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TMI Blog2018 (12) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... the Heading description or the Chapter Note 1, for an eligible classification under Chapter 25. Hence, classification of the subject goods under Chapter 25 i.e, specific Headings 2515 /2516 remains precluded by virtue of description in said Headings as also Chapter Note 1 Note 1 to Chapter 25 makes fulfilment of the specified criteria in the Heading description or the Note itself. Neither of the two categories of limestone slabs viz., Polished limestone slabs or Processed Limestone slabs (as referred at para 15.2 supra), can be classified under Chapter 25 in general and under Headings 2515/2516, in particular. Correctness of classification of the goods under Heading 6802, as held by the lower authority - Held that:- The meaning/scope of the word ‘worked’ is not separately and specifically delineated in the HSN Notes also. However, the said word is used at various places denoting certain illustrative and not exhaustive list of processes. The Heading 6802, apart from articles, also specifically covers stone in the description itself i.e. “worked monumental or building stone and articles thereof”. The same, coupled with the HSN Explanatory Notes, as detailed and analysed ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no rectification which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made, unless the applicant or the appellant has been given an opportunity of being heard. 2. Under Section 103 (1) of the Act, this advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a) On the applicant who had sought it in respect of any matter referred to in sub-Section (2) of Section 97 for advance ruling; (b) On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. Under Section 104 (l) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-Section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther cut it to square or rectangle shape on a table cutting machine. Out of two processes, we also opt for only one process called CUT on these stones. Some other kind of simple processes like CALIBRATION, TUMBLING etc. are also undertaken. But a stone SLAB generally do not need more than two processes before ready for selling into the market. After any kind of the process completed on a stone SLAB, the morphology doesn t change. The stone slab still remains a stone slab only, and no changes occur either in shape or in characteristic or in distinction. In essence both raw material and finished goods contain uniform Physical properties chemical composition. After processing also our commodity still called STONE in general trade parlance. In other words, a mineral after processing remains a mineral product or mineral substance only and nothing more than that . 14. 2 Questions on which advance ruling is required: A) In which Chapter the commodity called Polished/Processed limestone slabs falls ? B) Under which HSN Code the above commodity comes ? C) Can we put them under Mineral substances not elsewhere specified or included which is mentioned under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere are two kinds of stones available in limestone category. One is BLOCK and the other is SLAB. SAWN is a process performed on Block to derive uniform thickness TILES which are called a CREAM like material and our SSI unit don t do that process and sawn on blocks is mostly practiced in KOTA region of Rajasthan and also in Marble/Granite Industry worldwide. Whereas surface POLISH is a process which is performed on directly brought rough stone SLABs (minor mineral) of uneven thickness and it is called BUTTERMILK like material which we usually undertake in our small scale industries. The expenses incurred on a sawn TILE is higher than combined processes of POLISH CUT done on a SLAB of same size. In economic terms also any of the two processes combined together cannot match a single process of SAWN which is allowed in written form under HSN Code 2516. Selling price wise and quality wise also there is a huge difference in these both varieties of stones and our cheap polish slabs are mostly used in low budget housing needs. These cheap quality Polish stones are also a last resort for a customer to select from. It is noteworthy to mention here that, Processed or Mirror Polished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng authority to declare that POLISHED or PROCESSED LIMESTONE SLABS comes under any of the HSN Codes of Chapter 25. If an opportunity be given, we will come personally and demonstrate to prove the substance in our discussions before the competent authority by bringing small pieces of sample stones so that it will become easier for the authority to decide the HSN Code of our commodity on merits. Further clarifications if any will be submitted at the time of arguments. 3.2. The appellant filed additional submissions before the TSAAR vide a letter dated 05-01-201 8, as follows: Our further humble submissions are mentioned herein below substantiating that Processed/Polished Limestone slabs cannot be taken out of Chapter 25: 1. A downloaded list (four in no.s) of Rough as well as Processed Kota, Marble and Granite stones exported to different countries from India under Chapter HSN Code: 25 is enclosed here with as ANNEXURE-A1 as further proof substantiating that polish stone slabs have not been taken out of Chapter 25. 2. A bunch of newspaper clippings clearly stating that how GST/FITMENT Committee, of late, realized its mistake and expressing its concern having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aracter or distinction. In this way also it is quite evident that the polish stone slabs cannot be taken out of Chapter 25. (See ANNEXURE-A3) 7. Note 1 of Chapter 25 also allows other mechanical or physical processes on minerals without changing the structure of the product. It is very clear that Polish done on a stone slab is a process comes under mechanical or physical process by using simple machine and the shape and structure of stone slab still remaining stone slab only and not changed. (See ANNEXURE-A3). 8. Note 2(e) of Chapter 25 is also mentioning that Chapter 25 does not cover mosaic cubes or the like of heading 6802 , it does clearly mean that other products coming under 6802 can have a place in Chapter 25. (See ANNEXURE-A3). 