Fine Tools (India) Pvt. Ltd ., In re

FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING KARNATAKA

M/s. Fine Tools (India) Pvt. Ltd., (herein after referred to as ‘Applicant’, # 449P, 4th Phase, 10th Cross, KIADB Industrial Area, Peenya 2nd Stage, Bengaluru-560 058, Karnataka, having GSTIN 29AABCF0583FCIZQ, have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 read with Rule 104 of CGST  Rules, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2017, in form GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act, KGST Act.

2. The applicant submitted that they manufacture & supply the goods i.e. parts of seats of a kind used for motor vehicles (motor cars) and thus has sought advance ruling in respect of the classification of the commodity “parts of seats of a kind used for Motor Vehicles” and the rate of GM’ applicable thereon.

3. Admissibility of the Application : The applicant claimed that the questions on which advance rulings have been sought are with regard to “Classification of the commodity/goods manufactured and supplied by the applicant and the tax applicable thereon” which is covered under Section 97(2)(a) of the CGST Act 2017. Thus the question is covered under Sections 97(2)(a) of the COST Act 2017 and hence the instant application is admissible.

4. BRIEF FACTS OF THE CASE The applicant furnished the following facts relevant to the issue:

4.1 The goods manufactured & supplied by the applicant are “parts of seats of a kind used for motor vehicles (motor cars)” in the physical form of sub-assemblies namely shield FR seat cushion, shaft visor support, seat back lock striker, plate RR seat CTR armrest, RR seat lock control LH, knob vertical seat Adj, hook FR seat back, handle reclining adjuster release, cover RR seat FR brocket & sub-assemblies for car seats, as per the requirement of the customer/recipient, such as design, technical specification, product configuration, use/utility and material composition etc.

4.2 The goods are manufactured to suit specific use of a customer/recipient and capable of being used exclusively in seats of a kind used for motor vehicles i.e. the goods are tailor made and not fit for any alternate use other than specific use; the goods can’t be identified as distinct products in trade or common parlance as they are in the primary form of sub-assemblies.

5. Applicant’s Interpretation of Law: The applicant furnishes their interpretation of law on the issues on which advance ruling is sought, inter alia stating as under:

5.1 The “Component parts of seats of a kind used for motor vehicles* had been classified under tariff heading 9401 by us and accordingly the said parts are taxable @18% GST, in terms of entry number 435A of schedule III to the Notification 1/2017-Central Tax (Rate) dated 28-06-2017, as amended by Notification No.41/2017, Central Tax (Rate) dated 14 -11- 2017, which is as under:

The above entry number 435A of Schedule III to the Notification 1/2017-Central Tax (Rate) dated 28-06-2017, has been amended further vide Notification No. 05/2024-Central Tax (Rate), dated 08-10-2024 and the same is as under:

Also a new entry number 210A has been inserted to schedule IV with effect from 10-10-2024 consequent upon amendment of entry number 435A of schedule III, vide Notification No. 05/2024-Central Tax (Rate), dated 08-10-2024 which is as under: –

5.3 The applicant is having bona-fide understanding that pursuant to explicit exclusion of only ‘seats of kind used for motor vehicles” from the amended serial number and entries in 435A, the parts of such seats deemed to have been retained under the threshold/ambit of the said amended serial number and entries and thus parts of seats of kind used for motor vehicles are taxable at 18% in terms of the said entry number 435A of Schedule III to the notification supra.

5.4 Circular No.235/29/2024-GST dated 11.10.2024, at para 3, clarifies the GST rate applicable on car and motor cycle seats and specifies that car seats are classifiable under tariff heading 9401 attract 28% GST prospectively with effect from 10.10.2024 in terms of Notification No. 05/2024-Central Tax (Rate), dated 08-10-2024 and seats meant for two wheelers are classifiable under tariff heading 8714 and attract a GST rate of 28%.

5.5 In view of the above clarification issued by CBIC, it is obviously clear that only car seats (seats of a kind used for motor vehicles) have been brought under the ambit of new serial number and entry 210A in Schedule IV which attracted GST at the rate of 28% with effect from 10-10-2024. Pursuant to clarification issued as above by CBIC, parts of car seats remained intact under the purview/ambit of new (substituted) serial number and entry 435A, of Schedule III and would attract GST at the rate of 18%.

PERSONAL HEARING PROCEEDINGS HELD ON 05.06.2025

6. H N Srinivasa Rao, Advocate & Authorised Representative of the applicant appeared for personal hearing proceedings and reiterated the facts narrated in their application.

FINDINGS & DISCUSSION

7. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matters and differ from each other only on a few specific provisions, Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the  corresponding similar provisions in the KGST Act.

