TaxTMI 
TaxTMI 
2019 (6) TMI 1358
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....ation under Tariff item 3926 90 99 and not under Tariff item 8708 99 00? A.3 Whether Quick Adapter not only capable of being used to connect pipes and tubes in the interior of a motor vehicle, but also for similar functionality in other industries, merit classification under the Tariff item 3917 40 00 and not under Tariff item 8708 99 A.4 Whether Plastic pipe clips merits classification under the Tariff item 3926 90 99 and not under the Tariff item 8708 99 00? A.5 Whether Brackets and Channels merits classification under Tariff item 8708 99 00 despite being "parts of general use" made of plastic, and not under Chapter 39 of the First Schedule? A.6 Whether Non-Return Valve merits classification under Tariff item 8481 30 00 as it is capable of being used in the internal liquid lines of various machineries and equipment, and not under Tariff item 8708 99 00? A.7 Whether Metal U Clips merits classification under the Tariff item 8305 90 20 as it is not only capable of being used in the interior or exterior of a motor vehicle to join panels but in other machineries and equipment, and not under the Tariff entry 8708 99 00? A.8 Whether Fasteners and Spoilers merits classi....
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....Act, 1975 ("CTA") and Notification No. 1/2017 - Integrated Tax (Rate) dated 28th June, 2017 ("Classification Notification for payment of applicable Customs duty and Integrated Goods and Services Tax ("IGST") which is payable as duties of Customs in terms of the CTA. 6. In this regard, provision which are relevant and may have a bearing for classification of the Products in terms of the CTA and the Classification Notification should be appreciated and understood in the context of these facts and commercial circumstances to enable a considered conclusion under the GST regime and law. Relevant legal provisions of the Goods and Services Tax 7. In terms of Section 5(1) of the IGST 2017, IGST is to be levied on all inter-State supplies of goods and services, on the value determined under Section 15 of the CGST Act, 2017 ("CGST Act"). Further, Section 5(1) also provides that IGST will be levied on goods & services at such rates, not exceeding forty per cent, as may be notified by the Government on the recommendations of the GST Council. Scheme of classification 8. Scheme of classification of goods is provided in the Classification Notification which classifies goods into Ch....
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.... or, provided they constitute integral parts of engines or motors, articles of heading 8483; Section Note 3 References in Chapters 86 to 88 to "parts" or "accessories" do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under that heading which corresponds to the principal use of that part or accessory." ii. Section XV "Section Note 2 Throughout this Schedule, the expression "parts of general use" means: (a) articles of heading 7307, 7312, 7315, 7317 or 7318 and similar articles of other base metal; (b) springs and leaves for springs, of base metal, other than clock or watch springs (heading 9114); and (c) articles of headings 8301, 8302, 8308, 8310 and frames and mirrors, of base metal, of heading 8306 In Chapters 73 to 76 and 78 to 82 (but not in heading 7315) references to parts of goods do not include references to parts of general use as defined above. Subject to the preceding paragraph and to Not....
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....he classification of Threaded Metal Nuts is Heading 7318, and the specific Tariff item is 7318 16 00, which is extracted as follows: Tariff Item Description of goods 7318 Screw, bolts, nuts, coach-screws, screw hooks, rivets, cotters, cotter-pins, washers (including spring washers) and similar articles, of iron or steel ... -Threaded articles: ... -.. 7318 16 00 - Nuts 3. The fact that Metal Spring Nuts are made of corrosion resistant metals has no impact on their classification under the Tariff item 7318 16 00. Threaded Metal Nuts should not be classified under Chapter 87 of the First Schedule: 4. In the pre-GST regime, Threaded Metal Nuts were classified under Chapter 87 of the First Schedule which pertains to "Vehicles other than railway or tramway rolling-stock" and more specifically, under the Heading 8708 and Tariff item 8708 99 00. 5. On a perusal of the Section Note 2(b) of Chapter XVII of the First Schedule of the CTA, it is understood that the expressions "parts" and "parts and accessories" do not apply to "parts of general use" defined in Section Note 2 of Section XV of the First Schedule. In terms of Section Note 2(a) of Section....
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....ld that, "We find that the lower authorities have rightly relied upon Section Note 1 (9) to Section XVI, Note 2 to Section XVII and Note 2 to Section XV of the Central Excise Tariff Act, 1985 to hold that the items are parts of general use and excluded from Section XVII (under which Chapter 87 falls). Since Chapter Heading 73.18 specifically covers nuts and washers, it has been rightly held that their end use is irrelevant." 7. Therefore, in terms of Section Note 2(b) of Section XVII read with Section Note 2(a) of Section XV, the correct manner of classification of Threaded Metal Nuts is under Chapter 73 and more specifically under the Tariff item 7318 16 00. 8. It is also pertinent to note that in terms of Rule 3(a) of General Rules for Interpretation, when a product is classifiable under two or more headings, the heading which provides the most specific description should be preferred over the heading which gives the general description, 9. Reliance in this regard can be placed on the decision of the Hon'ble Supreme Court in the case Moorco (India) Ltd. vs Collector of Customs, Madras ("Moorco Case") = 1994 (9) TMI 68 - SUPREME COURT held that it is a settled principal i....