9. Tandur rough stones are stones of less value in the market and the marketable quality of these stones is enhanced by polishing and cutting. But the substance of the material is not altered. The stone slab is made more presentable and attractive for the benefit of the end users of low cost housing needs and it cannot be said that the activity is a manufacturing activity. 10. In the Hyderabad meeting of GST Council held on 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there allowed many processes in Chapter 25 under GST 5%, such as CRUSHING, POWDERING etc. on hardcore minerals which are expenditure wise also much costlier than POLISH done on surface of a rough slab by using a simple polish machine III. Advance Ruling Order: 4. After examining the issues, the Authority (TSAAR) passed the impugned order, wherein (after briefly summarising facts, application-contents etc.), the submissions made by the applicant during personal hearing and the Authority s discussion/findings are recorded as follows: 3. A personal hearing was held in this case and Mr. Rajgopal Sarda, Proprietor of M/S. Maheshwari Stone Supplying Co., Tandur have appeared for personal hearing on 27-01-2018 and explained the case, as under: a) That there are two kinds of stones available in limestone category. One is BLOCK and the other is SLAB. SAWN is a process performed on Block to derive uniform thickness TILES which are called a CREAM like material and their SSI unit do not do that process and sawn on blocks is mostly practiced in KOTA region of Rajasthan and also in Marble/Granite Industry worldwide._ b) That surface POLISH is a process which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y fiscal burden in the form of ROYALTY at the hands of Mining authorities of State Government. The process of expensive and luxurious category Marble/Granite is very complex in comparison to their Polish slabs; to such an extent that processing expenses incurred only on SAWN process of Granite/Marble is 2-4 times higher than the entire material cost of Processed Limestone slab itself of same surface area. e) Hence, finally it was submitted that at any angle it is appropriate that their commodity called Polished/Processed limestone slabs should not be taken out from chapter 25. Therefore, in light of their submissions they request the advance ruling authority to declare that POLISHED or PROCESSED LIMESTONE SLABS comes under any of the HSN Codes of Chapter 25. 4. The applicant is seeking advance ruling in respect of classification of processed/polished limestone slabs and with a submission that the said goods are correctly classifiable under chapter 25 of the GST Tariff. 5. Before deciding the classification of goods for which advance ruling was sought it is fair on our part to go through the Rules for Interpretation of Customs tariff which was made applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blocks or slabs, still having some rough, uneven surfaces. This working involves removing superfluous protuberances by means of hammer or chisel type tools. This subheading does not cover blocks or slabs which have been cut to a rectangular (including square) shape. 9. Similarly, the subheading explanatory notes for subheading 2515.12 are given below: To fall in this subheading, the blocks and slabs which have been merely cut by sawing must bear discernible traces of the sawing (by wire strand or other saws) on their surfaces. 10. The heading 25.16 covers Granite, Porphyry, Basalt, sandstone and other monumental or Building stones, whether or not roughly trimmed or merely cut, by sawing or otherwise into blocks or slabs The stones of this heading may be shaped or processed in the same ways as the stones of heading 25.15 (including building limestone or Portland stone) and that stones in shapes identifiable as road or paving setts, flagstones or curb stones are classified in heading 68.01 even if merely shaped or processed as specified in the text of this heading. 11. The heading 25.21 covers limestone flux and limestone and other calcareous rocks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the stage of the normal quarry products of chapter 25 are correctly classifiable under heading 68.02 of the Customs tariff as per the Harmonized Commodity Description and Coding System. As the Rules for Interpretation of Customs tariff was made applicable to GST Tariff and General rules for Interpretation of the schedule, the Polished/Processed limestone slabs are correctly classifiable under heading 6802 of the GST Tariff. 15. The issue has been examined with reference to the provisions of the CGST/TGST Act, 2017 and the Rules made there under and the notifications issued till date; and the Advance Ruling is given as under: - Polished/Processed limestone slabs are correctly classifiable under heading 6802 of the GST Tariff. The application filed by M/S Maheshwari Stone Supplying Co., Tandur, Vikarabad, is disposed accordingly . IV: Appeal filed by the Appellant, Personal Hearing Further submissions : 5.1. Against the above Advance ruling Order, the appellant filed the present appeal on the following grounds: ..We have received the copy of order no. 2/2018 of AAR on 17/04/2018 by regd. post which is enclosed here with as ANNEXURE-AAI. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose at all in their verdict. One such being as all RDs involved in processed stone slabs at source point in Telangana are falling under below 1.5 Cr. Turnover category, as such at the most they can write only two digit HSN code as per HSN Rules. And it had mentioned in GST goods rate list under HSN 25 that it covers Goods not mentioned elsewhere and this question had not been answered by AAR. We ask once again this AAAR that can t we opt for HSN 25 for Processed limestone slabs under category of goods not mentioned elsewhere ? Our further submissions before this AAAR are here under: 1. We strongly raise our objections for the fact that why Marble/Granite other than BLOCKS mentioned under the GST column of Chapter 25 also shall not be called as Worked monumental or building stone ? because other than Blocks means TILES/SLABS (in even thickness always) and they cannot be derived without bringing a BLOCK to a factory for splitting by subjecting to SAWN or CUT processes which are highly expensive than mere POLISH+SIZING combined together done on our Rough limestone slabs. If the AAR/GST is so particular about WORKED definition to be only interpreted for heading 6802, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cked first while classifying the product and not its technological manipulation. Where the product is classified on the very first level, then there is no need to drill down further in the strata below. Whether RAW or FINISHED our stones are called STONES, BUILDING STONES, FLOORING STONES in the market but not WORKED BUILDING STONE. 