2018 (12) TMI 1276 - AAAR - GST

Classification of goods - rate of tax - Agricultural Soil testing Minilab and its Reagent Refills - whether classifiable under Tariff heading 9027 of the GST Tariff or otherwise? - N/N. 2/2017 of Section 6, sub-Section (1) of the Act. Classification of the Minilab - Held that - By the nature, functions and usage etc., the Mridaparikshak instrument / Minilab falls within the specific phrase instruments for physical or chemical analysis used in Heading 9027 - this classification would be applicable under the primary criterion according to the terms of Headings vide Rule I of the Interpretative Rules. Heading 9027 in the Tariff mentions the names of only some such instruments for physical / chemical analysis illustratively, as referred earlier. As such, the Adv. Ruling Authority was right in referring to the HSN Notes and in arriving at the conclusion basing on the specific mention therein of pH meter, Wet Chemical Analyser; which are used for the similar functions of measuring / determining the pH factor, inorganic / organic components etc., as done by the impugned Mridaparikshak / Minilab - Inasmuch as the Mridaparikshak / Minilab is found to be classifiable under Heading 9027, the plea of appellants for classifying them under Heading 8201 remains further negated by Note I (h) to Section XV which precludes instruments/apparatus of Section XVIII (under which Chapter 90 falls) from being classified under Section XV, which includes Chapter 82. Thus, Mridaparikshak-MiniIab is rightly classifiable under Heading 9027 of the Tariff as held by the Adv. Ruling Authority and not under Heading 8201 as claimed by the appellant. Classification of Refill Reagents - Held that - Refill Reagents are not classifiable under the said Heading since these do not qualify to be considered as Hand tools by any means. Appellants have also not put forth any separate grounds/contentions in support of their claim for classifying the Refill reagents under Heading 8201 - The appellants have, either in the grounds of appeal or further submissions, not disputed either the finding of the lower Authority that the Refill Reagents are solely or principally for use with the Mridaparikshak Minilab falling under Heading 9027 nor as to the application of Note 2 (b) of Chapter 90, for determining the classification - thus, the Adv. Ruling Authority s decision of classifying Refill Reagents under Heading 9027 is correct and merits to be upheld. Whether the exemption entry Sl.No. 137 of Notification No. 2/2017-Central Tax (Rate) dated 28-6-201 7 is applicable to the impugned goods? - Held that - The exemption is applicable to a sub-set from out of the broad category of Hand tools covered in Heading 8201. Since the impugned goods do not fall in the Heading itself, the exemption given in respect of a part of the Heading would not be applicable to them - the impugned goods are not covered by the entry SI.No. 137 in the exemption Notification as claimed by the appellant. The impugned goods are correctly classifiable under Heading 9027 of the Tariff; they are not classifiable under Heading 8201 ibid. Further the impugned goods are not eligible for the exemption vide entry Sl.No. 137 of the Notification No. 2/2017- Central Tax (Rate) dated 28-6-2017. Ruling - The Advance Ruling pronounced vide TSAAR Order No. 02/2018 dated 30-052018 2018 (6) TMI 465 - AUTHORITY FOR ADVANCE RULING HYDERABAD TELANGANA passed by the Telangana State Authority for Advance Ruling in re appellant M/s. Nagarjuna Agro Chemicals Pvt. Ltd., Hyderabad is confirmed.

Issues Involved:
1. Timeliness of the appeal filing.
2. Classification of the "Mridaparikshak Minilab for Agriculture Soil Testing."
3. Classification of the Refill Reagents.
4. Applicability of the exemption under Notification No. 2/2017-Central Tax (Rate) dated 28-6-2017.

Detailed Analysis:

I. Timeliness of the Appeal Filing:
The appeal was filed within the prescribed time limit. The impugned order dated 30-05-2018 was received by the appellant on 02-06-2018, and the appeal was filed on 21-06-2018, which is within the 30-day limit as per Section 100 (2) of the TGST Act, 2017.

II. Classification of the "Mridaparikshak Minilab for Agriculture Soil Testing":
1. Appellant's Claim: The appellant argued that the Minilab should be classified under Heading 8201 as "Agricultural implements manually operated or animal driven" per Notification No. 2/2017-Central Tax (Rate), Entry No. 137.
2. Lower Authority's Ruling: The Adv. Ruling Authority classified the Minilab under Heading 9027, which pertains to "Instruments and apparatus for physical or chemical analysis."
3. Appellate Authority's Analysis:
- Nature and Usage: The Minilab is an electronic instrument used for determining various soil parameters such as soil pH, Electrical Conductivity, Organic Carbon, etc., through chemical analysis.
- Interpretation of Tariff Headings: The Heading 8201 covers hand tools used in agriculture, which are manually operated. The Minilab, being an electronic instrument, does not fit this category.
- Application of Ejusdem Generis: The phrase "other tools of a kind used in agriculture" in Heading 8201 should be interpreted in the context of the specific items listed, all of which are hand tools.
- Conclusion: The Minilab is not classifiable under Heading 8201 but under Heading 9027, as it is an instrument for chemical analysis.

III. Classification of the Refill Reagents:
1. Appellant's Claim: The appellant sought classification of Refill Reagents under Heading 8201.
2. Lower Authority's Ruling: The Adv. Ruling Authority classified the Refill Reagents under Heading 9027, as they are parts and accessories for the Minilab.
3. Appellate Authority's Analysis:
- Nature of Refill Reagents: The Refill Reagents are chemicals used in the Minilab for soil analysis and are identified only by numbers (Reagent 1 to 42).
- Application of Chapter Notes: Note 2(b) to Chapter 90 specifies that parts and accessories suitable for use solely or principally with an instrument of Heading 9027 should be classified under the same heading.
- Conclusion: The Refill Reagents are accessories to the Minilab and are correctly classified under Heading 9027.

IV. Applicability of the Exemption under Notification No. 2/2017-Central Tax (Rate):
1. Appellant's Claim: The appellant claimed that the Minilab and Refill Reagents should be exempt under Entry No. 137 of Notification No. 2/2017-Central Tax (Rate).
2. Appellate Authority's Analysis:
- Exemption Criteria: The exemption applies to "Agricultural implements manually operated or animal driven" under Heading 8201.
- Classification Outcome: Since the Minilab and Refill Reagents are classified under Heading 9027, they do not fall under the specified exemption criteria.
- Conclusion: The impugned goods are not eligible for the exemption under Entry No. 137 of Notification No. 2/2017-Central Tax (Rate).

Conclusion:
The Appellate Authority upheld the Adv. Ruling Authority's decision, confirming the classification of the "Mridaparikshak Minilab for Agriculture Soil Testing" and the Refill Reagents under Heading 9027, and ruled that they are not eligible for the exemption under Entry No. 137 of Notification No. 2/2017-Central Tax (Rate). The appeal was disposed of accordingly.

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