herein reads "or Note 4 to this Chapter otherwise requires" which is not relevant since Note 4 deals with goods falling under Heading 2530 which is not applicable, as detailed earlier. 28. The text explaining the phrase 'roughly trimmed' appears in the HSN under Notes to sub-heading 2515.11 - which covers goods of description 'Marble or travertine - - Crude or roughly trimmed'. The said explanation and meaning would be applicable for all goods falling under Heading 2515 since the expression 'roughly trimmed' is part of th....