6. The AAR didn t consider that the GOODS under CETH 6802 are shaped articles and further worked by a Stone-mason or sculptor. Limestone slabs in question are not such goods which are otherwise simply polished cut and this activity would not change the morphology, character, name, description, purpose and usage of stone slabs to that of articles mentioned within the scope of heading 6802. Such processes would thus not take out their classification out of Chapter 25. As per Chapter Note 1 to Chapter 68. products of Chapter 25 are excluded from the scope of Chapter 68. Thus, the products which are otherwise classifiable under Chapter 25 are excluded from Chapter 68. 7. The processes such as CRUSHING, POWDERING of minerals have still been retained in Chapter 25 only, in-spite of the fact that such processes not only require huge power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with a highly expensive processing machine, this is not possible. More over a BLOCK is being converted into TILES/SLABs of even thickness. It does clearly mean that NATURE, DESCRIPTION, PURPOSE USAGE have completely been changed and even after that it had been retained in Chapter 25 only!!! A block is no longer remained a Block but split into tiles/slabs thus changing its shape and usage. 12. Even there are many Excise judgments for Polished Marble/Granite not taking them out of Chapter 25. One such being in case of Classic Marble Company Pvt. Ltd. Vs Commissioner of Central Excise ST., Vapi in 2013(11) TMI 384 - CESTAT Ahmedabad delivered in Nov 2013, where it was held that Polished Marble/Granite cannot be taken out of Chapter 25. 13. The ruling of AAR will put our low cost processed stones under much higher bracket rate of GST without considering the selling price and other phenomena. Hence almost all kinds of stones whether low cost or luxurious after processing will now have to suffer GST @ 18% (under HSN Code 68) including much lower category and cheaper stones like of our processed LIMESTONE SLABS. By doing so the AAR had put all verities of EGGS int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of revenue to Govt, and they have been first put under 28% bracket in GST then reduced to 18%!!! We ask on what basis?? We afraid will it not be treated as a solid kind of favour extended to Corporate manufacturers who are financially so sound? The funny thing is MRP for each water bottle under both regimes remained same as ₹ 20/- on lower side and Given the fact of daily sales of water bottles in India, the Govt, is at a net loss of around INR 2000 Crores per annum. And this amount is very smartly entering into the pockets of financially well settled corporate houses, where as no benefits had been passed on to consumers. On the other hand if GST Council fix the rate of Tax on all kinds of low cost processed limestone slabs (produced from RAW slabs only and not to be confused produced from BLOCKS) in India to 5%, then also it may not amount to a decrease of INR 500 Crores per annum, though in actual terms it is not at all a decrease because under VAT regime our finished product was also charged only 5%. 17. From the above statement of point 16, at one end GST Council by reducing a TAX base unnecessarily has bringing loss to itself, where as small businessmen like us h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marble/Granite other than blocks mentioned under 18% column of Chapter 25 does clearly mean that they have been further processed beyond quarry i.e. in a factory by subjecting them to SAWN or CUT processes. The GST of 18% is the highest tax rate for Marble/Granite and the like, then in the event it can also be construed that even POLISHED SIZING for Marble/Granite slabs/tiles are also included in the same Chapter of 25. 21. The AARs findings interpretation rules if at all applicable then they are to a situation where in an assessee brings entire stone block into his factory, cuts into slabs or tiles and does all other activities thereafter such as POLISHING SIZING etc. But in our case no such activity is undertaken. Our job is very simple; to bring rough stone slabs and brush polish it s one of the suitable surface, without changing the shape, structure of the stone slab. Therefore the AAR had failed to notify that the reliance placed by them in defining heading 6802 apply only when processes specified therein are undertaken for conversion of blocks into slabs or tiles only. 22. On harmonious reading of Note 1 and Note 6 of Chapter 25 of CET and in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and better known to them, then at least AAAR could recommend to GST Council/Fitment Committee or Appropriate Authority to fix the GST Rate as 5% for our commodity based on our genuine and justified facts and submissions submitted herein above and enclosed here with in enclosed ANNEXURES. This can also be done in heading 6802 by creating 5% GST column for such kind of lower cost stones where morphology in RAW FINISH doesn t change at all . 5.2. The appellant made further submissions vide a letter captioned Sent by Regd. Post on 12/05/2018 , as follows: 2. Kindly refer Judgment of Customs, Excise Gold Tribunal-Delhi, in the matter of: Madhusudan Ceramics vs Collector of Central Excise on 13 November, 1990. (Can be searched in Google bar). (Equivalent citations: 1992 (37) ECC 86, 1991 ECR 206 Tri Delhi, 1991 (53) ELT 90 Tri Del). = 1990 (11) TMI 244 - CEGAT, NEW DELHI With reference to the above, our further submissions are as under: 1. While referring to paragraph no. 14 of ORDER No. 02/2018 of AAR in ANNEXURE-AAI, the AAR while classifying our GOODS had relied upon HCDCS alone but in the above appeal under citation no. 2 the contention of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonal hearing before this Appellate authority on 07-06-2018. Sri Rajgopal Sarda, Proprietor appeared for the hearing and reiterated and explained the various submissions in his appeal. As to the arguments made by the AAR w.r.t. the Explanatory Notes, he mentioned that the AAR was legally not justified in relying upon the Explanatory Notes. He had nothing further to add. 5.4. Vide a letter dated 12/06/2018, the appellant put forth the following further submissions: With respect to my Appeal under GST for Tandur stone slabs, if your good self consider following few lines, then it would become so clear that why polished stone slabs of Tandur fall under Chapter 25 of Customs tariff only. 1. Kindly differentiate between a BLOCK a SLAB as raw material undergoing the various processes. Slabs/Tiles derived from a Block come under manufacturing (shape is changed) activity, where as a rough stone slab undergone Polish or cutting processes cannot be equated to manufacturing because after undergoing those processes still it remains a stone slab only (no shape change). 