TMI Blog2019 (7) TMI 1334X X X X Extracts X X X X X X X X Extracts X X X X ..... re designed for use in automobiles. Door handle thus will be categorized as part of general use as per Note 2 to Section XV and hence will be classified according to the constituent material. In the instant case as the door handle is made of plastic will merit classification under the heading 3926. Brackets - Housing and Bracket Housing - HELD THAT:- Brackets suitable for automobiles find mention in the explanatory note (C) under heading 8302, Similarly, Housing and Bracket Housing are covered under sub-heading 8302 30 under the description mountings and fittings . Thus Brackets, Housing and Bracket Housing will be categorized as part of general use as per Note 2 to Section XV and hence will be classified according to their constituent material, In the instant case as the Brackets, Housing and Bracket Housing are made of plastic, they will merit classification under the heading 3926. Washers - HELD THAT:- Washers are mentioned in the heading text of 7318, The item gasket is similar to washer both being placed between two objects where the former is placed between two objects to prevent friction and the latter to prevent leakage. Therefore washers and gaskets will be catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ruling, the expression GST Act would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE QUESTION (S) RAISED 1. M/s. Nexture Technologies Private Limited, situated at Gat No. 102, Milkat No 623/2 Ambethan, Chakan Tal, Khed Chakan, Pune; Maharashtra-410501 ( Applicant ) is registered with jurisdictional authorities vide GSTIN 27AADCV8711DIZE and is, inter alia engaged in manufacture and supply of following goods ( impugned goods ): Plastic handle for motor vehicle doors (Including lever handle) Plastic fittings for such for motor vehicle s doors such as: Bracket Housing Bracket housing asket tator Glove box locking 2. It is pertinent to briefly discuss the nature, use and process employed for manufacture of impugned goods before we proceed to determine their classification B1.: Plastic door handle for motor vehicles: 3. The handles are affixed on the exterior side of a door to the motor vehicle. When a person needs to open the door of the motor vehicle, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tax Act, 2017 (MGST Act ). Notable that clause (a) and (e) of Section 97(2) envisaging issues pertaining to classification, applicability of notification and determination of liability to pay tax squarely cover the instant issue. 1.2 Further, since the issue is novel and has not been dealt in any proceedings under the CGST Act and the MGST Act, the instant application merits consideration for advance ruling II. Applicant s understanding II.1 As per the Applicant s understanding, the impugned goods merit classification under Entry at S. No. 111 of Schedule III of Notification No. 1/2017-Central Tax (Rate) (Notification 1/2017 ) exigible to central tax at the rate of 9 per cent. (in toto goods and services tax rate of 18 per cent.). The relevant extract of entry is reproduced as under: III. 3926 plastics and articles of other materials of headings 3901 to 3914 (other than bangles of plastic, plastic beads and feeding bottles) III. Applicable provisions and analysis III.1 Section 9 of the CGST Act forming the charging provision, provides for levy of central tax on all intra-state supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 3926 under First Schedule of Customs Tariff Act is reproduced as under: Chapter 39 Plastics and articles thereof 3926 Other articles of plastics and articles of other materials of heading 3901 to 3914 3926 30 --- Fittings for furniture, coachwork or the like 3926 30 10 --- Of polyurethane foam 3926 30 90 --- Other A.2 In order to classify impugned goods under Sub-Heading 3926 30, they must satisfy the description Fittings for furniture, coachwork or the like . For this purpose, it is pertinent to delineate the scope of Sub-heading 3926 30. A.3 Sub-heading 3926 30 covers fittings. The term fittings has not been defined in Customs Tariff Act or Notes appertaining to relevant Section and Chapter. A.4 The meaning of term fittings as obtained from various sources, are reproduced as under: The Oxford English Dictionary [accessible at https://en.oxforddictionaries.com/definition fitting , last accessed on February 4, 2019) defines the term as a small part on or atta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uary 4, 2019]. A.8 In this context, it is pertinent to make reference to General Rules of Interpretation ( GRI ) I, whereby the classification is required to be determined in terms of the description of goods against Headings and Sub-headings and Notes to relevant Section and Chapter A.9 Note 1 to Chapter 39 defines the term plastics in following manner: Throughout the Nomenclature the expression plastics means those materials of headings 39.01 to 39.14 which are or have been capable, either at the moment of polymerisation 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 ofthe external influence. A.10 It is submitted that impugned goods are small parts and equipments fixed onto the door of an automobile. Further, the impugned goods are manufactured through moulding machines using PVC granules. These processes and ingredients are covered with the sweep of Note 1 to Chapter 39. Hence, by application of GRI 1, the impugned goods are squarely covered under the sweep of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insight into the meaning of expressions employed in tariff schedule. In the case of CCE v. Wood craft Products Limited, 1995 (77) ELT 23 (SC) = 1995 (3) TMI 93 - SUPREME COURT , the Apex Court held that Explanatory Notes to HSN provide a safe guide for interpretation of the tariff schedule. C.4 As per the Explanatory Notes, Heading 8708 covers only those parts and accessories which satisfy the following criteria: They must be identifiable as being suitable for use solely or principally with the above-mentioned vehicles; and They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note) C.5 As per Note 2 to Section XVII, the expression parts and parts and accessories will not include parts of general use as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastic (Chapter 39). Such parts shall not be classifiable as under Section XVII even if they are specifically identifiable as parts or parts and accessories for the goods of Section XVll. C.6 Further, the Explanatory Notes delineate the scope of above exclusion in following manner: (A) Parts and ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule of the United States (HTSUS ) which is pari materia to the Heading presently under consideration. D.2 In cross ruling N 276852, where classification of plastic door handle of a truck was under consideration. The Ruling relied upon the interpretatory notes to Section XVII. As per the Ruling, the expression parts and parts and accessories of Section XVII [Vehicles, Aircraft, Vessels and Associated Transportation Equipment) of the Harmonized Tariff Schedule of the United States (HTSUS) do not apply to parts for general use, as defined in Legal Note 2 to Section XV, of base metal such as mountings, fittings and similar articles suitable for furniture, doors, staircases, windows, blinds, coachwork, saddlery, trunks, chests, caskets or the like (Section XV); or similar goods of plastics (Chapter 39), whether or not those parts are identifiable for goods of that section. Accordingly, similar parts (made of plastic) which are included in the term parts of general use shall not be treated as parts or parts and accessories of goods of Section XVII and are classifiable as goods of Heading 3926, HTSUS. Similarly, Cross ruling NYG84953 also classified various types of door ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of headings 8701 to 8705 exigible to rate of tax at 28%. A.4 The Applicant vide these written submissions, wishes to place on record additional grounds in respect of the aforesaid appeal. The Applicant in succeeding paragraphs advances submissions intended to be placed on record. These submissions are mutually exclusive and without prejudice to each other. The Applicant further craves leave to rely upon its submissions made in the main application filed before the Authority for Advance Rulings, Maharashtra. B. Additional Submissions The Impugned Goods do not merit classification under heading 8708 B.1 Heading 8708 falls under Section XVII of the HSN which covers Vehicles, Aircrafts and Associates Transport Equipment , B.2 The Applicant submits that as per the HSN Explanatory Notes to Heading g 708 [on Page No. XVII-8708-1 of the HSN] 1 (Page 25), this Heading covers only those parts and accessories which satisfy the following two criterias: (i) They must be identifiable as being suitable for use solely or principally with the motor vehicles; and (ii) They must not be excluded by the provisions of Section Notes of Section XVII B.3 It is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plastic door handle of motor vehicle doors, b. Plastic fittings for motor vehicle s door such as Bracket, Housing, Bracket housing, Gasket, Stator c. Glove box locking Above mentioned products ( impugned goods ) are manufactured using a moulding machine with the help of plastic granules. Applicants understanding: a. The impugned goods merit classification under Entry at S. No. 111 of Schedule III of Notification No. 1/2017-CentraI Tax (Rate) ( Notification 1/2017 ) to central tax at the rate of 9 per cent. (accordingly goods and services tax rate of 18 per cent.). The relevant extract of entry is S.No. Chapter / Heading item Subheading / Tariff item Description of Goods 111 3926 PVC Belt Conveyor, Plastic Tarpaulin b. For the purpose of determining classification under Notifications 1/2017- Central Tax (Rate) and 2/2017 Central Tax (Rate). Similarly, Explanation (iv) adopts the general rules for interpretation, Section Notes and Chapter Notes as provided in the Customs Tariff Act, 1975 for interpreting the Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to taxation each thing consider separately not consider commonly . The impugned goods are not covered under Heading 8708 Heading 8708 falls under Section XVII of the HSN which covers Vehicles, Aircrafts and Associated Transport Equipment . Heading 8708 covers Parts and accessories of motor vehicles of headings 8701 to 8705 . The World Customs Organisation has enunciated Harmonised Commodity Description and Coding System or Harmonised System of Tariff Nomenclature ( HSN ), an internationally standardised system to classify goods. The WCO has also issued Explanatory Notes to HSN ( Explanatory Notes) providing assistance in interpretation of the commodity groups created under HSN. The tariff schedule of Customs Tariff Act is a derivative of the HSN. Accordingly, the Explanatory Notes provide an insight into the meaning of expressions. As per the Explanatory Notes, Heading 8708 covers only those parts and accessories which satisfy the following critierias: They must be identifiable as being suitable for use solely or principally with the above-mentioned vehicles; and They must not be excluded by the provisions of the Notes to Section XVII A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, 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. 7307: Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel 7312: Stranded wire, ropes, cables, plaited bands, slings and the like, of iron or steel, not electrically insulated 7315: Chain and parts thereof, of iron or steel 7317 nals, tacks, drawing pins, corrugated nails, staples (other than those of heading 8305) and similar articles, of iron or steel, whether or not with heads of other material, but excluding such articles with heads of copper 7318: Screws, bolts, nuts, coach-screws, screw hooks, rivets, cotters, cotter-pins, washers (Including spring washers) and similar articles, of iron or steel 9114: Other clock or watch parts 8301: Padlocks and locks (key, combination or electrically operated), of base metal; clasps and frames with clasps, incorporating locks, of base metal; keys for any oe the foregoing articles, of base metal 8302: Base metal mountings, fittings and similar articles suitable for furniture, doors, sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The issue before us is in respect of classification of goods manufactured by the applicant, namely: Plastic handle for motor vehicle doors (including lever handle); Plastic fittings for such for motor vehicle s doors such as Bracket, Housing, Bracket housing, Gasket, Stator; and Glove box locking, All the said items, as per their submissions are manufactured through moulding machines using PVC granules and they are used exclusively for motor vehicles. The applicant has made various arguments to drive home their contention that the goods in question are covered under Chapter 3926 of the GST Tariff as articles of plastic and not under Chapter 8708 which covers Parts and accessories of motor vehicles of headings 8701 to 8705 . The jurisdictional office, on the other hand, has contended that the said goods will be covered under Chapter Heading 8708 of the GST Tariff. We shall therefore discuss both the Chapters and their relevance to the subject goods, in respect of which the queries have been raised by the applicant. We find that as per the Explanatory Notes, the Heading 8708 covers only those parts and accessories which satisfy the following criteria: They must be iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Bracket Housing are made of plastic, they will merit classification under the heading 3926, Washers are mentioned in the heading text of 7318, The item gasket is similar to washer both being placed between two objects where the former is placed between two objects to prevent friction and the latter to prevent leakage. Therefore washers and gaskets will be categorized as part of general use as per Note 2 to Section XV and hence will be classified according to the constituent material. In the instant case as the washers and gaskets are made of plastic, they will merit classification under the heading 3926. The item Stator is a part of an automobile lock. As the Automobile locks are specifically mentioned in the heading 8301.20, the stator being its part merits classification under 8301.60 (parts). Therefore stators will be categorized as part of general use as per Note 2 to Section XV and hence will be classified according to the constituent material. In the instant case as the stators are made of plastic, they will merit classification under the heading 3926. Similarly Glove box locking is also a lock of an automobile of heading 8301. Therefore will be categoriz ..... X X X X Extracts X X X X X X X X Extracts X X X X
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