2024 (2) TMI 1053 - AAR - GST

Classification of goods - original car seat covers which are manufactured and designed to permanently fit over the raw foam seat of the vehicle by the OEMs as well as the seat manufactures who further sell to OEMs and are sold with me vehicle as an essential and integral of part of seat is classifiable under HSN 9401 as Seats (other than those of heading 9402) whether or not convertible into beds, and parts thereof other than seats of kind used for aircraft or not - HELD THAT - Permanent Seats, herein referred to as such, are explicitly designated for exclusive utilization within a specified motor vehicle, thereby serving a specialized function meticulously aligned with the precise design and manufacturing specifications of said particular vehicle. The nomenclature permanent seat cover is employed to underscore the highly specialized nature of these seating arrangements, exemplifying a bespoke creation characterized by an assiduous focus on detail, ensuring seamless integration with the intended motor vehicle. It is paramount to recognize that Permanent Seats transcend mere functional contributions to the overall operation of the motor vehicle; they assume a pivotal role in guaranteeing that each seat is purposefully tailored for the precise vehicle with which it is affiliated. This meticulous alignment serves as a safeguard, preserving the structural Integrity and performance parameters of the motor vehicle In Its entirety. The original car seat covers which are manufactured and designed to permanently fit over the raw foam seat of the vehicles by the OEMs as well as the seat manufacturers who further sell to OEMs and are sold with the vehicle as an essential and integral part of seat is classifiable under HSN 8708 and is liable to pay @ 28%(CGST @ 14% SGST @ 14%).

Summary

Issues Involved:
1. Classification of original car seat covers.
2. Applicability of GST rate.

Summary:

Issue 1: Classification of Original Car Seat Covers
The applicant, M/s Saddles International Automotive & Aviation Interiors Private Limited, engaged in manufacturing and supplying original car seat covers, sought an advance ruling on whether these covers, permanently attached to the raw foam seat of vehicles, are classifiable under HSN 9401 as "Seats (other than those of heading 9402) whether or not convertible into beds, and parts thereof other than seats of a kind used for aircraft" and liable to GST @ 18%.

The applicant argued that the original car seat covers are an integral and essential part of the car seat, permanently fitted by OEMs, and not sold as additional covers or aftermarket products. They cited various judicial precedents and international rulings to support their claim that these covers should be classified under HSN 9401.

However, the Authority for Advance Ruling noted that the issue had been previously addressed in an earlier ruling concerning the same applicant, where it was determined that seat covers should be classified under HSN 8708 as parts and accessories of motor vehicles. The Authority reiterated that the "seats" supplied along with the original car should be classified under HSN code 8705.

Issue 2: Applicability of GST Rate
The applicant contended that the original car seat covers should be taxed at 18% GST under HSN 9401. They referenced Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017.

The Authority, however, concluded that the original car seat covers, being an integral part of the car seat assembly, should be classified under HSN 8708 and subjected to a GST rate of 28% (CGST @ 14% + SGST @ 14%).

Ruling:
Question: Whether the original car seat covers, designed to permanently fit over the raw foam seat of vehicles by OEMs and sold with the vehicle as an essential and integral part of the seat, are classifiable under HSN 9401 and liable to GST @ 18%?

Answer: No, the original car seat covers are classifiable under HSN 8708 and are liable to GST @ 28% (CGST @ 14% + SGST @ 14%).