In re M/s Laxmi Rubber Industries (GST AAR Rajasthan)
Question: Considering Note No. 1, 2, 3 of Section XVI and Note No. 2 of Chapter 84, whether based on rules of interpretation of HS codes, the items made of vulcanized rubber like Rubber Ring/ GASKET/ Seal, Rubber Foot Batten Washer and Rubber,Grommets falling under the heading 4016 are taxable as ‘specific rubber items having a GST rate of 18% or as components of sprinkler/ Drip irrigation system having a tax rate of 12% under heading 84249000. It is pertinent to note that these items are designed and shaped that these can be used only in sprinkler/drip irrigation equipment and have no other use.
Answer: The goods manufactured and supplied by the applicant viz. Rubber Ring/Gasket/Seal, Rubber Foot Batten Washer and Rubber Grommets are classifiable under Chapter Heading 4016 and attract GST @ 18% (CGST 9% + SGST 9%).
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, RAJASTHAN
Note: Under Section 100 of the CGST/ RGST Act, 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of CGST/ RGST Act, 2017, within a period of 30 days from the date of service of this order.
The issue raised by M/s Laxmi Rubber Industries, H-84, Road No. 5A, RIICO Bindayaka, Jaipur, Rajasthan 30/2012 (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (a) given as under:
a. Classification of any goods or services or both;
Further, the applicant being a registered person (GSTIN is 08AACFL1715B1ZX as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling.
1. SUBMISSION AND INTERPRETATION OF THE APPLICANT:
a. The applicant is engaged in the business of manufacturing/Trading of rubber parts of sprinkler system 86 drip irrigation system used in agriculture irrigation. The parts comprise of Rubber Ring/Gasket/Seal, Rubber Foot Batten Washer and Rubber Grommets which are exclusively made for use and to fit only in various types of Sprinkler/drip irrigation system and have no other use. These parts are designed and shaped that these can be used only in sprinkler/drip irrigation equipment.
b. The Rubber Ring/Gasket/Seal, Rubber Foot Batten Washer and Rubber Grommets are made of Vulcanized Rubber and have no other use. These parts are designed and shaped that these can be used only in sprinkler/drip irrigation equipment.
c. The manufactured/Traded goods are sold to entities manufacturing sprinkler systems, Sprinkler Parts, Traders and consumers using sprinkler system as a part to be used in their sprinkler/ drip irrigation system.
d. Entry No. 195B of Schedule II of notification no.01/2017 dated 28.06.2017 as inserted vide notification no. 06/2018 dated 25.01.2018 covers vide taxguru.in Chapter/heading/Sub- heading/Tariff item 8424 [Sprinklers; drip irrigation system including Laterals] having overall GST @12% (6% CGST and 6%SGST).
e. Circular number 81/55/2018-GST dt.31 December, 2018 has been issued as a clarification regarding GST tax rate for Sprinkler and Drip irrigation System including laterals and vide sr.no.4 of the circular it has been stated: “Therefore, the term “sprinklers”, in the said entry 195B, covers sprinkler irrigation system. Accordingly, sprinkler system consisting of nozzles, lateral and other components would attract 12% GST rate.
f. In the Circular No.81 it has been stated that lateral and other components would attract 12% GST rate. The HS Code 8424 90 00 covers Parts in the ambit of tariff item 8424.
g. The notes to Section XVI which covers Chapter 84 vide note no. 1 states that:-
(1) “This section does not cover:
(a) Transmission or conveyor belts or belting, of plastics of chapter 39, or of vulcanized rubber (heading 4010), or other articles of a kind used in machinery or mechanical or electrical appliances or for other technical uses, of vulcanized rubber other than hard rubber (heading 4016):”
The above Note No. 1 excludes from the purview articles of a kind used in machinery or mechanical or electrical appliances or for other technical uses, of vulcanized rubber other than hard rubber (heading 4016).
2. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT
