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2021 (3) TMI 448 - AUTHORITY FOR ADVANCE RULING, TAMILNADUClassification of goods - Air Springs - correctly classifiable under Tariff heading 40169990 or Tariff heading 8708 9900 and attract GST at the rate of 18%? - HELD THAT:- The applicant is engaged in the manufacture and sale of ‘Air Springs’ which are used in Air suspension systems for Buses, Trucks and Trailers. The product is composed of a rubber bellow which includes rubber and fabric composite, beadwire, griddle hoop, crimped top plate, piston and a bumper. The material composition of such ‘Air Spring’ is approximately 60% metal and 40% rubber. The ‘Air Springs’ work on the pneumatic system principle, whereby a volume of gas confined within a container is compressed, and, it produces a reaction force. The reaction force takes the vehicle load, makes the ride smoother and reduces wear and tear in the vehicle. Hence, the sole purpose of Air Spring is to provide a smooth, constant ride quality. In the erstwhile Central Excise regime they were classifying their product under the Heading 4016. Effective 01.07.2017, under GST, they have classified their product under CTH 8708. It is seen that all articles of vulcanized rubber(other than hard rubber) not covered by the preceding headings are included in this heading. Thus the entry 4016 is a residual entry which covers ‘Other articles of Vulcanised Rubber other than hard rubber’ in which CTH 4016 99 is a further residual entry ‘Other’ and CTH 4016 99 90 is a residual- residual-residual entry and therefore not a ‘specific entry’. To be classified under this heading, the product should be an article of vulcanised rubber other than hard rubber and should not be covered under any specific preceeding entries - it is seen that CTH 8708 covers ‘Parts and accessories of vehicles falling under CTH 8701 to 8705. Section Note 2(a) of Section XVII, states that the expression ‘Parts’ of this Section do not apply to articles covered under ‘CTH 4016-other articles of vulcanised rubber other than hard rubber’. The functional unit of the air spring, the container which holds the air i.e, bellows made of fabric-reinforced vulcanised soft rubber and therefore should merit classification under CTH 40169990, the suspension, i.e., the functional utility, is not provided only by the vulcanised soft rubber in the ‘Air Spring’. It is the entire formation of the product, bellow by the fabric reinforced vulcanised soft rubber, crimped with the bolts and the steel plate which provides the ‘functional utility’, when air is pumped in through the ‘compressor’ and let out through the connected valves in the system. It is without doubt that the rubber used in the product is vulcanised soft rubber and mere usage of the same in the product do not merit the product to be termed as an article of vulcanised rubber other than hard rubber and classifiable under CTH 40169990.When it is held that the ‘Air Springs’ are not products of ‘vulcanised rubber other than hard rubber’, then there is no application of Note 2 (a) of Section XVII of the Customs Tariff - The Air springs are a part of the ‘Suspension System’ fitted in the axles of the vehicles falling under CTH 8701 to 8705, designed for use in such vehicles. In the case at hand, it is true that the products are for use primarily with articles of chapter 8701 to 8705. The product Main Air Spring are fitted in the lift axle and act as suspension for lift axle. The product Lift Air Springs are fitted in the lift axle suspension system and operate to move the lift axle up and down. Thus both these air springs are ‘Suspension systems and part thereof’ and by predominant usage are classifiable under CTH 8708. Following the Apex Court’s decision above, the product in hand being suitable for use solely with articles of Chapter Heading No. 8701 to 8705 are classifiable under CTH 8708, more appropriately under ‘CTH 8708 80 00- Suspension Systems and parts thereof’. The product as a whole is not an article of vulcanized rubber other than hard rubber and not classifiable under Customs Tariff entry at 40169990. Customs heading entry at 87088000 specifically covers Suspension systems and parts thereof of Motor Vehicles classifiable under CTH 8701 to 8705 and the functional utility of the ‘Air Springs’ being extending suspension or acting as shock absorber designed specifically for Motor Vehicles, the said entry is to be preferred to the residual entry of CTH 8708 9900. However, the GST rates for the purposes of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 are based on the descriptions in the notification with the CTH at the four digit level - the ‘Air Springs’ manufactured by the applicant are rightly classifiable under CTH 8708 and more specifically under CTH 8708 8000.
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