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2024 (8) TMI 136 - AAAR - GSTClassification 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 - 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 - Sl. No. 435A under Schedule III of N/N. 1/2017-Central tax (rate) dt. 28.06.2017 as amended by N/N. 41/2017 Central Tax (rate) dt. 14.11.2017. HELD THAT - The seat covers fit to be mounted on the existing seat of the motor vehicles. These seat covers are meant for the protection of the seats and the functional value of seat cover is the comfort and convenience it extends to the driver and passengers. Thus the seat cover is nothing but an accessory, which is generally bought by the customer for protection and comfort. The features of the seat cover are distinct and clearly distinguishable from seat - The heading 940120 covers seats for motor vehicles whereas the appellant is not manufacturing seats as such but only a seat cover which is fitted over the seat already factory manufactured. Thus the product manufactured by the appellant is not covered under 940120. In order for motor vehicle parts or accessories to be classifiable under heading 8708, they must satisfy all the three following conditions They must be identifiable as being suitable for use solely or principally with motor vehicles of headings 8701-8705 - On the test of sole use / principal use also, the seat covers merit classification under-8708 as they are only usable and used for motor vehicles and not of general use.
Issues Involved:
1. Classification of original car seat covers. 2. Applicability of GST rate on original car seat covers. 3. Relevance of previous Advance Ruling. Issue-Wise Detailed Analysis: 1. Classification of Original Car Seat Covers: Appellant's Argument: - The original seat covers are made of fabric or PU and are permanently fitted over the raw foam seat, making them an integral part of the car seat. - The Appellant argues that these seat covers should be classified under Chapter Heading 9401, which pertains to "Seats (other than those of heading 9402), whether or not convertible into beds, and parts thereof," and should be liable to GST at 18% as per Sl. No. 435A of Schedule III of the Rate Notification. - The Appellant cites various legal precedents and HSN Explanatory Notes to support the classification under Chapter Heading 9401, emphasizing that the seat covers are parts of seats used in motor vehicles. Authority for Advance Ruling (AAR) Decision: - The AAR classified the original car seat covers under HSN 8708, which pertains to "Parts and accessories of the motor vehicles of headings 8701 to 8705," and liable to GST at 28%. - The AAR reasoned that the seat covers are designed for specific vehicles and are integral to the vehicle's operation, thus fitting the classification under Chapter Heading 8708. Appellate Authority's Analysis: - The Appellate Authority upheld the AAR's decision, agreeing that the seat covers are accessories specifically designed for motor vehicles and should be classified under Chapter Heading 8708. - The Authority noted that the seat covers are not seats themselves but accessories that provide protection and comfort, aligning with the definition of accessories under Chapter Heading 8708. 2. Applicability of GST Rate on Original Car Seat Covers: Appellant's Argument: - The Appellant contends that the original seat covers should attract GST at 18% under Sl. No. 435A of Schedule III of the Rate Notification, as they are parts of seats classified under Chapter Heading 9401. - The Appellant provides detailed explanations and references to HSN Explanatory Notes and judicial precedents to argue that the seat covers are integral parts of the seats and not merely accessories. Authority for Advance Ruling (AAR) Decision: - The AAR determined that the seat covers fall under Chapter Heading 8708 and are subject to GST at 28%, as they are parts and accessories of motor vehicles. Appellate Authority's Analysis: - The Appellate Authority concurred with the AAR's classification and GST rate, emphasizing that the seat covers are specifically designed for motor vehicles and are classified as accessories under Chapter Heading 8708, attracting GST at 28%. 3. Relevance of Previous Advance Ruling: Appellant's Argument: - The Appellant argues that the previous Advance Ruling (AAR No. 15/AP/GST/2021) dealt with additional/secondary seat covers, which are different from the original seat covers in question. - The Appellant asserts that the original seat covers are primary covers permanently affixed to the raw foam seat and should be classified differently. Authority for Advance Ruling (AAR) Decision: - The AAR referenced the previous ruling, stating that the issue was already covered under the earlier Advance Ruling, which classified seat covers under Chapter Heading 8708. Appellate Authority's Analysis: - The Appellate Authority upheld the AAR's reliance on the previous ruling, noting that the original seat covers, like the additional covers, are accessories designed for motor vehicles and should be classified under Chapter Heading 8708. Conclusion: - The Appellate Authority upheld the AAR's decision, classifying the original car seat covers under Chapter Heading 8708 and subjecting them to GST at 28%. The Authority found the classification and GST rate to be legal and proper, aligning with the previous Advance Ruling and the nature of the seat covers as accessories specifically designed for motor vehicles.
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