TaxTMI 
TaxTMI 
2021 (8) TMI 538
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....Saddles International Automotive & Aviation Interiors Private Limited (hereinafter referred to as applicant), registered under the AP Goods & Services Tax Act, 2017. 3. Brief Facts of the case: 3.1 M/s. Saddles International Automotive & Aviation Interiors Private Limited are mainly engaged in the business of production and manufacture of car seat covers, and other allied accessories necessary for seats. They sell the manufactured seat covers to Car seat makers who affix the seat covers into the seats and thereafter the seat is affixed to the motor vehicle. The applicant approached the Authority for Advance Ruling on the classification issue of the specific product i.e., 'car seat' covers' which is manufactured by the applicant. 3.2 The applicant submitted that they had so far classified 'seat covers' under the HSN 8708 at Serial No.170 under Schedule IV of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 with the applicable rate of CGST+SGST (14%+14%) amounting to 28%. 3.3 The applicant approached this authority seeking clarification regarding the competing entry at Serial No.211 of Notification 1/2017-Central Tax (Rate) dt:28.06.2017 under HSN 9....
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....the rate of CGST with respect to Serial No.211 from 28% to 18%. Serial No.211 was omitted and a new Serial No.435A was inserted. The relevant portion of Notification No.41 reads as below: "(C) in Schedule III -18%, - (cxviii) after S.No.435 and the entries relating thereto, the following serial number and the entries shall be inserted namely:- 435A 9401 (other than 9401 10 00) Seats (other than those of heading 9402), whether or not convertible into beds, and parts thereof (other than seats of a kind used for aircraft); 5.3. The applicant submits that 'seat covers' are rightly classifiable under Serial No. 435A (HSN 9401) as the 'seat covers' is an essential and integral 'part of 'seats' without which 'seat' can be rendered dysfunctional; that it is imperative to first understand the roles and the functions which are performed by 'seat: covers'. The key functions are summarized as below: * Seat covers help the driver and co-passenger to get into the most comfortable seating inside the car as per their convenience, which does not absorb heat; * Car seat covers are required for the protection of seats. * Covers do not ab....
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....estion. The 'seat covers' also help to assemble and complete the structure of 'seats'. Even though at first glance, 'seat covers' per se might not seem to be 'essential' to the completion of 'seats', but the functions it performs are indispensable for the 'seats'. 'Seat covers' allow the 'seat' to be complete in shape and perform. 5.9 Further, it is also important to analyse the meaning of the word 'accessory' to determine the appropriate classification since chapter 87 takes within its fold 'part' and 'accessory' of motor vehicle. The Hon'ble Karnataka High Court in the case of Supreme Motors v State of Karnataka [1987 (27) ELT 409 (Kar.)] while analysing the meaning of the word 'accessory' observed that: "accessory is the supplementary or secondary to something of greater or primary importance' 'additional', 'any of several mechanical devices that assist in operating or controlling the tone resources of an organ'. 'Accessories' are not necessarily confined to particular machines for which they may serve as aids. The same item. may be an accessory of more than one....
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.... it was also used by the consumers as soap for washing the clothes. The true meaning of this term in the popular parlance would be flowing from its predominant use. We, therefore, hold that in interpreting the term "soap" the real test would be functional test or the test of predominant user, and there is no reason to exclude "detergent soap" from the meaning of the term soap". 5.13. The applicant, in light of the aforementioned precedents, submits that 'seat covers' should be judged on the basis of the functions they perform. 'Seat covers' enable the seats to give a comfortable position to the drivers and the passengers. Further, they are equipped with cushion and give stability to the 'seats'. Hence, the applicant submits that 'seats' per se would be incomplete without the 'seat covers' in question in as much as it forms an integral part of the 'seats' and hence, merit classification under HSN 9401. It is stated that 'seats' are not to be judged only on the basis of their affixing to a motor vehicle. It has to be seen as a whole and a 'seat' would be complete only when the products in question are affixed to a '....
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....d render chapter 94 otiose and redundant. As explained herein above. Explanatory notes to chapter 94 covers various aspects of 'seat' and 'seat covers' in question and by virtue of their function form an essential 'part' of the 'seats'. On the other hand, explanatory Notes of Chapter 87 covers 'parts' of motor vehicles and there is no specific entry per se which covers any part of the 'seats' under chapter 87. Hence, as a corollary, the same ought to be appropriately classified under chapter 94 since a specific entry prevails over a general entry. 5.18. The 'common parlance test' is generally the most applied test, judicially, to determine the appropriate classification of any product. The applicability of the common parlance test has been upheld and resorted to in various cases by the Supreme Court like Indo International Industries v Commissioner of Sales Tax [1981 (8) ELT 325 (SC)] and Commissioner of Sales Tax vs Macneill & Barry Ltd [1986 (23) ELT 5 (SC)]. Applying common parlance test to the present factual scenario, it is to be analysed as to how the products in question are treated in the market. It can be said that t....
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....ananda K. attended and reiterated the submissions already made. 7. Discussion and Findings: We have examined the issues raised in the application. The taxability of the goods supplied as governed under the provisions of respective GST Acts are examined to decide the question involved in the present Ruling. The applicant approached this authority on the issue of classification wherein the product in question i.e., 'seat covers' would fall under HSN 9401 or not. It is followed by the query whether SI.No.435A of Schedule IV of the Notification No 1/2017-Central Tax (Rate) dt: 28.06.2017 applicable to 'Car Seat Covers' or not. The applicant being the manufacturer of seat covers and other allied accessories, sell the manufactured 'seat covers' to car seat makers who in turn affix the seat covers to the seats and there after the seat is fixed to the motor vehicle. If we look into the said entry as claimed by the applicant, i.e., "HSN 9401 Seats (other than those of heading 9402), whether or not convertible into beds, and parts thereof," it is mentioned as 'seats and parts thereof'. The term 'part' carries much significance in this case. The mean....