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2023 (3) TMI 1320 - AAR - GSTClassification of goods - PVC Cushion mats for motor vehicles (with no Textile material to be used in these) after cutting to size from rolls, to fit in vehicle floors as per the requirement of the buyers and packing - fall under HSN Code 39181090/39041090 or 87089900? - applicability of N/N. 1/2017-Central Tax(Rate) dated 28.06.2017 and N/N. 1/2017-Statc Tax(Rate) dated 28.06.2017 - If the PVC Cushion mats are received by the Applicant from their supplier in roll form under HSN Code 39181090, would its cutting to size, as per the requirement of the buyers and packing make it a different product for classification and tax purposes? HELD THAT - The applicant will be procuring these goods in rolls and cutting into the specified measurement as per the demand of his customers. The applicant has also submitted a sample of goods i.e. car foot mat made of PVC material and it is observed that there is no textile material/fabric used in it and this authority is convinced that neither there is any use of fabric material nor these are hand made. The said goods is made from PVC only and there should be no doubt that the same would fall in chapter 39 which covers PVC, a polymer and articles thereof. From the perusal of all the aspects of the issue at hand, i.e. factual and legal provisions and relevant notifications and the judgements of the courts of the land, it is observed that the goods do not fall under chapter 57 and also cannot be considered as purely car accessories. The supply of the said goods i.e. PVC cushion mats falls under the chapter 39 of the GST tariff rates. Applicable rate of tax is 18%.
Issues Involved:
1. Classification of PVC Cushion mats for motor vehicles. 2. Applicability of GST rate on PVC Cushion mats. 3. Impact of cutting PVC Cushion mats to size on their classification and tax rate. Issue-wise Detailed Analysis: 1. Classification of PVC Cushion Mats for Motor Vehicles: The applicant sought clarification on whether PVC Cushion mats, cut to size from rolls to fit vehicle floors, should fall under HSN Code 39181090/39041090 or 87089900. The applicant argued that these mats should be classified under HSN 3918 as "Floor Coverings of PVC" based on Rule 1 of the Rules of Interpretation of Customs Tariff. They referenced the Supreme Court judgment in C.C.E, Delhi-III Vs. Uni Products India Ltd., which held that car mats do not fall under Chapter 87 but rather under Chapter 39. The applicant also cited various judicial pronouncements supporting their view that the mats should be classified under Chapter 39. 2. Applicability of GST Rate on PVC Cushion Mats: The applicant contended that the PVC Cushion mats should attract GST at the rate of 18% as specified in Notification No. 1/2017-Central Tax (Rate) and Notification No. 1/2017-State Tax (Rate). They pointed out that items classified under HSN 3918 attract a GST rate of 18%, whereas items under HSN 87089900 attract a GST rate of 28%. The Proper Officer's comments supported the applicant's view, stating that the mats, made entirely of PVC with no textile material, should fall under Chapter 39 and be taxed at 18%. 3. Impact of Cutting PVC Cushion Mats to Size on Their Classification and Tax Rate: The applicant questioned whether cutting PVC Cushion mats to size would change their classification and tax rate. The Proper Officer noted that cutting the mats to size does not alter their fundamental nature or classification. The Authority for Advance Ruling (AAR) concluded that the PVC mats, even after being cut to size, remain classified under Chapter 39 and should be taxed at 18%. Discussion and Finding: The AAR reviewed the applicant's submissions, the comments of the Proper Officer, and relevant judicial precedents. It was observed that the PVC mats do not contain any textile material and are not handmade, thus falling under Chapter 39. The AAR relied on the Supreme Court judgment, which excluded car mats from Chapter 87 and classified them under Chapter 39. Consequently, the AAR ruled that the PVC Cushion mats should be classified under Chapter 39 and attract a GST rate of 18%. Ruling: 1. The supply of PVC Cushion mats falls under Chapter 39 of the GST tariff rates, and the applicable rate of tax is 18% [9% CGST and 9% SGST]. 2. The question of whether cutting the mats to size changes their classification was deemed not applicable as it does not alter their classification under Chapter 39. Decided Accordingly.
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