2020 (8) TMI 637 - AAR - GST

Classification of goods - rate of GST - Silicone Insole - Heel Cushion - Whether Silicone Insole and Heel Cushion is classifiable under Tariff 64 at SI.No.225 under Schedule-I as Footwear of sale value not exceeding ₹ 1000/per pair of Notification No.01/2017-CT(R) dated 28.06.2017 as amended by Notification No.24/2018-CT(R) dated 31.12.2018? - HELD THAT - Silicone Insoles Silicone Heel Cushion are removable insoles and the primary purpose of insoles is to make shoes more comfortable to wear. The removable insoles that come in most shoes vary in type and material ranging from very simple thin cushioning to sophisticated multiple layered arch support inserts. The readymade removable insoles manufactured by the applicant are of different sizes that are compatible with shoe size. The insoles or heel cushions are not customised for correcting orthopaedic conditions that vary from patient to patient. They are of standard shape and size as that of the footwears in which they can be used. As such it cannot be considered as an orthopaedic appliance; i.e; footwear or a special insole designed to correct orthopaedic condition and which is made to measure or designed to fit either foot equally; mass produced and presented singly to fall under HSN 9021. The HSN 6406 covers Parts of footwear (including uppers whether or not attached to soles other than outer soles); removable in-soles, heel cushions and similar articles; gaiters, leggings and similar articles, and parts thereof . The Silicone Insoles and Silicone Heel Cushion manufactured by the applicant are rightly classifiable under HSN 6406 as parts of footwear. The concessional rate of GST of 5% under Sl No. 225 of Schedule I of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 for footwear having retail sale price not exceeding ₹ 1000/- per pair is subject to the condition that such retail sale price is indelibly marked or embossed on the footwear itself. The products of the applicant namely; Silicone Insoles and Silicon Heel Cushion; being only parts of footwear do not qualify to be termed as footwear satisfying the prescribed condition to be eligible for the concessional rate of GST - they are not covered under Sl No. 225 of Schedule - I; but are covered under Sl No. 171 of Schedule III of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 attracting GST at the rate of 18%.

Summary

Issues:
1. Classification of Silicone Insole and Heel Cushion under HSN tariff item 9021.10.00.
2. Classification of Silicone Insole and Heel Cushion under Tariff 64 at SI.No.225 under Schedule-I.

Analysis:
1. The applicant sought a ruling on whether Silicone Insole and Heel Cushion fall under HSN tariff item 9021.10.00 or Tariff 64 at SI.No.225 under Schedule-I. The products are made from medical-grade silicone and biomechanically designed to correct orthopaedic conditions. The argument was made that these items qualify as "Orthopaedic appliances" under Chapter 90 of HSN, specifically under heading 9021. The products are functionally used for preventing or correcting orthopaedic conditions, making them suitable for classification under "Orthopaedic or fracture appliances."

2. The applicant also contended that the products could be classified under HSN 6406 and covered under Sl.No. 225 of Schedule I of Notification No. 01/2017 Central Tax (Rate) due to their sale value not exceeding ?1000 per pair. However, upon examination, it was found that the Silicone Insoles and Heel Cushion are removable insoles primarily designed to make shoes more comfortable. They are not customised for correcting orthopaedic conditions and are of standard shape and size, making them parts of footwear under HSN 6406, not orthopaedic appliances under HSN 9021.

3. The ruling clarified that the concessional GST rate of 5% under Sl No. 225 of Schedule I for footwear priced under ?1000 per pair requires the retail sale price to be marked on the footwear itself. Since the Silicone Insoles and Heel Cushion are only parts of footwear and do not meet the condition of being termed as footwear, they were classified under Sl No. 171 of Schedule III, attracting GST at the rate of 18% instead of the concessional rate.

4. In conclusion, the ruling stated that Silicone Insole and Heel Cushion are classifiable under HSN 6406 as parts of footwear, not under HSN 9021. They do not qualify as footwear under Sl No. 225 of Schedule I for the concessional GST rate, leading to their classification under Sl No. 171 of Schedule III with an 18% GST rate.