TMI Blog2019 (1) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... in the above mentioned products acts as plasticizers. As mentioned in their application the product Tile Adhesive mentioned by them are specifically used for setting tiles, whether on floor, walls or other tiles, etc and therefore it is apparent that their products would be classifiable under Chap. 32 and not Chap 38. Tile grout is compound used as joint filler between tiles. This product is also used for setting the wall/ floor tiles because the same is used between two tiles as an adhesive by way of filling the gap between two tiles so that the tiles become attached to each other. Ruling:- The products in question will be classifiable under Entry 24 of Schedule IV of Notification No. 1/2017-Central Taxes (Rate) dated 28.06.2017 liable to GST @ 28% (14% each of CGST and SGST). - GST-ARA-44/2018-19/B-117 - - - Dated:- 17-9-2018 - SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER PROCEEDINGS (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tile Application Entry 24 of Schedule IV 3 Tile Grout i. Cement based Tile Grout ii. Expoxy based Tile Grout Entry 24 of Schedule IV 1.4. The brief description of each of the above two categories of product is given below for ready reference: 1.5. Tile Adhesive: Tile adhesive is compound which converted into slurry by adding water to apply on wall/ stones/tiles to fix the tiles on the surface. The compound consists of Cement, Sand and Polymer. Sub category of tile adhesive products are explained as below: 1.5.1. Tile Adhesive for normal application: The product Tile Adhesive for Normal Application is single component Grey cement-based polymer modified adhesive for fixing tiles on floors and walls in interior as well as exteriors, The product is sold as free flowing powder. This product is mixed with water to form a slurry and is then applied on the Surface (where tiles have to be fixed) using trowel. The said surface is then combed with notch trowel and tiles are fixed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... water through the joint. The compound consist of Cement, sand Colorant. 1.6.2. The Epoxy based Tile Grout: This product is a two-component epoxy resin based tin table grout specifically designed for use in application for ceramic tiles, vitrified tiles and stone joint where hygienic and sterile condition is expected. The compound consists Of Epoxy resin, Hardener Colorant 1.7. The Applicant states that the above products are not manufactured by the applicant. The applicant buys the product from separate vendors and sells it under its brand name. 1.8. The Applicant states that under the erstwhile regime, the manufacturers of the Applicant were classifying the above products under Chapter Heading 3214. At this point it is relevant to note that the rate of excise duty for the Chapter Heading 3214 and the 3824 were same. Further, since the Applicant was merely a trader, the classification issue did not arise at the hands of the Applicant under the erstwhile Excise regime. 1.9. The Applicant submits that the aforesaid products have also been imported in the past under both the competing entries. Since the rate of the tax under both the entries was sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3214 Glaziers putty, grafting putty, resin cements, caulking compounds and other mastics; painters fillings; non- refractory surfacing preparations for facades, indoor walls, floors, ceilings or the like 2.5. The Applicant submits that on a plain reading of the description in the above two competing entries, it is clear that the aforesaid two categories of products of the applicant will fall under Entry 97 of Schedule III being chemical products and preparations of the chemical or allied industries. 2.6. The applicant submits that, the aforesaid two categories of products do not fall under the description of goods specified in Entry 24 of the Schedule IV. The aforesaid two categories of product cannot be considered as Glaziers putty, grafting putty, resin cements, caulking compounds and other mastics; painters fillings; non-refractory surfacing preparations for facades, indoor walls, floors, ceilings or the like. Thus, once it is not included in the Entry 24 of Schedule IV, it will be covered under Entry 97 of Schedule III liable to CGST at 9%. 3. The Applicant submits that even by the Chapter Notes to Customs Tariff Act and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Standard Preferential areas 3214 GLAZIERS PUTTY, GRAFTING PUTTY, RESIN CEMENTS, CAULKING COMPOUNDS AND OTHER MASTICS; PAINTERS FILLINGS; NON-REFRACTORY SURFACING PREPARTIONS FOR FACADES, INDOOR WALLS, FLOORS, CEILINGS OR THE LIKE 32141000 - Glaziers putty, grafting putty, resin cements, caulking compounds and other mastics; painters fillings kg. 10% 321490 - Other : 32149010 --- Non-refractory surfacing preparations kg. 10% 32149020 --- Resin cement kg. 10% 32149090 --- Other kg. 10% (B): Relevant Extract from Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up includes: (1) Powdered preparations consisting of equal parts of plaster and sand with plasticisers. (2) Preparations in powder form based on quartz and cement with small quantities of added plasticisers, used for instance, after adding water, for setting wall or floor tiles. (3) Pasty preparations made by coating minerals fillers (ground marble, quartz, or a mixture of quartz and silicate, for instance) with a binder (plastics or resins), with added pigments and, where appropriate, water or solvent. (4) Liquid preparations consisting, for instance, of synthetic rubber or acrylic polymers, asbestos fibres mixed with a pigment, and water. These are applied on facades with paint brush or spray gun and form a much thicker layer than paint. 