2018 (12) TMI 1274 - AAAR - GST

Classification of goods - Polished / Processed limestone slabs - whether classifiable under heading 6802 of the GST Tariff or otherwise? - Held that - The processes of polishing , tumbling and calibration ; or the state of goods as polished / tumbled / calibrated are not covered by Note 1 to Chapter 25 of the Customs Tariff Act, 1975 - it is evident that the HSN Explanatory Notes also reflect the restriction as to only certain specified processes being allowed on the products for a classification under Chapter 25 - as per HSN notes also, slabs which have been polished , tumbled and/or calibrated WOUld be covered by exclusions detailed in both General Note to Chapter 25, as well as the Heading Note to Heading 2515. In sum, the goods in question, limestone slabs, have admittedly been subjected to processes of polishing (including tumbling) and calibration, in addition to being cut to rectangular/square shapes. The said processes, except that of cutting, are not among those specified either in the Heading description or the Chapter Note 1, for an eligible classification under Chapter 25. Hence, classification of the subject goods under Chapter 25 i.e, specific Headings 2515 /2516 remains precluded by virtue of description in said Headings as also Chapter Note 1 Note 1 to Chapter 25 makes fulfilment of the specified criteria in the Heading description or the Note itself. Neither of the two categories of limestone slabs viz., Polished limestone slabs or Processed Limestone slabs (as referred at para 15.2 supra), can be classified under Chapter 25 in general and under Headings 2515/2516, in particular. Correctness of classification of the goods under Heading 6802, as held by the lower authority - Held that - The meaning/scope of the word worked is not separately and specifically delineated in the HSN Notes also. However, the said word is used at various places denoting certain illustrative and not exhaustive list of processes. The Heading 6802, apart from articles, also specifically covers stone in the description itself i.e. worked monumental or building stone and articles thereof . The same, coupled with the HSN Explanatory Notes, as detailed and analysed above, show that such stone (limestone slabs, in the instant context) which have been worked beyond the processes mentioned in Chapter 25 on the one hand and polished as specified under Chapter 68 in particular reference to slabs (blocks etc.,) has to be classified under Heading 6802. There is no restrictive connotation that such working has to be done only by stone-mason or sculptor. The appellant has not made out a case against the decision in impugned Advance Ruling in so far as it has been ruled that Polished / Processed Limestone slabs are. correctly classifiable under heading 6802 of the GST Tariff (sic) . The classification under Chapter Heading 6802 of the First Schedule to the Customs Tariff Act, 1975 is the appropriate classification of the said goods (both polished only as well as processed , as referred at para 15.2 supra), in view of the relevant Heading-description read with the Chapter Notes and HSN Explanatory Notes. Ruling - The commodity Polished/Processed limestone slabs falls under Chapter 68 of the First Schedule to the Customs Tariff Act, 1975. The commodity comes under Chapter Heading 6802 (Tariff Item No. 6802 92 00 - Other calcareous stone ) of the Schedule. The goods Polished/ Processed Limestone slabs do not fall under HSN Code - Chapter Heading 2530 of the Schedule. The goods Polished / processed Limestone slabs do not fall under HSN Codes i.e, Chapter headings 2515 / 2516 / 2521 of the Schedule. The goods would not fall under Chapter 25 of the Schedule.

Summary

Issues Involved:
1. Whether the appeal was filed within the prescribed time.
2. Classification of "Polished/Processed limestone slabs" under the correct HSN Code.
3. Consideration of whether the goods fall under Chapter 25 or Chapter 68 of the GST Tariff.
4. Applicability of the Customs Tariff Act and HSN Explanatory Notes for classification.
5. Examination of the processes involved in the production of the goods.
6. Determination of the correct GST rate applicable.

Detailed Analysis:

I. Whether the Appeal was Filed in Time:
The appeal was filed within the prescribed time. The signed copy of the order dated 25.03.2018 was received by the appellant on 17.04.2018, and the appeal was filed on 07.05.2018, within the 30-day period as required under Section 100(2) of the Act.

II. Classification of "Polished/Processed Limestone Slabs":
The appellant sought classification under Chapter 25, specifically under Headings 2515, 2516, 2521, or 2530, arguing that the goods should be classified as mineral products not elsewhere specified or included, or as goods not mentioned elsewhere. The lower authority classified the goods under Heading 6802 of Chapter 68.

III. Consideration of Whether the Goods Fall Under Chapter 25 or Chapter 68:
1. Chapter 25: The goods in question are limestone slabs that have been subjected to processes such as polishing, tumbling, and calibration. Chapter 25 covers mineral products in the crude state or subjected to processes like washing, crushing, grinding, etc., but not products that have been subjected to further processing beyond that mentioned in each heading.
- Headings 2515 and 2516: These headings cover stones that are roughly trimmed or merely cut into blocks or slabs of rectangular shape. The processes of polishing, tumbling, and calibration are not specified in these headings.
- Note 1 to Chapter 25: The processes of polishing and tumbling are not included in the specified processes allowed under this note. The goods, therefore, do not qualify under Chapter 25.

2. Chapter 68: Heading 6802 covers worked monumental or building stone and articles thereof, including stones that have been polished, chamfered, etc.
- The goods have been subjected to processes beyond those specified in Chapter 25, including polishing and calibration, making them classifiable under Heading 6802.

IV. Applicability of the Customs Tariff Act and HSN Explanatory Notes for Classification:
The GST-rate notification specifically provides for the applicability of the Customs Tariff and related Rules for Interpretation/Explanatory Notes. The HSN Explanatory Notes are relevant and a safe guide for deciding issues of classification, as established by various judgments, including those of the Hon'ble Supreme Court.

V. Examination of the Processes Involved in the Production of the Goods:
1. Polishing: The process involves smoothening the surface of the slabs using a simple table polish machine.
2. Tumbling: This involves further smoothing and polishing of the surface.
3. Calibration: This process ensures that the slabs have a uniform thickness by cutting off uneven portions.

These processes are beyond the crude state or the simple processes allowed under Chapter 25, thus making the goods classifiable under Chapter 68.

VI. Determination of the Correct GST Rate Applicable:
Based on the classification under Heading 6802, the applicable GST rate would be as per the relevant entries in the Central Tax (Rate) Notifications.

Conclusion:
The subject goods "Polished/Processed limestone slabs" are correctly classifiable under Chapter 68, Heading 6802 of the GST Tariff. This classification is based on the detailed analysis of the processes involved and the applicable statutory provisions, including the Customs Tariff Act and HSN Explanatory Notes. The appeal is disposed of accordingly, confirming the classification under Heading 6802.