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2024 (9) TMI 664 - AAR - GSTClassification of goods - Natural Fibre Composite board manufactured by the, applicant comprising of Natural Fibre, Calcium carbonate, recycling waste and other processing aid as well as PVC resin, wherein PVC acts only as a bonding agent - to be classified as wood and Articles of Wood under Chapter 44 and attract 12% rate of GST or not - appropriate rate and classification of GST. HELD THAT - The Fibreboard manufactured by bonding fibres extracted from wood chips or other lingo-cellulose material. They are bonded together by adding thermosetting rosins and find application such as furniture, interior decoration and in building are classified under this heading. The product in hand is a 'Natural Fibre Composite Board' and finds application in furniture, interior decoration, building, etc. In this case as per the manufacturing process, fibres arc extracted from the rice husk and then mixed with lime powder (calcium carbonate), processing additives such as lubricants, foaming agents, foam regulators, heat stabilizers, etc. PVC resin is used as a binding agent. Hence, the product is a Fibreboard and is more aptly classifiable under CTH 441193 as 'Others' as it is not a Medium Density Fibreboard. Further classification will depend on the individual properties of the product. Having decided that the NFC Board manufactured by the applicant with mam content as Rice husk, will more appropriately be classified under CTH 441193, the applicable rate of GST is taken up for consideration. The rate of CGST is notified vide Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 as amended in respect of goods and that is notified vide Notification No. vide G.O. (Ms) No. 62 dated 29.06.2017 as amended - the Rice Husk Hoard or fibre board manufactured from agricultural crop residues, irrespective of the Chapter under which the same are classified, are subjected to CGST @ 6% and 6 % SGST.
Issues Involved:
1. Classification of Natural Fibre Composite (NFC) boards. 2. Applicable GST rate for NFC boards. Issue-wise Detailed Analysis: 1. Classification of Natural Fibre Composite (NFC) boards: The applicant, M/s TraPlast Industries Pvt Ltd., manufactures NFC boards using natural fibers such as rice husk, rice grass, wheat grass, and coconut shell. The manufacturing process involves mixing these natural fibers with PVC resin and other additives, followed by extrusion, sizing, traction, and cutting. The applicant sought an advance ruling on whether NFC boards, comprising natural fibers, calcium carbonate, recycling waste, and PVC resin (acting as a bonding agent), should be classified as wood and articles of wood under Chapter 44 of the GST Tariff. The applicant argued that NFC boards should be classified under Heading 44.10, as they are similar to particle boards made from agricultural residues. The applicant referred to the HSN explanatory notes and previous tribunal decisions to support this classification. They emphasized that the primary material in NFC boards is natural fiber, and PVC is used only as a binder, making the boards resemble wood profiles. The ruling authority examined the composition of NFC boards, which includes 30% natural fiber (coconut shell or rice husk powder), 13% calcium carbonate, 15% recycling waste, 29% PVC resin, and 13% other processing aids and lubricants. They concluded that the NFC boards are more aptly classifiable under CTH 441193 as 'Others' since they are not medium-density fiberboards. 2. Applicable GST rate for NFC boards: The applicant contended that NFC boards should attract a GST rate of 12% (6% CGST and 6% SGST) under Schedule II of Notification No. 01/2017-CT (Rate) dated 28.06.2017. This schedule specifies that certain goods falling under Chapter 44, including fiberboards made from agricultural residues, are subject to a 12% GST rate. The ruling authority confirmed that NFC boards, being classified under CTH 441193, fall under the description of fiberboards manufactured from agricultural crop residues. Therefore, they attract a GST rate of 12% (6% CGST and 6% SGST) as per S.No. 92 of Schedule II under Notification No. 01/2017-CT (Rate) dated 28.06.2017 and the corresponding state notification. Ruling: The authority ruled that the Natural Fibre Composite (NFC) Board manufactured by the applicant merits classification under Chapter 441193 of the Customs Tariff and attracts a GST rate of 12% (6% CGST and 6% SGST) as per the relevant notifications. The ruling affirmed the classification and GST rate based on the description and composition submitted by the applicant.
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