2018 (7) TMI 1332 - AAR - GST

Classification of goods - Brake Pad and Auto Parts - whether the goods to fall under ITC HSN 87083000 attracting 28% GST or ITC HSN 6813 attracting 18% GST? - Held that - The Brake Pads manufactured by the applicant do not qualify under the ITC HSN 6813 since the heading clearly excludes the mounted frictional material and the product of the applicant is a result of frictional material mounted on metal sheets - the HSN heading 8708 classifies parts and accessories of motor vehicle of headings 8701 to 8705 which are in respect of Tractors (other than tractors of the type used on railway platforms), Motor vehicles for transport of 10 over more person, Motor cars and other Motor vehicles principally designed for the transport of person (other than those of headings 8702), including station wagons and racing cars, Motor Vehicles for transport of goods and special purpose motor vehicles respectively. Vide N/N. 1/2017-Central Tax (Rate), dated 28.06.2017, as amended from time to time and the corresponding State tax N/N. 35/ST-2, dated 30.06.2017 as amended from time to time, the parts and accessories of motor vehicles of heading 8701 to 8705 (other than specified parts of tractors) as classifiable under HSN 8708 attract 14% CGST & 14% HGST totaling 28% GST. Ruling - The Brake Pads, i.e., friction material mounted on metal plate, manufactured by the applicant for motor vehicles of headings 8701 to 8705 (other than specified parts of tractors) are correctly classifiable under HSN 87083000 of the Custom Tariff Act. In view of the N/N. 1/2017-Central Tax (Rate), dated 28.06.2017, as amended from time to time and the corresponding State tax N/N. 35/ST-2, dated 30.06.2017 as amended from time to time, the brake pads for use as brake assembly and its parts thereof for tractors attract 18% GST (9% CGST 9% HGST) and the brake pads manufactured as parts and accessories of motor vehicles of heading 8701 to 8705 (other than tractors) attract 28% CST (14% CGST 14% HGST).

Summary

Issues involved:
Classification of Brake Pads under GST - Whether under ITC HSN 87083000 attracting 28% GST or ITC HSN 6813 attracting 18% GST.

Detailed Analysis:

1. Examination of Applicant's Request:
The applicant sought an advance ruling for the correct classification of their product, Brake Pad and Auto Parts, under either ITC HSN 87083000 attracting 28% GST or ITC HSN 6813 attracting 18% GST. The Jurisdictional Officer's report highlighted that the product, Brake Pads, manufactured by mounting Friction material on metal sheets, falls under ITC HSN 8708 and is taxable at 28% GST.

2. Proceedings of Personal Hearing:
During the personal hearing, it was revealed that the applicant is a 100% EOU exporting Brake Pads for motor vehicles. The office of Commissioner of Customs allowed correction of HSN from 6803 to 8708-3000 in shipping bills. The decision was reserved after thorough deliberations.

3. Authority's Findings:
The Authority reproduced relevant headings under ITC HS, clarifying that Brake Pads do not qualify under ITC HSN 6813 as it excludes mounted friction material. The product is correctly classified under ITC HSN 87083000. Additionally, parts and accessories of motor vehicles under HSN 8708 attract 28% GST as per notifications.

4. Advance Ruling:
The Authority ruled that Brake Pads, friction material mounted on metal plates, for motor vehicles of headings 8701 to 8705, are correctly classifiable under HSN 87083000. The GST rate applicable is 28% for parts and accessories of motor vehicles (excluding tractors).

This judgment provides a detailed analysis of the classification of Brake Pads under GST, emphasizing the correct classification under ITC HSN 87083000 and the corresponding GST rate of 28% for parts and accessories of motor vehicles. The decision was made after considering the applicant's manufacturing process, relevant HS codes, and GST notifications.