TMI Blog2018 (8) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... s With a basis of plaster” - the impugned product contains several chemicals and not “maida” per se. There is no question that anybody would purchase this product for being used as “maida” as so many other chemicals as given in table above are also added to it . Neither can “maida” alone be used for preparing the various shapes as various chemicals are needed to be added to “maida” for it to be used and reused as modelling dough for making the various shapes. These chemicals are needed to give the needful firmness, elasticity, plasticity and non perishability to the shapes. The dough needs to be mouldable and flexible to make the various shapes. There needs to be some safeguard against cracking, crumbling. The meaning of ‘plastic” is not just restricted to the polymer ‘plastic’ but rather it refers to various properties with respect to malleability and flexibility. The impugned product being a dough used for amusement of children, the Heading 3407 would be the correct classification. Ruling:- “Modelling dough” will be covered under CTH 3407 under the Customs Tariff Act, 1975. - GST-ARA-31/2017-18-B-39 - - - Dated:- 23-5-2018 - SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm Modelling pastes, including those put up for children s amusement finds a mention in Chapter Heading No. 34.07 as Tariff Item No. 34.07 00 10. Modelling paste of Chapter Heading No. 34 07 is specified under Sl. No. 63 of- Schedule-III to Notification No. 1/2017-Central Tax (Rate) dated 28 06.2017 as amended by Notification No. 41/2017- Central Tax (Rate) dated 14.11.2017 which reads as under. Sl.No. Chapter Heading/Sub-Heading Description of Goods Rate of Tax (CGST) 63 3407 Modelling pastes, including those put up for children s amusement; Preparations known as dental wax or as dental impression compounds , put up in sets, in packings for retail sale or in plates, horseshoe shapes, sticks or similar forms;, other preparations for use in dentistry, with a basis of plaster (of calcined um or calcium sulphate) 9% Therefore, the applicable rate of GST (CGST+SGST or IGST) amounts to 18% on the concerned product. 4. The present ambiguity arises due to the fact that Chapter Heading No. 34.07 falls under Section VI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion with the department, whereas some of our competitors have already started charging CGST @ 6%, to take benefit of lower GST rates, which is affecting fair competition, not allowing a level playing field, resulting in loss of market share and financial loss to us. This can also cause confusion amongst consumers, as there are different GST rates being applied in the market for essentially the same product, under different classification / codes for different brands, in different distribution channels. 9. Under the aforesaid circumstances, the ambiguity regarding the applicable taxation rate on the product in question is affecting our business significantly and hitting our industry badly Under such circumstances, we reiterate our request to expedite the matter at hand and Issue a clarification regarding the same and also grant us with a personal meeting to represent our case in detail. STATEMENT CONTAINING APPLICANT S INTERPRETATION OF LAW AND/OR FACTS AS THE CASE MAY BE IN RESPECT OF QUESTION(S) ON WHICH ADVANCE RULING IS REQUIRED. A. APPLICANT S ELIGIBILITY TO FILE PRESENT ADVANCE RULING APPLICATION. A.1 That the sub-section (c) of Section 95 of the Central G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97(2) of the CGST Act, which reads as under:- 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 . (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 supply 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 results in a supply of goods or services or both, within the meaning of that term. Emphasis Supplied A.8 In view of the above, it is submitted that advance ruling may be sought by the Applicant on the questions concernin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017, the questions for determination in advance ruling lie before the Maharashtra Authority for Advance Ruling. A.12 In view of the foregoing, the Applicant submits that it is eligible to file the present advance ruling application before the Maharashtra Authority for Advance Ruling, Mumbai, appointed Vide Notification No. MGST-1017/CR/193/Taxation, dated 24.10.2017 read with Section 99 of Maharashtra Goods and Service Tax Act, 2017. QUESTIONS REQUIRING ADVANCE RULING B. The question on which Advance Ruling is sought by the Applicant is as under:- a. What is the appropriate classification and rate of GST applicable on the supply of product - Modelling Dough under Central Goods and Service Tax Act, 2017 ( CGST ). Or Whether Modelling Dough would correctly be classifiable under heading No.3407 or 9503 of Customs Tariff? APPLICANT S INTERPRETATION C. MODELLING DOUGH AS MANUFACTURED AND SUPPLIED BY THE APPLICANT ARE CLASSIFIABLE UNDER CHAPTER 95 OF THE CUSTOMS TARIFF AND COVERED BY SL. NO. 228 OF SCHEDULE-II TO NOTIFICATION NO. 1/2017-CENTRAL TAX (RATE) DATED 30.06.2017 C.1 In terms of Section 9(1) of CGST Act subject to Section 9(2), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or children s amusement 3407 00 90 --- Other Chapter Heading No. 95.03 Tariff Item Description of goods Unit Rate Standard Preferential Areas 1 2 3 4 5 9503 TRICYCLES, SCOOTERS, PEDAL