2019 (5) TMI 1040 - AAR - GST

Classification of goods - rate of tax - items made of vulcanized rubber like Rubber Ring/ GASKET/ Seal, Rubber Foot Batten Washer and Rubber Grommets - whether classified under the heading 4016 are taxable as specific rubber items having a GST rate of 18% or as components of sprinkler/ Drip irrigation system having a tax rate of 12% under heading 84249000? HELD THAT - While going through the Entry No. 195B of Schedule II of Notification No.01/2017 dated 28.06.2017 read with Circular number 81/55/2018-GST dated 31st December, 2018, it is observes that the Sprinkler Irrigation System/ drip irrigation system including laterals only will be covered under the said notification and attract GST @12%. If individual rubber parts of the Sprinkler Irrigation System/drip irrigation system are supplied separately viz. Rubber Ring/ Gasket/ Seal, Rubber Foot Batten Washer and Rubber Grommets, will not be covered under Entry No. 195B of Schedule II of Notification No. 01/2017 dated 28.06.2017. Even otherwise also rubber parts will be classifiable under chapter heading 4016. The goods manufactured and supplied by the applicant viz. Rubber Ring/ Gasket/ Seal, Rubber Foot Batten Washer and Rubber Grommets are classifiable under Chapter Heading 4016 and attract GST@ 18% (CGST 9% SGST 9%).

Summary

Issues:
Classification of goods for GST rate determination.

Analysis:
The applicant, engaged in manufacturing/trading rubber parts for sprinkler and drip irrigation systems, sought clarification on the classification of their products for GST purposes. The applicant argued that the items, namely Rubber Ring/Gasket/Seal, Rubber Foot Batten Washer, and Rubber Grommets, designed exclusively for use in sprinkler/drip irrigation systems, should be considered components of such systems with a 12% GST rate under heading 84249000. The jurisdictional officer supported this view.

During the hearing, the applicant reiterated their stance, emphasizing the specialized nature of the rubber parts for irrigation systems. The Authority analyzed the submissions and noted that the rubber items did not fall under Chapter 84 as they were excluded by Section Note of Section XVI, placing them under heading 4016 instead.

The ruling referred to Entry No. 195B of Schedule II of Notification No.01/2017 and Circular No. 81/55/2018-GST, which clarified that only the complete sprinkler/drip irrigation systems were eligible for the 12% GST rate. Individual rubber parts supplied separately were not covered under this entry and were classifiable under Chapter Heading 4016, attracting an 18% GST rate.

In conclusion, the Authority ruled that the rubber products manufactured and supplied by the applicant were classified under Chapter Heading 4016 and subject to an 18% GST rate (CGST 9% + SGST 9%). The ruling provided clarity on the classification of the goods for GST determination, aligning with the specific provisions and interpretations of the relevant notifications and circulars.