In re Ms. V. V.Enterprises Private Limited (GST AAR Tamil Nadu)
1. Gemini Modern Auto Coffee Filter and Gemini Modern Traditional Coffee Filter supplied by the applicants are classifiable under Chapter Heading 84198190.
2. For the period 01.07.2017 to 14.11.2017, the applicable rate on “Gemini Modern Auto Coffee Filter” and “Gemini Modern Traditional Coffee Filter” is CGST 9% as per S1.No. 453 of Schedule -III of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 and SGST 9% as per SI.No. 453 of Schedule -III of Notification No. 11(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. The products are taxable to CGST 9% and SGST 9% as per Sl. No. 320 of Schedule III to Notification no. 01/2017-C.t.(Rate) dated 28.06.2017′ as amended by Notification No. 41/2017 dated 14.11.2017 and Sl.No. 320 of Schedule III to Notification No. 11(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 effective from 15.11.2017.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING TAMIL NADU
Note : Any appeal against the advance ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
M/s. V. V. Enterprises Private Limited 45, Raju Nagar, 2nd Street, Mettukuppam, OkkiyamThoraipakkam, Kanchipuram, Tamil Nadu 600 097,(hereinafter referred to as ‘Applicant’) are registered under GST Act vide GSTIN 33AAACV2596F1ZD. The Applicant manufactures Electric, Automatic, Filter Coffee Maker and Manual, Electrically Warmed Filter Coffee Maker and is also involved in the activity of manufacture of various products namely Beverages, Vending Machines and Components, Magnetic Float Switches etc. The Applicant has sought Advance Ruling in respect of their two manufacturing products namely, `Automatic Electric Filter Coffee Maker’ and ‘Manual, Electrically Warmed Filter Coffee Maker as below:
“1. Whether in the facts and circumstances of the case and in view of the fact that Automatic Electric Filter Coffee Maker fell under Chapter Heading No. 8419 of the GST Tariff and therefore SI. No. 320 of Schedule III to Notification No. 41/17 CTR dated 14.11.2017 and corresponding Sl.No. 320 of Schedule HI to G.O. M.s. No. 157 dated 14.11.2017 to be taxed at the rate of 18% ?
2. Whether in the facts and circumstances of the case and in view of the fact that Automatic Electric Filter Coffee Maker is machinery not meant for domestic use and will therefore be classified under Chapter Heading No. 8419 of GST tariff to be charged at the rate of 18%?
3. Whether in the facts and circumstances of the case and in view of the fact that, Manual/ Traditional Filter Coffee Maker, being not meant for domestic used and falling under Chapter Heading No. 8419 of GST tariff SI. No. 320 of Schedule III to Notification No. 41/ 17 CTR dated 14.11.2017 and corresponding SI. NO. 320 of Schedule III to G.O. Ms. No. 157 of 2017 is to be taxed at the rate of 18%?”.
The Applicant has submitted the copy of application in Form GST ARA – 01 and also submitted a copy of Challan evidencing payment of application fees of Rs.5,000/- each under Sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017.
2.1 The Applicant has stated that Automatic Electric Filter Coffee Maker is Machinery. The Machine contains a water tank and the plain water is poured into the water tank. When the Machine is switched on, the immersion heater, which is located inside the boiler of the Machine heats the plain water which is poured into the water tank. When the heated water reaches the desired temperature of 900 C, a solenoid valve outside the tank will open. Then the hot water will fall on the coffee powder which is inside the filter of the machine. Once the coffee is cooked, the same drips down as a hot decoction into a collecting vessel which is part of the Machine. The temperature in the collecting vessel is maintained through a warmer heater. The activity of heating and switching off of the heating operation is controlled by a thermostat which in turn is controlled by a Printed Circuit Board (PCB). This indicates that the activity of heating of the water, the activity of transfer of heated water on the coffee powder and the activity of preservation of the heat of the cooked coffee is all controlled by a thermostat which in turn is controlled by a PCB. The product is not for domestic use. At a given time, as much as 150 to 500 grams of coffee powder can be fed into the Machine. This can result into as many as 100 cups of coffee in 15 minutes time and on the other hand, a domestic coffee maker will not be able to handle more than 25 grams of coffee powder at a time resulting in not more than 4 to 5 cups of coffee. The Machine can be used repeatedly for further cycle during the day. The Machine is designed for commercial use in Hotels and Restaurants. The cost of this Machine is approximately between Rs. 8,000/- to Rs. 20,000/- depending upon the size of the Machine. The size will determine the quantum of coffee powder which can be handled at a time by the machine They are selling this product to Hotels and Restaurants such as Hot Chips Restaurants, Hotel Surguru, Hotel AryaNivas, AdyarAnandaBhavan, etc. In view of the above, the product in question, Automatic Electric Filter Coffee Maker, will be a Machine which falls squarely under Chapter 8419 of the GST tariff contemplated by Schedule III of Notification No. 41/17-CTR dated 14.11.2017 read with schedule III of G.O. Ms.No. 157 of 2017 dated 14.11.2017 to be taxed at an aggregated GST rate of 18%.