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.... the foregoing, it can be concluded that Threaded Metal Nuts merit classification under the Tariff item 7318 16 00 despite being capable of being used in the exterior or interior of a motor vehicle and not under Tariff item 8708 99 00, since its function is the same as that of a standard nut. B. Plastic Rivets Nature of the product 1. The subject product is a type of nut made of plastic with circular grooves around it ("Plastic Rivets") and is generally used in the fitment of trims on the body of a motor vehicle. The primary function of Plastic Rivets is to join fitments. Rivets can be used in other industries as well. An image of Plastic Rivets is enclosed herein and marked as Exhibit B. Classification of the product Plastic Rivets should be classified under Chapter 39 of the First Schedule: 2. Plastic Rivets merit classification under Chapter 39 of the First Schedule, which pertains to "Plastics and articles thereof'. Under Chapter 39, the relevant heading for the classification of Plastic Rivets is Heading 3926, and the specific Tariff item is 3926 90 99, which is extracted as follows: Tariff Item Description of goods 3926 Other articles of plastics....
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.... used in the fitment of trims on the body of a motor vehicle but in other industries for similar functionality. C. Adaptor for plastic pipe Nature of the product 1. The subject product is a type of Quick Connector made of plastic ("Quick Connector") and can be used to connect pipes or tubes in the interior of a motor vehicle and for the purpose of internal fluid handling. Quick Connectors can be used in other industries too. An image of Quick Connector is enclosed herein and marked as Exhibit C. Classification of the product Quick Connectors should be classified under Chapter 39 of the First Schedule: 2. Quick Connectors merit classification under Chapter 39 of the First Schedule, which pertains to "Plastics and articles thereof'. Since Quick Connectors are used to connect pipe or tubes, it comes within the ambit of the Heading 3917 "Tubes, pipes and hoses, and fittings thereof (for example, joints, elbows, flanges), of plastics". Therefore, Quick Connectors merit classification under the Heading 3917 and more specifically under Tariff item 3917 40 00. 3. In this context, it is necessary to refer to the Explanatory Notes to Heading 3917 of HSN Explanatory Notes....
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.... Plastic Pipe Clips is enclosed herein and marked as Exhibit D. Classification of the product Plastic Pipe Clips should be classified under Chapter 39 of the First Schedule: 2. Plastic Pipe Clips by its description merits classification under Chapter 39 of the First Schedule, which pertains to "Plastics and articles thereof'. Under Chapter 39, the relevant heading for the classification of Plastic Pipe Clips is Heading 3926, and the specific Tariff item is 3926 90 99 considering the nature of the product. Plastic Pipe Clips should not be classified under Chapter 87 of the First Schedule: 3. In the pre-GST regime, the Plastic Pipe Clips were classified under Chapter 87 of the First Schedule of CTA which pertains to "Vehicles other than railway or tramway rolling-stock" and more specifically, under Heading 8708 and Tariff item 8708 99 00. 4. on a perusal of the Section Note 2(b) of Chapter XVII of the First Schedule of CTA, it is understood that the expressions "parts" and "parts and accessories" do not apply to "parts of general use" defined in Section Note 2 of Section XV of the First Schedule of CTA, or similar of plastic under Chapter 39. Since Plastic Pipe Clip....
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....ve that Brackets and Channels are designed to be used in the manufacture of motor vehicles. Though Brackets and Channels are capable of being used in other industries with certain modifications, they are currently principally being used in the manufacture of motor vehicles by automobile manufacturers. 4. Therefore, Brackets and Channels satisfy the test of "Principal use" or "Sole use" set out in n Note 3 of Section XVII of the CTA and may be classified under Chapter 87. 5. Under Chapter 87, the relevant heading for classification of Subject Products is Heading 8708, since it is clear that Brackets and Channels can be considered as parts and accessories of motor vehicles, under the specific Tariff item 8708 99 00. Brackets and Channels should not be classified under Chapter 39 of the First Schedule: 6. On a perusal of Section Note 2(b) of Chapter XVII of the First Schedule of the CTA, it is understood that the expressions "parts" and "parts and accessories" do not apply to "parts of general use" defined in Section Note 2 of Section XV of the First Schedule, or similar goods Of plastic under Chapter 39. Therefore, by virtue of Section Note 2(b) of Chapter XVII of the Fir....
