TaxTMI 
TaxTMI 
2019 (7) TMI 1159
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....are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- "A. STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE QUESTION (S) RAISED 1.1. M/s. R.K. Industries (hereinafter referred as "The Applicant") are manufacturers and exporters of various products consisting of Water Bottles, Lunch Boxes, Pencil box, Milk Mugs, Tea/Coffee Mugs, Milk/Tea/Coffee Mugs with Steel Bidding, Airtight & Leak proof Plastic Food Storage container, Airtight & Leak-proof Steel Food Storage Container, Lunch Boxes with Elegant Pouches, super Lock & Seal Containers, Super Steel Lock container. (The leaflet/brochure of the relevant products are attached with the present application and marked as Annex A) 1.2. They also manufacture specially designed Steel mug with plastic outer body, thu....
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.... stretched of the required height of the mug. After that the Steel mug goes into the buffing process to get polish from both the sides; outside and inside. • Plastic Outer Mugs are manufactured with the help of injection moulding machine. Polypropylene material is used in the form of granules. The same is subjected to heat and pressure in an injection moulding machine. • Bonding (Bidding/fixing) of stainless steel mug: After the manufacturing of Plastic Outer Mug and Stainless Steel Glass, both are combined as one product with the help of bonding (bidding) process. In this process; the Steel mug is placed inside the premade plastic moulded outer body. The rim of the mug is made by bending the edge of the steel glass with the plastic body. Thus, a stainless steel mug gets manufactured with a plastic outer body. The process is permanent (inseparable) in nature. The plastic outer body can be separated only on breaking the same. 2.2 Uses/Benefits 2.2.1. The main benefit is that of the steel mug. The material used makes it : • odourless • very easy to clean. • durability 2.2.2. Steel is a malleable material, extre....
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....le useful or necessary in a household; a domestic implement, vessel, or article of furniture; and instrument or vessel in common use in a kitchen, dairy, etc.,; any vessel or other article serving a useful end or purpose; a tool or implement used by artisans, farmers, etc." Stroud's Judicial Dictionary of Words & Phrases, Volume 3, Sixth Edition: "Utensil.- Anything necessary for our use and occupation; house-hold stuffe" (cowel). 3.B. Legal interpretation of a term: It is the settled position in law that the terms appearing in the taxing statutes are required to be understood in the manner defined therein & in absence of any such definition, they should be understood in their popular meaning as understood as per common parlance. In M/s Annapurna Biscuit Manufacturing Co., Kanpur Vs Commissioner of Sales Tax, U.P., Lucknow (1981 AIR 1656, 1982 SCR (1) 149) on 28 July, 1981 = 1961 (7) TMI 55 - SUPREME COURT it was held by the Supreme Court "It is a well settled rule of construction that the words used in a law imposing a tax should be construed in the same way in which they are understood in ordinary parlance in the area in which the....
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....ich the interpretation clause declares that they shall include. The words used in an inclusive definition denote extension and cannot be treated as restricted in any sense. When we are dealing with an inclusive definition it would be inappropriate to put a restrictive interpretation upon the terms of wider limitation. As the word 'utensil' is not defined under the Act' but in entry No. 5 the word used is 'all utensils' 'including, it is inappropriate to put a restrictive meaning to the word 'utensil' as understood in common parlance. The word 'utensil' is a term of wider denotation." 2.4.5 Similar entry came up for consideration before the Chhattisgarh High Court in the matter of Kamesh Traders v. State of Chhattisgarh (2012) 52 VST 120 (Chhattisgarh) passed in W.P. No. 6975 of 2008 decided on December 2, 2010 = 2010 (12) TMI 1107 - CHHATTISGARH HIGH COURT wherein the Chhattisgarh High Court has taken the view that entry makes no distinction between the utensils on the basis of the material for making the utensils except precious metals and that the articles used as articles of kitchen and for domestic purpose are covered in it. The Chhat....
