TaxTMI 
TaxTMI 
2021 (8) TMI 190
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....) 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 subsection (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 said advance ruling have changed. 4. Under Section 104(1) 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 sb-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. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. The....
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....RRED NOT HOLDING THAT THE 'AIR SPRINGS' MANUFACTURED AND SUPPLIED BY THE APPELLANT ARE ARTICLES OF VULCANIZED RUBBER. • The impugned order accepts the fact that the product in question comprises of vulcanized soft rubber and not hard rubber. This is evident from the findings at para 8.3 of the order. • The functionality of the product 'Air Springs' is extended by the rubber part of the product (Vulcanized Rubber') and the same is evident from para 8.5 of the impugned order, whereby reference is made to the report of the Chartered Engineer. Further, though it is stated that functional utility is not provided solely by the soft rubber, the impugned order does not contradict the independent Chartered Engineer report dated 29.02.2020 relied upon by the Applicant/Appellant that the functional utility is primarily provided by the vulcanized soft rubber. Furthermore, no independent technical report or evidence has been relied upon by the authority in the impugned order to contradict the expert opinion of the Chartered Engineer dated 29.02.2020. • The impugned order proceeds on the erroneous basis that despite the product comprising of vulcanized rubb....
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.... of Import Tariff lays down that mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to Rule 3(a), shall be classified as if they consisted of the material or component which gives them their essential character in so far as this criterion is applicable. That in addition to the HSN Explanatory Notes to Chapter 40, the 'essential character' test also is the mandate of Rule 3(b) of the General Rules for the Interpretation of the Import Tariff. This Rule has also not been considered in the Impugned Order and the Impugned Order has been passed without even referring to the relevant HSN Explanatory notes to Chapter 40 or the General Rules for the Interpretation of the Import Tariff. • The Appellant had placed reliance on the US tariff classification bearing no. N303352 and dated March 28, 2019 to shows that the essential character of the air spring is imparted from the rubber component (vulcanized rubber'). The US authority in such classification opinion on the issue of tariff classification of convoluted/bellows air spring from Mexico', has opined t....
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.... to Section XVII. The Impugned Order does not dispute this position but proceeds on the basis that the product in question does not fall under Chapter Heading 4016 (for the erroneous reasons highlighted above), and hence the product will fall for classification under Chapter 8708. • The Impugned Order itself accepts the position that if an article is of vulcanized rubber', the same is excluded from the scope of Chapter 87 in view of Section Note 2(a) [See para 8.4 of the Impugned Order], The Impugned Order however proceeds on the erroneous basis that the product in question does not fall under Chapter Heading 4016 (which findings are incorrect for the reasons highlighted hereinabove), and hence the product will fall for classification under Chapter 8708. • The General Rules of Interpretation of Import Tariff lays down as follows - "Classification of goods in this Schedule shall be governed by the following principles: I. 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....
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.... ACCESSORIES' UNDER CHAPTER 8708. CONSEQUENTLY. THE CLASSIFICATION OF 'AIR SPRINGS' UNDER TARIFF HEADING 8708 8000 IS ERRONEOUS • The HSN Explanatory Notes to Chapter XVII specifically excludes springs' from the scope of parts and accessories under Chapter 8707. Also springs of base metals are excluded from the scope of Chapter 87. • Without prejudice to the submission that the 'air springs' derive their essential character from the vulcanized rubber' and are hence products of vulcanized rubber classifiable under Chapter heading 4016, it is submitted that even assuming though not accepting that these are springs of base metal, even in such a case the classification cannot be under Chapter 87 but will only be under Chapter 7320, the GST rate for which is 18%. Therefore, without prejudice to the submission set out hereinabove, it is submitted that the springs per se cannot be classified under Chapter 87 as has been done vide the Impugned Order. GROUND 4 - WITHOUT PREJUDICE. THE IMPUGNED ORDER FAILED TO APPRECIATE THAT COMPETING MANUFACTURERS WHO MANUFACTURE AIR SPRINGS' HAVE CLASSIFIED THE SAME UNDER TARIFF HEADING 4016 9990. HERE CANNOT BE TWO COMPETING ....
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....the product is not classifiable under CTH 8708 but only under CTH 4016. DISCUSSIONS: 6. We have carefully considered the submissions of the Appellant, the impugned Order and the applicable statutory provisions. We find the issue before us for decision is whether the product "Air Springs" manufactured by the appellant which is a critical component in Air suspension systems for Buses, Trucks and Trailers are classifiable under CTH 4016 as claimed by the appellant or under CTH 8708 as decided by the Lower Authority. 7.1 From the submissions, it is seen that the product is composed of a rubber bellow which includes rubber and fabric composite, beadwire, griddle hoop, crimped top plate, piston and a bumper. The material composition is approximately 60% metal and 40% rubber. It is stated that the product works on the pneumatic system principle and the vulcanized rubber component gives the key functionality of the product, a critical component of the air suspension and lift axle systems in trucks, trailers and buses. Pre-GST, the appellant had classified this product under CETH 4016 and after the introduction of GST from 1st July 2017, they have started classifying under CTH 8708....
