2018 (10) TMI 1880 - AAR - GST

Classification of goods - Bike Locks used for motorized bicycle - classified and taxable under HS-8714 (Parts and Accessories of Bicycle and other cycle) - HELD THAT - The locks classified under Chapter 8301 are for the purpose of general use whereas the cycle locks are specific as they are exclusively used for bicycles and cannot be used for any product other than the bicycle. The accessories are well defined by the Supreme Court in Annapurna Carbon Industries Co. v. State of Andhra Pradesh 1976 (3) TMI 156 - SUPREME COURT wherein the Hon ble Court held that meaning of accessories is accepted as an object or device that is not essential in itself but that adds to the beauty or convenience or effectiveness of something else or is supplementary or secondary to something primary or greater importance. Also EXIM data with respect to goods under question makes it explicitly clear that HS Code 8714 is being used for cycle locks in import as well as export around the world. This supports the view that bicycle locks appropriately fall under HS-8714 - further it is found that cycle locks as parts and accessories of vehicles of Headings 8712 and 8713 falling under Chapter 8714 were exempted vide Entry No. 293 of exemption Notification No. 12/2012-Central Excise dated 17-3-2012 as amended. Thus bicycle locks were already being classified under Chapter 8714 in pre-GST era. The product cycle locks is classifiable under Chapter Heading 8714 of the Customs Tariff Act 1975 and Goods and Services Tax rate applicable to Chapter Heading 8714 is applicable to the said product.

Summary

Issues: Classification and taxability of 'Bike Locks' under HS-8714.

Analysis:
The applicant, an unregistered person, sought an advance ruling on the classification of 'Bike Locks' used for motorized bicycles under HS-8714. The matter was taken up by the Authority of Advance Ruling in Uttar Pradesh, comprising the Joint Commissioner, CGST and Central Excise, Lucknow, and Joint Commissioner (Law), Commercial Tax, Lucknow.

During the personal hearing, the applicant argued that 'cycle locks' are specifically made for bicycles only and cannot be used for any other purpose. They emphasized that the industry and general public identify 'cycle locks' as a distinct item. The applicant also provided a sample of a 'cycle lock' for reference.

Upon examination of the submissions and case laws cited, the Authority referred to the Customs Tariff Act, 1975 for classification under the GST Act. They noted that locks classified under Chapter 8301 are for general use, while cycle locks are exclusive to bicycles and cannot be used for any other product.

The Authority considered the definition of 'accessories' as per legal precedents, emphasizing that accessories add to the beauty, convenience, or effectiveness of something else. They also highlighted the importance of commercial sense in classifying goods based on how they are identified by those using or dealing with the product.

Furthermore, the Authority reviewed EXIM data, which indicated that HS Code 8714 is used for cycle locks in import and export globally. A report from the jurisdictional Deputy Commissioner supported classifying bicycle locks under HSN-8714, citing trade practices and exemption history under Chapter 8714.

Ultimately, the Authority ruled that 'cycle locks' are classifiable under Chapter Heading 8714 of the Customs Tariff Act, 1975, and the Goods and Services Tax rate applicable to Chapter Heading 8714 is applicable to the said product. The ruling was based on the specific nature of 'cycle locks' for bicycles and their historical classification under Chapter 8714.