TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 539
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....stand is automatically fed into cutting / tufting head where that yarn is cut into bits of required pile height and tufted over a uniform thickness PVC base in conveyor belt which is cured by passing over heated radiators (Heating Zone) and then chilled surface (chilling zone) of the continuous process machinery. The PVC base solidifies and results in formation of PVC matting in rolls which can also be cut into mat size by longitudinal and cross cutting. All the above process is done in this machine automatically and this requires minimum labour for operation. The raw materials used are (1) PVC Resin, (2) DOP, (3) Dolomite Filler, (4) Pigment and (5) Coir Yarn. The estimated annual turnover on two shifts basis approximately is Rs. 12-18 Crores. Number of workers required for single shift is 10 and for two shifts are 20. The manufacturing operation is fully automated. Coir yarn and PVC mix is fed into the machine at one end and the finished product PVC tufted coir mat and matting automatically get rolled at the other end. The machinery is designed to produce 100 square meter per hour of PVC tufted coir mat and matting. Backing refers to a process where a very thin layer of material ....
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....mats and matting which is not available to coir mats and matting. Example; Cutting to any shape or size, uniform and thick tuft, easy to handle etc (essential character). The Explanation to Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 clearly lays down that rules for interpretation of the first schedule to the Customs Tariff Act, 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 pile of coir fibre is tufted on a PVC base and hence it should be classified as PVC tufted coir mats and matting (reference - general rules for the interpretation of import tariff). The general rate of tax applicable to floor covering falling under Chapter 57 is 12%. The rate is reduced to 5% in respect of specified goods based on the recommendations of the Fitment Committee with justification for reduction from the standard rate of 12%. The recommendations were placed before the Council, discussed at the council and approved with such modification as the council deemed fit. No such recommendation is seemed to have been made or approved by the GST Council in respe....
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....ds are made in the cottage sector. Further the said recommendations by the Fitment committee were approved by the GST Council as per Para 24(ii), Page No. 24 of the corresponding minutes for the said Council Meeting. In the Agenda item 3, Para No.29 of Page 15-17 of the Minutes book of 4th GST Council Meeting, the Principles and procedures for fixation of band of tax rates were laid down. In Para 29(H) of the said Minutes, for goods to be classified under the low band tax rate of 5%, such goods should normally be consumed by the vulnerable sections of the society or have high impact on inflation. Hence as per the above, it is ascertained that the recommendations as mentioned above are for the cottage sector, whereas the manufacture of PVC Tufted Coir Mats uses sophisticated machinery and also involve high investments and also employ less man power. Therefore it is felt that the Fitment Committee and the GST Council has neither recommended nor approved the PVC Tufted Coir Mats to be considered in the low band tax rate of 5%. 7. PERSONAL HEARING: The applicant was granted opportunity for personal hearing on 05.01.2021. Shri. Sethumadhavan, Authorised Representative of the applicant....
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....cant cannot be classified under 5702 20 as it does not include coir mattings / carpets with PVC backing. The Heading 5703 covers carpet and other textile floor coverings, tufted whether or not made up and sub-heading 5703 90 covers carpets and floor coverings of other textile material; tariff item 5703 90 20 covers carpets and other floor covering of coir and tariff item 5703 90 90 covers other carpets and floor coverings. The Heading 5705 covers other carpets and other textile floor coverings whether or not made up and hence the product of the applicant does not fall under 5705. On the basis of the descriptions of the headings and the relevant chapter notes the product of the applicant is appropriately classifiable under Tariff Sub-Heading 5703 90 90 of the Customs Tariff Act. 8.5. Having come to the conclusion that the product of the applicant is rightly classifiable under Customs Tariff Sub - Heading 5703 90 90 the question that is to be answered is whether the product will attract GST at the rate of 5 % as per SI No. 219 of Schedule I or GST at the rate of 12 % as per SI No. 144 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. SI No: 219 of Sche....