In re N. R. Engineering Industries (GST AAR Tamilnadu)
Introduction: The classification of goods under the Goods and Services Tax (GST) Act is crucial for determining applicable tax rates. In the case of N. R. Engineering Industries in Tamil Nadu, the issue revolves around the classification of car seat parts, specifically Car Seat Cushion Suspension wires and Steel hooks. This article provides a comprehensive analysis of the matter, including detailed submissions, discussions, and findings.
Detailed Analysis
The Applicant, N. R. Engineering Industries, sought clarity on the classification of Car Seat Cushion Suspension wires and Steel hooks under HSN codes 87089900 and 94019900, respectively. Both the Applicant and tax jurisdictional officers presented their arguments, citing relevant provisions, explanatory notes, and precedents.
The discussions revolved around the interpretation of Chapter headings 8708 and 9401, considering the specific nature of the goods and their essential role in the functioning of car seats. The Applicant contended that the items in question constituted integral parts of the seats, crucial for providing cushioning effects and structural support.
Analyzing the submissions and statutory provisions, it was determined that the Car Seat Cushion Suspension wires and Steel hooks indeed qualify as parts of car seats under Chapter heading 9401. The analysis considered various factors, including the nature of the goods, their usage, and relevant explanatory notes to arrive at this conclusion.
Conclusion: Based on the thorough analysis of submissions, statutory provisions, and precedents, the Authority for Advance Ruling in Tamil Nadu ruled that the Car Seat Cushion Suspension wires and Steel hooks manufactured by N. R. Engineering Industries fall under HSN 94019900. This classification attracts a CGST of 9% and SGST of 9%.
This ruling provides clarity on the classification of essential components of car seats under the GST regime, offering valuable insights for businesses in the automotive industry and ensuring consistency in tax treatment.
For further details and implications, refer to the comprehensive analysis and ruling provided herein.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, TAMILNADU
M/s. N. R. Engineering Industries, SF No. 573/1, KNG Pudur Road, Sankara Nagar, Somayampalayam, Coimbatore, Tamilnadu – 641 108 (hereinafter referred to as the ‘Applicant’) is engaged in the manufacture of car seat Cushion Suspension wires and steel hooks. They are registered under the GST Acts with GSTIN: 33ADZPM4614Q1ZQ.
2.1 The Applicant 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.
3.1. In their application for Advance Ruling, the Applicant has stated that –
> They are a MSME unit engaged in the manufacture of two items.-
(i) Car Seat Cushion Suspension Wire
(ii) Steel hooks
> The write-up of the two items are as below:
(i.A) Car Seat Cushion Suspension Wires:
The main raw material for the manufacture of Cushion Suspension wire is Spring Steel Wires. This raw material Spring Steel wires comes in the form of Coils. These spring coils are loaded in wire forming CNC Machines. The required shapes of these spring coils are programmed in the CNC machines. The spring coils are converted into Cushion Suspension Wires in the CNC Machine. The photo of Cushions Suspension wires is attached. The cushion suspension wires are given individually sometimes the customers ask for pairs. When an order comes for pairs. Two Cushion Suspension Wires are joined using the plastic coated steels wires.
(i.B) Use of the Cushion Suspension Wires:
The Cushion Suspension wire is used for the manufacture of car seats. This is used to give cushion effect in the car seats. Earlier coil springs were used for this purpose. Now instead of coil springs, Cushion Suspension wires are used for this purpose. There will be a track assembly in the front left and front right car seats. This track assembly has a steel structure in the shape of the seats. The Cushion suspension wires are used between this steel structures. The seat foam is kept over these Cushion Suspension wires. These Cushion Suspension Wires absorb the shocks when a car goes through bumps or pot holes. The Cushion Suspension wires are used both in the front and back seats.
(ii.A) Steel hooks:
In the car seats, to give strength to the track assembly, in addition to the Cushion Suspension wire, the steel wires are used. At the end of these steel wire steel hooks are used. The main raw material is mild steel wires. These mild steel wire comes in coil forms. The coils are loaded in the CNC Machines. The shapes required for the steel hooks are programmed and fed in these CNC Machines. The coils fed into the CNC machines comes out as the hook of the required shape. After this process, in the end of the hook a hole is punched to hold the cable (photo attached).
3.2. On interpretation of law, the Applicant states that –
> Under the Goods and Services Tax Act, both Central Goods and Services Tax Act and State Goods and Services Tax Act, the rate of tax for the goods and services are specified in the notifications issued by virtue of the powers conferred under section 9 of the respective Acts; The rate of tax for the goods are specified in the Notification No. 1/2017-C.T.(Rate) dated 28-6-2017 as amended from time to time; The rate of tax depends upon the Description of the goods specified in the notification and Chapter/ Heading/ Sub-heading/ Tariff item; The clause (iii) and clause (iv) of this notification reads as under:
“(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 shall, so far as may be, apply to the interpretation of this notification.”
> They are engaged in the manufacture of Cushion Suspension Wires and Steel hooka, which are used as parts of the Car Seating System and they have been classifying both these products under HSN 87089900.
Entry in the Notification No. 1/2017-C.T.(Rate) dated 28-6-2017
