2018 (10) TMI 1048 - AAR - GST

Classification of goods - rate of tax - Agricultural Seedling Trays - Applicant claims that the goods are to be classifiable under Tariff heading 8201 Chapter 82 falls under Section XV of Customs Tariff which covers Base Metals an articles of Base Metals . Held that - A combined reading of section and chapter notes and description of goods covered under Tariff heading 8201 reveals that the goods covered under this Section XV have to be made of base metals or should be articles of base metals. Base metals as per Section Note above do not include plastics . Further, chapter 82 covering Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal should necessarily have a blade, working edge, working surface or other working part of base metal or others - The product in question is Seedling Trays made of fully of plastic i.e. polypropylene and hence it cannot be classified under chapter 82 or anywhere under Section XV and accordingly it cannot be classified under 8201 as Hand tools, such as spades, shovels, mattocks, picks, hoes, forks and rakes; axes, bill hooks and similar hewing tools; secateurs and pruners of any kind; scythes, sickles, hay knives, hedge shears, timber wedges and other tools of a kind used in agriculture, horticulture or forestry. The trays are sold to end users who are farmers and also small dealers who make the sale to farmers. These trays are also compatible to various rice transplantation machinery in terms of the dimension of the seedlings mat grown, spacing between each seedling etc. The trays help in growing and transporting the seedlings in an organized, labor-saving manner so that the seedling mats grown can be fed into the machines or planted as such by hand. However, the tray itself is not a part of any machine or used with any machine or electronically driven nor is it an accessory of any agricultural machinery. Rice planting machinery do not need these seedling trays to function and hence cannot be classified as parts or accessories of agricultural machinery. The subject goods are rightly classified under CTH 39269099 as articles of plastics not elsewhere specified. SL no 111 of Schedule III of Notification No 01/2017-C.T. (Rate) dated 28.06.2017 as amended and SL no 111 of Schedule III of of G.O. (Ms) No. 62 dated 29.06.2017 no. II (2)/CTR/532(d-4)/2017 covers Other articles of plastics and articles of other materials of headings 3901 to 3914 other than bangles of plastic, plastic beads and feeding bottles at 9% CGST and 9% SGST. Ruling - Agricultural Seedling Trays made of Plastic manufactured by the Applicant are classifiable under CTH 39269099 and the applicable tax rate is 9% CGST as per Sl. No. 111 of Schedule 111 of Notification No 01/2017-C.T. (Rate) dated 28.06.2017 as amended and is 9% SGST as per Sl No. 111 of Schedule III of G.O. (Ms) No. 62 dated 29.06.2017 No. II (2)/CTR/532(d-4)/2017 as amended.

Summary

Issues: Classification of Agricultural Seedling Trays under GST

Issue 1: Classification of Agricultural Seedling Trays
The case involved determining the classification of Agricultural Seedling Trays manufactured by the Applicant under the GST regime. The Applicant claimed that the trays should be classified under Tariff heading 8201 Chapter 82, which covers "Base Metals and articles of Base Metals." However, it was argued that the trays were made of plastic, specifically polypropylene, and did not fall under the definition of base metals as per the relevant section and chapter notes. The trays were described as being used for growing paddy seedlings and were not part of any machinery or used with any machine. The Applicant contended that the trays facilitated organized and labor-saving seedling growth and transportation. The Authority examined the product brochure and determined that the trays were rightly classified under CTH 39269099 as articles of plastics not elsewhere specified, attracting a tax rate of 9% CGST and 9% SGST.

Analysis:
The Authority analyzed the classification issue by considering the relevant provisions of the Customs Tariff Act, 1975, and the GST notifications. It was noted that Chapter 82 of the Customs Tariff Act pertained to "Base Metals and articles of Base Metals," which required the goods to be made of base metals or articles of base metals. The Section Note clarified that base metals did not include plastics, leading to the conclusion that the plastic trays could not be classified under Chapter 82. The product description and usage provided by the Applicant indicated that the trays were solely made of polypropylene and were used for agricultural purposes without being part of any machinery. This analysis led to the classification of the trays under CTH 39269099 as articles of plastics not elsewhere specified, in line with the HSN Explanatory Notes and relevant GST notifications.

Conclusion:
In conclusion, the Authority ruled that the Agricultural Seedling Trays made of plastic by the Applicant were correctly classified under CTH 39269099. The applicable tax rate for these trays was determined to be 9% CGST and 9% SGST, as per the specific entries in the GST notifications. The ruling provided clarity on the classification of the trays under the GST regime, ensuring compliance with the tax rates and categories applicable to such products.