2018 (10) TMI 512 - AAR - GST

Rate of Tax - Classification of goods - Tile Adhesive and Joint Filler - whether classified under HSN 3214 or under HSN 3824? Held that - HSN 3214 includes non-refractory surfacing preparations, whereas HSN 3824 consist of products of natural mixtures. The product is manufactured by mixing natural products like silica sand, dolomite powder, cement and chemicals. The firm has obtained mining lease license from Mining & Geology Department for manufacturing value addition products like tile adhesive, joint filler etc from silica sand. The product is manufactured by mixing natural products like Silica Sand and Dolomite powder with cement and chemicals and would, therefore, come under the classification prepared binder . Ruling - The tile adhesive and joint filler manufactured by mixing natural products like silica sand, dolomite powder, cement and chemicals come under the category of prepared binder specified under HSN 3824 which is taxable @18% GST.

Summary

Issues: Classification of Tile Adhesive and Joint Filler for GST tax rate determination.

Analysis:
The case involved a manufacturer of Tile Adhesive and Joint Filler seeking an advance ruling on the applicable tax rate for the products. The applicant used raw materials such as silica sand, dolomite, cement, and chemicals to manufacture the adhesive, which was considered a 'prepared binder' under HSN 3824 and taxable at 18% GST. However, the assessing authority argued that the product fell under HSN 3214, which covers items like putty and cement compounds. The authorized representative contended that the adhesive was a mixture of natural products, distinct from putty, and should be classified under HSN 3824.

Upon examination, it was noted that HSN 3214 included non-refractory surfacing preparations, while HSN 3824 encompassed products of natural mixtures. The manufacturer had a mining lease license to utilize natural resources like silica sand and dolomite powder for manufacturing the adhesive. The product, created by blending these natural elements with cement and chemicals, was considered a 'prepared binder' falling under HSN 3824. Consequently, the ruling determined that the Tile Adhesive and Joint Filler, made from natural components like silica sand, dolomite powder, cement, and chemicals, were classified as 'prepared binders' under HSN 3824 and subject to 18% GST.

This judgment clarifies the classification of the products based on their composition and production process, highlighting the distinction between 'prepared binders' and other similar substances like putty. The ruling provides clarity on the applicable tax rate for the manufacturer's goods, ensuring compliance with GST regulations and avoiding ambiguity in tax determination for similar products in the future.