2. The AAR in their judgment relied on non-statutory aspects such as HCDCS, giving description of only he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. We now proceed to record our discussions and findings. 8.1. At the outset, it is observed that in the Grounds of Appeal (as also initial application for Advance Ruling), reproduced above, some of the submissions put forth by appellant are to the effect of disputing the GST levy-rate of 28% on limestone slabs (as goods falling under HSN Code 6802) or questioning the basis of and rationale behind fixing such quantum of levy; arguing as to purported discrimination / inequity by citing lesser rate of GST-levy fixed in respect of other products / commodities - Water bottles, marbles, granites etc., and industries/sectors having highly mechanised processes etc., compared to small-scale units and so forth. Certain other submissions are also made by referring to newspaper reports/clippings, GST-captions/slogans, effects of the higher rate on small scale units, employment-aspects, etc. 8.2. We find that such submissions/contentions cannot merit consideration in the present proceedings before this forum since (i) the basis / rationale and reasoning in fixing quantum of levy @ 28% (or 18% as subsequently reduced), is a policy-decision of the Government(s) / statutory GST Counci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. Other questions framed in the application (reproduced above and hence not reiterated here), are corollary to the said main question; their determination would depend upon that of the main question 7 . 10.1. To determine the aforesaid main question/issue, it would be appropriate to refer to the statutory provisions, relevant entries in the Central Tax (Rate) Notifications 8 as also the Headings, Chapter Notes etc., applicable in the given context. 10.2. Levy of GST came into effect from 1-7-2017. The charging Sections, Section 9 (1), in both the Central Goods and Services Tax Act, 201 7 ( CGST Act / the Act , in short) and the Telangana Goods Services Tax Act, 201 7 ( TGST Act / the State Act ) - collectively referred to as the Acts - read as follows: 9. Levy and collection. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent. , as may be notified by the Government on the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sand lime bricks 10 or Stone inlay work 11 176A 6802 Statues, statuettes, pedestals; high or low reliefs, crosses, figures of animals, bowls, vases, cups, cachou boxes, writing sets, ashtrays, paper weights, artificial fruit and folia e, etc.; other ornamental goods essentially of stone ; SCHEDULE III - 9% S.No. Chapter/Heading/Sub-heading/Tariff item Description of Goods (1) (2) (3) 12 26A 2515 12 20, 2515 12 90 Marble and travertine, other than blocks 26B 2516 12 00 Granite, other than blocks ; 13 177A 6802 All goods other than :- (i) all goods of marble and granite; (ii) Statues, statuettes, pedestals; high or low reliefs, crosses, figures of animals, bowls, vases, cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification . . . 10.6. From the above, it is seen that the statutory provision vide the charging Section 9 of the Acts, mandates that the rates of GST would be as per recommendations of the GST Council and notified by the Government. The Notification No. 1 /201 7-Central Tax (Rate) dated 28.06.201 7 has been issued in exercise of the powers conferred under the said Section 9 and on the recommendations of the GST Council. The Notification prescribes the rates of GST-levy on various goods with a reference to the Chapter Heading / subheading / Tariff Item along with description of goods. The said Chapter Heading, sub-heading and Tariff Item are defined, by the Explanation to the Notification, to be those specified in the First Schedule to the Customs Tariff Act, 1975. The Explanation further provides for application of the Rules for Interpretation, Section Notes, Chapter Notes and General Explanatory Notes, for interpreting the entries in the Notification, as far as the case may be. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard was also placed on the decision of Hon ble Tribunal in the case of Madhusudan Ceramics vs Collector of Central Excise 1991 (53) ELT 90 Tri Del = 1990 (11) TMI 244 - CEGAT, NEW DELHI . We have examined the contention. The HSN (Harmonised System of Nomenclature) Explanatory Notes (formal description being the Brussels Convention on the Harmonised Commodity Description and Coding System (HCDCS)), contain the internationally accepted nomenclature and classification of goods and India is a signatory to the said convention. It is a well-settled legal proposition that where the Tariff-Schedule is based upon and structured on the same pattern as the HSN, the HSN Notes are relevant and a safe guide for deciding issues of classification. This principle has been enunciated in a catena of judgements, including those of Hon ble Supreme Court in CCE, Shillong vs Wood Craft Products Ltd. 1995 (77) ELT 23 (SC) = 1995 (3) TMI 93 - SUPREME COURT OF INDIA , CCE, Hyderabad vs. Bakelite Hylam Ltd., 1997 (091) ELT 0013 (SC) = 1997 (3) TMI 598 - SUPREME COURT Commissioner of C.Ex., Goa vs Phil Corporation Ltd. etc. 2008 (223) ELT 9 (SC) = 2008 (2) TMI 3 - SUPREME COURT OF INDIA . Thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by appellant) as well as Chapter 68 i.e, Heading 6802, along with the relevant Chapter Notes, are reproduced below: (Reference to HSN Explanatory Notes would come into consideration, only in case of any doubt / ambiguity in interpreting / applying these headings/Notes etc. and the same has accordingly been dealt, in the subsequent paragraphs). SECTION V MINERAL PRODUCTS Chapter 25 Salt; sulphur; earths and stone; plastering materials, lime and cement Notes : 1. Except where their context or Note 4 to this Chapter otherwise requires, the headings of this Chapter cover only products which are in the crude state or which