2021 (7) TMI 1360 - AAR - GST

Classification of GST - processing of raw material by cutting/sawing into different sizes starting from 30CM X 30CM to 60CM X 90CM based on requirements of the customers and finally the product is used mainly for flooring in foreign countries - classified under the HSN code 25140000 or under the HSN code 6803000? - HELD THAT - Basing on the applicant's description of the product and processes that it under goes, it is evident that the goods under dispute are slate stone that is trimmed and cut into sizes as per the requirement of the clients. After going through the photographic evidences submitted by the applicant, it is observed that there is no workmanship involved at any stage of the entire process of the making of the final product. The activity under taken by the applicant is just cutting/ sawing the slate stone into different sizes. Apart from cutting of the stone into standard pre determined sizes the applicant does not take up any other special activity. Taking note of the factual position, it has been considered that the product under goes only 'processing' and retains its original character. At any point of time in the entire process it had neither under gone any 'manufacturing' activity involving workmanship nor had been transformed into a different commodity. Thus, the said product can be classified under SI.No. 122 of Chapter / Heading / Sub-heading / Tariff item of 2514 Slate, whether or not roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape vide notification no 1/2017-Central Tax (Rate) dt 28.06.2017.

Summary

Issues involved:
Classification of a product under HSN codes 25140000 or 68030000.

Analysis:
The Advance Ruling Authority of Andhra Pradesh addressed the issue of classifying a product under specific HSN codes. The applicant, engaged in processing raw materials for flooring purposes, sought clarification on the classification of their product. The authority noted that the CGST Act and APGST Act have similar provisions unless specifically mentioned. The applicant's final product, created through sawing raw material into various sizes, was the subject of classification under HSN codes 25140000 and 68030000. The authority considered the applicant's interpretation that the product falls under the category of slate, cut into blocks or slabs, based on customer requirements.

Upon examination, the authority found that the product in question was slate stone cut into sizes without involving additional workmanship. The product retained its original character throughout the process, indicating processing rather than manufacturing. The authority referred to the relevant tariff items and notifications to determine the classification. It was concluded that the product should be classified under SI.No. 122 of Chapter 2514, attracting a tax rate of 5%. The ruling clarified that the product falls under the category of slate, as per the specified HSN code, based on the nature of processing and characteristics of the final product.

In summary, the judgment provided a detailed analysis of the classification issue, considering the nature of the product, processing involved, and relevant tariff provisions. By examining the facts and legal framework, the authority determined the appropriate classification under the HSN code, providing clarity on the applicable tax rate and regulatory implications.