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    Summary of AAR in Hafele India Private Limited

    Contributed by CA Manindar & Bhavani

     

    Sl. No

    GST-ARA-10/2017/B-13

    Name of

    HAFELE INDIA PRIVATE LIMITED

    Ruling

     

    TMI Citation

    2018 (5) TMI 646 - AUTHORITY FOR ADVANCE RULING - MAHARASHTRA

    AAR State

    MAHARASHTRA

    Macro Issue

    Whether the product "Caesarstone" imported by the applicant can be classified under

     

    HSN Code 2506 or 6810?

    Facts

    The applicant is engaged in importation of Bathroom and Kitchenware fitting and

     

    Caesarstone Quartz. At the time of importation of Caesarstone Quartz, it is liable to pay

     

    Basic Customs Duty and IGST and classified under heading 6810. For outward supply of

     

    goods, it is liable to pay GST and there arises the question of whether it is to be classified

     

    under heading 2506 or 6810.

     

     

     

    Sr No

     

    HSN Code

    Description

     

    IGST Rate

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    1.

     

    2506

     

    Quartz (other than natural sands) quartzite,

    5%

     

     

     

     

     

     

     

     

     

     

     

    whether or not roughly trimmed or merely cut by

     

     

     

     

     

     

     

     

     

     

     

     

     

    sawing or otherwise in to blocks or slabs of a

     

     

     

     

     

     

     

     

     

     

     

     

     

    rectangular (including square) shape

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    2.

     

    6810

     

    Articles of cement of concrete or of artificial stone

    15%

     

     

     

     

     

     

     

     

     

     

     

    whether or not reinforces

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Applicant

    Guiding Principles involved to settle the issue:

     

     

     

     

     

    Stand

     

     

     

     

     

    1.  Classification of good under Customs Tariff Act 1975 along with relevant chapter

     

     

     

     

     

    notes of Chapter 25 and 68

     

     

     

     

     
    1. General Rules of interpretation of the first schedule to the Customs Tariff Act 1975
    2. HSN explanatory notes released by WCO

    Whether the good fits under Heading 2506

    Quartz is combined with polymers and pigments and compacted under intense vacuum and cut into slabs to for the output -ceasarstone.

    The Chapter Note 1 of Chapter 25 clearly states that “------, the headings of this Chapter cover only products which are in the crude state or which have been washed(even with chemical substancese liminating the impurities without changing the structure of the

     


     

     

     

    product), crushed, ground, powdered, levigated, sifted, screened, concentrated by

     

     

     

     

    flotation, magnetic separation or other mechanical or physical processes (except

     

     

     

     

    crystallization), but not products that have been roasted, calcined, obtained by mixing or

     

     

     

     

    subjected to processing beyond that mentioned in each heading.”

     

     

     

     

    It is imperative to understand that the composition of Caesarstone contains 93% crushed

     

     

     

     

    quartz. Quartz is combined with high-quality polyester resins and pigments and is then

     

     

     

     

    compacted under intense vacuum and pressure into dense and non-porous slabs.

     

     

     

     

    As per Chapter Note I to Chapter 68 which clearly provides that chapter does not cover

     

     

     

     

    goods falling under Chapter 25.

     

     

     

     

    As the manufacturing process is covered under the mechanical process and considering

     

     

     

     

    Rule 2(a) and Rule 3(b) of General Rules for Interpretation and Chapter Note 1 to Chapter

     

     

     

     

    25, Caesarstone imported shall be construed as a Quartz and classified under chapter 25.

     

     

     

    Department

    By considering the content of Chapter Note 1 to Chapter 25, the goods should not change

     

     

     

    Stand

    the character of mineral product. In addition to mechanical and physical process, chemical

     

     

     

     

     

     

     

     

    process is also involved. Such process carried out is beyond the scope of Chapter Note 1 to

     

     

     

     

    Chapter 25. Caesarstone is an engineered quartz surface and it is a man made stone or

     

     

     

     

    artificial stone. Quartz is one of the raw material to produce Caesarstone and addition of

     

     

     

     

    polymer resins and pigments to the quartz changes the character/structure of mineral

     

     

     

     

    product.

     

     

     

     

    AA also considereda ruling of Harmonised Tariff Schedule of United States in case of

     

     

     

     

    Silestone TM wherein the slabs composed of 93% Quartz and 7% of resin binder, it is

     

     

     

     

    classified under sub heading 6810.99.00 and considered as artificial stone.

     

     

     

    Ruling with

    Caesarstone imported by the applicant is to be classified under HSN code 6810

     

     

     

    reasons

     

     

     

     

     

     

     

    Discussion

    On perusal of the Tariff headings of Chapter 25 and Chapter 68, it is clearly evident that a

     

     

     

    Outcome

     

     

     

    processed stone (artificial or natural) will be classifiable under chapter 68 while chapter

     

     

     

     

     

     

     

     

    25 covers only natural stones in crude state. Accordingly, no contrary views have been

     

     

     

     

    shared.

     

     

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