have been washed (even with chemical substances eliminating the impurities without changing the structure of the product), crushed, ground, powdered, levigated, sifted, 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. The products of this Chapter may contain an added anti-dusting agent, provided that such addition doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -- Sandstone kg. 2516 90 - Other monumental or building stone : 2516 90 10 --- Pakur stone kg. 2516 90 20 --- Stone boulders kg. 2516 90 90 --- Other kg. 2521 LIMESTONE FLUX; LIMESTONE AND OTHER CALCAREOUS STONES, OF A KIND USED FOR THE MANUFACTURE OF LIME OR CEMENT 252100 - Limestone flux; limestone and other calcareous stones, of a kind used for the manufacture of lime or cement : 2521 00 10 --- Limestone flux (L.D., below 1 % SiO 2) kg. 2521 00 90 --- Other kg. 2530 MINERAL SUBSTANCES NOT ELSEWH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) to (n) not reproduced since pertaining to other goods/Chapters etc and hence not relevant. 2. In heading 6802, the expression worked monumental or building stone applies not only to the varieties of stone referred to in heading 2515 or 2516 but also to all other natural stone (for example, quartzite, flint, dolomite and steatite) similarly worked; it does not, however, apply to slate. 6802 WORKED MONUMENTAL OR BUILDING STONE (EXCEPT SLATE) AND ARTICLES THEREOF, OTHER THAN GOODS OF HEADING 6801; MOSAIC CUBES AND THE LIKE, OF NATURAL STONE (INCLUDING SLATE), WHETHER OR NOT ON A BACKING; ARTIFICIALLY COLOURED GRANULES, CHIPPINGS AND POWDER, OF NATURAL STONE (INCLUDING SLATE) 6802 10 00 - Tiles, cubes and similar articles, whether or not on a backing; artificially coloured granules, chippings and powder, of natural stone (including slate) not rectangular (including square), the largest surface area of which is capable of being enclosed in a square the side of which is less than 7 cm; artificially coloured granules, chippings and powder kg. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to principles of rule 3. 3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question framed for advance ruling - in itself bears elements of vagueness / imprecision. That is, while the pre-fixed term polished denotes process of polishing undertaken, the word processed is generalised and not specific. (3) However, in the given context, by taking into account the activities described by appellant for the purpose of these proceedings, the term processed is taken to be denoting combination of all the processes mentioned in the application i.e, cutting + polishing + tumbling + calibration (not necessarily in the said sequence). Further, appellant while describing goods in question as polished / processed limestone slabs , also did not specify whether the process undertaken is only polishing in certain cases and processed in other cases; or both polishing and processing are undertaken in some cases or in all cases. 15.2. In view of the above described aspects of indeterminate nature, the issue for determination is being considered 22 in these appeal proceedings based on appellant s description of goods/processes, as follows: (a) Classification of polished limestone slabs i.e, where apart from cutting slabs into rectangula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 12-5-2018, it has been described as: (quote) ..Even CUTTING of sides of a Stone slab is possible only with the application of physical force of a labour against a cutting wheel of a simple machine. (iii) However, as stated above, appellant has not described/explained as to the meaning / nature of the processes tumbling and calibration . Hence, recourse is taken to dictionary/technical literature for ascertaining the same. As per the details available on public domain, tumbling 23 and calibration 24 , with regard to stones/slabs, are found to be described as: Tumbling : technique for smoothing and polishing a rough surface on relatively small parts. Calibration : process whereby the stone is put through a machine (strip-mill) to achieve flags (stones) of approximately the same thickness. After this process, the stone will retain its natural riven surface but will show calibration tool marks on the underside. Calibration also known as strip-milling involves running the stones through a series of closely spaced saw blades to cut grooves or channels into the underside and thereafter the remaining upstand is nobbled off to leave a stone of selecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods i.e., Calcareous monumental or building stone, that limestone falls under Heading 2515, if apparent specific gravity thereof is 2.5 or more. (Meaning of Calcareous as per standard dictionaries and also in common and technical understanding 25 is mostly or partly composed of calcium carbonate - in other words, containing lime or being chalky . Further elaboration given herein is that major materials in Limestone sedimentary rock are the minerals calcite and aragonite, which are different crystal forms of calcium carbonate (CaCO 3 ) ) c) If specific gravity is less than 2.5 the same would fall under Heading 251 6, notwithstanding that Heading 25.1 6 does not contain the word calcareous and mentions only other monumental or building stone . This is in view of the HSN (Harmonised System of Nomenclature) Explanatory Notes for Headings 25.15 and 25.1 6, which read respectively, as follows (the validity of reference to HSN Notes, has been delineated earlier) : 25.15 : The heading covers other similar hard calcareous monumental or building stones, provided their apparent specific gravity is 2.5 or more (i.e., effective weight in kg/ 1,000 cm 3 ). Calcareous mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vering limestone, as detailed above. Hence, Heading 2530 is also found to be not applicable and not relevant. 18.2. As such, the issue narrows down to classification of the subject goods either under Chapter 25 (i.e, Headings 2515 or 251 6, as detailed supra) or under Chapter 68, Heading 6802 in particular. If the goods fall under Chapter 25t the same remain excluded from Chapter 68, by virtue of Note 1 (a) of Chapter 68. It has to be therefore first examined whether the goods fall under Chapter 25. Classification under Chapter 25 is primarily governed by Note 1 to the said Chapter. The said Chapter Note specifies certain criteria for classification under Chapter 25. These can be analysed as follows: The Note starts with the phrase Except where their context (.. 