2019 (3) TMI 1851 - AAR - GST

Classification of goods - rate of tax - detachable foot mats used for motor vehicles, manufactured from PVC including TPU/Foam and sold in detachable condition as standalone products - fall under Chapter 39 of the GST Tariff or otherwise? - taxable at 12% or 18%? - HELD THAT - Heading 3904 of this chapter covers Polymers of Vinyl Chloride or of other Halogenated Olefins, in primary forms. As per the manufacturing process explained by the applicant, at the time of personal hearing as well as written submission, the car foot mats are made of PVC fibres, which are bounded to each other by way of liquid PVC coating. In this manner, the foot mats are made entirely of PVC and is clearly covered under the Sub-Heading 4904 10 which covers Poly Vinyl Chloride, not mixed with any other substances, taxable at 18%. But as per Clause (p) of Note 2 of Chapter 39, goods of Section XI (Textiles and textile articles) are excluded from this chapter. Section XI deals with textiles and textile articles and Chapter 57 (carpets and other textile floor covering) form part of this section. The article manufactured and supplied by the applicant is neither covered under Chapter 57 nor any other chapter of Section XI. As such, the exclusion provided in Clause (p) of Note 2 of Chapter 39 is not applicable in case of the product of the applicant. The PVC foot mats manufactured and supplied by the applicant fall under Chapter 39, Sub-Heading 4904 10, taxable at 18%.

Summary

Issues: Classification of detachable foot mats for motor vehicles under GST - Whether taxable at 12% or 18%?

Analysis:
1. Submission of the Applicant:
- The applicant sought clarification on the tax rate for detachable foot mats made from PVC for motor vehicles.
- Reference was made to Notification No. 1/2017 Central Tax (Rate) and State Tax (Rate) for applicable GST rates.
- Confusion arose regarding whether the product falls under Chapter Heading 5705 or Chapter Heading 39.

2. Discussion:
- Chapter 57 of the GST Tariff pertains to carpets and textile floor coverings, but the product in question does not involve cotton or handloom, ruling out classification under Sub-Heading 5705.
- The product, being entirely made of PVC, was determined to fall under Chapter 39, specifically Sub-Heading 4904 10, attracting an 18% tax rate.
- Exclusion under Clause (p) of Note 2 of Chapter 39, which pertains to textiles and textile articles, did not apply to the applicant's product.

3. Finding:
- The Authority concluded that the PVC foot mats should be classified under Chapter 39, Sub-Heading 4904 10, and taxed at 18% (CGST 9%, HGST 9%).

Therefore, the judgment clarified the classification of the detachable foot mats for motor vehicles under GST, determining the applicable tax rate to be 18%.