3.7. The Applicant submits that on a plain reading of the above HSN Explanatory Notes, it can be seen that the said Chapter Heading 3214 only includes Non-refractory surfacing preparations to make facades, indoor walls, floors and ceilings, swimming pool walls and floors, etc. water proof and improve their appearance. Further the said non-refractory preparations contained in Chapter Heading 3214 generally remain visibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ientific and technical meaning of the terms or expression used but to their popular meaning that is to say, the meaning attached to them by those dealing in them. Further, Hon ble Supreme Court in the case of Ramavatar Bhuadaiprasad Etc. Vs. Assistant Sales Tax Officer, Akola - (1961) 12 STC 286 (SC) = 1961 (3) TMI 55 - SUPREME COURT OF INDIA held that if a word is used in a taxing statute, it has to be understood as in common parlance. 3.15. Further, Hon ble Supreme Court in the case of Commissioner of Sales Tax, Madhya Pradesh Vs. Jaswant Singh Charan Singh - (1967) 19 STC 469 (SC) while considering the question of Whether the word coal covers Charcoal, held that the meaning of the word coal in the statute as understood in its commercial or popular sense would include charcoal . The Apex Court upheld the decision of High Court Wherein the High Court had observed that while construing entries in a statute like the Sales Tax Acts, the Court should prefer the Popular meaning of the terms used in such entries and not their dictionary meanings and that so construed charcoal would be included in the word coal . 3.16. The Hon ble Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on a plain reading of the dictionary meaning of mortar, it is clear that the non-refractory tile adhesives and tile grout products sold by the applicant is used as mortar by the actual users for fixing and bonding the tiles on the walls and floorings. It is not used as a surface finishing material. Hence, the said products will be covered under the above Chapter Heading 3824 only. Additional submissions on 08.08.2018 Brief facts: 1.1. The Applicant is a manufacturer and dealer in paints and other chemical based products and adhesives. Applicant is, inter alia, in the business of the buying and selling Tile Adhesives and Grouting material. 1.2. The Applicant has been classifying the below mentioned six products under 24 of Schedule IV of Notification No. 1/2017- Central Taxes (Rate) dated 28.06.2017 and paying CGST thereon. The description of the products is explained below and the invoices for the products are annexed along with the application. Table - 1 Sr. No. Product Description Classification adopted by NM 1. Tile Adhesive for Normal Application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be fixed) using trowel. The said surface is then combed with notch trowel and tiles are fixed. This products is used under the tiles to join the tiles together in order to provide strength to the walls, floors, etc., where the tiles are applied. It is used an adhesive for bonding of tiles. 1.8. Glass Tile Adhesive: 1.8.1. The Product Glass Tile Adhesive is single component white cement based polymer modified fiber reinforced adhesives for fixing glass mosaic tiles in interiors as well as exteriors. The product is sold as free flowing powder. This product is mixed with water to form a slurry and is then applied on the surface (where tiles have to be fixed) using trowel. The said surface is then combed with notch trowel and tiles are fixed. This products is used under the tiles to join the tiles together in Order to provide strength to the walls, floors, etc. where the tiles are applied. It is used an adhesive for bonding of tiles. 1.9. Tile - on - Tile Application: 1.9.1. The product Tile-on-Tile Adhesive is single component white cement based polymer modified adhesives for fixing tiles over tiles on floors and walls in interiors as well as exteriors. The product co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to note that the rate of excise duty for the Chapter Heading 3214 and the 3824 were same. Further, since the Applicant was merely a trader, the classification issue did not arise at the hands of the Applicant under the erstwhile Excise regime. 1.16. The Applicant submits that the aforesaid products have also been imported in the past under both the competing entries. Since the rate of the tax under both the entries was same under the Central Excise Tariff Act, 1985, the applicant did not face the issue of correct classification. 1.17. The Applicant states that as far as classification under GST is concerned, if the products are classifiable under Chapter Heading 3214, then the said products will be liable to GST at 28% under Entry 24 of Schedule IV of the Notification No. 1/2017 - Central Tax (Rate) dated 2806.2017. In case, it is held that above products are classifiable under Chapter Heading 3824 then the rate Of GST applicable will be 18% under Entry 97 of Schedule III of the said Notification No. 1/2017 - Central Taxes (Rate) dated 28.06.2017. 1) In view of the above facts, the applicant has raised the question as to whether the six products will be classifiable un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear that the aforesaid six products of the applicant will fall under Entry 97 of Schedule III being chemical products and preparations of the chemical or allied industries. 