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TMI Blog2022 (8) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in respect of the following questions: a) Classification of parts & accessories suitable for use solely with the hearing aids b) Rate of tax on supply of such parts & accessories which are suitable for use solely with the hearing aids. c) Whether such parts & accessories, suitable for use solely with the hearing aids, are exempt by virtue of Sl.No.142 of 2/2017-CT(R) as amended from time to time 4. BRIEF FACTS OF THE CASE: The applicant furnishes the following facts relevant to the issue: 4.1 The applicant supplies the parts & accessories to the domestic market, which are said to be suitable for use solely with the hearing aids, which are manufactured by their parent company abroad and imported by the applicant. The applicant claims that the said parts & accessories are designed by their parent company to make them suitable for use solely with the hearing aids with no other alternate use and hence these are suitable for use solely with the hearing aids. 4.2 The applicant is supplying the parts & accessories of hearing aids on classifying the same under heading 9021 9010 on charging 18% GST, in terms of entry No.453 of Schedule III to the Notification 1/2017-CT (R) dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not mentioned in any heading, then: i. If suitable for sole or principal use with a machine or devise, then classify with the machine or device (Note 2 (b)); ii. Otherwise, classify under heading 9033 (Note 2(c)); 5.4 As the parts and accessories supplied by the applicant is suitable for use solely with hearing aids, taking shelter under Note 2 (b) to Chapter 90, the said parts and accessories are also to be classified under Chapter heading 9021 along with hearing aids. Hence, the tax treatment (in terms of classification, rate of tax and exemption, if any) of hearing aids will be applicable to its parts and accessories as well. Having established that parts and accessories are classified as hearings aids under Chapter heading 9021 (4-digit HSN level in 1/2017- CTR and 2/2017-CTR next question that needs answer is the classification at 8-digit HSN level. 5.5 Reference is made to 1/2017-CTR and 2/2017-CTR; SI. No. 221 of Schedule II (12% rate of tax) to 1/2017-CTR excludes hearing aids and SI. No. 142 of 2/2017-CTR (exemption entry) exempts hearing aids. Both the entries in respective notifications are at 4-digit HSN level and not at 8-digit HSN level. Therefore, we draw re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is specified are as under: Notfn. No. Sl.No. Chapter/Heading/Sub-heading/Tariff item Description as per Notfn. Remarks 1/2017-CTR Sl. No. 221 (Sch. II) 9021 Splints and other fracture appliances; artificial parts of the body; other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability; intraocular lens [other than orthopaedic appliances, such as crutches, surgical belts, and trusses, hearing aids] 12% rate is decided for various medical devices but hearing aids is excluded from this list. 2/2017-CTR SL. No. 142 9021 Hearing aids Exemption is granted to hearing aids from levy of GST. 5.9 As can be seen above, SL. No. 221 with 12 % rate of tax specifically excludes hearing aids from its ambit by mentioning a 4-digit HSN i.e., 9021 (at Chapter heading level.) As already discussed, hearing aids includes its parts and accessories (more-so in the absence of bifurcation of parts and accessories from hearing aids as done in Customs Tariff at Chapter hearing 9021. Consequently, even parts and accessories which are suitable for use solely with hearing aids also gets excluded from the ambit of SL. No. 221 (12% rate of tax). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , instrument or apparatus of heading 9010, 9013 or 9031) are to be classified with the machines, instruments or apparatus of that kind;" 9.4 Thus, as per chapter note 2 (b), parts of ophthalmic equipment suitable for use solely or principally with an ophthalmic equipment should be classified with the ophthalmic equipment only and shall attract 12 %. 9.5 In view of the above, it is clarified that 12 % GST would be applicable on the parts and accessories suitable for use solely or principally with a medical device falling under heading 9018, 9019, 9021 or 9022 in terms of chapter note 2 (b)." 5.11 The above clarification was issued relying on Chapter Note 2 (b) to Chapter 90 similar to the Applicant's understanding in the instance case in hand. Accordingly, the Applicant believes that the Circular is squarely covers their case and hence believe that the parts and accessories suitable for use solely with hearing aids are to be classified as hearing aids only. 5.12 Considering all the above submissions, the Applicant believes that the parts and accessories supplied by it (which are suitable for use solely with hearing aids) are exempt from GST and are covered under Sl. No. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the above, the primary issue before us to decide is the classification of the parts & accessories, suitable for use solely with the hearing aids. The other issues are the applicable rate of GST thereon and also the applicability of Entry No.142 of 2/2017-CT(R) dated 28.06.2017 to the said parts & accessories of hearing aids, which are based on the classification. Thus we proceed to examine, discuss & decide the classification of the parts & accessories of the hearing aids. 12. We invite reference, with regard to the classification of goods under GST, to the explanation (iii) & (iv) of the notification No.1/2017-Central Tax (Rate) dated 28.06.2017, which is as under: Explanation. - For the purposes of this notification No.1/ 2017-Central Tax (Rate) dated 28.06.2017,- (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs; (b) other parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of heading 9010, 9013 or 9031) are to be classified with the machines, instruments or apparatus of that kind; (c) all other parts and accessories are to be classified in heading 9033. 15. It could be seen from the above that Note 2(a) clearly specifies that parts and accessories which are goods included in any of the headings of this Chapter (90) or of Chapter 84, 85 or 91 (other than heading 8487, 8548 or 9033) are in all cases to be classified in their respective headings. In the instant case, the parts & accessories of hearing aids are goods that are specifically covered under heading 9021 9010 and hence they merit classification in their respective heading i.e. 9021 9010. Also Note 2(b) supra implies that it covers only those other parts and accessories which can't be classified in terms of Note 2(a). In other words Note 2(a) is applicable to the instant case and Note 2(b) has to be considered in case Note 2(a) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. Further the entries bearing numbers 221 of Schedule II & 453 of Schedule III, under Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, as amended are relevant entries to the hearing aids and are as under: Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, as amended Schedule II - GST rate - 12% Sl.No. Chapter /Heading /Sub-heading /Tariff item Description of Goods (1) (2) (3) 221. 9021 Splints and other fracture appliances; artificial parts of the body; other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability; intraocular lens [other than orthopaedic appliances, such as crutches, surgical belts, and trusses, hearing aids] Schedule III - GST rate - 18% 453. Any Chapter Goods which are not specified in Schedule I, II, IV, V or VI It is clearly evident that hearing aids are excluded from entry no.221 of Schedule II, which attracts GST rate of 12%. The only entry that covers the parts & accessories of hearing aids is 453 of Schedule III, mentioned above, which attracts the GST @ 18%. 21. In view of the foregoing, we pass the following RULING a) The parts & accessories of hearing aids are co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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