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2021 (6) TMI 685 - AAR - GSTClassification of manufactured goods - Automotive Seating System - classified under CH 87089900 attracting GST @28% or under CH 940199990 attracting GST @18%? - HELD THAT - It is seen that the chapter heading 9401 covers only seats and parts thereof. So only such items, which constitute as specific parts of a seat such as backs, bottoms, armrests etc can be termed as parts of seats - CTH 8708 covers 'Parts and accessories of Motor Vehicles' and CTH 9401 covers 'Parts of seats of Motor vehicles' - From the definitions, 'parts' are an amount or section which when combined with others makes up the whole of something. Hence part is an essential component of the whole without which the whole cannot be complete or cannot function. It is an integral component of the whole. Accessories are not an essential component without which the whole cannot be complete or function, but it is a component which when added improves the utility, efficiency or appearance of the whole thing. In this case, it is stated that the Track Assembly is fitted to the floor of the car and it enables the forward and backward movement of the seat. The seat is manufactured and is complete before fixing it on the said assembly. The seat is fixed on this track assembly only to facilitate the movement of seat forward and backward. Thus it is clear that the seat and track assembly are two individual, independent products, manufactured separately and fixed together to make the seat movable for a comfortable position of the driver and the front co passenger - the track assembly which only improves the efficiency and convenience of the seat goes to prove that it is not in the nature of 'Parts' of Vehicle seats' and would not merit classification under CH9401. When seats are fixed on the TRACK ASSY it can slide back and forth with the operation of a lever for varying the positions of the seats, which is basically intended to improve the comfort and efficiency of the persons sitting thereon. This mechanism enables the passengers and drivers of the automobile to adjust seat positions for their comfort and convenience. Thus the Track assembly manufactured and supplied by the applicant is an adjunct to the car seat. Therefore, it is clear that the 'Track assembly' is an accessory to the Motor vehicle and is covered under CTH 8708-'Parts and accessories of Motor vehicles' provided the three conditions mentioned is satisfied - the 'Track assemblies' are identified as being suitable for use solely or principally with the Motor Vehicles and the first condition is satisfied - The said goods are not excluded under Section Note 2 to Section XVII, which is the second condition - Track assembly being an accessory which provides add-on-value, in terms of comfort for the driver/front passenger in terms of leg room, seating position, etc is not a 'Part of vehicle seat' as has been arrived at above, and is not specifically mentioned elsewhere in the nomenclature and thereby the third condition is also satisfied - Track assembly being an accessory which provides add-on-value, in terms of comfort for the driver/front passenger in terms of leg room, seating position, etc is not a 'Part of vehicle seat' as has been arrived at above, and is not specifically mentioned elsewhere in the nomenclature and thereby the third condition is also satisfied. Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, DELHI VERSUS INSULATION ELECTRICAL (P) LTD. 2008 (3) TMI 22 - SUPREME COURT has decided that Seat assembly cannot be held as 'Parts' meriting classification under Chapter heading 9401, rather they would be accessories to Motor vehicles and would merit classification under Chapter heading 8708 because they are fitted in the motor car for adjustment of the seats for convenience and comfort of the passengers - The case being similar, the Apex Court decision squarely applicable to the case at hand. Thus, the 'Track assembly' manufactured and supplied by the applicant, being accessory of the Motor vehicle, is aptly covered under the CTH 8708- Parts and accessories of the motor vehicles The product 'Track Assembly' manufactured and supplied by M/s. Daebu Automotive India Private Limited, is classifiable under CTH 8708 of the First Schedule to the Customs Tariff Act, 1975 as applicable to GST as per Explanation (iii) to Notification 1/2017-Central Tax (Rate) dt 28.06.2017 and G.O. Ms No. 59, Commercial Taxes and Registration (B1) dt 29th June 2017 - applicable rate of tax is CGST @ 14% as per entry Sl.No.170 of Schedule-IV of the Notification no.1/2017-Central Tax (Rate) dt. 28.06.2017 as amended and SGST @14% as per entry sl. No. 170 of Schedule-IV of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. 29.06.2017 as amended.
Issues Involved:
1. Classification of the "Automotive Seating System" manufactured by the applicant. 2. Determination of the applicable GST rate for the goods manufactured. Detailed Analysis: Issue 1: Classification of the "Automotive Seating System" The applicant, engaged in the manufacture of seat components and accessories for four-wheelers, sought to determine the correct classification of their product, specifically the "Track Assembly" used in automotive seating systems. The applicant argued that the Track Assembly should be classified under HSN 8708 99 00 as "parts and accessories of motor vehicles," attracting a GST rate of 28%, rather than under HSN 9401 99 00 as "parts of seats," which attracts a lower GST rate of 18%. The Track Assembly, which includes components like Rail Assembly and Cushion Panel Assembly, is fitted to the floor of a car and enables the seat's forward and backward movement. The applicant contended that this assembly is not an essential part of the seat but rather an accessory that enhances the seat's functionality and comfort. The applicant referenced the Supreme Court ruling in Commissioner of C.Ex., Delhi Vs. Insulation Electrical (P) Ltd., which classified similar goods under CETH 8708, supporting their argument that the Track Assembly should be classified under HSN 8708 99 00. Upon examining the submissions, the Authority noted that the Track Assembly is fitted to the floor of the car and facilitates the seat's movement. Since the seat is complete without the Track Assembly, it was concluded that the Track Assembly is not a part of the seat but an accessory to the motor vehicle. The Authority determined that the Track Assembly is an accessory to the motor vehicle and falls under CTH 8708, "Parts and accessories of the motor vehicles," as it meets the criteria of being suitable for use solely or principally with motor vehicles, not being excluded by Section Note 2 to Section XVII, and not being specifically mentioned elsewhere in the nomenclature. Issue 2: Applicable GST RateHaving classified the Track Assembly under CTH 8708, the applicable GST rate was determined based on the Schedule-IV of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017. The relevant entry, Sl.No.170, lists "Parts and accessories of the motor vehicles of headings 8701 to 8705," attracting a GST rate of 28% (14% CGST + 14% SGST). Ruling:1. The product "Track Assembly" manufactured and supplied by the applicant is classified under CTH 8708 of the First Schedule to the Customs Tariff Act, 1975. 2. The applicable GST rate is 28% (14% CGST + 14% SGST) as per entry Sl.No.170 of Schedule-IV of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 and corresponding state notification.
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