2021 (8) TMI 782 - AAR - GST

Classification of goods - Agricultural manually hand operated Seed dressing, Coating and Treating drum - classified under HSN 8201 or under HS code 84371000? - HELD THAT - As per HSN Notes Page No. XVI-8436-1 , the other agricultural machinery includes seed dusting machines usually consisting of one or more hoppers feeding a revolving drum in which the seeds are coated with insecticidal or fungicidal powders. It is found that this Chapter Heading is more appropriate for classifying the subject goods as the function of subject goods is also similar wherein the said agricultural machinery has a drum in which seeds are coated and treated with chemicals before sowing. The said Chapter heading makes no different treatment between manual and power driven machines. On examination of HSN 8436, the subheading 843680 covers other machinery and tariff item 84368090 covers other . The description of subject goods fit into this Chapter Heading 8436, precisely subheading 843680 and further precisely at Tariff item 84368090. There are no reason to examine HSN 8437 which covers MACHINES FOR CLEANING, SORTING OR GRADING SEED, GRAIN OR DRIED LEGUMINOUS VEGETABLES; MACHINERY USED IN THE MILLING INDUSTRY OR FOR THE WORKING OF CEREALS OR DRIED LEGUMINOUS VEGETABLES, OTHER THAN FARM-TYPE MACHINERY - this HSN for subject goods is dismissed. Thus, the subject HSN is reflected at entry 199 to Schedule II to the Notification No. 01/2017-CT R dated 28-6-17 - Seed dressing, coating and treating drum machine is classified at HSN 84368090 tariff item and liable to GST at 12%.

Summary

Issues: Classification of 'Agricultural manually hand operated Seed dressing, Coating and Treating drum' for GST purposes under the Harmonized System of Nomenclature (HSN).

Analysis:
1. Issue of Classification: The applicant sought an Advance Ruling on the classification of the manually operated seed dressing machine under the HSN for GST purposes. The applicant argued that the machine should be classified under HSN 8201, attracting a Nil rate of GST, while highlighting that power-operated machines of a similar nature are charged at 5% GST under HS code 84371000.

2. Consideration of Tariff Entries: The Authority examined the Tariff entries at HSN 8201 and 8436 to determine the correct classification. HSN 8201 pertains to hand tools used in agriculture, horticulture, or forestry, emphasizing tools operated by hand with specific characteristics. However, it was noted that the applicant's product did not qualify as a hand tool but rather a machine used for seed dressing, coating, and treating seeds with chemicals, leading to the conclusion that it should not be classified under HSN 8201.

3. Applicability of HSN 8436: The Authority then referred to HSN 8436, which encompasses other agricultural machinery, including seed dusting machines with revolving drums for coating seeds with chemicals. This chapter heading was deemed more appropriate for classifying the subject machine due to its function aligning with the description provided. Specifically, subheading 843680 and tariff item 84368090 under HSN 8436 were identified as the suitable classification for the seed dressing machine.

4. Ruling and Tax Liability: Based on the analysis, the Authority issued a ruling that the 'Seed dressing, coating and treating drum' machine falls under HSN 84368090 tariff item and is liable to GST at 12% (6% CGST + 6% SGST). The decision was supported by the interpretation of HSN notes as a guiding tool for classification, ensuring the correct application of GST rates.

In conclusion, the judgment clarified the classification of the agricultural seed dressing machine under the appropriate HSN category for GST purposes, emphasizing the importance of accurate classification to determine the applicable tax rates.