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TMI Blog2018 (5) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act" 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus - "Exhibit A Statement of Facts 1. M/s Hafele India Private Limited (hereinafter referred to as the "Applicant") is a Private Limited Company having a registered place of business at Office No. 3, Building "A" Beta, I - Think Techno Campus, OFF J.V.L.R., Opp. Kanjurmarg Station, Kanjurmarg (East), Mumbai - 400042. The Applicant has obtained GST registration in Maharashtra bearing registration number 27AABCH2726AlZ5. The applicant is also registered in other states in India. 2. The Applicant is engaged in the business of importation of kitchen and bathroom fittings along with furniture and other home accessories (hereinafter called as goods) for onward selling. The Petitioner while importing these goods is subject to Basic Customs Duty and Integrated Goods and Services Tax ("IGST") under Customs Tariff Act, 1975 on goods cleared for home consumption. 3. The Applicant also im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the classification adopted under the pre-GST era. 7. Based on the examination, the Applicant realized that Caesarstone merits classification under HSN 2506 or 6810 of the GST Schedule. At the time of importation, the same is being classified in chapter 6810 for the purpose of levy of BCD and IGST on the same. 8. Considering the ambiguity in classification, the Applicant has initiated an application for an Advance Ruling before this Hon'ble Advance Ruling Authority for determination of the correct classification of Caesarstone under the Maharashtra Goods and Services Tax Act 2017. 9. The Applicant wishes to submit that Caesarstone can be classified in either of the following tariff entries: SR. NO. HSN CODE DESCRIPTION OF GOODS IGST RATE 1. 2506 Quartz (other than natural sands) quartzite, whether or not roughly trimmed or merely cut by sawing or otherwise in to blocks or slabs of a rectangular (including square) shape 5% 2. 6810 Articles of cement of concrete or of artificial stone whether or not reinforces 18% Exhibit B - Merits of the case 1. At the outset, the Applicant submits that it has fulfilled all the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of silicon and Oxygen atoms in a continuous framework of SiO4 Silicon-Oxygen tetrahedra. It is the second-most abundant mineral in Earth's continental crust behind feldspar, 6. Section V of the First Schedule to the Customs Tariff Act deals with various Mineral Products. Section V is further bifurcated into 3 Chapters viz., Chapter 25, Chapter 26 and Chapter 27. Chapter 25 covers "Salt; Sulphur-, earths and stone; plastering materials, lime and cement". The Customs Tariff provides that quartz of the following description can be classified under Chapter heading 2506 of the Customs Tariff: "Quartz (other than natural sands); quartzite, whether or not roughly trimmed or merely cur, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape" 7. As can be seen from the above that Caesarstone is approximately 90 percent crushed quartz. In this connection, we refer to Rule 2(a) of the General Rules for Interpretation which provides that a reference to a material or substance shall be taken to include a reference to mixture or combination of that material or substance with other materials or substances. Further, as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifted, screened, concentrated by flotation, magnetic separation or other mechanical or physical processes (except crystallization), but not products that have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading." 13. In view of the above, it can be construed that only such products that are in crude form or have undergone inter alia the mechanical or physical processes are permitted to be classified under Chapter 25 of the Customs Tariff. Thus, while a product may not be supplied in crude form, if the same is subjected to the processes mentioned under Chapter Note 1 to Chapter 25, such product would also be construed to form part of Chapter 25 of the Customs Tariff Act Schedule. For this, it needs to be evaluated whether the processes carried on by the Applicant's vendor falls within the purview of the term "mechanical process" as specified in Chapter Note 1 to Chapter 25. 14. The term "mechanical process" has been defined in the Advanced Law Lexicon (5th Edition) as "A process involving the use of machine". While this definition explains the meaning of the term "mechanical process", we can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and heated to 900C for 45 minutes which gives Caesarstone its ultimate strength and solidity. f. Polishing: Slabs are then gauged, calibrated and polished to a perfect finish in a wide range of colors and designs in one of our three textural surface finishes: Polished, Honed or Viento, The processes explained above have also been elaborated by the Applicant's vendor in its website. A copy of the same is attached an annexed as Exhibit H. 16. On a combined reading of the definition of the term mechanical process with the manufacturing process carried on by the Applicant's vendor, it can be construed that entire manufacturing process is within the scope of the term mechanical process. Consequently, in terms of Chapter Note I to Chapter 25, the manufacturing operations conducted by the Applicant's vendor are within the ambit of permissible processes. 