27 ) otherwise requires, the headings of this Chapter cover.. . This denotes that the description in the Headings is the first and foremost criterion to be considered. If the Headings do not otherwise require/provide, then headings would cover : (a) only products which are in the crude state, or (b) products which have been washed, crushed, ground, powdered, levigated, sifted, screened or concentrated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ammer or chisel-type tools . 28 (c) The appellant has not claimed/stated that their products qualify to be roughly trimmed i.e., superfluous protuberances are removed by means of hammer or chisel-type tools. On the contrary, it is admitted position that they are undertaking calibration , which as seen, is a mechanical process of obtaining approximate uniformity in thickness of slabs. (d) Calibration, by the nature of process and objective/end-result, appears to be similar to or in the nature of trimming ( trimming by dictionary meaning - is to make something tidier or more level by cutting a small amount off it ). However, Headings 2515 2516 use the phrase roughly trimmed and not merely as trimmed . The two terms roughly trimmed and trimmed cannot be considered as being on same footing; moreover when the former term has been assigned with a defined meaning in the HSN. Hence, calibration would not fall under the category of roughly trimmed . As such, is not a permitted process in the Headings. (e) Process of cutting limestone slabs into square or rectangular shapes (as per surfaces), is admittedly undertaken by the appellant. The said process is spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a substance) to a fine powder or smooth paste . It is further mentioned that the origin of the word is in mid-1 6th century: from Latin levigat- made smooth, polished , from the verb levigare, from levis smooth . Other dictionaries Collins, Merriam Webster etc., also show the meaning of the word, as verb, to be reducing / grinding to a smooth, fine powder , while indicating its origin/etymology to be linked to Latin word meaning polish/smooth . (ii) Thus, while the word levigated may have been originally used as a reference to smoothness/polish (and thereby including process of polishing also), the contemporary meaning is only that of reducing/grinding to a smooth fine powder/paste. Hence, it appears that the meaning which is in contemporary vogue and prevalence merits consideration, in preference over an archaic meaning/origin of the word. In common parlance also, usage of the word levigated as an equivalent / substitute for polished is not found/prevalent; i.e, in the trade, reference is made to polished slabs/stone and not as levigated slabs/stones . (iii) Further, if one considers the usage of the word levigated in the Chapter Note, the same appears w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) The phrase other mechanical or physical process appearing in Note 1 to Chapter 25, as seen, is not an independent / stand-alone phrase, but used in conjunction with the earlier words/phrases which qualifies it. For ready reference, the said Chapter Note, is again reproduced as under: 1. Except where their context or Note 4 to this Chapter otherwise requires, the headings of this Chapter cover only products which are in the crude state or which have been washed (even with chemical substances eliminating the impurities without changing the structure of the product), crushed, ground, powdered, levigated, sifted, 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 . (ii) In the above text, the words screened, concentrated appear in continuation followed by description of processes flotation, magnetic separation or other mechanical or physical processes.. . This would denote a construction / meaning that processes of flotation, magnetic separation or other mec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote but not products subjected to processing beyond that mentioned in each heading , as redundant/otiose. Such interpretation or construction is therefore impermissible as per settled legal principles of interpretation. Hence, appellant s contention that their goods would be covered by Chapter Note I by virtue of the phrase or other mechanical or physical processes , is not based on correct appreciation of the said Note; and hence, not tenable. 20.3. From the above, it therefore emerges that the meaning / interpretation sought to be canvassed by appellant for the words levigated , ground and other mechanical or physical process appearing in Chapter Note 1, do not find sustainability or legal support, as analysed supra. 20.4. It follows from the above discussion that the processes of polishing , tumbling and calibration ; or the state of goods as polished / tumbled / calibrated are not covered by Note 1 to Chapter 25 of the Customs Tariff Act, 1 975. 21. Before arriving at a definite conclusion in this regard, we deem it fit to now also refer to the HSN Explanatory Notes pertaining to Chapter 25 and the headings 251 5/251 6 therein; which read as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meals and similar siliceous earths (heading 25.12) and dolomite (heading 25.18) may be calcined; magnesite and magnesia (heading 25.19) may be fused or calcined (dead-burned (sintered) or caustic-burned). In the case of dead-burned (sintered) magnesia, other oxides (e.g., iron oxide, chromium oxide) may have been added to facilitate sintering. Similarly the materials of headings 25.06, 25.14, 25.15, 25.16, 25.18 and 25.26 may be roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape. When products are classifiable in heading 25.17 and any other heading of this Chapter, they are to be classified in heading 25.17. The Chapter excludes precious or semi-precious stones of Chapter 71. . . . . . . . . . . . . 