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....lance test should also be applied in the present case as well. 2.4.8 In the above case also, if the "popular parlance test" is applied, the product is used for drinking and storing liquids for household/domestic purposes in day to day activities. Hence, even as per common parlance this product falls under the head of "utensils" 2.4.9 On analysis of the chapter heading 73, the utensil must be manufactured from "iron or steel" to fall under the HSN code - 7323 (refer Annexure B of Customs Tariff Headings) 2.4.10 However in the above case, the product is primarily made of steel, but it has plastic outer body, for it to fall under the aforementioned head, the product should be made of iron and steel. 2.4.11 Relying on the verdict of the application made for the determination of rate of tax filed by M/s. Kraftwares (India) Pvt. Ltd. (DDQ-1187/ADM-5/393/B-5 dt. 6.5.1988) under Section 52(1)(e) of the Bombay Sales Tax Act, 1959. The applicants had stated that they are manufacturers of stainless steel utensils. However, some of these utensils had copper clad to its bottom to improve the heat conductivity of the utensils and make the utensils more fuel efficient. Also the applic....
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....lysing the product composition. On the same analogy one can state that the steel mugs as a utensil made of iron and steel. Additional submissions on 07.05.2019. The GST Rate Schedule Notification No. 1/2017-Central Tax (Rate) dated 28^th June 2017 contains an explanation at the end of the notification. It states as under: Explanation. - For the purposes of this notification,- (i) ............. (ii) ............. (iii) ............... (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. The relevant General Rules for The Interpretation of Import Tariff are reproduced hereunder "2. (a) ...... (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting....
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....sing of this order. We heard both the sides. 05. OBSERVATIONS AND FINDINGS: 5.1 We have gone through the facts of the case, documents on record and submissions made in the matter. The issue before us is one of classification of goods and its tax rate under GST. 5.2 Applicant is a GST registered person, engaged in the manufacturer & export of various products. They also manufacture specially designed Steel mug with plastic outer body which according to their submissions, utilizes the beneficial properties of both, steel and plastic. 5.3 It is their claim that, the product 'steel mug with plastic outer body' answers the description provided in Sch.-II, Chapter Heading 7323, Sr. No. 184 of the Notification 1/2017, dt.28.06.2017. For this, they have strongly argued that the subject products contains around 75% of steel with the balance 25% being plastic & other materials and also are considered as 'domestic utensil'. They have submitted the process of manufacture and have urged that the weight of the subject products is predominantly due to iron and steel, the weight of the plastic being negligible, 5.4 We find that the learned Authorized Representative h....
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....75%) and for outer body plastic (with plastic and other components amounting to only 25% of the total cost of the product)]. Clause (iv) of the Explanation in GST Rate Schedule Notification No. 1/2017-Central Tax (Rate) dated 28^th June 2017 mentions that: "The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may he, apply to the interpretation of this notification." 5.8 The relevant General Rules for The Interpretation of Import Tariff are reproduced hereunder General Rules There are six General Rules used in interpreting (applying) the Tariff These are known as the General Rules of Interpretation (GIR) 1 through 6. Rules one to four are related and must be applied in sequence. Rules five and six stand on their own to be applied as needed. RULE 1 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....
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....all be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3. Explanation: Rule 2 (a) deals with the classification of unfinished, incomplete, unassembled or disassembled goods. Unfinished and incomplete goods can be classified under the same Heading as the same goods in a finished state provided that they have the essential character of the complete or finished article. As well, unassembled or disassembled goods may also be classified the same as the complete finished product. This rule does not apply if the text of the Heading or the relevant Legal Notes exclude the unfinished or unassembled product in question. Example: An automobile missing only its wheels would be classified the same as if it were complete. Explanation: Rule 2 (b) lays the groundwork for dealing with products, not classifiable through the use of ....
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....ems more specific or detailed than the other. Example: Mint tea is not stated specifically, as a product, in the Tariff Although the product descriptions available are mint and tea, mint tea under the appropriate tea Heading because it provides the most specific product description and mint is only the flavour of the tea. Explanation: Rule 3 (b) applies to mixtures, composite goods and sets that cannot be classified by use of the previous Rules. These should be classified as if they consisted of the material or component which gives them their essential character. Example: An importer bringing in "liquor gift sets" (that include the bottle of liquor and glasses) must classify the goods under the appropriate liquor Heading. The essential character of the item is the liquor itself and not the glasses contained within the set. Explanation: Rule 3 (c) is for use in cases in which a good seems to fit in more than one Heading and the essential character cannot be determined. In this case, the product should be classified under the Heading which occurs last in numerical order. 5.9 Based on the general rules of interpretation we find that, because the subject product is a....