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2022 (8) TMI 970 - AAR - GSTClassification of goods - Benefit of exemption from GST - rate of tax - parts accessories suitable for use solely with the hearing aids - exemption by virtue of Sl.No.142 of 2/2017-CT(R) as amended from time to time - HELD THAT - The hearing aids are covered under heading 9021, under 4-digit classification; Hearing aids, excluding parts and accessories are covered under 9021 40, under 6-digit classification; Frequency modulated hearing aid system used for hearing by handicapped persons in group situation are covered under 9021 4010, under 8-digit classification and remaining are covered as others under 9021 4090. Thus it is clearly evident that the heading 9021 40 covers only the hearing aids but not parts accessories thereof. The parts accessories of hearing aids are specifically covered under heading 9021 9010. Note 2(a) clearly specifies that parts and accessories which are goods included in any of the headings of this Chapter (90) or of Chapter 84, 85 or 91 (other than heading 8487, 8548 or 9033) are in all cases to be classified in their respective headings. In the instant case, the parts accessories of hearing aids are goods that are specifically covered under heading 9021 9010 and hence they merit classification in their respective heading i.e. 9021 9010. Also Note 2(b) implies that it covers only those other parts and accessories which can't be classified in terms of Note 2(a) - In other words Note 2(a) is applicable to the instant case and Note 2(b) has to be considered in case Note 2(a) is not applicable. Thus the parts accessories of hearing aids are rightly classifiable under heading 9021 9010. The exemption is applicable only to supply of goods, the description of which is specified at column (3) of the schedule falling under the tariff item, sub-heading, heading chapter as specified at corresponding entry at column (2). Thus the exemption is applicable only to the supply of goods described under column (3) and not to all the goods falling under the corresponding entry in column (2) - It is clearly evident from the entry no.142 that the said entry covers only goods described as hearing aids and not the parts accessories of the hearing aids . Thus the entry is not applicable to the instant case. It is clearly evident that hearing aids are excluded from entry no.221 of Schedule II, which attracts GST rate of 12%. The only entry that covers the parts accessories of hearing aids is 453 of Schedule III, which attracts the GST @ 18%.
Issues Involved
1. Classification of parts and accessories suitable for use solely with hearing aids. 2. Rate of tax on supply of such parts and accessories. 3. Exemption applicability of parts and accessories under Sl.No.142 of Notification 2/2017-CT(R). Detailed Analysis 1. Classification of Parts and Accessories Suitable for Use Solely with Hearing Aids The applicant is engaged in trading hearing aids and their parts and accessories, which are imported from their parent company. They sought an advance ruling on the classification of these parts and accessories, arguing that they should be classified under heading 9021 9010, as they are designed solely for use with hearing aids. The applicant referenced Note 2 to Chapter 90 of the Customs Tariff Act, 1975, which provides rules for classifying parts and accessories. According to Note 2(b), parts and accessories suitable for use solely or principally with a particular kind of machine or apparatus should be classified with that machine or apparatus. The applicant contended that since these parts and accessories are suitable only for hearing aids, they should be classified under heading 9021, which pertains to hearing aids. 2. Rate of Tax on Supply of Such Parts and Accessories The applicant initially charged 18% GST on these parts and accessories, classifying them under heading 9021 9010 as per entry No.453 of Schedule III to Notification 1/2017-CT(R). However, they argued that these parts and accessories should be exempt from GST under Sl.No.142 of 2/2017-CT(R), which exempts hearing aids from GST. They referenced various entries and notes in the Customs Tariff Act and GST notifications to support their claim that the parts and accessories should be classified along with hearing aids and thus be exempted from GST. 3. Exemption Applicability of Parts and Accessories Under Sl.No.142 of Notification 2/2017-CT(R) The Authority for Advance Rulings (AAR) examined the applicant's submissions and the relevant legal provisions. They noted that the parts and accessories of hearing aids are specifically covered under heading 9021 9010. According to Note 2(a) to Chapter 90, parts and accessories that are goods included in any of the headings of Chapter 90 are to be classified in their respective headings. Therefore, the parts and accessories of hearing aids should be classified under heading 9021 9010. The AAR also clarified that the Circular No.113/32/2019-GST, which the applicant referenced, is not applicable in this case because it pertains to parts of ophthalmic equipment, which do not have a separate tariff heading, unlike parts and accessories of hearing aids. The AAR further examined the applicability of entry No.142 of Notification 2/2017-CT(R) and concluded that this entry covers only "hearing aids" and not their parts and accessories. Therefore, the exemption provided under this entry does not apply to the parts and accessories of hearing aids. The relevant entries for parts and accessories of hearing aids are entry No.221 of Schedule II (which excludes hearing aids) and entry No.453 of Schedule III (which covers goods not specified in other schedules and attracts 18% GST). Ruling a) The parts and accessories of hearing aids are classified under heading 9021 9010. b) The applicable GST rate on these parts and accessories is 18% as per entry No.453 of Schedule III to Notification 1/2017-CT(R). c) Entry No.142 of Notification 2/2017-CT(R) does not apply to the parts and accessories of hearing aids, and thus, they are not exempt from GST.
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