25.15 Marble, travertine, ecaussine and other calcareous monumental or building stone of an apparent specific gravity of 2.5 or more, and alabaster, whether or not roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape (+). - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g industry) (heading 25.30 when in the crude state). (c) Stones identifiable as mosaic cubes or as paving flagstones, even if merely shaped or processed as specified in the text of this heading (heading 68.02 or 68.01 respectively). Subheading 2515.11 For the purposes of this subheading, crude refers to blocks or slabs which have been merely split along the natural cleavage planes of the stone. Their surfaces are often uneven or undulating and frequently bear marks of the tools used to separate them (crowbars, wedges, picks, etc.). This subheading also covers unshaped stone (quarrystone, rubble) obtained by breaking out rocks from the quarry face (using picks, explosives, etc.). They have uneven, broken surfaces and irregular edges. This type of stone often bears the marks of quarrying (blast holes, wedge marks, etc.). Unshaped stone is used for the construction of dykes, breakwaters, road foundations, etc. The subheading also includes waste of irregular shape arising from the actual extraction or from subsequent working (quarry stones, waste from sawing, etc.), but only if large enough to be used for cutting or construction. Otherwise it is classified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e, bossed, dressed with ground, polished, chamfered etc., are not used in a cumulative connotation i.e, it is not required/necessary that all these processes have to be undertaken; any one or more of the processes if undertaken would attract application of the said explanation. The list of these mentioned processes, is also not exhaustive as seen from etc. appearing after chamfered . 22.2. In view of the above, as per HSN notes also, slabs which have been polished , tumbled and/or calibrated WOUld be covered by exclusions detailed in both General Note to Chapter 25, as well as the Heading Note to Heading 2515. 23. Based on the above detailed analysis, we find that in sum, the goods in question, limestone slabs, have admittedly been subjected to processes of polishing (including tumbling) and calibration, in addition to being cut to rectangular/square shapes. The said processes, except that of cutting, are not among those specified either in the Heading description or the Chapter Note 1, for an eligible classification under Chapter 25. Hence, classification of the subject goods under Chapter 25 i.e, specific Headings 2515 /2516 remains precluded by virtue of desc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the cases, Hon ble Tribunal held the said activity to be not amounting to manufacture in the period prior to 1-3-2006 (when Note 6 was introduced in Chapter 25, with specific reference to headings 251 5 and 251 6, by deeming the processes of cutting or sawing or sizing or polishing or any other process for converting of stone blocks into slabs or tiles, as amounting to manufacture). For the period post 1-3-2006, in view of Chapter Note 6, the activity of converting blocks into slabs with the processes of, inter-alia, polishing was held to be amounting to manufacture ; and the goods classified under Chapter 25. Thus, in view of the specific Chapter Note incorporated in the Central Excise Tariff, process of polishing came to be included in Chapter 25, which was accordingly considered by the Hon ble Tribunal. It is pertinent to note that the words or polishing in the above said Note 6 to Chapter 25, were omitted by the Finance Act, 2012. 24.4. We therefore find that the aforesaid decisions were rendered in totally different context i.e, Central Excise duty levy which is on manufacture , coupled with existence of Chapter Notes deeming polishing to be manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Supreme Court. 27.2. Extracts of HSN Notes for Chapter 68, the relevant portions highlighted (underlined), read as follows: CHAPTER 68 Articles of stone, plaster, cement, asbestos, mica or similar materials Notes... ... (Chapter Notes similar to that in Chapter 68 of Customs Tariff Schedule referred earlier hence not reproduced). GENERAL This Chapter covers : (A) Various products of Chapter 25 worked to a degree beyond that permitted by Note 1 to that Chapter. (B) The products excluded from Chapter 25 by Note 2 (e) to that Chapter. (C) Certain goods made from mineral materials of Section V. (D) Goods made from certain of the materials of Chapter 28 (e.g., the artificial abrasives). Some of the goods in category (C) or (D) may be agglomerated by means of binders, contain fillers, be reinforced, or in the case of products such as abrasives or mica be put up on a backing or support of textile material, paper, paperboard or other materials. Most of these products and finished articles are obtained by operations (e.g., shaping, moulding), which alter the form rather than the nature of the constituent material. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecifically by other headings of the Nomenclature and examples of these are given at the end of this Explanatory Note and in the General Note to the Chapter. The heading therefore covers stone which has been further processed than mere shaping into blocks, sheets or slabs by splitting, roughly cutting or squaring, or squaring by sawing (square or rectangular faces). The heading thus covers stone in the forms produced by the stone-mason, sculptor, etc., viz.: (A) Roughly sawn blanks; also non-rectangular sheets (one or more faces triangular, hexagonal, trapezoidal, circular, etc.). (B) Stone of any shape (including blocks, slabs or sheets), whether or not in the form of finished articles, which has been bossed (i.e., stone which has been given a rock faced finish by smoothing along the edges while leaving rough protuberant faces), dressed with the pick, bushing hammer, or chisel, etc., furrowed with the drag-comb, etc., planed, sand dressed, ground, polished , chamfered, moulded, turned, ornamented, carved etc. The heading therefore includes not only constructional stone (including facing slabs) worked as above, but also articles such as .. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding stone (except slate) which has been worked beyond the stage of the normal quarry products of Chapter 25. There are, however, certain exceptions where goods are covered more specifically by other headings of the Nomenclature and examples of these are given at the end of this Explanatory Note and in the General Note to the Chapter. The said exceptions do not include limestone slabs either polished or processed. (vi) The description in Heading 6802 itself covers stone i.e, worked monumental or building stone; apart from articles of such stone. (vii) The said stone should be subjected to processes beyond that specified in Chapter 25, which is also described as beyond the stage of normal quarry products of Chapter 25 . (viii) Any further process than mere shaping into slabs by cutting, also would render the goods to fall under Heading 6802. (ix) Amplification / illustrations to the above Note, specifies that the heading covers stone in the forms produced by stone mason, sculptor etc. ( here again, usage of word etc. , shows that the same is not exhaustive to restrict it to products made by a stone mason or sculptor only). (x) Stone of any shape, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Chapter 68 in particular reference to slabs (blocks etc.,) has to be classified under Heading 6802. There is no restrictive connotation that such working has to be done only by stone-mason or sculptor, as explained above. Further, the reason that there is no change in morphology, character, name, description, usage etc., would not be a relevant criteria for classification under Chapter 68, as the HSN Notes specifically acknowledge that stone of any shape including slabs, whether or not in the form of finished articles, but which has been, among others, polished are covered under the Heading 6802. In respect of the subject goods, there is further process of calibration undertaken to achieve relative uniformity in thickness. Hence, appellant s contentions in this regard are devoid of merit, in the light of the HSN Explanatory Notes. 30. The remaining grounds / contentions put forth by the appellant have been examined, as detailed below:- (a) The appellant has made repeated references that the goods Marble and Granite - blocks/slabs- have been kept in Chapter 25. It was further urged that by the very description of the said goods, without any prefix or adjective als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depends on the nature / level of processing undertaken; whereby if these are in crude state or subjected to specific processes (detailed in HSN also), they would be classifiable under Chapter 25 and if worked beyond that, including polishing, they would be classifiable under Chapter 68 under any of the above subheadings, as applicable. In Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017; against the Heading 6802, the description appearing in Heading 6802 of Customs Tariff has been as such incorporated (with certain specified exceptions/exclusions), pursuant to the amendment effective from 15-11-2017 (Sl.No. 177E of the Notification refers). As such, specific mention of Marble, Granite does not appear in the description against Heading 6802 in the Notification, since the said Heading along with the description, encompasses coverage of Marble, Granite under certain specific subheadings / Tariff Item number. Appellant s argument in this regard is thus without any basis. (b) Another contention of the appellant is that marble, granite as well as Cement which are all figuring in Chapter 25, but involve high costs of production, mechanisation etc.,; and consequently that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r GST-levy purposes, has to be determined in respect of the goods, as they are supplied. Accordingly, on the detailed analysis of both given facts and the relevant provisions, as discussed above, the subject goods viz., polished / processed limestone slabs merit to be classified under Heading 6802 of the Tariff Schedule. 31.1. In view of the foregoing, we find that the appellant has not made out a case against the decision in impugned Advance Ruling in so far as it has been ruled that Polished / Processed Limestone slabs are. correctly classifiable under heading 6802 of the GST Tariff (sic) . The classification under Chapter Heading 6802 of the First Schedule to the Customs Tariff Act, 1975 is the appropriate classification of the said goods (both polished only as well as processed , as referred at para 15.2 supra), in view of the relevant Heading-description read with the Chapter Notes and HSN Explanatory Notes; as discussed and analysed above. 31.2. In terms of sub-classification under Heading 6802, the said goods would fall under Tariff Item No. 6802 92 00 - Other calcareous stone ; considering that limestone slabs are calcareous stone , as stated earlier and ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the Telangana State Authority for Advance Ruling in re: appellant M/s. Maheshwari Stone Supplying Co., Tandur, is modified as specified in para 32 above. The subject appeal is disposed of accordingly. -------------- Notes:- 1 . Para No. (12B) is as given in the application for Advance Ruling, apparently referring to the said Sl.No. in the prescribed format Form GST ARA-01 for Application form for Advance Ruling , which requires furnishing Description of Nature of activity in brief . 2 3. Sl. No.s (14) (15) are as given in the application for Advance Ruling, apparently referring to the said Sl.No.s in the prescribed format Form GST ARA-01 for Application form for Advance Ruling , which requires furnishing Question(s) on which advance ruling is required and Statement of relevant facts having a bearing on the question(s) raised . 4. Sl.No. (16) is as given in the application for Advance Ruling, apparently referring to the said SI.No. in the prescribed format Form GST ARA-01 for Application form for Advance Ruling , which requires furnishing Statement containing applicant s interpretation of law...... . 5. Para No. (14) as gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification No. 41/2017- Central Tax (Rate) dated 14.11.2017 w.e.f. 15-11-2017. 15. Inserted by C (1) of Notification No. 41/2017- Central Tax (Rate) dated 14.11.2017 w.e.f. 15-11-2017. 16. Phrase in {} inserted by (C)(v) of Notification No.18/2018-Central Tax (Rate) dated 26th July, 2018, effective from 27th July, 2018. 17. Sl.No. 16 omitted by (D)(i) of Notification No. 41/2017- Central Tax (Rate) dated 14-11-2017 effective from 15-11-2017. 18 . Sl.No. 17 omitted by (D)(i) of Notification No. 41/2017- Central Tax (Rate) dated 14-11-2017 effective from 15-11-2017. 19. Sl.No. 70 omitted by (D)(iii) of Notification No. 41/2017- Central Tax (Rate) dated 14-11-2017 effective from 15-11-2017. 20. As substituted by (D)(iv) of Notification No.34/2017- Central Tax (Rate) dated 13.10.2017. Originally, the entry read as Worked monumental or building stone (except slate) and articles thereof, other than goods of heading 6801; mosaic cubes and the like, of natural stone (including slate), whether or not on a backing; artificially coloured granules, chippings and powder, of natural stone (including slate); of marble, travertine and alabaster, of Granite of Other c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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