TaxTMI 
TaxTMI 
2019 (7) TMI 811
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....et, Mettukuppam, Okkiyam Thoraipakkam, Kanchipuram, Tamil Nadu 600 097, (hereinafter referred to as 'Applicant) are registered under GST Act vide GSTIN 33AAACV2596F1ZD. The Applicant manufactures Electric, Automatic, Filter Coffee Maker and Manual, Electrically Warmed Filter Coffee Maker and is also involved in the activity of manufacture of various products namely Beverages, Vending Machines and Components, Magnetic Float Switches etc. The Applicant has sought Advance Ruling in respect of their two manufacturing products namely, 'Automatic Electric Filter Coffee Maker' and 'Manual, Electrically Warmed Filter Coffee Maker as below: "1. Whether in the facts and circumstances of the case and in view of the fact that Automatic Electric Filter Coffee Maker fell under Chapter Heading No. 8419 of the GST Tariff and therefore SI No. 320 of Schedule III to Notification No. 41/17 CTR dated 14.11.2017 and corresponding Sl.No. 320 of Schedule III to G.O. M.s. No. 157 dated 14.11.2017 to be taxed at the rate of 18% ? 2. Whether in the facts and circumstances of the case and in view of the fact that Automatic Electric Filter Coffee Maker is machinery not meant for domestic use....
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....l use in Hotels and Restaurants. The cost of this Machine is approximately between Rs. 8,000/- to Rs. 20,000/- depending upon the size of the Machine. The size will determine the quantum of coffee powder which can be handled at a time by the machine They are selling this product to Hotels and Restaurants such as Hot Chips Restaurants, Hotel Surguru, Hotel Arya Nivas, Adyar Ananda Bhavan, etc. In view of the above, the product in question, Automatic Electric Filter Coffee Maker, will be a Machine which falls squarely under Chapter 8419 of the GST tariff contemplated by Schedule III of Notification No. 41/17-CTR dated 14.11.2017 read with schedule III of G.O. Ms.No. 157 of 2017 dated 14.11.2017 to be taxed at an aggregated GST rate of 18%. 2.2 Regarding Manual / traditional filter coffee maker Machine, the same is meant only for commercial use. The Applicant stated that this product is designed to handle 250 to 500 grams of coffee powder in one cycle. In this instance, the hot water itself is poured into the Machine. There is a filter inside the Machine, through which the hot water passes and drips into coffee powder resulting in the cooking of Coffee powder and extraction of deco....
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....tted by them. They stated that though one uses Printed Circuit Board (PCB) other electricity, they have Parts which is essential to Machinery. Therefore, the Applicant stated that both the products should be classifiable under Chapter Head 8419 and not under Chapter Heading 8516. 3.2 The applicant was offered an opportunity of final hearing and heard on 12.03.2019. The Applicant appeared and stated that they Manufacture Coffee Maker for commercial use either Fully-Automatic or/ and Semi-Automatic. They have a minimum capacity of 250 gram (75 cup), 500 gram (150 cups) only, whereas domestic has 4-5 cups capacity. The Chapter Heading 8516 is for Coffee Maker/ Electro Thermic Appliances of domestic use. Whereas, Chapter Heading 8419 is the correct classification as 'Electrical Machinery' involving change of temperature. They were earlier classifying these products under the Chapter Heading 8516, but the Central Excise Duty was the same for all the above products. They submitted various case laws to state that principle of estoppel cannot stand in the way of law. They also stated that up to 13.11.2017, both the Chapter Heading 8419 & 8516 were attracting 28%, later tax rate of Chapt....
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....re general description. Hence, in line with the General Rules of the Interpretation of the Harmonised System of Nomenclature, the said product is classifiable under Chapter heading 85167100 only • the taxpayer has claimed that the said products viz. 'Automatic Electric Filter Coffee Maker" and 'Manual/ traditional Filter Coffee Maker" is a Machinery. But, the description of the goods mentioned in the copy of bills as 'Filter 'Cofffee Maker" by the taxpayer himself, which squarely fits in Chapter Heading 85167100. The functions elucidated by the taxpayer are only the working of 'Coffee-Maker'. Hence, the said goods are only 'Coffee-Makers'. • Moreover, the end use of the said products i.e. Coffee Maker is for domestic purpose. The Applicant viz., M/s. V.V. Enterprises has been initially classifying the impugned product only under the chapter heading 8516 71 00. It is evident that in as much as the rate of GST Chapter Heading 8419 81 20 has been reduced to 18% from 28% with effect from 14.11.2017, whereas the GST rate for 85167100 remained at 28% throughout, the taxpayer is now claiming classification under 8419 81 20. Hence, the said product merits classifi....
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....s no treatment of coffee powder but a processing of the coffee powder by using hot water. The coffee powder is used up in the process and the filtrate (a colloidal solution) does not have the same physical or chemical nature as the raw material (dry ground coffee powder) thus, it is a process amounting to manufacture of coffee decoction using the electro-thermic device and such device would not be covered by Chapter 84 for the reasons given below. • Since the goods dealt with by the applicant is an electro-thermic device, it is covered by Chapter 85 only. Chapter 84 does not cover electrical equipment and there is no entry for electro-thermic devices anywhere under that chapter. All electro-thermic devices are covered by Chapter 85 only. More specifically, there is an entry 8516 7100 which covers "coffee or tea makers'. • No reasons are adduced by the applicant as to why the goods dealt with by him would not fall within this specific entry except to contend that the scale of operation of the appliance manufactured by him is greater than that of the coffee makers used in households. The relevant chapter entries do not make any distinction of the nature sugg....