2.2 Regarding Manual /traditional filter coffee maker Machine, the same is meant only for commercial use. The Applicant stated that this product is designed to handle 250 to 500 grams of coffee powder in one cycle. In this instance, the hot water itself is poured into the Machine. There is a filter inside the Machine, through which the hot water passes and drips into coffee powder resulting in the cooking of Coffee powder and extraction of decoction. The decoction is kept warm in a warmer heater which is controlled by a thermostat. Unlike the first Machine, namely, Automatic Electric Filter Coffee Maker, this Machine is not controlled by the Printed Circuit Board (PCB). This Machine is operated electrically and electricity is needed for the purpose of maintaining temperature through a thermostat which is inside the heater which is part of the Machine.
2.3 The Applicant has interpreted that the products falls under Chapter 8419 and covered under Sl. No. 320 of Schedule III to Notification No.41/17 CTR dated 14.11.2017 and corresponding Sl. No. 320 of Schedule III to G.O. Ms. No. 157 of 2017. This chapter will apply in respect of Machinery, whether or not electrically heated for the treatment of materials by a process involving a change of temperature such as Heating, Cooking, Roasting, Distilling, Rectifying, Sterilizing, Pasteurizing, Steaming, Drying, Evaporating, Condensing or Cooling other than Machinery or plant of a kind not used for domestic purposes. In the instant case the Automatic Electric Filter Coffee Maker is a Machine, which is using a heater and heating operation to cook a substance. It is also not meant for domestic use but for commercial use. In these circumstances, the Machine will fall under Chapter 8419 and will therefore get taxed at 18% (CGST 9% and SGST 9%) under the GST. The Manual/Traditional Filter Coffee Maker also is used to cook and make decoction. It also uses a heating operation in the warmer heater through a thermostat. The machine is not meant for domestic use and items meant for domestic use are classified separately under the Chapter Heading 8516 of the GST tariff to be taxed at 28%. There is a clear demarcation in the scheme of GST notifications; Machines meant for domestic use are taxed at higher rate. Machines meant for non-domestic use are taxed at lesser rate.
3.1 The Applicant appeared for the personal hearing held on 19.11.2018, before the Authority. They submitted brochures, copies of Invoices, details of capacity of each product. The Applicant stated that both goods are electrical machinery and supported by the Supreme Court judicial cases laying down the definition of Machine. They stated that they are used only in industries/hotels and not for domestic use. They would fall under definition of ‘Plant’ as laid down in Supreme Court Judgment submitted by them. They stated that though one uses Printed Circuit Board (PCB) other electricity, they have Parts which is essential to Machinery. Therefore, the Applicant stated that both the products should be classifiable under Chapter Head 8419 and not under Chapter Heading 8516.
3.2 The applicant was offered an opportunity of final hearing and heard on 12.03.2019. The Applicant appeared and stated that they Manufacture Coffee Maker for commercial use either Fully-Automatic or/and Semi-Automatic. They have a minimum capacity of 250 gram (75 cup), 500 gram (150 cups) only, whereas domestic has 4-5 cups capacity. The Chapter Heading 8516 is for Coffee Maker/Electro Thermic Appliances of domestic use. Whereas, Chapter Heading 8419 is the correct classification as ‘Electrical Machinery’ involving change of temperature. They were earlier classifying these products under the Chapter Heading 8516, but the Central Excise Duty was the same for all the above products. They submitted various case laws to state that principle of estoppel cannot stand in the way of law. They also stated that up to 13.11.2017, both the Chapter Heading 8419 & 8516 were attracting 28%, later tax rate of Chapter Heading 8419 became 18%. From 27.07.2018, the tax rate for Chapter Heading 8516 also became 18%. They submitted invoices of sale during pre-GST 86 Post -GST period.
4. The jurisdictional authority, Chennai (south) Commissionerate, has furnished the following comments:
> The issue in hand is whether the products viz. ‘Automatic, Electric, filter Coffee maker’ and ‘Manual/traditional filter coffee maker’ are classifiable under 85167100 attracting 28%GST or under 84198120 attracting 18% GST. The description of the two chapter headings are as follows:
