2019 (3) TMI 705 - AAR - GST

Classification of goods - ascertaining applicability of the Rate Notification - Parts of ink / ball point pen - Whether tips and ball both being pen parts under HSN Chapter Head 9608 used in manufacturing process of ball point pens are taxable at the rate of 12%; b) If the tips and balls used in the manufacturing of ball point pens are not taxable at the rate of 12% under HSN 9608 then at what rate shall they be taxable and under which HSN? Held that - Since tips and balls of pens are definitively not considered as part of Pen holders pencil holders and similar holders they are to be classified under 9608 99 90 Others under HSN 9608 and are to be taxed accordingly. In the Rate Notification ball point pens classified under HSN 9608 are included under Sl No. 232 of Schedule II under the description pens other than fountain pens stylograph pens . The same Notification also mentions fountain pens stylograph pens under Sl No. 447 of Schedule III. However parts of pen including tips and balls of pens classifiable under HSN 9608 as discussed above are not exempted or specifically included under entries of any other schedules. They are therefore to be included under Sl No. 453 of Schedule III and taxable @ 9% CGST and 9% SGST.

Summary

Issues:
1. Admissibility of the Application
2. Submissions of the Applicant
3. Submissions of the Revenue
4. Observation & Findings of the Authority

Admissibility of the Application:
The Applicant sought a ruling on the classification and tax rate of pen tips and balls used in manufacturing ball point pens. The Authority found the questions admissible under Section 97(a) & (b) of the GST Act as they involved classification for determining the applicability of the Rate Notification. The Application was admitted as the questions were not decided by any authority, and no objections were raised.

Submissions of the Applicant:
The Applicant initially referred to the products as ball point pen balls and "Tips," later interchanging the terms with "Nibs." The Authority requested samples for clarification. The Applicant's submissions focused on the classification and tax rate of the pen parts under consideration.

Submissions of the Revenue:
The Revenue argued that pen balls and tips are parts of refills, not standalone products, and should be classified under the residuary sub-heading 96089990, attracting GST at 18%. They contended that the anatomy and functionality of nibs and tips are distinct, leading to different classifications and tax rates.

Observation & Findings of the Authority:
The Authority clarified the differences between nibs and tips, emphasizing their unique features and functions in pen anatomy. Based on the terminology and samples provided, the Authority determined that the products in question were pen balls and tips. Following a detailed analysis of the Tariff Act and Rate Notification, the Authority classified the pen parts under 96089990, taxable at 9% CGST and 9% SGST.

Ruling:
The Authority ruled that "Tips and Balls" of Ball Point Pens are to be classified under GST Tariff Heading 96089990 and included under Sl No. 453 of Schedule III of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017. This ruling is valid unless declared void under the provisions of the GST Act.