In re R K Industries (GST AAR Maharashtra)
Steel Mugs with plastic body are advertised and sold as steel mugs, as submitted by the applicant. It is the steel that gives the essential characteristic to the subject product. Liquids specially, is they are boiling are not preferred to be poured in plastic containers. Hence in such a case it would be appropriate to consider the element of steel as the major element which are used in such conditions. Further, the plastic with its varied colours would seem to be lending to only visual attraction of the steel mugs and the essential characteristic remains to be steel.
5.12 Thus in view of the above discussions and also in view of Rule 3 (b) of the Rules of General Interpretation to classify goods, we find that the subject goods fall under Chapter Heading 7323, since according to us, the material which is giving the essential character to the steel cups with plastic body is the presence of steel, which is 75% of the total value and composition of the subject goods. Further we also find that the said product is therefore covered under Sr. No. 184 of Schedule 11 of Notification 1/2017 Central Tax (Rate) dated 28th June, 2017.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
PROCEEDINGS
(Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by M/s R K INDUSTRIES, the applicant, seeking an advance ruling in respect of the following question.
1. Whether Steel Mugs with a plastic outer body supplied by the applicant would be classified under SI. No 184 of Schedule II of Notification No 1/2017 of Central Tax (Rate) dated 28th June, 2017 (as amended)?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression ‘GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
“A. STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE QUESTION (S) RAISED
1.1. M/s. R.K. Industries (hereinafter referred as “The Applicant”) are manufacturers and exporters of various products consisting of Water Bottles, Lunch Boxes, Pencil box, Milk Mugs, Tea/Coffee Mugs, Milk/Tea/Coffee Mugs with Steel Bidding, Airtight & Leak proof Plastic Food Storage container, Airtight & Leak-proof Steel Food Storage Container, Lunch Boxes with Elegant Pouches, super Lock & Seal Containers, Super Steel Lock container. (The leaflet/brochure of the relevant products are attached with the present application and marked as Annex A)
1.2. They also manufacture specially designed Steel mug with plastic outer body, thus utilising the beneficial properties of both substances steel & plastic. (Pg. No 2-6 Ann. A)
1.3. With the introduction of GST, the applicant analyzed the notifications issued by the Central Board of Indirect Taxes and Customs (CBIC). Notification 01/2017-CentraI Tax (Rate) dated 28.06.2017 as amended from time to time along with the Rules of interpretation of First Schedule to the Customs Tariff Act, 1975 (CTA), including Section Notes and Chapter Notes were used for the purpose of classification under GST.
1.4. As an abundant precaution as well as conservatism, the mugs mentioned hereinabove were classified under Tariff heading 3924 Tableware, kitchenware, other household articles & hygienic or toilet articles, of plastics & accordingly were offered for tax @ 9% (IGST 18%). However, on further research as well as on observing the competitors, it is noticed that the same steel mugs with an outer plastic body are being classified under Tariff heading 7323 – Table, kitchen or other household articles of iron & steel; Utensils whose applicable rate of tax is 6% (IGST 12%). Since, the aforementioned mugs being supplied by the applicant are same as supplied by its competitors being covered under Sch. II of the said Rate Notification, your applicant are now convinced & are of the opinion & view that their above referred product is covered under Chapter heading 7323.
1.6. Accordingly, the application is made with detailed submission herein below to determine the eligibility of the steel mugs with outer plastic body to be covered under Schedule II and its tax rate thereof.
2. Analysis of the case:
Prior to heading into the classification entry’, it is pertinent to first understand the product ‘steel mugs with outer plastic outer body and its manufacturing process.
2.1 Manufacturing Process
2.1.1 The process is quite technical; however, an attempt is made to discuss it in simple words.
It is also pertinent to note that the composition of materials in the mugs as well as the cost element involved is 75% of STEEL & the rest of plastic and other materials.