17. Besides this, the Applicant further submits that the HSN system of coding goods is based on the HSN developed by the World Customs Organization ("WCO"). The WCO, periodically releases an Explanatory Note to each of the Chapters / Products of the HSN. 18. We refer to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of Caesarstone is 6810 of the Customs Tariff. Chapter heading 6810 covers "Articles of cement, of concrete or of artificial stone, whether or not reinforced'. In this connection, it is humbly submitted that Caesarstone is neither an article of cement nor a concrete article. It can at the maximum be classified only under the entry "Articles of artificial stone" 23. Moreover, tariff entry 6810 inter alia covers various products like tiles, flagstones, bricks, prefabricated structural components for building or civil engineering and concrete boulder. While it is beyond doubt that Caesarstone is different from tiles, bricks and prefabricated components for building or civil engineering, it would also be important to understand the meaning of the terms "flagstones" and "concrete boulder". a. As per Rule 22 of the Madhya Pradesh Mineral Rules 1996, Flagstone is a natural sedimentary rock which is used for flooring, roof top, etc. and used in the cutting and polishing industry. The meaning of the term flagstone clarifies that the same is different from Caesarstone. b. We would also refer to the meaning of the term "concrete boulder". The w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps (2506) and Other Artificial Stones (6810). In the instant case, the most specific description that relates to the nature of the impugned goods is under tariff entry' 2506, c. The Hon'ble Apex Court, in plethora of judgments held that the heading that provides a more specific description shall be preferred to the headings providing a more general description. i. In Indian Metals & Ferro Alloys Ltd., Cuttack vs. Collector of Central Excise, Bhubaneshwar, [1991 Supp (1) SCC 125 = 1990 (11) TMI 143 - SUPREME COURT OF INDIA], the Hon'ble Apex Court held that a residuary item can be referred to and such item can be applied only when goods are shown to be not falling under any other specific item. If they are covered by a specific item, residuary item has no application. It was further held that unless the department can establish that the goods in question can, by no conceivable process of reasoning, be brought under any of the specific items mentioned in the tariff. resort cannot be had to the residuary item. ii. Similarly, the Hon'ble Apex Court in the case of Speedway Rubber Company vs. CCE, Chandigarh [ 2002 (143) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: 1. M/s Hafele India Pvt Ltd.(hereinafter referred to as the applicant) are registered with Central Government under GST Act with GSTIN No 27AABCH2762A1Z5 2. The applicant has filed an application with the Advance Ruling Authority (hereinafter referred to as "authority" for brevity) for determination of classification of the product '"Caesarstone" imported and sold in domestic market by the applicant. 3. The question before the authority is to decide whether the product "Caesarstone" imported by the applicant can be classified under HSN Code 2506 or 6810. 4. The applicant while submitting their case before the authority have submitted the manufacturing process by which the product "Caesarstone" is manufactured and it's composition. In para 3 of Exhibit B, it has been submitted by the applicant that the said product is manufactured by combining Quartz with high quality polyster resin and pigments which is then compacted under intense vibration, vacuum and pressure into dense and nonporous slabs. The submission is supported by the technical literature (pg 41) submitted by the applicant alongwith the application. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 25 for classification of the product under any particular sub-heading of Chapter 25, the processes mentioned against the chapter sub heading are only required to be carried out and not beyond that. The processes mentioned against Chapter sub-heading are only cutting or mere trimming by sawing or otherwise and not beyond that. In the instant case as more processes are carried out than mentioned in chapter sub heading 2506, the product cannot be classified under chapter 2506. 10. Thus, the classification of the product under Chapter 25 is ruled out in view of Chapter note 1 of Chapter 25. 11. The Chapter 68 includes Articles of Stone, plaster, Cement, asbestos, mica or similar material. Quartz being similar product, the articles made of quartz i.e. "Caesarstone" can be classified under Chapter 68. Chapter 6810 specifically mentions "Articles of Cement, of concrete or of artificial stone, whether or not reinforced" and includes Tiles, flagstones, bricks and similar articles. The product Caesarstone being similar article as Tiles, the same is correctly classifiable under Chapter 6810. 12. In view of the above submission it is prayed that the authority may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers 4 distinctive surface finishes that Offer added character beyond the color offering. Caesarstone can be finished on two faces by special order requiring a minimum order quantity and additional lead-time. Polished surfaces have a silk gloss finish with a ratio greater than or equal to 35% at 50% Honed is matte finish surface with the look and feel of natural stone, requiring more maintenance yet no sealants. Concrete TM matte, textured finish which introduces an industrial aged feel to the surface. This unique finish never requires sealing and is designed to acquire a natural patina over time which adds to the character of the surface, yet remains easy to clean and maintain. Motivo (R) is a pattern-design application applying a patented embossed effect. Caesarstone (R) is the original engineered quartz surface. Use it as an attractive, versatile, and distinctive finish for residential, commercial and institutional buildings. Manufacturing Process Caesarstone has three state-of-the-art production facilities and five fully automated production lines servicing a global distribution network. We use advanced Breton technologies, and employ highly skilled and trained staff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which claim is being laid and also, the entry which is claimed as being not applicable - S. No. Chapter/Heading/subheading/Tariff item Description of Goods GST Rate (CGST+MGST] 114. 