2019 (11) TMI 164 - AAR - GST

Classification of goods - Coir mats, mattings and floor coverings - whether covered under HSN 5702, 5703 and 5705? - whether taxable @ 5% GST vide Notification No.01/2017-CT (Rate) dated 28-06-2017 - HELD THAT - Coir mats, mattings and floor coverings covered under HSN 5702, 5703 and 5705 are taxable @ 5% GST vide Notification No.01/2017-CT (Rate) dated 28-06-2017 as amended by Notification No.34/2017- CT (Rate) dated 13-10-2017. This classification covers only the commodities which are manufactured exclusively using coir fiber. If any, PVC or rubber or any other materials are stuffed on the textile of coir, which is used as floor mats or mattings, it will come under Customs Tariff Head 5703 90 90 and it will be taxed @ 12% GST. Whether or not item number (A)(xiii) in Schedule I - 2.5% (which reads as in Sl.N0.219, in column (2), for the figure, 5702, 5703, 5705 , shall be substituted), referred to in Notification No.34/2017-Central Tax (Rate) dtd.13-10-2017 is meant to cover PVC Tufted Coir Mats and Matting? - HELD THAT - PVC Tufted Coir Mats and Matting cannot be considered as textile of coir and floor coverings covered under HSN 5702, 5703 and 5705. If any, PVC or rubber or any other materials are stuffed on the textile of coir, which is used as floor mats or mattings, it will come under the Customs Tariff Head 5703 90 90 and it will be taxed @ 12% GST as per Entry at SI No. 144 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. Whether or not PVC Tufted Coir Mats and Matting attracts low band tax rate of 5% as per the recommendations of the Fitment Committee and approval of the GST Council? - HELD THAT - PVC Tufted Coir Mats and Matting cannot be considered as textile of coir and floor coverings covered under HSN 5702, 5703 and 5705 and hence taxable @12% under Customs Tariff Head 5703 90 90. Whether or not PVC Tufted Coir Mats and Matting can be classified under tariff item 5703 90 20-carpets and floor coverings of coir (inserted vide Sl.No.9 (iii) of Notification No.109/2008-Customs (N.T) dtd. 24-09-2008) corresponding to Entry Sl.No.219, of Schedule I attracting 5% GST? - HELD THAT - No, PVC Tufted Coir Mats and Matting cannot be classified under tariff item 5703 90 20-carpets and floor coverings of coir (inserted vide Sl.No.9 (iii) of Notification No.109/2008-Customs (N.T) dtd. 24-09-2008) corresponding to Entry Sl.No.219, of Schedule I attracting 5% GST. Whether or not PVC Tufted Coir Mats and Matting can be classified under tariff item 5703 90 90-of other textile material - other corresponding to entry in Sl.No.144 of Schedule II attracting 12% GST? - HELD THAT - Yes, PVC Tufted Coir Mats and Matting can be classified under tariff item 5703 90 90-of other textile material - other corresponding to entry in Sl.No.144 of Schedule II attracting 12% GST. PVC Coir Mats Matting can be classified under tariff item 57050049/57050090-Carpets, carpeting, rugs, mats and matting-Other corresponding to Entry in SL.No.219 of Schedule I attracting 5% GST? - HELD THAT - The PVC Tufted Coir Mats and Matting are classifiable under Customs Tariff Head 5703 90 90 and attracts GST at the rate of 12% as per SI No. 144 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017.

Summary

Issues:
1. Classification of PVC Tufted Coir Mats and Matting under GST
2. Applicability of tax rates on PVC Tufted Coir Mats and Matting
3. Classification of PVC Tufted Coir Mats and Matting under different tariff items

Analysis:
1. The applicant sought clarification on the classification of PVC Tufted Coir Mats and Matting under GST. The Authority considered whether these products should be categorized under item number (A)(xiii) in Schedule I for a 2.5% tax rate or under other tariff items attracting different rates. The ruling clarified that PVC Tufted Coir Mats and Matting do not fall under the category of textiles made of coir and floor coverings specified under HSN 5702, 5703, and 5705. Instead, if materials like PVC or rubber are added to coir textiles, the products are classified under Customs Tariff Head 5703 90 90, attracting a 12% GST rate.

2. The Authority addressed the issue of the applicable tax rate on PVC Tufted Coir Mats and Matting. It was determined that these products cannot be considered as traditional coir textiles or floor coverings, as specified under HSN 5702, 5703, and 5705. Consequently, PVC Tufted Coir Mats and Matting are taxed at 12% under Customs Tariff Head 5703 90 90, rather than the lower 5% rate recommended by the Fitment Committee and approved by the GST Council.

3. The ruling also examined the classification of PVC Tufted Coir Mats and Matting under different tariff items. It was clarified that these products cannot be classified under tariff item 5703 90 20 for carpets and floor coverings of coir, or under tariff item 5703 90 90 for other textile materials. Instead, PVC Tufted Coir Mats and Matting are classified under Customs Tariff Head 5703 90 90, attracting a 12% GST rate. The ruling confirmed that these products do not align with the criteria for classification under specific tariff items that would result in a lower tax rate.

In conclusion, the Authority for Advance Ruling in Kerala determined that PVC Tufted Coir Mats and Matting should be classified under Customs Tariff Head 5703 90 90 and are subject to a GST rate of 12%, as per Entry at SI No. 144 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. The ruling provided clarity on the classification and tax treatment of these products under the GST regime.