GST Classification Dispute on Entry 195B Raised Before AAR

The applicant, M/s Arti Pitaliya, based in Jaipur, Rajasthan, is a manufacturer of rubber rings specifically designed for use in sprinkler and drip irrigation systems. These rings act as essential seals within the irrigation assembly to prevent leakage. The applicant sought an advance ruling to determine the correct HSN classification and applicable GST rate for these rubber rings.

They contended that since the rings are parts suitable for use solely or principally with agricultural irrigation equipment (falling under Heading 8424), they should be classified accordingly to benefit from a specific tax treatment, rather than being classified as general articles of vulcanized rubber.

Central Issue Whether the rubber rings manufactured for sole use in sprinkler and drip irrigation systems should be classified under HSN 4016 (Other articles of vulcanized rubber) or as parts of irrigation systems under HSN 8424, and what is the applicable GST rate.

Tribunal Held: The Rajasthan Authority for Advance Ruling (AAR), comprising Members Utkarsha (Central Tax) and Dr. Akhedan Charan (State Tax), ruled that the rubber rings are classifiable under HSN 4016 93 20. The Authority observed that the manufacturing process involves standard rubber compounding and compression moulding, resulting in precision seals.

While the rings are used in irrigation systems, General Explanatory Note 2(a) to Section XVI and Note 1(a) to Chapter 84 exclude articles of vulcanized rubber (other than hard rubber) of a kind used in machinery or mechanical appliances from Heading 8424. Consequently, they must be classified under their respective constituent material heading. Therefore, the rubber rings attract GST at the rate of 12% (6% CGST + 6% SGST) under Serial No. 123 of Schedule II of Notification No. 1/2017-Central Tax (Rate).

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