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....using the chapter heading; HSN Explanatory Notes are safe guides for interpretation and equal importance is to be given to the Rules of Interpretation and lastly, the functional utility, design, shape and predominant usage should also be taken into account while determining the classification of an item, which had been undisputedly followed by the Lower authority. In the case at hand the product is designed for use as a part of the suspension in the Motor Vehicles and the functional utility of the product is as a 'Part of the suspension system of the Motor Vehicle' as deduced by the Lower authority and we find that the appellant is not disputing this fact. The appellant states that the product is an 'article of vulcanized rubber' and once when an article is 'an article of vulcanized rubber', the same gets excluded from the purview of section XVII as per Note 2 to Section XVII and cannot be classified under CTH 8708, therefore necessarily to be classified under CTH 4016-other articles of vulcanized rubber other than hard rubber. 7.4 Therefore, we find that the point to be decided is whether the product is an article of vulcanized rubber other than hard rubber and if so, whether a....
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....referred to in the HSN Heading and the Tariff Heading, the description refers to reduced size model of an Article used by adults. This test helps us to understand the difference between "toys" and "furniture". Lastly, it is important to bear in mind that functional utility, design, shape and predominant usage have also got to be taken into account while determining the classification of an item. The aforestated aids and assistance are more important than the names used in the trade or common parlance in the matter of correct classification. From the above, it is clear that explanatory notes provides a safe guide for interpretation of an entry. In the case at hand, the scope of Chapter 40 as per the General notes in the HSN is as follows: Scope of the Chapter This Chapter covers rubber, as defined above, in the raw or semi-manufactured states, whether or not vulcanised or hard, and articles wholly of rubber or whose essential character derives from rubber, other than products excluded by Note 2 to this Chapter. It says articles whose essential character derives from rubber are covered in this chapter. As per the Chartered Engineers' certific....
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....do not apply to the following articles, whether or not they are identifiable as for the goods of this Section: (a) joints, washers or the like of any material (classified according to their constituent material or in heading 8484) or other articles of vulcanised rubber other than hard rubber (heading 4016); (b) parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39); The contention of the appellant is that as per Note 2(a) above, the product which is an article of vulcanized rubber other than hard rubber is excluded from being considered as 'Parts". Here again, we find that Hon'ble Supreme Court in the case of M/s Pragati Silicones PVT Ltd Vs. Commissioner of Central Excise Delhi [2007-TIOL-71-SC-CX], while considering whether Note 2(b) of Section XVII excludes 'Plastic Name Plates' to be excluded from considering as 'Parts', has stated that: 27. Based on the submissions made by Counsel for the Revenue, the central question before us is: whether the abovementioned Section Note 2(b) excludes plastic name plates from the scope of Section XVII? Thus, we are required to looking into th....
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....would be the description of goods included within Chapter XV. 30. However, the minute a reference is made to Chapter 39, it is the provisions in Chapter 39 that control the scope of "similar goods of plastics". Thus, when Note 2(b) refers to similar goods of plastics as in Chapter 39, it must be interpreted to mean similarly defined goods in Chapter 39. And since no definition or reference exists in Chapter 39 regarding name plates, etc., we cannot find any exclusion with respect to these goods from Chapter 87. For example, when the exclusion regarding base metal name plates is made, it is so because there exist specific and detailed headings in that Chapter. But in the absence of such specific headings in Chapter 39, we are unable to accept the exclusion of the plastic name plates from Chapter 87 and include it within a residuary provision in Chapter 39. 31. Thus, we are of the opinion that the language in Note 2(b) cannot be interpreted to exclude plastic name plates from the scope of Section XVII. 8.4 Applying the above ratio to the case at hand, in Note 2(a) similar to Note 2(b), there are two parts, viz., • joints, washers or the like ....
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....accessories which are not suitable for use solely or primarily with articles of Chapter Heading 87.08 which pertains to parts and accessories of motor vehicles of Chapter Headings 87.01 to 87.05. The Court was also categorical that in such a case the test that is to be applied is : 'whether the goods are suitable for use solely or primarily with articles of Chapter Heading 87.01 to 87.05'. (emphasis supplied) 8.5 In the case at hand, the product is not a joint, washer or the like, it is an 'Air bellow', a specifically designed part for use in the Motor Vehicle as a Shock absorbent and therefore, even if the part which gives the essential character of the product is made of vulcanized rubber other than hard rubber and the functionality of the product is extended by the said rubber portion as claimed by the appellant, still as per the dictum pronounced by the Apex Court referred above, the test of commercial identity and not the functionality test is relevant. The commercial identity of the product is that the product is a critical component of the air suspension and lift axle system in trucks, trailers and buses as has been stated by the appellant. It is also pertinent to note th....