2019 (7) TMI 1734 - AAR - GST

Classification of goods - seat adjuster - to be classified under Chapter 8708 at Serial No. 170 of Notification No. 1/2017- Central Tax (Rate) dated 28.06.2017 or under Chapter 9401 at Serial No. 435A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 41/2017- Central Tax (Rate) dated 14.11.2017? - HELD THAT - Seat adjuster helps the driver and co-passenger to get into the most comfortable leg position inside the car by using it to move the seat forward and backward as per their convenience to maintain safe posture and position while driving. It helps in adjusting the position of the seat. Additionally, seat adjuster contains necessary safety features to protect the occupants in case of a collusion/accident. These are the features of the product Seat adjuster and it does not seem to be a part of a seat - The Applicant themselves changed the classification of seat adjuster from HSN 9401 to HSN 8708 with effect from April 1, 2019 and paid the applicable GST from November 2017. It seems that the applicant took a right step as a measure of caution and to avoid interest liability. The seat adjuster would be accessories to the motor vehicle and would merit classification under chapter heading 8708, because they are fitted in the motor car for adjustment of the seats for the convenience and comfort of the passangers. Chapter heading 8708 covers parts and accessories of the motor vehicles of headings 8701 to 8705.

Summary

Issues Involved:
Classification of 'seat adjuster' under GST - Chapter 8708 or Chapter 9401.

Detailed Analysis:

Issue 1 - Classification of 'seat adjuster':
The applicant, a manufacturer of automotive components, sought clarification on the classification of the 'seat adjuster' under GST. The applicant believed the 'seat adjuster' should be classified under Chapter 9401, while the tax authorities suggested classification under Chapter 8708.

Discussion:
The applicant argued that the 'seat adjuster' is crucial for adjusting seat positions, ensuring safety during collisions, and enhancing overall comfort. They had initially classified it under HSN 9401 pre-GST and continued post-GST until a potential conflicting classification was identified under HSN 8708. The applicant, to avoid interest liability, changed the classification to HSN 8708 and paid the applicable GST under protest.

Findings:
During the hearing, it was noted that the 'seat adjuster' primarily facilitated seat adjustments and safety features, not constituting an essential part of the seat itself. Reference was made to a Supreme Court judgment where similar components were classified as accessories of motor vehicles under Chapter 8708, not as parts of seats under Chapter 9401. The Court emphasized that Chapter 8708 covers all accessories of motor vehicles, including items like the 'seat adjuster' that enhance convenience and comfort but are not integral parts of the seat.

Ruling:
Based on the discussion and findings, the Authority ruled that the 'seat adjuster' should be classified under Chapter 8708, Schedule IV of Notification No. 1/2017, and taxed at 14% CGST and 14% HGST. The decision aligned with the interpretation that such components are accessories to motor vehicles, falling under the broader scope of Chapter 8708 rather than being considered integral parts of seats under Chapter 9401.

Conclusion:
The judgment clarified the appropriate classification of the 'seat adjuster' under GST, emphasizing its role as an accessory to motor vehicles under Chapter 8708. The ruling provided clarity on the tax treatment for such components, ensuring consistency and compliance with the GST regulations.