2018 (9) TMI 1337 - AAR - GST

Classification of goods - Disc Brake Pads - What is the appropriate classification of Disc Brake Pads under GST? Whether Disc Brake Pads supplied by the Applicant is covered under Sl.No. 170 of Schedule IV of N/N. 1/2017 dated 28.06.2017- Integrated Tax (Rate), i.e., under Tariff Heading 8708 attracting GST at 28% or under Sl.No.182 B of Schedule III of the Rate Notification i.e., under Tariff Heading 6813 attracting GST Rate of 18%? Held that - Friction Material in the form of discs or pads or any other form consisting of mineral materials with or without textiles are classifiable under CTH 6813 if they are not mounted. But when they are mounted including friction material fixed to a metal plate provided with circular cavities, perforated tongues or similar fittings for disc brakes, these are classified as parts of the machines or vehicles for which they are designed. In the present case, the product consists of a friction material (made up of organic fibers and minerals, graphite) which is bonded with a steel backing plate forming an integrated component. Heading 6813 specifically excludes such mounted brake linings which are rightly classifiable as parts of vehicles for which they are designed - Thus the product to be classified Disk brake Pads , a part of the motor vehicle, classifiable under Heading 87083000 as Brakes and servo-brakes; parts thereof . The product attracts 14% CGST covered under Sl.No. 170 of Schedule IV of Notification No. 01/2017 dated 28.06.2017- C.T. (rate) as amended and 14% SGST under Sl.No. 170 of Schedule IV of G.O. (Ms) No. 62 dated 29.06.2017 No. II(2)/CTR/532(d-4)/2017 respectively for intra state supply. Ruling - Disc Brake Pads manufactured and supplied by the Applicant are classified under Heading 87083000 and covered under S. No. 170 of Schedule IV of Notification No. 01/2017 CT (Rate) dated 28.06.2017 and Sl.No. 170 of Schedule IV of G.O. (Ms) No. 62 dated 29.06.2017 No. II(2)/CTR/532(d-4)/2017 attracting 14% CGST/14% SGST respectively.

Summary

Issues involved:
Classification of 'Disc Brake Pads' under GST - Whether under Tariff Heading 8708 attracting GST at 28% or under Tariff Heading 6813 attracting GST Rate of 18%.

Analysis:
1. The applicant, engaged in manufacturing auto components, sought classification of 'Disc Brake Pads' under GST. The product consists of a friction material and a steel back plate, with the friction material providing necessary frictional force during braking. The manufacturing process involves bonding the friction material to the backing plate, forming an integrated component.

2. The applicant argued that the product should be classified under CTH 8708 at 28% GST rate, as it is a part of motor vehicles. However, the AAR examined the product's characteristics and found it to be rightly classifiable under CTH 6813 if not mounted, but as a part of vehicles under CTH 8708 if mounted. The 'Disc Brake Pads' in question were found to be mounted, thus classified under Heading 87083000 as 'Brakes and servo-brakes; parts thereof', attracting 14% CGST and SGST.

3. The AAR relied on the HSN Explanatory Notes to Heading 6813, which specifically excludes mounted brake linings, and Heading 8708, which covers parts and accessories of motor vehicles. The product's function in automotive vehicle brakes to slow down or stop the vehicle aligns it with the classification under Heading 8708 as a part of motor vehicles.

4. Therefore, the ruling concluded that the 'Disc Brake Pads' manufactured and supplied by the applicant are classified under Heading 87083000, covered under specific entries in the GST notification, attracting 14% CGST and 14% SGST for intra-state supply.

Conclusion:
The Authority for Advance Ruling, Tamil Nadu, determined the appropriate classification of 'Disc Brake Pads' under GST, emphasizing the distinction between mounted and unmounted friction materials and the classification under relevant tariff headings based on the product's characteristics and usage in motor vehicles.