8. We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant & the submissions made by their learned representative during the time of hearing.

9. The applicant is involved in manufacture & supply the goods i.e. parts of seats of a kind used for motor vehicles (motor cars) and thus has sought advance ruling in respect of the classification of the commodity “parts of seats of a kind used for Motor Vehicles” and the rate of GST applicable thereon. We proceed to consider the classification of “parts of seats of a kind used for Motor Vehicles”. In this regard we invite reference to Explanations (iii) arid (iv) appended to the Notification 1/2017-Central Tax (Rate) dated 28-06-2017which are relevant to determination of Classification of a product & are 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.

Accordingly we make a reference to the Section Notes and Chapter Notes of the relevant Chapters of the Customs Tariff and also the corresponding Harmonised Commodity Description and Coding System Explanatory Notes of World Customs Organisation (WCO).

10. Section XX of the First Schedule to the Customs Tariff Act, 1975 covers Miscellaneous Manufactured Articles; Chapter 94 covers Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed famishing; luminaires and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name- plates and the like; prefabricated building; Tariff heading. 9401 covers Seats (Other than those of Heading 9402), whether or not convertible into Beds, and parts thereof and Tariff heading 9401 20 00 covers Seats of a kind used for motor vehicles. The parts of seats of wood are covered under Tariff heading 9401 91 00 and all other parts of seats are covered under Tariff heading 9401 90 00. Thus the seats of a kind used for motor vehicles and Parts thereof are covered under Tariff heading 9401 (up to 4 digit heading). Further the Circular No.235/29/2024-GST dated 11.10.2024, at para 3.3 also clarifies and confirms that Tariff heading 9401 20 00 specifically covers seats of a kind used for motor vehicle.

11. Now we proceed to discuss and determine the rate of GST applicable on of seats of a kind used for Motor Vehicles. The rate of GST on any goods is arrived at in terms of the respective schedule of the Notification 1/2017-Central Tax (Rate) dated 28-06-2017, as amended from time to time.

The Notification 1/2017-Central Tax (Rate) dated 28-06-2017 as amended notifies the rate of the central tax in respect of goods specified in respective Schedule appended to this notification (hereinafter referred to as the said Schedules), that shall be levied on intra-State supplies of goods, the description of which is specified in the corresponding entry in column (3) of the said Schedules, falling under the tariff item, sub heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedules. The rates of GST notified under relevant schedules, relevant entries and relevant descriptions in respect of the goods Seats of a kind used for Motor Vehicles and parts thereof in the order of time are as under:

(i)

01-07-2017 to 14-11-2017

Schedule IV — 14%

(ii) Sl. No. 435A was inserted under schedule III of Notification 1/2017-Central Tax (Rate) dated 28-06-2017 with effect from 15-11-2017, vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017, which is as under:

(iii) SI. No. 435A and the entries relating thereto of Schedule-III were substituted with effect from 10-10-2024 vide Notification No. 05/2024-Central Tax (Rate), dated 08-10-2024 and the Present Position is as under:

10-10-2024 onwards
Schedule III — 9% 

A new entry at entry number 210A of schedule IV has been inserted with effect from 10-10-2024 consequent upon amendment of entry number 435A of educe III, vide Notification No. 05/2024-Central Tax (Rate), dated 08-10-2024which is as under:

10-10-2024 onwards
Schedule IV – 14%

12. It could be seen from the above that a new entry 210A, under Schedule IV has been carved out of earlier entry No.435A of Schedule III in terms of the goods having description “Seats of a kind used for motor vehicle? and the said description does not cover the word “parts thereof; whereas the amended entry 435A contains the word “Parts thereof . In view of the above the applicant contended that the Seats of a kind used for motor vehicles are covered under entry No.210A of Schedule IV to the Notification 1/2017-Central Tax (Rate) dated 28-06-2017as amended & attract GST @ 28% and the parts thereof are still covered under Entry No.435A of Schedule III & attract GST rate of 18%.

13. We, on observation of relevant entries, relevant schedules and relevant descriptions, agree with the applicant and hold that the Seats of a kind used for motor vehicles are covered under entry No.210A of Schedule IV to the Notification 1/2017-Central Tax (Rate) dated 28-06-2017, as amended & attract GST ® 28% and the parts thereof are still covered under Entry No.435A of Schedule HI & attract GST rate of 18%.

14. In view of the foregoing, we pass the following

RULING

The parts of Seats of a kind used for motor vehicles are classifiable under Tariff heading 9401 (Specifically under Tariff Heading 9401 90 00) and attract GST rate of 18%, in terms of entry number 435A of Schedule III to the Notification 1/2017-Central Tax (Rate) dated 28-06-2017 as amended.