In re Oswal Poly Rubbers (GST AAR Haryana)
Q1. To clarify as to whether PVC Cushion mats for motor vehicles (with no Textile material to be used in these) after cutting to size from rolls, to fit in vehicle floors as per the requirement of the buyers and packing shall fall under HSN Code 3918 1090/39041090 or 87089900 attracting GST at the rate 18% [9% (CGST) and 9% (SGST)] or 28% [14% (CGST) and 14% (SGST)] respectively in terms of Notification No. 1/2017-Central Tax(Rate) dated 28.06.2017 and Notification No. 1/2017-Central Tax(Rate) dated 28.06.2017 or tax/any other rate as may be applicable as per law.
A1. The supply of the said goods i.e. PVC cushion mats falls under the chapter 39 of the GST tariff rates. Applicable rate of tax is 18%
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, HARYANA
APPLICANT’S ELIGIBILITY FOR SEEKING AN ADVANCE RULING:
To file an application before the Authority of Advance Ruling, the applicant must satisfy the conditions prescribed under the Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act, 2017) and Haryana Goods and Services Tax Act, 2017 (hereinafter referred to as HGST Act, 2017). Since the provisions of both the Acts are parimateria, any reference to provisions of CGST Act, 2017 in this order should be construed as a reference to corresponding provisions in HGST Act, 2017 as well. Sections 97(2) of the CGST Act, 2017 prescribes that an Advance Ruling may be sought inter alia on the questions of (a) Classification of any goods or services or both.(b) Applicability of a notification issued under the provisions of this Act. (e) Determination of the liability to pay tax on any goods or services or both.
Further, proviso with reference to the Section 98(2) of CGST Act, 2017 states that where the questions raised in the application is already pending or decided in any proceedings in the case of the applicant under any provision of this Act, the application may be rejected by the Advance Ruling Authority after providing an opportunity of being heard to the applicant. And in this case, the applicant has undertaken in form ARA-01 that the issue is neither pending nor decided in any proceedings under any of the provisions of the Act. Besides the applicable fees in the case has been paid. So, he is eligible to seek an Advance Ruling under the above provisions and the case is being heard on merits.
Statement of facts as per ARA-01
1. That the Applicant company is engaged in the manufacturing of Rubber and PVC Mats, flaps & components for domestic & automobile industry at Dharuhera, Haryana.
2. That the Applicant now proposes/intends to manufacture PVC Cushion foot mats also. First, Cushion mats in Rolls (in running length), made up of 100% PVC with no Textile materials used, shall be procured from the vendors. These rolls then shall be customized/cut to fit in vehicle floors/ cut to size as per requirement of the customers and finally packed and dispatched to customers.
3. That the Applicant has been of the view, guided by the general view of the trade and the department, that as the PVC mats are for automobiles/cars or to be suitable for use solely or principally with the articles of Chapters 86 to 88 & the same are covered under Chapter Heading 8708, as “parts and accessories of motor vehicles of Headings 8701 to 8705.
4. However, Notification No. 1/2017-Central Tax(Rate) dated 28.06.2017 and Notification No. 1/2017-State Tax (Rate) specify the rate of CGST/SGST to be levied on different products along with their corresponding Chapter/Heading/ Sub-heading/Tariff item. In both the said Notifications, the Entry 100 (Ch. Hd. 3901 to 3913), 104A (Ch. Hd. 3918) and Entry 111 (Ch. Hd. 3926) deals with such products for various purposes and the GST rate on all these products is 18% (9% CGST and 9% HGST).
5. Further, heading 39.18 deals with “floor coverings of plastic, whether or not self-adhesive in rolls, or in the form of tiles; wall or ceiling coverings of plastic attracting GST at the rate 18%-9% (CGST) and 9% (SGST) vide Entry No. 104A of Schedule II Notification No. 1/2017, whereas items falling under 87089900 relating to parts & accessories of motor vehicles attract GST at the rate 28% [14% (CGST) and 14% (SGST)] in terms of the said Notification.
6. That the ratio of the judgement rendered by the Apex Court in the case of C.C.E, Delhi-Ill Vs. Uni Products India Ltd .- 2020 (372) E.L.T. 465 (S.C.) (Annexure-5), leads the Applicant to the view that as the goods arc specifically covered under HSN 3918 as Floor Coverings of PVC in terms of Rule 1 of the Rules of Interpretation of Customs Tariff, just for sole reason that subject item are exclusively made for cars, goods cannot be transplanted to residual entry against Heading 8708 ibid.
7. Moreover, for the purpose of GST, Classification of goods under any tariff item/ subheading / heading/ chapter needs to be done using the general rules of interpretation of the first Schedule of the Customs Tariff Act, 1975 including the Section and Chapter Notes and the General Explanatory Notes to the HSN of the First Schedule of the CTA, 1975.
8. In light of the above, the PVC cushion Mats proposed to be manufactured by the applicant seem to be specifically covered under HSN 3918 as Floor Coverings of PVC in terms of Rule 1 of the Rules of Interpretation of Customs Tariff.
9. That the Applicant is amply supported in their above contention by the judicial pronouncements/Rulings recently rendered in many recent cases. And to rule out the ambiguity in the classification and tax structure on PVC Cushion foot mats before the proposed commercial start of production/manufacture is being sought.
