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TMI Blog2019 (6) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... under Tariff item 8708 99 00? A.3 Whether Quick Adapter not only capable of being used to connect pipes and tubes in the interior of a motor vehicle, but also for similar functionality in other industries, merit classification under the Tariff item 3917 40 00 and not under Tariff item 8708 99 A.4 Whether Plastic pipe clips merits classification under the Tariff item 3926 90 99 and not under the Tariff item 8708 99 00? A.5 Whether Brackets and Channels merits classification under Tariff item 8708 99 00 despite being "parts of general use" made of plastic, and not under Chapter 39 of the First Schedule? A.6 Whether Non-Return Valve merits classification under Tariff item 8481 30 00 as it is capable of being used in the internal liquid lines of various machineries and equipment, and not under Tariff item 8708 99 00? A.7 Whether Metal U Clips merits classification under the Tariff item 8305 90 20 as it is not only capable of being used in the interior or exterior of a motor vehicle to join panels but in other machineries and equipment, and not under the Tariff entry 8708 99 00? A.8 Whether Fasteners and Spoilers merits classification under Tariff item 8708 29 00 which pertains t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 28th June, 2017 ("Classification Notification for payment of applicable Customs duty and Integrated Goods and Services Tax ("IGST") which is payable as duties of Customs in terms of the CTA. 6. In this regard, provision which are relevant and may have a bearing for classification of the Products in terms of the CTA and the Classification Notification should be appreciated and understood in the context of these facts and commercial circumstances to enable a considered conclusion under the GST regime and law. Relevant legal provisions of the Goods and Services Tax 7. In terms of Section 5(1) of the IGST 2017, IGST is to be levied on all inter-State supplies of goods and services, on the value determined under Section 15 of the CGST Act, 2017 ("CGST Act"). Further, Section 5(1) also provides that IGST will be levied on goods & services at such rates, not exceeding forty per cent, as may be notified by the Government on the recommendations of the GST Council. Scheme of classification 8. Scheme of classification of goods is provided in the Classification Notification which classifies goods into Chapter, Section, Heading and Groups and also provides description of the goods and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessories" do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under that heading which corresponds to the principal use of that part or accessory." ii. Section XV "Section Note 2 Throughout this Schedule, the expression "parts of general use" means: (a) articles of heading 7307, 7312, 7315, 7317 or 7318 and similar articles of other base metal; (b) springs and leaves for springs, of base metal, other than clock or watch springs (heading 9114); and (c) articles of headings 8301, 8302, 8308, 8310 and frames and mirrors, of base metal, of heading 8306 In Chapters 73 to 76 and 78 to 82 (but not in heading 7315) references to parts of goods do not include references to parts of general use as defined above. Subject to the preceding paragraph and to Note 1 to Chapter 83, the articles of Chapter 82 or 83 are excluded from Chapters 72 to 76 and 78 to 81." General Rules for interpretation of the Harmonized System ("General Rules for Interpretation") 14. To determine the correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing spring washers) and similar articles, of iron or steel ... -Threaded articles: ... -.. 7318 16 00 - Nuts 3. The fact that Metal Spring Nuts are made of corrosion resistant metals has no impact on their classification under the Tariff item 7318 16 00. Threaded Metal Nuts should not be classified under Chapter 87 of the First Schedule: 4. In the pre-GST regime, Threaded Metal Nuts were classified under Chapter 87 of the First Schedule which pertains to "Vehicles other than railway or tramway rolling-stock" and more specifically, under the Heading 8708 and Tariff item 8708 99 00. 5. On a perusal of the Section Note 2(b) of Chapter XVII of the First Schedule of the CTA, it is understood that the expressions "parts" and "parts and accessories" do not apply to "parts of general use" defined in Section Note 2 of Section XV of the First Schedule. In terms of Section Note 2(a) of Section XV of the CTA, products classifiable under Heading 73 18 tantamount to "parts of general use" and are therefore disqualified from being classified under Section XVII, which pertains to Chapter 87. This is also corroborated by the Explanatory Note to Heading 7318 of the Harmonised System of No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally covers nuts and washers, it has been rightly held that their end use is irrelevant." 7. Therefore, in terms of Section Note 2(b) of Section XVII read with Section Note 2(a) of Section XV, the correct manner of classification of Threaded Metal Nuts is under Chapter 73 and more specifically under the Tariff item 7318 16 00. 