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2020 (4) TMI 635 - AAR - GSTClassification of goods - rate of GST - Bagasse based Particle Board manufactured with a composition of 75% of bagasse, 25% of wood particles and 5 kgs. of resins - whether fall under serial No.92 of Schedule II GST rate 12%) or under Sr. No. 137A of Schedule III (GST rate 18%) of the Notification No. 01/2017-Integrated Tax Rate dated 28.06.2017? - Sr. No. 92 of Schedule-II of Notification No.01/2017- IGST (Rate dtd. 28.06.2017 - HELD THAT - The Bagasse board has specific entry at Sr. No. 92 in Schedule II to the Notification No.01/2017- Central Tax (Rate), dated 28.06.2017. Accordingly, the said entry covers Bagasse boards falling under Chapter 44 or any other Chapter and attracts concessional GST rate of 12%. The entry covers Bagasse Board manufactured from bagasse only. Apart from the Particle Boards mentioned in entry at Sr. No. 92 in Schedule II to the Notification No. 01/2017- Central Tax (Rate), dated 28.06.2017, the other Particle Boards cover in entry at Sr. No. 137A in Schedule III to the Notification No. 01/2017- Central Tax (Rate), dated 28.06.2017. In the present case, Bagasse based Particle Board to be manufactured by the applicant is a composition of bagasse wood particles and not only of bagasse, therefore, same would be covered under entry at Sr. No. 137A in Schedule III to the Notification No. 01/2017- Central Tax (Rate), dated 28.06.2017 and attracts GST rate of 18%.
Issues Involved:
1. Classification of Bagasse-based Particle Board under GST. 2. Applicable GST rate for Bagasse-based Particle Board. Issue-wise Detailed Analysis: 1. Classification of Bagasse-based Particle Board under GST: The applicant sought an advance ruling to determine whether Bagasse-based Particle Board, composed of 75% bagasse, 25% wood particles, and 5 kgs of resins, falls under Serial No. 92 of Schedule II (GST rate 12%) or Serial No. 137A of Schedule III (GST rate 18%) of Notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017. The applicant argued that their product should be classified under Serial No. 92 of Schedule II, which specifies a 12% GST rate for "Bagasse Board" and other similar boards. They contended that the predominant material in their product is bagasse, and therefore, it should be classified as a "Bagasse Board" under the specific entry. The applicant supported their argument by citing rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, particularly Rule 3(b), which states that composite goods should be classified based on the material that gives them their essential character. They also referenced several judicial decisions to bolster their claim that the predominant material should determine the classification. 2. Applicable GST rate for Bagasse-based Particle Board: The Central Goods & Services Tax Commissionerate, Surat, provided comments stating that the product cannot be termed as "Bagasse Board" due to the inclusion of wood particles. They pointed out that the appropriate classification would be under Serial No. 137A of Schedule III, which covers "Particle Board, Oriented Strand Board and similar board (for example, wafer board) of wood or other ligneous materials, whether or not agglomerated with resins or other organic binding substances, other than specified boards," attracting an 18% GST rate. Discussion & Findings: The Authority for Advance Ruling (AAR) considered the submissions from both the applicant and the CGST Commissionerate. The AAR noted that Serial No. 92 of Schedule II specifically covers "Bagasse Board" and similar boards, which attract a 12% GST rate. However, this entry pertains to boards made solely from bagasse. The AAR found that the applicant's product is a composite of bagasse and wood particles, not solely bagasse. Therefore, it does not fall under the specific entry for "Bagasse Board" in Serial No. 92 of Schedule II. Instead, it falls under the more general entry in Serial No. 137A of Schedule III, which covers various types of particle boards, including those made from wood or other ligneous materials, attracting an 18% GST rate. Ruling: The AAR ruled that the Bagasse-based Particle Board, composed of 75% bagasse, 25% wood particles, and 5 kgs of resins, falls under Serial No. 137A in Schedule III of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017. Consequently, the applicable GST rate is 18% (9% CGST and 9% SGST).
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