2.7. The applicant submits that, the aforesaid six products do not fall under the description of goods specified in Entry 24 of the Schedule IV. The aforesaid six products cannot be considered as Glaziers putty, grafting putty, resin cements, caulking compounds and other mastics; painters fillings; non refractory surfacing preparations for facades, indoor walls, floors, ceilings or the like. It is clear that the Entry 24 covers only surfacing preparations. 2.8. The term surfacing preparations has not been defined under the said Notification or the Customs Tariff Act, 1975. Once the said term is no defined under the governing laws, the said words has to be interpreted based on the settled legal principles. It is settled law that any word which is not defined under the Act will have to be first interpret by applying the common parlance theory i.e. the word has to be interpreted in the way which a common understands. 2.9. It is submitted that under the common parlance theory, surfacing preparation means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Entry 97 of Schedule III consisting of goods of Chapter Heading 3824. 3. The Applicant submits that even by the Chapter Notes to Customs Tariff Act and the HSN Explanatory Notes, the above six products are classifiable under Chapter Heading 3824: 3.1. The Applicant submits that in case of any ambiguity in classification of goods under the Notification No. 1/2017, resort shall be made to the General Explanatory Notes to the Customs Tariff Act and the HSN Explanatory Notes. 3.2. The Explanation to the above Rate Notification No. 1/2017 - Central Taxes (Rate) dated is extracted below for ready reference: Explanation .- For the purposes of this Schedule, (i) The phrase unit container means a package, whether large or small (for example, tin, can, box, jar, bottle, bag, or carton, drum, barrel, or canister) designed to hold a pre- determined quantity or number, which is indicated on such package. (ii) The phrase registered brand name means brand name or trade name, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --- Other kg. 10% (B): Relevant Extract from Chapter Heading 3824 Tariff Item Description of goods Unit Rate of duty Standard Preferential areas 1 2 3 4 5 3824 PREPARED BINDERS FOR FOUNDRY MOULDS OR CORES; CHEMICAL PRODUCTS AND PREPARATIONS OF THE CHEMICAL OR ALLIED INDUSTRIES (INCLUDING THOSE CONSISTING OF MIXTURES OF NATURAL PRODUCTS), NOT ELSEWHERE SPECIFIED OR INCLUDED 3824 50 - Non-refractory mortars and concretes: 3824 54 10 --- Concretes ready to use known as Ready- mix Concrete (RMC) Kg. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oof and improve their appearance. Further the said non-refractory preparations contained in Chapter Heading 3214 generally remain Visible as final surfacing, 4.2. In the present case, all the above six products are non-refractory preparations. However, they are not used for water-proofing or improving the appearance of the wall of tiles. The said six products are used for bonding of the tiles either horizontally or vertically. Further in no case, the above six products emerge as final visible surface. In fact, the Tile Adhesives are never used on the surface. 4.3. The Applicant relies on the decision of Hon ble CESTAT in the case of Sika India Pvt. Ltd. Vs. Commissioner of Central Excise, Jaipur - 2018-TIOL-243 CESTAT-DEL = 2017 (12) TMI 892 - CESTAT NEW DELHI wherein while deciding the classification of finished products such as cement grout, repair mortar, repair concrete, tile adhesives, waterproofing compounding sealants for tiles, walls etc. Hon ble CESTAT held that the above products are not of a type used for Surfacing preparations for walls, ceilings etc. It is held that the said products cannot be classified under Chapter Heading 3214. 4.5. Thus, the Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the word coal 4.10. The Hon ble Supreme Court in the case of Commissioner of Central Excise Vs. Connaught Plaza Restaurant (P) Ltd. - (2012) 13 SCC 639 (SC) = 2012 (12) TMI 149 - SUPREME COURT was concerned with the question of whether the soft serve ice cream would be covered under the term ice cream. The Apex Court while holding against the revenue and in the favour of the assesse to hold that ice cream would cover the soft serve ice cream. The Apex Court held that in the absence of a statutory definition in precise terms; words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding, or according to their popular meaning. In other words, they must be constructed in the sense that the people conversant with the subject-matter of the statute, would attribute to it. 4.11 The Applicant submits in the present case, the product is mainly used by the civil contractors and plumbers who use the above products of the Applicant company for fixing the tiles. The said contractors and plumbers use the tile adhesives as mortars for bonding the tiles with floor or the wall. 4.12. The Applicant submits that in the absence of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Rules is extracted below for ready reference: 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 refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference 10 (a) or (b), they shall be classified under the heading which occur s last in nume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther stated that the product is a non-refractory mortars and concretes under sub heading 382450. He further stated that as per such heading 38245010 description is concretes ready to use known as readymix concrete (RMC) . He stated that the goods manufactured by applicant is nothing but mortars as per tariff heading 382450 product should fall 38245090 whose description is other for proving the claim Of the dealer he has given documents such as invoices, and application. After scrutiny of documents submitted along with application, tariff heading 3824 3214 description therein, primafacie it appears that applicant is manufacturer of tile adhesive tile grout . Basic properties composition of above mentioned product is as under: 1) Tile adhesive: - As per applicant tile adhesive is mixture of cements sand and polymer i.e. methyl cellulose. This mixture is called as polymers concrete and the useful and for binding the surface of tile with wall. The tile adhesive act as a binder and make available maximum surface area for binding it provides adhesive strength tensile strength to the particles. 