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....er the same entry as that of Quick Connectors, which is Tariff item 3917 40 00 and should be classified under the Tariff item 8481 30 00. 4. The classification of Non-Return Valves under the Tariff item 8481 30 00 is further supported by the Explanatory Notes to heading 84.81 of HSN Explanatory Notes, which is reproduced below: "The heading includes inter alia: (1)... (2)... (3) Non-return Valves (E.g. swing check vales and ball valves)" 6. Therefore, by virtue of the description of the product and the HSN Explanatory Notes extracted at paragraph 5 above, it can be concluded that Non-Return Valves should be classified under Tariff item 8481 30 00. Non-Return Valve should not be classified under Chapter 87 of the First Schedule: 5. In the pre-GST regime, the Non-Return Valves were classified under Chapter 87 of the First Schedule which pertains to "Vehicles other than railway or tramway rolling-stock" and more specifically, under the Heading 8708 and Tariff item 8708 99 00. 6. On a perusal of the Section Note 2(e) of Chapter XVII of the First Schedule of the CTA, it is understood that the expressions "parts" and "parts and accessori....
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....do not cover within their ambit parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. Metal U Clips, being generic in nature, are capable of being used in other industries. Its use is not limited to the automobile sector. 5. Therefore, Metal U Clips do not satisfy the test of "Principal use" or "Sole use" set out in Section Note 3 of Section XVII and is disqualified from being classified under Chapter 87. 6. It is pertinent to note that in terms of Rule 3(a) of General Rules for Interpretation of CTA, when a product is classifiable under two or more headings, the heading which provides the most specific description should be preferred over the heading which gives the general description. 7. Reliance in this regard can also be placed on the decision of the Hon'ble Supreme Court in the Moorco Case mentioned above. 8. In view of all the foregoing, it can be concluded that Metal U Clips merit classification under the Tariff item 7326 90 99 and not under the Tariff item 8708 99 00. Moulding Fasteners, Spoiler Lips Nature of the product 1. Moulding Fasteners and Spoiler Lips are essentially articles made of pla....
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....d Spoilers should not be classified under the Tariff item 8708 99 00: 6. In the pre-GST regime, the Subject Products were classified under Chapter 87 of the First Schedule and more specifically, under the Tariff item 8708 99 00. 7. But, it is pertinent to note that in terms of Rule 3(a) of General Rules for Interpretation of the CTA, when a product is classifiable under two or more headings, the heading which provides the most specific description should be preferred over the heading which gives the general description. 8. Reliance in this regard can also be placed on the decision of the Hon'ble Supreme Court in the Moorco Case mentioned above. 11. Since it can be clearly ascertained from the nature of the Fasteners and Spoilers that they are parts and accessories of a motor vehicle and are found on the exterior of a motor vehicle, it can be concluded that the Fasteners and Spoilers merit classification under Tariff item 8708 29 00. Bracket (Metal Assemblies) Nature of the product 1. The subject product is a type of bracket made of metal ("Bracket") and is primarily used to support wiring harness and pipes in the engine compartment of a motor vehicle. Classi....
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....ds, its usage is also extended to various other industries. An image of Steel Washer is enclosed herein and marked as Exhibit J. Classification of the product Steel Washer should be classified under Chapter 73 of the First Schedule: 1. The subject product is essentially an anti-creeping ring which is mounted on plastic parts to prevent damage to the part when a screw is affixed to it ("Steel Washer"). While, Steel Washer use in the automobile industry, its usage is also extended to various other industries. An image of Steel Washer is enclosed herein and marked as Exhibit J. Steel Washer should be classified under Chapter 73 of the First Schedule: 2. Steel Washer by its very description and nature merits classification under Chapter 73 of the First Schedule, which pertains to "Articles of iron or steel". Under Chapter 73, the relevant heading for the classification of Steel Washer is Heading 7318, and the specific Tariff item is 7318 21 00. Subject Product should not be classified under Chapter 8 7 of the First Schedule: 3. In the pre-GST regime, the Subject Product was classified under Chapter 87 of the First Schedule which pertains to "Vehicles other than rai....
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....case. Amendment in application Due to change in our understanding based on further information available regarding the nature of two Imported Products, namely Metal U Clips (specified at Sl. No. A.7 of Form GST ARA-01 submitted along with the Application) and Stainless Steel (specified at Sl. No. A.10 of Form GST ARA-01 along with the Application), we wish to amend our submissions in the manner set out in Annexure B. Accordingly we have made changes in the original application so that we have not repeated the same submissions. Additional submission on 25.02.2019. During the course of the final hearing, the Department vide the captioned Letter put forth the following contentions: 1. Para 2 of the covering letter dated 18 November 2018 accompanying the ARA, indicates that the Applicant is seeking to determine the appropriate classification for the imported products in terms CTA, 1975 and the Classification Notification. 2. In the column titled "Description (in brief)" present in the FORM GST ARA 01 ("Form"), the description provided by the Applicant is import of certain products for manufacturing industrial clip fasteners and prototyping assembly systems which or....
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....ded in the Form. This evidences that the Department has without appreciating the true nature of the transaction involved, on the basis of a cursory perusal of the Form, raised this contention, which practice is bad in law?. 1.4 Additionally, vide the Letter, the Department has contended that the Applicant has sought to determine the classification of the imported products in terms of CTA and the Classification Notification. In this regard it is relevant to note that the Classification Notification has been issued under Section 9 of the CGST Act, 2017 to provide for the applicable rate of Goods and Services Tax ("GST") on supply of goods which are mentioned in the Schedule therein. IGST that will be leviable on inter-state supply of goods is also determined in terms of the Classification Notification. 1.5 Vide this contention of the Department, it is clear that the Department has recognized that the Applicant is desirous of seeking the appropriate classification of the products in terms of the Classification Notification, which sets out the rate at which IGST is to be discharged on inter-state supply of goods, by drawing support for the same from the CTA. 1.6 Therefore, whi....
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.... definitive set of rules prescribed for the classification of goods under the Customs law, erstwhile Central Excise law and the current GST law. Resultantly, interpretation for the purpose of classification of a product, remain the same irrespective of the authority before whom the question is posed, Reliance in this regard can be placed on Western Cable Engineering (P.) Ltd., in re [2018] 97 taxmann.com 155 (AAR-DAMAN, DIU AND DNH (Supra) = 2018 (9) TMI 689 - AUTHORITY FOR ADVANCE RULING, DAMAN, DIU AND DADAR AND NAGAR HAVELI, wherein the court observed that "We note that Harmonized System of Nomenclature (BSN) is internationally recognized product/items coding system which has also been accepted in India. From the above detailed Chapter Sub Heading wise classification or the product in the existing law, ie. under Central Excise it is round that the classification of the above said product is one and the same under GST regime as well as under Customs low. No change in the classification under all the entire three. "Act" have been noticed." 3.2 Thus, as the rules for the interpretation of a product remain the same under both the GST and Customs law, an assessee is free to approa....
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....ERNED OFFICER The submission, as reproduced verbatim, could be seen thus- "From para 2 of assessee's forwarding letter it is seen that the assesse is seeking to determine the appropriate classification for the imported products in terms of the Customs Tariff Act, 1985 and Notification No. 1/2017-lntegrated Tax (Rate) dated 28th June, 2017. Further, in the FORM GST ARA - 01 filed by them, in Column 8- Description (in brief), the assesse has given description of the products as "Import of certain products for manufacturing industrial clip fasteners and prototyping assembly systems which are used in automobiles. In view of the above, it appears that the assesse is seeking classification imported goods for which CGST, Pune - I is not the jurisdictional authority. Further the Advance Ruling Authority (GST), Maharashtra may not be the correct Advance Ruling Authority if the assesse is seeking classification of imported goods as there are separate Regulations governing the imported goods viz. Authority for Advance Ruling (Central Excise, Custom and Service Tax) Procedure Regulations, 2005. This is brought to your notice for further necessary action in the matter. This issue....
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.... IGST is to be levied on all inter-State supplies of goods and services, on the value determined under Section 15 of the CGST Act. 5.5 The applicant has made the subject application to this authority, for the appropriate classification of the enumerated products imported by them. 5.6 The application was admitted on the basis of oral contention and written submission made by the applicant and jurisdictional officer. However on perusal of the submissions and documents on record, we find that the query has been raised by the applicant in respect of goods imported by them which are then used in the manufacture of finished goods. 5.7 This authority is governed by the provisions of Chapter XVII of CGST ACT and the relevant Sections 95 to 98, 102, 103, 104 and 105. As per section 95, the term 'advance ruling' means a decision provided by this authority to the applicant on matters or questions specified in subsection 2 of Section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. For the sake of better understanding Section 97 is reproduced as below: Section 97: 97(1): an applicant desirous o....
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.... made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of sub-sections (1) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) supply of services and not as a supply of goods. From a reading of the said section it is very apparent that, import of services are alone considered as a 'supply', not import of goods. Further we find that Section 5 of the IGST Act, the integrated tax on goods imported into India shall b....