2023 (12) TMI 508 - AAR - GST

Classification of goods - rate of tax - Two wheeler seat covers - to be classified under HSN code 9401 2000 or 87089900 or under or 87149990? HELD THAT - The commodity manufactured by the Applicant i.e., Two Wheeler seat cover does not merit classification either under CTH 8708 or 9401 and if the Seat covers are cleared under CTH 87149990 the GST applicable is not 5% as collected by some of the taxpayers - Motorcycles are classified under CTH 8711 and on the seats of such Motorcycles, the seat covers are fitted. Hence, these seat covers are nothing but part and accessories of Motorcycles and fall under CTH 8714, and more specifically under CTH 87149990. Thus, the Two wheeler seat covers are specifically covered under CTH 87149990 and are taxable (@ 14% CGST 14% SGST vide entry no. 174 of Schedule IV of Notification No. 1/2017- CT(Rate), dated 28.6.2017, as amended.

Summary

Issues Involved:
1. Correct GST rate for two-wheeler seat covers manufactured by the applicant.
2. Classification of the product under the appropriate HSN code.

Summary:

Issue 1: Correct GST rate for two-wheeler seat covers
The applicant, a manufacturer of two-wheeler seat covers, sought an advance ruling on whether the GST rate of 28% under HSN code 87089900 is correct. The applicant was previously collecting 28% GST but observed that competitors were charging 18% under HSN code 9401 2000 or 5% under HSN code 87149990. The applicant requested clarification on the correct tax rate.

Issue 2: Classification of the product under the appropriate HSN code
The jurisdictional authority noted that the applicant manufactures seat covers using foam and rexine, which are fitted onto two-wheelers. The authority examined whether the product falls under HSN codes 9401 2000, 87089900, or 87149990. The seat covers were determined to be accessories that enhance the functional value and comfort for the rider and pillion rider.

Discussion and Findings:
1. HSN 8708: This code pertains to parts and accessories of motor vehicles of headings 8701 to 8705, which include tractors, motor cars, and other motor vehicles but not two-wheelers. Therefore, HSN 8708 is not applicable to the applicant's product.
2. HSN 9401: This code covers seats for motor vehicles, but the applicant manufactures seat covers, not seats. Hence, HSN 9401 is also ruled out.
3. HSN 8714: This code pertains to parts and accessories of vehicles of headings 8711 to 8713, which include motorcycles and other cycles. The applicant's seat covers are accessories for motorcycles and fall under HSN 87149990.

The ruling concluded that the two-wheeler seat covers manufactured by the applicant are classified under HSN 87149990 and are taxable at 28% GST (14% CGST + 14% SGST) as per entry no. 174 of Schedule IV of Notification No. 1/2017-CT (Rate), dated 28.6.2017, as amended.

Ruling:
Two-wheeler seat covers merit classification under HSN 87149990 and are taxable at 14% CGST + 14% SGST as per entry no. 174 of Schedule IV of Notification No. 1/2017-CT (Rate), dated 28.6.2017, as amended.