Applicant’s interpretation of Law on the issue at hand:-
1. The view of the Applicant is that the PVC cushion Mats proposed to be manufactured by us seems to be specifically covered under Chapter 39; HSN 3918 for Floor Coverings of PVC is amply supported by the provisions of Rule 1 of the Rules of Interpretation of Customs Tariff as explained in detail here in above and the case laws squarely covering this issue.
2. The Applicant would like to mention that in the case C.C.E, Delhi-Ill Vs. Uni Products India Ltd .- 2020 (372) E.L.T. 465 (S.C.), Hon’ble Supreme Court has clearly held that-
“Chapter 87 ibid does not contain car mats as independent Tariff Entry -All mechanical components covered under Chapter 87 – HSN Explanatory Notes dealing with interpretation of rules specifically exclude “tufted textile carpets, identifiable for use in motor cars” from Heading 8708 ibid and placed them under Heading 5703 ibid – Third condition specified in Section XVII ibid of Explanatory Notes in relation to “Ill-Parts and Accessories” not satisfied by subject item – Just for sole reason that subject item are exclusively made for cars and not for “home use” (in broad terms), goods cannot be transplanted to residual entry against Heading 8708 ibid – Subject goods come under Tariff Item 5703 90 90 ibid – No necessity to import “common parlance” test or any other similar device of construction for identifying position of these goods against relevant tariff entries.
3. Therefore, the ratio of the aforementioned judgement rendered by the Apex Court leads the Applicant to the view that as the goods are specifically covered under HSN 3918 as Floor Coverings of PVC in terms of Rule 1 of the Rules of Interpretation of Customs Tariff, just for sole reason that subject item are exclusively made for cars, goods cannot be transplanted to residual entry against Heading 8708 ibid.
4. As for the Rules of Interpretation of Customs Tariff, it may be submitted that there is no such case of merit of classification of the said goods under 2 different chapter headings equally. Instead, the said proposed goods are specifically classifiable under 3918 as PVC floor coverings, and invoking Rule 3 is not necessary when classification can be decided under Rule 1 itself
5. In view of the above submissions, the PVC cushion Mats proposed to be manufactured by the applicant, a sample of which is being produced before the Hon’ble Authority at the time of personal hearing, seem to be specifically covered under HSN 3918 as Floor Coverings of PVC in terms of Rule 1 of the Rules of Interpretation of Customs Tariff.
6. The Applicant is amply supported in their above contention by the judicial pronouncements/Rulings recently rendered in the cases of In Re Soft Turf- 2021 (55) G.S.T.L. 52 (App. A.A.R. – GST – Ker.), Shiroki Auto Components India Pvt. Ltd. Vs. C.C.E & S.T 2020 (374) E.L.T. 433 (Tri. -Ahmd.) and National Plastic Industries Limited- 2018 (12) G.S.T.L. 445 (A.A.R. – GST).
7. Ruling on this very identical matter has already been given by Haryana Authority for Advance Ruling itself in the case of Stinzo Automotives Pvt. Ltd .- 2021 (47) G.S.T.L. 311 (A.A.R. – GST – Haryana) holding that “Detachable PVC foot mats used for motor vehicles sold in detachable condition as stand-alone products and where cotton not used in manufacturing of these mats and they are not handmade, covered under Chapter 39 and sub-heading 4904 10 of Customs Tariff taxable at 18% (CGST 9%, HGST 9%).
The above cited precedent case law is squarely applicable in favour of the Applicant.
Questions on which Advance Ruling has been sought:-
1. To clarify as to whether PVC Cushion mats for motor vehicles (with no Textile material to be used in these) after cutting to size from rolls, to fit in vehicle floors as per the requirement of the buyers and packing shall fall under HSN Code 39181090/39041090 or 87089900 attracting GST at the rate 18% [9% (CGST) and 9% (SGST)] or 28% [14% (CGST) and 14% (SGST)] respectively in terms of Notification No. 1/2017-Central Tax(Rate) dated 28.06.2017 and Notification No. 1/2017-State Tax(Rate) dated 28.06.2017 or tax/ any other rate as may be applicable as per law.
2. If the PVC Cushion mats are received by the Applicant from their supplier in roll form under HSN Code 39181090, would its cutting to size, as per the requirement of the buyers and packing make it a different product for classification and tax purposes?
PERSONAL HEARING:
Sh. Rakesh Bhola, advocate presented the case on behalf of the applicant on 15.12.2022. Lie briefed the matter to the authority.
Gist of the comments of the Proper officer dated 23.01.2023 & 02.02.2023:-
(A) That the applicant’s application is in respect of the classification of the PVC floor mat and the applicable rate of GST on the same. And it is observed that the applicant has informed that they will buy the raw material for PVC Mat with no textile material in ‘the shape of 100% PVC rolls under HSN 39181090 and then applicant cut into size as per requirement of the customers/fit in vehicle floor. While preparing the Mat for car floor, they are just cutting into the and there are no changes in product of PVT Mat. While the GST Tariff/ Schedule IV for 28% (14%CGST+14%SGST CGST, HSN Chapter 8701 to 8708 are related to Motor Car and its Parts are here given in below:
