attract GST rate 18%
Case Title | SI Air Springs Private Limited |
Court | Tamil Nadu AAAR |
Honourable Judges | Member Thiru.G.V Krishna Rao & Member Thiru M.A. Siddique |
Citation | 2021 (6) GSTPanacea 55 HC Tamil Nadu TN/AAAR/13/2021(AR) A.R.APPEAL NO.05/2021/AAAR |
Judgement Date | 29-June-2021 |
Council for Petitioner | Karthik Sundaram |
Council for Respondent | NA |
Section | Section 100 (1) |
In Favour of | In Favour of Respondent |
The Tamil Nadu Bench of Member Thiru.G.V Krishna Rao & Member Thiru M.A. Siddique has held that the commercial identity of the product is that the product is a critical component of the air suspension and lift axle system in trucks, trailers and buses as has been stated by the appellant. It is also pertinent to note that the product is suitable for use solely or primarily with the articles of Chapter 8701 to 8705.
attract GST rate 18%
FACTS OF THE CASE
The Appellant has stated that they are engaged in the manufacture and sale of ‘Air Springs’ which are used in Air suspension systems for Buses, Trucks and Trailers. The product is composed of a rubber bellow which includes rubber and fabric composite, beadwire, griddle hoop, crimped top plate, piston and a bumper. The material composition of such ‘Air Spring’ is approximately 60% metal and 40% rubber. The ‘Air Springs’ work on the pneumatic system principle, whereby a volume of gas confined within a container is compressed, and, it produces a reaction force. The reaction force takes the vehicle load, makes the ride smoother and reduces wear and tear in the vehicle. Hence, the sole purpose of Air Spring is to provide a smooth, constant ride quality. In the erstwhile Central Excise regime they were classifying their product under the Heading 4016. Effective 01.07.2017, under GST, they have classified their product under CTH 8708
The Appellant had filed an application before Hon’ble Authority for Advance Ruling, seeking clarification on the following questions
Whether “Air Springs” manufactured and supplied by the appellant will be correctly classifiable under Tariff heading 40169990 as opposed to Tariff heading 8708 9900 and attract GST at the rate of 18%.
The Original Authority has ruled as follows
Air Springs” Manufactured and supplied by the applicant are rightly classified under CTH 8708 and more specifically under CTH 8708 8000
Aggrieved by the above decision, the Appellant has filed the present appeal.
Shri. Karthik Sundaram, Advocate and the authorized representative appeared for the hearing virtually. He reiterated the written submissions. He emphasized that Their product being one of vulcanized rubber other than hard rubber, is classifiable under CTH 4016 only As per the Technical report furnished by the Chartered Engineer, it is clear that the key functionality of the product is derived from rubber component and the same has not been applied in the impugned order Articles of Vulcanized rubber other than hard rubber are specifically exempted vide Note 2 to Section XVII Therefore he stated that the product is not classifiable under CTH 8708 but only under CTH 4016
attract GST rate 18%
COURT HELD
Considering the facts as recorded, held that the commercial identity of the product is that the product is a critical component of the air suspension and lift axle system in trucks, trailers and buses as has been stated by the appellant. It is also pertinent to note that the product is suitable for use solely or primarily with the articles of Chapter 8701 to 8705.
For the reasons discussed above, Bench hold that Air Springs manufactured by the appellant is classifiable under CTH 8708 as rightly held by the Lower Authority. The subject appeal is disposed of accordingly.
attract GST rate 18%
ANALYSIS OF THE JUDGEMENT
In the case at hand, the product is not a joint, washer or the like, it is an ‘Air bellow’, a specifically designed part for use in the Motor Vehicle as a Shock absorbent and therefore, even if the part which gives the essential character of the product is made of vulcanized rubber other than hard rubber and the functionality of the product is extended by the said rubber portion as claimed by the appellant, still as per the dictum pronounced by the Apex Court referred above, the test of commercial identity and not the functionality test is relevant. The commercial identity of the product is that the product is a critical component of the air suspension and lift axle system in trucks, trailers and buses as has been stated by the appellant. It is also pertinent to note that the product is suitable for use solely or primarily with the articles of Chapter 8701 to 8705
The product in hand is an air below the utility of which is to act as a ‘
’. It is not a spring classifiable under any of the Chapters mentioned, for the reason that the product is not an article of base metal or alloy of base metal. The product is made of fabric coated soft vulcanized rubber trimmed with the base plate and designed to give its full utility when used in axles of the Motor Vehicles to absorb shock and provide the required suspension
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