2) Tile grout: - It is use for filling the gap of the tile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10% 382450 - Non-refractory mortars and concretes: Applicant stated that tile adhesive is nothing but mixture of cement sand and polymer, which is used after adding water to make it in plaster form. So as per sub heading 38245010 it is a nothing but non refractory mortar and just like ready mix concrete and therefor products should fall under HSN Code 3824 and rare of tax should be 18%. After scrutiny of the document and contention of applicant along with description mention in HSN Code 3214 3824, this office is Of opinion that applicant has rightly charged 28 % GST as per the classification of goods under tariff heading 3214 of Central Excise tariff Act. The HSN Code 3824 is not applicable to the goods manufactured by applicant i.e. tile adhesive and tile grout, because no doubt it is mortar i.e. mixture of sand, cement and polymer and ready mix concrete (RMC) is mixture of aggregate sand, cement, water but not polymer. After adding polymer as a adhesive, polymer reduces the water holding capacity of concrete and make it hard instantly. Polymer contained mixture also reduces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes. The cement used in this concrete is rich in alumina content (aluminous cement).This is a lime-based concrete. Asphalt concrete - this type is used primarily for road construction. The role of cement in this case is played by bitumen, which tightly holds and binds the concrete composites in the presence of coal tar at high temperatures. Polymer concrete - This type is used where the cementing material is a polymer. High temperature have the effect of weakening the bond and endangering the construction. The construction material can be cement-based or gypsum-based. Notable examples of dry mixture mortars which utilize methyl cellulose include tile adhesives, EIFS, insulting plasters, hand-troweled and machine-sprayed plaster, stucco, self-leveling flooring, extruded cement panels, skim coats, joint crack fillers, and tile grouts. Typical usage is about 0.2% - 0.5% Of total dry powder weight for dry mixtures. Derivatives of methyl cellulose which improve performance characteristics include hydroxypropyl methyl cellulose (HPMC) and hydroxyethyl methyl cellulose (HEMC). These derivatives typically improve the characteristics such as water retention, verti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was taken up for Preliminary hearing on dt. 18.07.2018 when Sh. Rahul Thakkar, Advocate along with Sh. Hiral Raja, G. M. Taxation Sh. Niket Prasad Branch Manager and Sh. Ajay Patel, Sr. Manager Taxation appeared and contended for admission of application as per contentions in their ARA and oral written submissions. Jurisdictional Officer, Sh. J. M. Raut, Dy. Commr. of Sales Tax (E-636), Large Tax Payer Unit-III, Mumbai appeared and made written submissions. The application was admitted and called for final hearing on 08.08.2018 when Sh. Rahul Thakkar, Advocate along with Sh. Hiral Raja, G. M. Taxation Sh. Ajay Patel, Sr. Manager Taxation Sh. Yogender Pandey appeared made oral written submissions. The Jurisdictional Officer was not present. 05. OBSERVATIONS We have gone through the facts of the case, documents on record and submissions made by both, the applicant and the department. The issue before us is a classification issue. The applicant has requested on a ruling as to whether Tile Adhesive (which includes Tile Adhesive for Normal Application, Glass Tile Adhesive, Tile-on-Tile Application, Tile Adhesive for Stone Heavy Tile Application) and Tile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to interpret the above relevant Sub-headings. The relevant portion Of the HSN Explanatory Notes is extracted below for ready reference: 32.14 - GLAZIERS PUTTY, GRAFTING PUTTY, RESIN CEMENTS, CAULKING COMPOUNDS AND OTHER MASTICS; PAINTERS FILLINGS; NONREFRACTORY SURFACING PREPARATIONS FOR FACADES, INDOOR WALLS, FLOORS, CEILINGS OR THE LIKE. (B) NON-REFRACTORY SURFACING PREPARATIONS. Non-refractory surfacing preparations are used on facades, indoor walls, floors and ceilings, swimming pool walls and floors, etc., to make them waterproof and improve their appearance. Generally they remain visible as the final surfacing. This group includes: (1) Powdered preparations consisting of equal parts of plaster and sand with plasticizers. (2) Preparations in powder form based on quartz and cement with small quantities of added plasticizers, used for instance, after adding water, for setting wall or floor tiles. (3) Pasty preparations made by coating minerals fillers (ground marble, quartz, or a mixture of quartz and silicate, for instance) with a binder (plastics or resins), With added pigments and, where appropriate, water or solvent. (4) L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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