CARS AND SIMILAR WHEELED TOYS; DOLL S CARRIAGES; DOLLS; OTHER TOYS; REDUCED-SIZE ( SCALE ) MODELS AND SIMILAR RECREATIONAL MODELS, WORKING OR NOT ; PUZZLES OF ALL KINDS 9503 00 - Tricycles, scooters, pedal cars and similar wheeled toys; dolls' carriages; dolls; other toys; reduced-size ( scale ) models and similar recreational models, working or not; puz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith explanation to the Notification No. 1/2017-Central Tax (Rate) shows that in order to determine the rate of CGST leviable on the product in question, it is paramount to determine the classification or the product in question under Customs Tariff Act. 1975. C.7 The Custom Tariff is generally based on the tariff classification adopted by World Customs Organisation in its Harmonized Commodity Description of Coding System (hereinafter referred to as HSN ). Hence, wherever a Chapter of Custom Tariff is fully aligned with the corresponding Chapter of HSN, then the HSN explanatory notes explaining the scope of headings of that Chapter would have persuasive value in the determination of scope of headings of correspondence Chapter of Central Excise Tariff. The aforesaid position has been laid down by the Hon ble Supreme Court in the following decisions: (a) Camlin Limited vs. CCE -2008 (230) ELT 193 (SC) (b) Coen Bharat Limited vs. CCE--2007 (217) ELT 165 (SC) (c) CCE vs. Bakelite limited - 1997 (91) ELT 13 (SC) C.8 Explanatory Notes for Chapter Heading No. 34.07 of the HSN read as follows: (A) Modelling pastes These ore plastics preparations g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n content the ingredients from materials of Heading No.3901 to 3914. In the present case, the product in question is made entirely out of maida i.e. preparations of wheat flour and none of the contents/materials as covered under Heading No. 3901 to 3914 are present. Thus, the question of product in question Falling under Heading 3407 is clearly ruled out. C.12 It is pertinent to note that the applicant s product i.e. Modelling Dough is a clay-like semi-solid product which is primarily made of maida or refined wheat flour. Although it is made for the use of children as a growth stimulating, creativity toy and may be termed to be for the amusement of children; it is specifically made from edible substances including maida so as to make it safe for children and not have any harmful effects even if accidently consumed by the children. The ingredients of the product are specifically selected and no plastics are added to the product. Therefore, the product cannot be said to be classifiable under Chapter Heading No. 34.07 which specifically includes goods made of plastics only. C. 13 Further, Chapter 34 of the Customs Tariff includes Shop; organic surface-active, washing prepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion D.1 What is the appropriate classification and rate of CGST on the supply of the product in question- Modelling Dough . Applicants understanding D.2 That the correct classification of the product in question i.e. Modelling Dough should be under the Chapter Heading No. 95.03 of the Customs Tariff Act, 1975 attracting CGST on supply ot- such goods @ 6% by virtue of Sl. No. 228 of Schedule-II to Notification No. 1/2017-CentraI Tax (Rate) dated 30.06.2017 as amended by Notification No. 41/20 17- Central Tax (Rate) dated 14.11.2017. 03. CONTENTION - AS PER THE CONCERNED OFFICER The relevant portion of the submission, as reproduced verbatim, could be seen thus- 2. It is submitted at the outset that the applicant ought to have furnished all the relevant information and details in his application necessary to decide the classification issue. For determination of classification number of factors are required to be examined like raw materials/inputs used and their proportion; desired characteristics of the final product and in turn function, essential characteristics of different raw materials used /the purpose of using each input, manufacturing process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dough at home. One such article is reproduced in Annexure A enclosed. It appears from the information available that for preparation of such modelling dough any grain flour which is not sticky can be used e.g. corn flour. Vegetable oil is used to make the dough easier to work i.e. for pliability and elasticity. Alum is added which act alum as preservative. From the article at Wikipedia about (https://en.wikipedia.org/wiki/Alum) relevant information is reproduced below:- An alum ˈ ləm is a type of chemical compound, usually a hydrated double sulfate salt of aluminium with the general formula XAl(SO 4 ) 2 12H 2 O , where X is a monovalent cation such as potassium or ammonium. By itself, alum often refers to potassium alum, with the formula KAl(SO4) 2 12H 2 O . Other alums are named after the monovalent ion, such as sodium alum and ammonium alum. The name alum is also used, more generally, for salts with the same formula and structure, except that aluminium is replaced by another trivalent metal ion like chromium(III), and/or sulfur is replaced by other chalcogen like selenium. The most common of these analogs is chrome alum KCr(SO 4) 2 12H 2 O . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t are given. The application was admitted and a final hearing was held on dt.17.04.2018 when Sh. Nirav Karia, Advocate alongwith Sh. R. Nambirajan, Advocate and Sh. Ashish Philip Abraham, Advocate appeared and submitted copies of invoices of other resellers i.e. M/S. Crossword Bookstores Ltd., and Big Bazar in respect of products of Camlin, Funskool, etc. Further they requested that the issue be decided on merits please. Jurisdictional Officer, Sh. S. S. Bhide stated that the issue be decided on merits. 05. OBSERVATIONS We have gone through the facts of the case. The applicant seeks to have the classification of the product modelling dough . From the oral and written submission, it is understood that the applicant seems to convey that there are two Custom Tariff Headings under which the impugned product could be said to fall. We have been informed that the impugned product is- Is made up of maida i.e. refined wheat flour or white flour . a specially manufactured semi-solid, clay-like structure to be used as a toy for kids to make various shapes, things, caricatures of animals etc. is usually supplied in packs containing multiple such dough in var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ULPHATE ) 3407 00 - Modelling pastes, including those put up for children s amusement; preparations known as dental wax or as dental impression compounds , put up in sets, in packings for retail sale or in plates, horseshoe shapes, sticks or similar forms; other preparations for use in dentistry, with a basis of plaster (of calcined gypsum or calcium sulphate): 3407 00 10 --- Modelling pastes, including those put up for kg. 10% children s amusement 3407 00 90 --- Other Heading 9503 9503 TRICYCLES, SCOOTERS, PEDAL CARS AND SIMILAR WHEELED TOYS; DOLL S CARRIAGES; DOLLS; OTHER TOYS; REDUCED-SIZE ( SCALE ) MODELS AND SIMILAR RECREATIONAL MODELS, WORKING OR NOT ; PUZZLES OF ALL KINDS 9503 00 - Tricycles, scooters, pedal cars and similar wheeled toys; dolls' carriages; dolls; other toys; reduced-size ( scale ) models and similar recreational models, working or not; puzzle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered persons in an attempt to reduce effective price of product and increase their market share and profits. Further, it shall be noted that many unorganized and un-registered players (having meagre market share) are also taking undue advantage of the above and clearing similar products by charging CGST @6% only. As observed earlier, we are of the prima facie opinion that the impugned product would be covered by the CTH 3407. However, we would now look at the matter in view of the issues raised above. Chapter 34 of the Customs Tariff falls in Section VI which is for Products of the Chemical or Allied Industries . The Heading of Chapter 34 reads as Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, dental waxes and dental preparations With a basis of plaster , We have seen above that the impugned product contains several chemicals and not maida per se. There is no question that anybody would purchase this product for being used as maida as so many other chemicals as given in table above are also added to it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luence. It is essential here to mark the difference in the words used. Chapter 39 says plastics while Chapter 34 says plastic . Plastics is not the same as plastic . The meaning of plastic is not given by the HSN and nor the Customs Tariff Act of India. Hence, we refer to the meaning of plastic as normally understood thus - We find that the word Plastic is a noun as well as an Adjective.. AS NOUN..... noun: plastic ; plural noun plastics 1. a synthetic material made from a wide range of organic polymers such as polyethylene, PVC, nylon, etc., that can be moulded into shape while soft, and then set into a rigid or slightly elastic form. mains pipes should be made or plastic or copper informal credit cards or other types of-plastic card that be used as money. he pays with cash Instead of with plastic AS ADJECTIVE PLASTIC HAS MAINLY TWO MEANINGS 1. made of plastic. plastic bottles artificial or unnatural.......This is the one meaning a holiday rep with huge white teeth and a plastic smile synonyms: artificaial, false, synthetic, fake, superfic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same has been used. The same rule applies to the HSN Notes to Chapter 39. Further, it should not be lost sight of that the word which should be understood in the same sense, throughout the Nomenclature, is the word plastics , The Notes Chapter 39 say that the expression Plastics means those materials of headings 39.01 10 39.14 which are or have been capable, either at the moment of polymerization or at some subsequent stage of being formed under external influence (usually heat and pressure, If necessary with a solvent or plasticiser) by moulding, casting, extruding_rolling or other process into shapes which are retained on the removal of the external Influence . Whereas Notes to Heading 3407 Say that modelling pastes are plastic preparations generally used by artists or goldsmiths for making models and also by children for amusement purposes. Thus we find that the applicant in their contentions have taken Plastics and Plastic as one and the same and are therefore not able to be certain of the correct classification of their product which would be under CTH 3407 as per detailed discussions above once we are able to differentiate between the word Plast ..... X X X X Extracts X X X X X X X X Extracts X X X X
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