2024 (3) TMI 674 - AAR - GST

Classification of goods - car seat Cushion Suspension wires - Steel hooks - to be classified under HSN 87089900 thereby attracting CGST of 14 % plus SGST of 14% or will fall under HSN 94019900 thereby attracting CGST of 9% plus SGST of 9%? - HELD THAT - Chapter Heading 8708.00 covers 'parts and accessories' of motor vehicles and this chapter heading is wide enough in its scope so as to cover all accessories of motor vehicles as well whereas Chapter heading 9401.00 covers all type of seats and 'parts' thereof. For any product to classify under chapter 9401 9000(classification given in para 3.2 above), the same has to be in the nature of 'part of seats'. The term 'part' per se means a portion of an equipment or a machinery which is essentially linked to the functioning of that particular equipment or machinery. In other words, 'part' is an integral element of machinery or equipment without which the specific product cannot function. The 'part' in question should be so inextricably be linked to the product that the same cannot be brought into any form without the 'part' in question. From the write-up, it is found that these cushion suspension wire is now-a-days used instead of coil springs and these are used both in front and back seats of a car. Also these are forming part of the basic skeleton steel structure of the seats. During personal hearing, the Applicant displayed the entire steel structure and explained how the cushion suspension wire is used in the steel structure. We observed that, without the said item, the basic structure of the seat cannot be achieved and basic function of cushion effect in the car seats cannot be achieved. Hence, the said item is a part of the seat, as it is one of the building blocks of the steel structure and an integral part of the seat. The steel hooks are used to keep the steel wires in place and in taut position, so the structure is achieved and also the functional usage, i.e. to give cushion effect, is also achieved. During personal hearing, the Applicant displayed the entire steel structure and how the steel hooks are used in the steel structure. Hence, the said item is a part of the seat, as it is one of the building blocks of the steel structure and an integral part of the seat. The goods viz. 'Car seat Cushion Suspension wires' and 'Steel hooks' manufactured by the Applicant will fall under HSN 94019900 thereby attracting CGST of 9% plus SGST of 9%.

Summary

Issues Involved:
1. Classification of 'Car Seat Cushion Suspension Wires' and 'Steel Hooks' under the appropriate HSN code.
2. Applicable GST rate for the classified items.

Summary:

Issue 1: Classification of 'Car Seat Cushion Suspension Wires' and 'Steel Hooks'

The Applicant, engaged in the manufacture of 'Car Seat Cushion Suspension Wires' and 'Steel Hooks', sought an advance ruling on their classification under the Harmonized System of Nomenclature (HSN). The Applicant contended that these items should fall under HSN 94019900, attracting a GST rate of 18% (CGST 9% + SGST 9%), as they are parts of car seats. The State jurisdictional officer argued that these items should be classified under HSN 87089900, attracting a GST rate of 28% (CGST 14% + SGST 14%), as parts and accessories of motor vehicles.

Issue 2: Applicable GST Rate

The Authority for Advance Ruling (AAR) examined the submissions and relevant legal provisions, including the Customs Tariff Act, 1975, and the relevant HSN explanatory notes. The AAR noted that for a product to classify under Chapter 9401, it must be an integral part of a seat, essential for its function. The AAR found that the 'Car Seat Cushion Suspension Wires' and 'Steel Hooks' are integral parts of the car seat structure, providing necessary support and cushioning, and thus should be classified under HSN 94019900.

Decision:

The AAR ruled that:
1. The 'Car Seat Cushion Suspension Wires' manufactured by the Applicant will fall under HSN 94019900, attracting CGST 9% and SGST 9%.
2. The 'Steel Hooks' manufactured by the Applicant, used in the manufacture of car seats, will also fall under HSN 94019900, attracting CGST 9% and SGST 9%.

The ruling emphasized that these items are essential parts of car seats, not merely accessories, and thus should be classified under the specific heading for parts of seats rather than the general heading for motor vehicle parts and accessories.