TaxTMI 
TaxTMI 
2024 (2) TMI 1053
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....nafter referred to CGST Act and APGST Act 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. ....
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....han seats of kind used for aircraft" and is liable to GST @ 18 % 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 ca....
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.... original seat covers nor sold as after market product but is an integral part of the car 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. ....
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....112017 as amended: (I) 'Tariff item", "sub-heading" "heading" and 'Chapter shall mean respectively a tariff item, sub-heading, 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 re....
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....red to in headings 9401 to 9403 are to be classified in those headings only if they are designed for placing on the floor or ground. The following are, however, to be classified in the above-mentioned headings even if they are designed to be hung, to be fixed to the wall or to stand one on the other: (a) Cupboards, bookcases, other shelved furniture (including single shelves presented with supports for fixing them to the 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 940....
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.... the question of classification of parts of the furniture of Chapter 94, the HSN explanatory notes state as under: "PARTS This Chapter only covers parts, whether or not in the rough, of the goods of headings 94.01 to 94.03 and 94.05, when identifiable by their shape or other specific features as parts designed solely or principally for an article of those headings. They are classified in this Chapter when not more specifically covered elsewhere." Further, the HSN Explanatory Notes under heading 9401 (as amended in 2022) extended 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 c....
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.... an essential portion or integral element. 1. Thus, perusal of the above definitions, categorically express that the term "part" would refer to a thing or item which essentially belongs to a distinct larger whole, which is necessary for the constitution of the whole and without which the whole cannot be constituted. 2. The Supreme Court, in the case of Pragati Silicon Pvt. Ltd. vs. CCE, Delhi [2007 (211) ELT 534 (SC)], has held that for an item to qualify as a "part," it must be an essential component of a machine or a larger assembly, without which the intended use of the finished product cannot be achieved. Such a "part" is not normally used independently and is 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....
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....hapter Note 2 of Chapter 94, it was held that the term 'floor or ground' would also include floor of the car or vehicle. Seats made for vehicles are placed on the floor of the car or vehicle. Therefore, Chapter Note 2 would not exclude seats of vehicles from Chapter 94. 5. Significantly, it was also held by the Hon'ble Supreme Court in Matador Foam case(supra) that foam used as cushion which is affixed to frame of the automobile seat during manufacture of seat assembly would fall under CTH 9401 as a part of the automobile seat. Therefore, in the present matter, the original car seat cover that is attached to the car seat assembly as a primary layer of fabric before mounting of the car seat on the 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 ....
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....n the motor vehicle but were used in the manufacture of another parts i.e. Round Recliner which is an integral part of motor vehicle seats. Therefore, Apex Court judgment is applicable in the facts of the present case. 10......As regards the judgment in the case of Insulation Electricals Pvt. Limited (supra) relied upon by the Revenue, we find that in the said judgment motor vehicle parts and accessories involved was rail assembly front seat adjuster/assembly slider seat and rear back seat lock assembly, all those Homs are not part of seal but accessories which is fitted in the motor vehicle. Whereas, as per facts in the present case child parts are used to make Round Recliner which is used for manufacturing of Recliner Assembly and the 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 Compone....
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...., stuffed or sprung), seat or backrest covers for permanent attachment to a seat, and spiral springs assembled for seat upholstery." The unstuffed seat shell is a dedicated part of an incomplete child seat and is not more specifically provided for elsewhere in the tariff schedule. The applicable subheading for the subject merchandise will be 9401.90.5021, HTSUS, which provides for "Seats (other than those of heading 9402), whether or not convertible into beds, and parts thereof: Parts: Other: Other: Other of textile material, cut to shape." The rate of duty will be free." 12. Further, the Canada Border Services Agency (CBSA) issued Memorandum D10-15-31 providing guidelines on tariff classification of permanent car seat covers under the Customs Tariff. The same is extracted 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 m....
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....n ensues: Permanent Seats, herein referred to as such, are explicitly designated for exclusive utilization within a specified motor vehicle, thereby serving a specialized function meticulously aligned with the precise design and manufacturing specifications of said particular vehicle. The nomenclature "permanent seat cover" is employed to underscore the highly specialized nature of these seating arrangements, exemplifying a bespoke creation characterized by an assiduous focus on detail, ensuring seamless integration with the intended motor vehicle. It is imperative to underscore and reiterate that Permanent Seats are expressly proscribed from being employed or promoted for general purposes beyond the specific application intended for the correlated motor vehicle. The distinctive design and the bespoke manufacturing process undertaken for these seats 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 transce....