2018 (10) TMI 1045 - AAR - GST

Classification of goods - rate of GST - Ramming Mass used in lining of induction furnace - crushed quartz stones used in lining of furnace through claimed as not containing Boric Acid - applicant presently is paying GST @ 18% on Ramming Mass manufactured and supplied by them and classifying them under HSN 3816 - whether impugned goods classified under CETH 2506 or under CETH 3816? Held that - The issue was deliberated in the Conference where two heads of classification viz. CETH 2506 and 3816 were discussed in case of the product Ramming Mass of the kind obtained by crushing/ grinding and mixing of quartz and quartzite minerals of different sizes and where no external binders are added to such mixture - It was noted that explanatory notes to the HSN of Heading 3816 covers certain preparations (e.g. for furnace linings) with an added refractor binder - Many of the products of this heading also contain non-refractory binders such as hydraulic binding agents therefore to qualify for classification under heading 3816 refractory binder is required to be added to such powdered (grained quartz/ quartzite mixture. Since no refractory binder is added to the impugned product the same is not covered under heading 3816. The issue is decided in the case of COLLECTOR OF C. EX. BHUBANESWAR VERSUS MAYUR CHEMICAL INDUSTRIES 1990 (1) TMI 234 - CEGAT NEW DELHI where it was held that the product should be classified under sub-heading 3801.90 for the relevant period and would be classifiable under 3816.00 after 1st March 1988. Quartz powder obtained by crushing Quartz stones fall under HSN code 2806 and attracts 5% rate of tax under GST. Ruling - Ramming Mass which is a Refractory Material is classifiable under HSN code 3816 and would attract 18% rate of tax under GST (9% CGST 9% SGST). Quartz powder obtained by crushing Quartz stones falls under HSN code 2806 and would attract 5% rate of tax under GST (2.5% CGST 2.5% SGST)

Summary

Issues:
1. Classification and applicable rate of GST on Ramming Mass used in lining of induction furnace.
2. Classification and applicable rate of GST on crushed quartz stones used in lining of furnace.

Analysis:
The applicant, a registered manufacturer cum supplier under GST, sought an advance ruling on the classification and GST rate of Ramming Mass and crushed quartz stones. The Ramming Mass, a refractory material for induction furnace lining, is manufactured by mixing Quartz granules with a minor ratio of boric acid, classified under HSN code 3816, attracting an 18% GST rate. The Quartz powder obtained by crushing Quartz stones falls under HSN code 2806, taxed at 5% GST. The applicant correctly classified and paid GST on Ramming Mass at 18%. The jurisdictional officer confirmed the classification of Ramming Mass under HSN code 3816 and Quartz stones under HSN code 2506, taxed at 18% and 5%, respectively.

The personal hearing revealed that Ramming Mass consists of Quartz granules mixed with boric acid, acting as a binding material, essential for refractory properties. The major component of Ramming Mass is the Quartz granules combined with boric acid in a specific ratio, making it suitable for induction furnace lining. The CBEC minutes highlighted the classification of Silica Ramming Mass under Chapter Heading 3816, emphasizing the necessity of a refractory binder for classification. The Tribunal's decision reinforced the requirement of a refractory binder for classification under heading 3816.

Based on the facts and legal provisions, the ruling concluded that Ramming Mass, as a Refractory Material, falls under HSN code 3816, attracting an 18% GST rate, while Quartz powder obtained by crushing Quartz stones is classified under HSN code 2806, taxed at 5% GST. The ruling clarified the correct classification and GST rates for both Ramming Mass and crushed quartz stones, providing clarity on the applicable tax rates for these materials used in furnace lining.