TaxTMI 
TaxTMI 
2024 (2) TMI 1053
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....t respectively) by M/s. 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 (hereinafter referred to as "applicant") is engaged in manufacturing and supplies original car seat covers made from fabric that are designed to fit permanently over the raw foam seat installed in the vehicle, to original equipment manufacturers ('OEMs) as well as to seat manufactures who further sell it to OEMs and is sold with the vehicle. Applicant is having GST Registration number 37ABBCS7194NlZK. 3.2 The Applicant has been engaged by various OEMs for supply of primary original seat covers manufactured from fabric or Polyutherane (PU) which are designed to permanently fit over the raw foam seat installed in the car and becomes an integral part of car seats. The Applicant also supplies these primary seat covers to the seat manufacturers, on contract basis, who further supply it to OEMs for permanent affixation over the raw foam seat. 3.3 The manufacturing process of such seat cove....
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....vide SI. No. 435A under Schedule III of Notification No. 1/2017-Central tax (rate) dt. 28.06.2017 as amended by Notification no. 41/2017-Central Tax (rate) dt. 14.11.2017 On Verification of basic information of the applicant, it is observed that the applicant is under Central jurisdiction i.e, Hindupur-2 Range, Anantapur Division. Accordingly, the application has been forwarded to the jurisdictional officer and a copy marked to the Central Tax authorities to offer their remarks as per Sec. 98(1) of CGST /APGST Act 2017. In response, remarks are received from the Central jurisdictional officer concerned stating that no proceedings lying pending with the issue, for which the advance ruling sought by the applicant. 5. Applicant's Interpretation of Law: 5.1 The applicant submits that pertinent to mention here that earlier, a ruling was sought by applicant from the Hon'ble Authority for Advance Ruling, Andhra Pradesh, reported as In Re: Saddles International Automotive & Aviation interiors Pvt. Ltd., 2021 (54) G.S.T.L. 464 (A.A.R- GST- A.P.) where they sold the manufactured seat covers to car seat makers who affix the seat covers into the seat covers to car seat makers who....
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.... seats installed in the vehicle sold to the customer. 5.5 In the aforesaid facts of the case, the Applicant submits that the issue on which the present advance ruling is sought is whether the supply of original seat covers manufactured by Applicant for the OEMs which are designed to permanently fit over the raw foam seat installed in the vehicle falls under HSN 9401 as Seats ((other than those of hearing 9402) whether or not convertible into beds., and parts thereof [other than seats of a kind used for aircraft]' and is liable to GST 18% vide Sl. No. 435A under Schedule III of Notification No. 1/2017 as amended. That the question relating to classification of any goods and/ or services is eligible to be posed for advance ruling before the Advance Ruling Authority in terms of Section 97(2)(a) of the CGST Act. Further, the question raised in the present Applicant is in respect of different product and In the facts which are different from the earlier Ruling. Hence, the present advance ruling application is maintainable before the Hon'ble Authority of Advance Ruling, Andhra Pradesh. APPLICANT'S UNDERSTANDING : 5.6 Applicant's Interpretation that the original seat co....
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....eading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (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. 5.9 Thus, in terms of Explanation wherever any tariff item, sub-heading, heading or Chapter is mentioned In the Notification No. 1/2017 as amended, the same has to be given the meaning as given to it under Customs Tariff. Further, the Notification No. 1/2017 as amended has to be interpreted as per the General Rules of Interpretation (hereinafter referred to as 'Interpretative Rules') given in First Schedule to Customs Tariff, including the Section Notes, Chapter Notes and the General Explanatory Notes of the First Schedule of Customs Tariff. The relevant entry pertaining to HSN 9401 of Notification No. 1/2017 as amended; is reproduced below for ease of reference: SI.No Relevant Schedule Chapter Heading/ Sub-Heading Description of Goods Rate of Tax 435A Schedule-III 9401 (other than 9401 10 0....
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.... wall) and unit furniture; (b) seats and beds. 3. (A) In headings 9401 to 9403 references to parts of goods do not include references to sheets or slabs (whether or not cut to shape but not combined with other parts) of glass (including mirrors), marble or other stone or of any other material referred to in Chapter 68 or 69. (B) Goods described in heading 9404, presented separately, are not to be classified in heading 9401, 9402 or 9403 as parts of goods." In view of the above, it can be said that a seat will be classifiable under CTH 9401 only if satisfies the condition specified under Chapter Noto 2 of Chapter 94 i.e., the seat should be designed for placing on the floor or the ground. It may be noted that CTH 9401 inter-alia covers seats, CTH 9402 inter-alia covers medical, surgical, dental or veterinary furniture etc. and CTH 9403 covers other furniture. The aforesaid Chapter Note is applicable to CTH 9401 to CTH 9403. Though the term "seats" has not been defined in the HSN Explanatory Notes, the term "furniture" is defined in the HSN Explanatory Notes as under: "GENERAL This Chapter covers, subject to the exclusions listed in the Explanatory Notes to this Chapter: ....
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....ended the scope of 'parts' to include seat covers for permanent attachment to a seat. The relevant portion of the excerpt is reproduced below: "PARTS The heading also covers identifiable parts of chairs or other seats, such as backs, bottoms and arm-rests (whether or not upholstered with straw or cane, stuffed or sprung), seat or backrest covers for permanent attachment to a seat, and spiral springs assembled for seat upholstery." It is well settled that the explanatory notes have persuasive value and in the event of disputes, various Courts have upheld seeking recourse to the explanatory notes while determining classification of products. Reliance in this regard is placed on the decision of Hon'ble Supreme Court in L.M.L. Limited vs. Commissioner of Customs [2010 (258) ELT 321 (SC)], in which it was held that in order to resolve a dispute on tariff classification, internationally accepted nomenclature emerging from HSN explanatory notes, is a safe guide for classification. The above principle was also recognised in the following rulings of the Apex Court:- * CCE v. Wood Craft Products Ltd. [1995 (77) ELT 23 (SC)] * Collector of Central Excise v. Bakelite Hyl....