8. It is also pertinent to note that in terms of Rule 3(a) of General Rules for Interpretation, when a product is classifiable under two or more headings, the heading which provides the most specific description should be preferred over the heading which gives the general description, 9. Reliance in this regard can be placed on the decision of the Hon'ble Supreme Court in the case Moorco (India) Ltd. vs Collector of Customs, Madras ("Moorco Case") = 1994 (9) TMI 68 - SUPREME COURT held that it is a settled principal in law that for classification of goods (or services), it is always the most specific entry which is required to be preferred over an entry which provides a more general description. This ratio has been consistently followed in matters of classification under the Customs and the Central Excise law; the relevant extract from Moorco Case is repro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is a type of nut made of plastic with circular grooves around it ("Plastic Rivets") and is generally used in the fitment of trims on the body of a motor vehicle. The primary function of Plastic Rivets is to join fitments. Rivets can be used in other industries as well. An image of Plastic Rivets is enclosed herein and marked as Exhibit B. Classification of the product Plastic Rivets should be classified under Chapter 39 of the First Schedule: 2. Plastic Rivets merit classification under Chapter 39 of the First Schedule, which pertains to "Plastics and articles thereof'. Under Chapter 39, the relevant heading for the classification of Plastic Rivets is Heading 3926, and the specific Tariff item is 3926 90 99, which is extracted as follows: Tariff Item Description of goods 3926 Other articles of plastics and articles of other materials of headings 3901 to 3914 ... - Other: ... -... ... - Other: 3926 90 99 - ... ---- Other 3. In this context, it is necessary to refer to the Explanatory Notes to Heading 3926 of the HSN Explanatory Notes, which is reproduced below: "This heading covers articles not elsewhere specified or included, of plastics (as defined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age of Quick Connector is enclosed herein and marked as Exhibit C. Classification of the product Quick Connectors should be classified under Chapter 39 of the First Schedule: 2. Quick Connectors merit classification under Chapter 39 of the First Schedule, which pertains to "Plastics and articles thereof'. Since Quick Connectors are used to connect pipe or tubes, it comes within the ambit of the Heading 3917 "Tubes, pipes and hoses, and fittings thereof (for example, joints, elbows, flanges), of plastics". Therefore, Quick Connectors merit classification under the Heading 3917 and more specifically under Tariff item 3917 40 00. 3. In this context, it is necessary to refer to the Explanatory Notes to Heading 3917 of HSN Explanatory Notes, which is reproduced below: "This heading also includes fittings of plastics for tubes, pipes and hoses (for example, joints, elbows, flanges)." Quick Connectors should not be classified under Chapter 87 of the First Schedule: 4. In the pre-GST regime, Quick Connectors were classified under Chapter 87 of the First Schedule of CTA which pertains to "Vehicles other than railway or tramway rolling-stock" and more specifically, under the Heading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the nature of the product. Plastic Pipe Clips should not be classified under Chapter 87 of the First Schedule: 3. In the pre-GST regime, the Plastic Pipe Clips were classified under Chapter 87 of the First Schedule of CTA which pertains to "Vehicles other than railway or tramway rolling-stock" and more specifically, under Heading 8708 and Tariff item 8708 99 00. 4. on a perusal of the Section Note 2(b) of Chapter XVII of the First Schedule of CTA, it is understood that the expressions "parts" and "parts and accessories" do not apply to "parts of general use" defined in Section Note 2 of Section XV of the First Schedule of CTA, or similar of plastic under Chapter 39. Since Plastic Pipe Clips attract classification under the Heading 3926, it is excluded from being covered within the expressions "parts" and "parts and accessories" found in Section XVII of First Schedule, which encompasses Chapter 87 in its ambit, by virtue of Section Note 2(b). 5. Therefore, in terms of Section Note 2(b) of Section XVII, the correct manner of Classification of Plastic Pipe Clips is under Chapter SH 3926 90 99. 6. It is also pertinent to note that in terms of Rule 3(a) of General Rules for In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for classification of Subject Products is Heading 8708, since it is clear that Brackets and Channels can be considered as parts and accessories of motor vehicles, under the specific Tariff item 8708 99 00. Brackets and Channels should not be classified under Chapter 39 of the First Schedule: 6. On a perusal of Section Note 2(b) of Chapter XVII of the First Schedule of the CTA, it is understood that the expressions "parts" and "parts and accessories" do not apply to "parts of general use" defined in Section Note 2 of Section XV of the First Schedule, or similar goods Of plastic under Chapter 39. Therefore, by virtue of Section Note 2(b) of Chapter XVII of the First Schedule, it may prima facie appear that the Subject Products ought to be classified under Chapter 39 and more specifically under the Heading 3917 which pertains to "Tubes, pipes and hoses, and fittings therefor (for example, joints, elbows, flanges), of plastics". 7. But, it is pertinent to note that in terms of Rule 3(a) of General Rules for Interpretation, when a product is classifiable under two or more headings, the heading which provides the most specific description should be preferred over the heading which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acted at paragraph 5 above, it can be concluded that Non-Return Valves should be classified under Tariff item 8481 30 00. Non-Return Valve should not be classified under Chapter 87 of the First Schedule: 5. In the pre-GST regime, the Non-Return Valves were classified under Chapter 87 of the First Schedule which pertains to "Vehicles other than railway or tramway rolling-stock" and more specifically, under the Heading 8708 and Tariff item 8708 99 00. 6. On a perusal of the Section Note 2(e) of Chapter XVII of the First Schedule of the CTA, it is understood that the expressions "parts" and "parts and accessories" do not apply to articles of Heading 8481 or 8482. Since Non-Return Valve attracts classification under the Tariff item 8481 30 00, it is disqualified from being classified under Section XVII, which covers Chapter 87. This is also corroborated by the HSN Explanatory Notes extracted at paragraph 5 above. 7. Therefore, in terms of Section Note 2(e) of Section XVII of the First Schedule, the correct manner of classification of Non-Return Valve is under Chapter 84 and more specifically under Tariff item 8481 30 00. 8. It is also pertinent to note that in terms of Rule 3(a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or more headings, the heading which provides the most specific description should be preferred over the heading which gives the general description. 7. Reliance in this regard can also be placed on the decision of the Hon'ble Supreme Court in the Moorco Case mentioned above. 8. In view of all the foregoing, it can be concluded that Metal U Clips merit classification under the Tariff item 7326 90 99 and not under the Tariff item 8708 99 00. Moulding Fasteners, Spoiler Lips Nature of the product 1. Moulding Fasteners and Spoiler Lips are essentially articles made of plastic which find use in the body of a motor vehicle ("Fasteners and Spoiler"). Moulding Fasteners belong to a generic product category in which articles made of plastic, which do not qualify as rivets, nuts, screws, etc, are grouped ("Moulding Fasteners"). Moulding Fasteners are primarily used for holding plastic parts in place, mounting parts on the body of a motor vehicle or to provide support to shafts and pipes. An image of Moulding Fasteners is enclosed herein and marked as Exhibit H and an image of Spoiler Lips is enclosed herein and marked as Exhibit I. Classification of the product Fasteners and Spoilers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Case mentioned above. 11. Since it can be clearly ascertained from the nature of the Fasteners and Spoilers that they are parts and accessories of a motor vehicle and are found on the exterior of a motor vehicle, it can be concluded that the Fasteners and Spoilers merit classification under Tariff item 8708 29 00. Bracket (Metal Assemblies) Nature of the product 1. The subject product is a type of bracket made of metal ("Bracket") and is primarily used to support wiring harness and pipes in the engine compartment of a motor vehicle. Classification of the product Present Classification: 2. Currently, Bracket is classified under Chapter 87 of the First Schedule which pertains to "Vehicles other than railway or tramway rolling-stock" and more specifically, under the Heading 8708 and the Tariff item 8708 99 00. Proposed Classification: 3. A Raymond India intends to continue classifying Bracket under Tariff item 8708 99 00. 4. On a perusal of the Section Note 3 of Chapter XVII of the First Schedule of the CTA, it is understood that references to the expressions "parts" or "accessories" in Chapters 86 to 88 do not cover within their ambit parts or accessories which are not su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sher by its very description and nature merits classification under Chapter 73 of the First Schedule, which pertains to "Articles of iron or steel". Under Chapter 73, the relevant heading for the classification of Steel Washer is Heading 7318, and the specific Tariff item is 7318 21 00. Subject Product should not be classified under Chapter 8 7 of the First Schedule: 3. In the pre-GST regime, the Subject Product was classified under Chapter 87 of the First Schedule which pertains to "Vehicles other than railway or tramway rolling-stock" and more specifically, under the Heading 8708 and Tariff item 8708 99 00. 4. On a perusal of Section Note 2(b) of Chapter XVII of the First Schedule Of the CTA, it is understood that the expressions "parts" and "parts and accessories" do not apply to "parts of general use" defined in Section Note 2 of Section XV of the First Schedule, which inter alia includes articles of heading 7318. Since Steel Washer merits classification under Tariff Item 7318 21 00, which comes within the ambit of Heading 7318, it will be tantamount to "parts of general use" and thereby will be disqualified from being classified under Chapter 87 by virtue of Section Note 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 2 of the covering letter dated 18 November 2018 accompanying the ARA, indicates that the Applicant is seeking to determine the appropriate classification for the imported products in terms CTA, 1975 and the Classification Notification. 2. In the column titled "Description (in brief)" present in the FORM GST ARA 01 ("Form"), the description provided by the Applicant is import of certain products for manufacturing industrial clip fasteners and prototyping assembly systems which ore used in automobiles." 3. Applicant is seeking classification of imported goods for which CGST, Pune - 1 is not the jurisdictional authority. 4. The Advance Ruling Authority (GST), Maharashtra ("Authority') is not the correct Advance Ruling Authority as the Applicant is seeking classification of imported goods, for which there are separate Regulations viz, Authority for Advance Rulings (Central Excise, Customs and Service Tax) Procedure Regulations, 2005. In the response to the above contentions raised by the Department, the Applicant makes the following submissions, which are being made without prejudice to, and are to be read along with the submissions made in the ARA, and with the submissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods is also determined in terms of the Classification Notification. 