2506 Quartz (other than natural sands) quartzite, whether or not roughly trimmed or merely cut by sawing or otherwise in to blocks or slabs of a rectangular (including square) shape 5% [2.5% + 2.5%] 181. 6810 Articles of cement of concrete or of artificial stone whether or not reinforces 18% [9% + 9%] It can be seen that the Heading 2506 covers "Quartz". However, the entry says that the quartz would be one which may or may not be roughly trimmed or merely cut. The process of trimming or cutting is further specified as being by the method of sawing or otherwise. Such quartz would be in blocks or slabs of a rectangular (including square) shape. A look at the information reproduced above reveals that the impugned product is not "quartz" per se. "Quartz" is one of the raw materials to produce the impugned product which is an engineered quartz surface and which has use as an attractive, versatile, and distinctive finish for residential, commercial and institutional buildings. Such a finished pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We see above that even roasting is not allowed by the Chapter Note. The General Notes of this Chapter further say that- "Minerals which have been otherwise processed (e.g., purified by re-crystallisation, obtained by mixing minerals falling in the same or different headings of this Chapter, made up into articles by shaping, carving, etc.) generally fall in later Chapters (for example, Chapter 28 or 68). " As can be seen the above General notes throw light on the words "otherwise processed" It can be seen that these words do not cover activities such as mixing with other minerals, let alone polymers or pigments. Further, the words " otherwise processed" do not cover activities such as making up of articles by shaping, curving, etc. HSN Notes of the Heading 2506 make things clearer when they say - "Quartz is the naturally occurring crystal form of silica. It falls in this heading only if complying with both of the following two conditions : (a) It must be in the crude state or have not undergone any process beyond that allowed in Note 1 to this Chapter; for this purpose, heat treatment designed solely to facilitate crushing is regarded as a process permitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the description against the Heading 6810 for the purposes of the schedule entry under the GST Act. Now, we see that the Heading covers artificial stone. Artificial stone is understood thus- https://en.wikipedia.org/wiki/Artificial stone Artificial stone is a name for various kinds of synthetic stone products used from the 18th century onward. As well as artistic uses, they have been used in building construction, civil engineering work, and industrial uses such as grindstones. Engineered stone See also: Engineered stone Engineered stones are the latest development of artificial stones, it was invented in the early 1980s and have since been continuously developed by the Italian company Breton S.P.A.'s late founder Marcello Toncelli Engineered stones are a mix of marble powder, resin, and pigment cast using vacuum oscillation to form blocks. Slabs are then produced by cutting, grinding, and polishing. Some factories have developed a special, low-viscosity, high-strength polyester resin to improve hardness, strength, and gloss and to reduce water absorption. There are two major varieties of engineered stones based on the main composition of its aggregates (stone powders) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As the product is made primarily from naturally forming quartz, a difference of up to two shade tones can be viewed between sample and slab, i.e. the sample you see may not be exactly the same as the slab. This is an important consideration if choosing engineered stone - which is a different process to if selecting natural stone, (where you can chose the specific slab). A look at all above helps understand that the impugned product is an article made from artificial stone. It is a product made using artificial or engineered stone. The product certification explains things, beyond doubt - It can, therefore, be understood as to why the impugned product is being cleared under the Heading 6810. We have also found a Ruling in respect of the product classification of Silestone TM (as seen above) agglomerated stone slabs under the Harmonized Tariff Schedule of the United States (HTSUS). The information about the product was thus - The slabs are composed of 93% quartz and 7% resm binder. After 'he slabs are imported. they are sold only to U.S distributors who use then to produce various counter tops. vanities and fireplace surrounds. It was held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, chamfered, molded, carved, ornamented, beveled, edge worked, etc. In addition to worked monumental or building stone, heading 6802 covers articles of monumental and building stone. A significant exception to this rule involves articles of precious or semiprecious stone classifiable in Chapter 71 Heading 6802 (Worked Natural Stone) vs. Heading 6810 (Artificial Stone) Worked monumental/building stone is classifiable in heading 6802, assuming the stone is natural. However, artificial stone is classifiable in heading 6810. Artificial stone is formed when pieces of natural stone, or crushed or powdered natural stone, is agglomerated with plastic resins, cement or other binders. In artificial (agglomerated) stone, the binding material and the natural stone are uniformly agglomerated throughout the body of the article. The classification of floor and wall tiles of agglomerated stone is dependent on the precise type of binding material used in the products. Subheading 6810.19.12 provides for floor and wall tiles of stone agglomerated with binders other than cement (e.g., plastic resins). Floor and wall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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