In re Coastal Foam Private Limited (GST AAR Andhra Pradesh)
Overview and Product Description
This Advance Ruling Order by the GST AAR, Andhra Pradesh, addresses the classification and applicable GST rate for Coir Felt / Coir Sheets manufactured by M/s Coastal Foam Private Limited (Applicant).
The Applicant is engaged in manufacturing Coir Sheets, which are described as eco-friendly, high-performance products used extensively in mattress making, padding for furniture, and insulation products.
The product’s composition is:
1. Coconut Coir Fibre: Approximately 80%, serving as the core structural element.
2. Low Melt Polyester Fibre (LMF): Approximately 20%, acting as a thermal binder without the use of adhesives or chemicals.
The Manufacturing Process involves opening and cleaning the fibres, forming a uniform mat, passing it through a heating oven for thermal bonding (where the LMF fuses with the coir), and finally cooling, trimming, and cutting the stable composite sheet to size.
Questions Raised and Applicant’s Submissions
The Applicant sought clarification on the 8-digit HSN code for the coir felt/sheets and the corresponding rate of tax. The Applicant confirmed that the question was not pending or decided by any other authority.
Applicant’s Interpretation
- Primary Classification: The Applicant contended that the goods were pure coir products and fell under Serial No. 223 of Schedule-II of the APGST Act, 2017, which covers Coir Products (except coir mattresses) under HSN 9404, and is generally taxed at 12% (6% CGST + 6% SGST).
- Definition of Coir Products: The Applicant submitted that the product falls within the meaning of “COIR PRODUCTS” as defined under Section 3(d) of the Coir Industry Act, 1953 (which includes articles manufactured wholly or partly from coir or coir yarn).
- Alternative Classification and Rate (5%): Without prejudice to the primary submission, the Applicant alternatively claimed the product should be classified under HSN 5609 00 10 (“Products of Coir”), which is liable to be taxed at 5% (2.5% CGST + 2.5% SGST), arguing that the product is an article made from coir yarn. The Applicant cited an Allahabad High Court judgment regarding the classification of coir yarn.
- Exclusion: The Applicant explicitly submitted that their product is not “rubberised coir sheets,” as the substances and process used are distinct from those described by the Bureau of Indian Standards (BIS) specification for rubberized coir.
AAR’s Discussion and Findings