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....Invoices and the case laws and also comments furnished by the Additional Commissioner, Chennai (South) Commissionerate, Office of the commissioner of GST & Central Excise, Government of India and the remarks submitted by the Assistant commissioner(ST), Sholinganallur Assessment Circle, Commercial Taxes Department, Tamil Nadu and heard the arguments made by the Applicant at the time of hearing on 19.11.2018 & 12.03.2019. The issue to be decided is 1. whether the Automatic Electric Filter Coffee Maker is a machinery not meant for domestic use and will therefore be classified under CTH 8419 and charged to GST at the rate of 18% effective from 14.11.2017 as per Notification No. 41/ 17 CTR dated 14.11.2017 with corresponding SI.No.220 of G.O. Ms. No. 157 dated 14.11.2017, issued under provisions of TNGST Act 2. Whether the Manual/ Traditional Filter Coffee Maker, being not meant for domestic use and falling under CTH 8419 and charged to GST at the rate of 18% effective from 14.11.2017 as per Notification No. 41/17 CTR dated 14.11.2017 with corresponding Sl.No.220 of G.O. Ms. No. 157 dated 14.11.2017, issued under provisions of TNGST Act 7.2 In terms of explanat....
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.... 84.02 to 84.24 cover the Other machines and apparatus which are classified mainly by reference to their function, and regardless of the field of industry in which they are used. • Chapter Heading 8419 states: 8419 MACHINERY, PLANT OR LABORATORY EQUIPMENT, WHETHER OR NOT ELECTRICALLY HEATED (EXCLUDING FURNACES, OVENS AND OTHER EQUIPMENT OF HEADING 8514), FOR THE TREATMENT OF MATERIALS BY A PROCESS INVOLVING A CHANGE OF TEMPERATURE SUCH AS HEATING,COOKING, ROASTING, DISTILLING, RECTIFYING, STERILISING, PASTEURISING, STEAMING, DRYING, EVAPORATING, VAPORISING, CONDENSING OR COOLING, OTHER THAN MACHINERY OR PLANT OF A KIND USED FOR DOMESTIC PURPOSES; INSTANTANEOUS OR STORAGE WATER HEATERS, NON -ELECTRIC .......................................................... - Other machinery, plant and equipment: 841981 -- For making hot drinks or for cooking or heating food : 84198110 --- Friers 84198120 --- Other kitchen machines 84198190 --- Other • HSN Explanatory Notes on Chapter Heading 8419 states It should be noted that this heading does not include : (r....
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....apter 84 covers all machinery and mechanical appliances unless they are more specifically covered in Chapter 85. Though in general machines and machinery are covered in Chapter 84 and electrical goods under Chapter 85, General Notes to Chapter 84 specifically states that machinery and apparatus of Chapter 84, specifically 419 remain covered in Chapter 84 even if electric. In the instant case, both "Gemini Modern Auto Coffee Filter" and "Gemini Modern Traditional Coffee Filter" are machinery which are electric as they use electricity, the former for operating the internal electric circuitry for controlled heating and flow of water and thermostat for keeping the prepared decoction warm and the later only for the thermostat. As per Explanatory Notes to heading 8419, the heading covers machinery and plant designed to cause a transformation of materials resulting principally from a temperature change eg. heating, cooking etc. In the instant case, the coffee powder fed into the applicant's machines is subjected to heating by means of hot water, which is internally heated in case of "Gemini Modern Auto Coffee Filter" or externally fed in case of "Gemini Modern Traditional Coffee Filter". ....
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....MMERSION HEATERS; ELECTRIC SPACE HEATING APPARATUS AND SOIL HEATING APPARATUS; ELECTRO-THERMIC HAIR-DRESSING APPARATUS (FOR EXAMPLE, HAIR DRYERS , HAIR CURLERS, CURLING TONG HEATERS) AND HAND DRYERS; ELECTRIC SMOOTHING IRONS; OTHER ELECTRO-THERMIC APPLIANCES OF A KIND USED FOR DOMESTIC PURPOSES; ELECTRIC HEATING RESISTORS, OTHER THAN THOSE OF HEADING 8545 - Other electro-thermic appliances: 85167100 -- Coffee or tea makers • HSN Explanatory notes on Chapter 8516 states as (E) OTHER ELECTRO-TIJERMIC APPLIANCES OF A KINP USED FOR DOMESTIC PURPOSES This group includes all electro-thermic machines and appliances provided they are normally used in the household. Certain of these have been referred to in previous parts of this Explanatory Note (e.g., electric fires, geysers, hair dryers, smoothing irons, etc.). Others include (1) Microwave ovens, (2) Other ovens and cookers, cooking plates, boiling rings, grillers and roasters (e.g., convection type, resistance type, infra-red, high frequency induction and combined gas-electric appliances). (3) Coffee or tea makers (including percolators). This group ex....
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....17 dated 14.11.2017 with effect from 15.11.2017 is as follows: Sl.No. Chapter / Heading/ Sub-Heading/Tariff item Description of Goods 320 8419 Machinery, plant or laboratory equipment, whether or not electrically heated (excluding furnaces, ovens and other equipment of heading 8514), for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterlising, pasteurizing, steaming, drying, evaporating, vaporizing, condensing or cooling, other than machinery or plant of a kind used for domestic purposes; instantaneous or storage water heaters, non-electric[other than Solar water heater and system] From the above description, it is evident that 'Machinery, for the treatment of materials by process involving a change of temperature such as cooking, other than machinery of a. kind used for domestic purpose', falling under the tariff item 8419 is covered under the said entry. In the case at hand as discussed in para 7.4 above, the products are machines covered under 8419, not of a kind used for domestic purposes, therefore are squarely covered under the said entry. Hence, the products under co....