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2021 (9) TMI 1067 - AAR - GSTClassification of goods - HSN Code - rate of GST - Crumb rubber/granule - HELD THAT - Headings 40.03 and 40.04 covers reclaimed rubber in primary forms or in plates, sheets or strip, and waste, parings and scrap of rubber (other than hard rubber) and powders and granules obtained therefrom. Further, the Notes to Heading 40.04 states that Goods of rubber (other than hard rubber) definitely not usable as such because of cutting-up, wear or other reasons includes worn-out rubber tyres not suitable for retreading and scrap obtained from such worn-out rubber tyres. Also notes to Heading 40.04 also states that Powders and granules, obtained from such goods of such rubber (other than hard rubber) definitely not usable as such because of cutting-up, wear or other reasons which includes worn-out rubber tyres, are covered under Heading 40.04. This applicant is producing crumb rubber/granules from used/waste tyres and has submitted during the course of the hearing that, the waste/used tyres are not usable because they are worn out tyres due to wear and tear - the used/ waste tyres, made of rubber are nothing but rubber and rubber goods not usable as such because of cutting up, wear or other reasons from which the subject goods are produced. Thus the impugned goods are squarely covered under the Heading 40.04 of the GST Tariff Act, 2017. It is clearly seen that Powders and granules obtained from waste, parings and scrap of rubber (other than hard rubber), in this case used tyres, are covered under Tariff Heading 4004 00 00 and attract 18% IGST or 9% each of CGST/SGST or UTGST - the subject product namely; crumb rubber/granules falls under Heading 4004 of the GST Tariff thus attracting GST @ 18%.
Issues Involved:
1. Classification of Crumb Rubber/Granule under the Harmonized System of Nomenclature (HSN). 2. Applicable GST rate for Crumb Rubber/Granule. Issue-wise Detailed Analysis: 1. Classification of Crumb Rubber/Granule under the HSN: The applicant, M/s. Green Rubber Crumb Private Limited, sought an advance ruling on the classification of crumb rubber/granule, specifically whether it falls under HSN 4002 or 4004. The applicant contended that crumb rubber/granule, even if manufactured from waste/used tyres, is a finished product and should be classified under HSN 4002. They supported their argument with several documents, including a clarification from the Ministry of Environment, Forest & Climate Change (MOEF), which stated that rubber crumbs or granules made from used tyres are considered products rather than waste. The Authority for Advance Ruling examined the submissions and documents provided by the applicant, including import and sales invoices, and found inconsistencies. The invoices submitted by the applicant classified the product under HSN 4004, which pertains to waste, parings, and scrap of rubber, and powders and granules obtained therefrom. The Authority referred to the explanatory notes of Chapter 40 of the GST Tariff Act, which covers rubber and articles thereof. They noted that HSN 4002 covers synthetic rubber and mixtures in primary forms, plates, sheets, or strips, which does not align with the form of crumb rubber/granule. Conversely, HSN 4004 includes waste, parings, and scrap of rubber and powders and granules obtained from such waste, which accurately describes the crumb rubber/granule produced from used tyres. 2. Applicable GST Rate for Crumb Rubber/Granule: The Authority determined that the crumb rubber/granule falls under HSN 4004, which attracts a GST rate of 18% (9% CGST and 9% SGST/UTGST or 18% IGST). This classification is based on the nature of the product being derived from waste rubber, specifically used tyres, which are not usable as such due to wear and tear. Conclusion: The Authority for Advance Ruling concluded that crumb rubber/granule is classifiable under HSN 4004 and is liable to GST at the rate of 18%. The decision aligns with the provisions of the GST Tariff Act and the explanatory notes for Chapter 40, ensuring that the classification and applicable tax rate are consistent with the nature of the product. Order: Crumb rubber/granule is classifiable under Heading 4004 and is liable to GST @18% (9% each of CGST & SGST/18% IGST).
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