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....s not easily disassembled for maintenance purposes. 3. The Hon'ble Supreme Court in CCE v. Insulation Electrical (P) Ltd., 2009 (224) ELT 512 (SC) analysed the term "part" and held that "part" is an essential component of the whole without which the whole cannot function 4. Further, in CC v. Hydranautlcs Membrane India Ltd., 1994 (71) ELT 711 (Tri.-Del), the Hon'ble Tribunal construed the meaning of "part" as: "part as something essentially belonging to a larger whole, an integral portion". On a cumulative analysis of the above judicial precedents, the point which crystallizes is that "part" per so means a portion of equipment or machinery which is essentially linked to the functioning of that particular equipment or machinery In other words, "part" is on integral element of machinery or equipment without which the specific product cannot function The "part" in question should be so inextricably be linked to the product that the same cannot be brought into any form without the "part' in question The Applicant, as slated above, is engaged in manufacture of the primary layer of textile fabric of the car seat which is permanently fitted as a first or original cover ove....
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....he car floor, would also qualify as an integral part of such car seat and classifiable under CTH 9401. 6. Further, in the case of Shiroki Auto Components India Pvt. Ltd., 2020 (374) E.L.T. 433 (Tri. - Ahmd.), the Hon'ble Tribunal held that the imported child parts were used by assessee in the manufacture of another parts i.e. Round Recliner which is an Integral part of motor vehicle seats and thus would fall under tariff item 9401 90 00 of Customs Tariff Act, as part of seat of a motor vehicle, and not as parts of motor vehicle under Heading 8708 as the goods Imported were not directly used in manufacture of motor vehicle parts The relevant portion of the decision is reproduced below: 5.... The limited issue to be decided is whether the child parts imported by the appellant from Japan is classifiable under CTH 94019000 as parts of vehicle seats as declared by the appellant or under CTH 87089900 as parts and accessories of motor vehicles of heading 8701 to 8705 as assessed by the Customs. .......... 8....It is undisputed that child parts used for making parts which are subsequently used in the complete assembly of vehicle seat and the vehicle seat has been classified unde....
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.... Recliner Assembly is fitted inside the seat at the time of assembling of complete seat. Therefore, the child parts are integral parts of seat and not like accessories which is fitted in the motor vehicle. Hence, the facts of the case in Insulation Electricals Pvt. Limited (supra) and in the present case are entirely different. 7. The aforesaid decision was affirmed by the Hon'ble Supreme Court in Commissioner vs. Shiroki Auto Components India Pvt. Ltd. - 2021 (378) E.L.T. A145 (S.C.), wherein the appeal filed by department (Civil Appeal No. 1623 of 2021) was dismissed and classification of child parts used in seat of vehicles under Tariff item 9401 90 00 instead of tariff item 8708 99 00 was upheld. 8. In view of the above, it is humbly submitted that the product in question in the instant case is the primary/original layer(cover) of fabric which is permanently attached over the raw foam/cushion and becomes an inseparable and integral part of the car seat. The seat assembly is thereafter mounted/installed on the floor of the car. Thus, without such layer of fabric or cover, the car seat will be incomplete and be in a functional/marketable state or condition to a prospective ....
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.... for ease of reference: "DEFINITIONS Permanent car seat covers: These are covers for the permanent attachment to the backs, bottoms and frames of seats of automobiles and other motor vehicles. Permanent car seat covers may be equipped with elements and cutouts for fixing and adapting them to seats and their frames. They can be made of different materials, and can consist of more than one piece for assembly to constitute a complete seat cover. After the seats are installed in the vehicle, the covers cannot generally be removed without first removing the seat from the vehicle. For purposes of this administrative policy, it is understood that these covers are presented separately from the seats, and that "permanent attachment" means at least one of the following:- "i. the covers are physically incorporated into the seats, for instance, by being attached by an adhesive, stitching or the like; ii. the covers are so affixed to the seats that they become practically inseparable, for instance by being attached by staples, bolts, screws or the like that would, at a minimum, require tools to remove the covers; or, iii. the covers are so attached to seats that removal of the covers....
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....s render them an intrinsic and indispensable component of the comprehensive motor vehicle structure. Absent the presence of these highly specialized seating units, the motor vehicle in question would be rendered non-operational and ineligible for lawful sale. In summation, it is paramount to recognize that Permanent Seats transcend mere functional contributions to the overall operation of the motor vehicle; they assume a pivotal role in guaranteeing that each seat is purposefully tailored for the precise vehicle with which it is affiliated. This meticulous alignment serves as a safeguard, preserving the structural Integrity and performance parameters of the motor vehicle In Its entirety. It Is pertinent to note that the Issue had been already covered In the Advance Ruling filed by the same applicant before the same authority subject however minor modification that the earlier ruling was with regard to seat covers where as the present one Is to the sheet shell which will form an Integral part of the car itself. In the earlier ruling itself it has been held that the seat covers shall be treated as falling under HSN 8708 under schedule IV as parts and accessories of motor vehicles ....