1.5 Vide this contention of the Department, it is clear that the Department has recognized that the Applicant is desirous of seeking the appropriate classification of the products in terms of the Classification Notification, which sets out the rate at which IGST is to be discharged on inter-state supply of goods, by drawing support for the same from the CTA. 1.6 Therefore, while on one hand, the Department has taken into cognizance the fact that the Applicant wishes to seek the appropriate classification of the products by employing a conjoint reading of the Classification Notification and the CTA (and not solely on the basis of the CTA), on the other hand, the Department has failed to take the same into consideration while making its subsequent contentions 2. Authority is empowered to rule on classification of goods under Sec 97 of CGST Act 2.1 In terms of the provisions governing the process of Advance Ruling, permitted questions are to be posed to the Authority of Advance Ruling who has been empowered to rule on the questions. Question regarding classification of goods is permitted in terms of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g wise classification or the product in the existing law, ie. under Central Excise it is round that the classification of the above said product is one and the same under GST regime as well as under Customs low. No change in the classification under all the entire three. "Act" have been noticed." 3.2 Thus, as the rules for the interpretation of a product remain the same under both the GST and Customs law, an assessee is free to approach any of the authorities as the function exercised by both are similar in nature. 4. Other submissions 4.1 Without prejudice to the submissions made above, the Applicant wishes to the make the following submissions: * The question pertaining to the jurisdiction of this Hon'ble Authority to rule on the classification of the products that form a part of the ARA, should have been raised during the admission hearing conducted on 15th January 2019. The representative of the Department was afforded an opportunity to contest the admissibility of the ARA during the admission hearing. Despite being provided with an opportunity to contest the admissibility of the ARA, no contention was raised by the representative of the Department in this regard. Conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T), Maharashtra may not be the correct Advance Ruling Authority if the assesse is seeking classification of imported goods as there are separate Regulations governing the imported goods viz. Authority for Advance Ruling (Central Excise, Custom and Service Tax) Procedure Regulations, 2005. This is brought to your notice for further necessary action in the matter. This issues with the approval of Commissioner. 04. HEARING Preliminary hearing in the matter was held on 15.01.2019. Sh. Nishant Shah, Advocate and Sh. Abhinay Kapoor appeared & requested for admission of application as per details in their application. Jurisdictional Officer Sh. Indarjeet Singh, Supdt" Pune- I, also appeared. The application was admitted and called for final hearing on 07.02.2019. Sh. Nishant Shah, Advocate appeared, made oral and written submissions. Applicant received reply from the Jurisdictional Officer and they asked for time to reply to the same. Jurisdictional Officer, Sh. Indarjeet Singh, Suptt., Pune-I appeared and submitted that the applicant is seeking classification of imported goods and therefore they should apply for ruling to the Authority for Advance Rulings (Central Excise, Customs & Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by this authority to the applicant on matters or questions specified in subsection 2 of Section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. For the sake of better understanding Section 97 is reproduced as below: Section 97: 97(1): an applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and manner and accompanied by such fee as may be prescribed, stating the question on which the advance ruling is sought. 97(2) The question on which the advance ruling is sought under this Act, shall be in respect of,- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supplies of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is very apparent that, import of services are alone considered as a 'supply', not import of goods. Further we find that Section 5 of the IGST Act, the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of Section 3 of the CTA, 1975 on the value as determined under the said act at the point when duties of Customs are levied on the said goods under Section 12 of the Customs Act, 1962. Since the subject proposed transaction is itself not a 'supply' under the GST Act, in view of the provisions of Section 95 read with Section 97 of the GST Act, the issue is not within the purview of this authority. 5.9 Further to the above and as per the provisions of Section 5 of the IGST ACT, IGST is leviable on interstate supply i.e. on imported goods from outside India. IGST is levied on the basis of the scheme Of HSN code of that products prescribed in CTA, Act 1975. The IGST and other custom duties are levied by the customs authorities, at the point of importation in India, whilst clearing the imported goods under appropriate HSN Code. On goods imported into India, the Customs Authority, is the first authority to charge IGST, and to clas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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