Ministry of Finance

Central Board of Indirect Taxes & Customs

OFFICE OF THE MEMBER,

ADVANCE RULING, DAMAN, DIU & DNH,

VAPI-DAMAN ROAD, CHALA, VAPI

damanadvru1@gmail.com

Ph.: 0260-2970014 Fax: 0260-2970013

Passed by:-

Date of Advance Ruling: - 21/03/2018

Date of Issue :- 21/03/2018

N.B.:- This copy is granted free of charge for the private use of the person to whom it is issued.

1. Any person deeming himself aggrieved by this Advance Ruling may appeal against the Ruling before the Appellate Authority for Advance Ruling, in terms of Section 100 of the Central Goods & Service Tax Act,, 2017. Such appeal shall be done within 30 days from the date of the communication of the order. The appeal papers shall bear fee of Rs. 10,000/- as provided under Rule 106(1) of the Central Goods & Service Tax Rules,2017.

2. The Appeal should be filed in Form GST ARA-02, prescribed under sub-rule (1) of Rule 106 & GST ARA-03 of the Central Goods & Service Tax Rules, 2017, as the case may be, duly signed by the person specified in sub-rule (3) (a & b)of the Rule 106.

3. The appeal including the statement of facts and relevant documents, shall be filed in quadruplicate accompanied by equal number of copies of the order appealed against (one of which at least shall be certified copy).

4. An appeal against this order shall lie before the Appellate Authority of Advance Ruling on payment of Rs. 10,000/- as provided under Rule 106(1) of the Central Goods & Service Tax Rules, 2017.

To

M/s Western Cablex Engineering Pvt Ltd,

Plot No. 7, Silver Industrial Estate, Bhimpore,

Daman

AR No. 01/AR/SK-CP/Daman/2017-18/ DATE 21.03.2018 PASSED BY SATISH KUMAR. MEMBER ADVANCE RULING CGST & MS. CHARMIE PAREKH. MEMBER ADVANCE RULING UTGST. DAMAN UNDER SUB SECTION 2 OF SECTION 97 OF THE CENTRAL GOODS AND SERVICE TAX ACT, 2017 ARISING OUT OF THE APPLICATION DATED 22.08.2017 MADE BY M/S WESTERN CABLEX ENGINEERING PVT LTD. PLOT No. 7. SILVER INDUSTRIAL ESTATE. BHIMPOE. DAMAN.

Brief Facts of the Case:-

M/s Western Cablex Engineering Pvt Ltd, herein after referred to as assessee Plot No. 7, Silver Industrial Estate, Bhimpore, Daman,registered under Goods & Service Tax vide GSTIN Number 25AAACW 2419 GlZL,vide their letter dated 24.07.2017, submitted an application in form of GST ARA-01 under Rule 104(1) of Advance Ruling alongwith statements of facts and copy of Challan bearing No. 17072500000009 dated 24.07.2017 evidencing the payment of required fee of Rs. 5000/-,In the said application the assessee has sought clarification for correct classification of their goods i.e. Heat Shrinkable Cable Jointing Kits to be classified under HS Code 8546 or 8547.

2. To verify the facts, application of the assessee was forward to the Assistant Commissioner,Div-V, GST & CE, Daman for examination and their detailed reports on the following points was called for:-

i. Classification of the said goods under Central Excise Tariff Act, 1985;

ii. Whether any issue on the subject matter has been decided by the appellate Authority in their own case of the assessee or other cases. If yes, please furnish the copy of the said orders;

iii. What is prevailing practice of classification of the product in question? and

iv. Their report on classification of the subject goods under GST regime with supporting Case Laws/Notifications/Circulars or other similar documentary evidence.

2.1 The JRO, Division-V, Daman, vide their letter No. V/16-56/Advance Ruling/D-V/17-18/349 dtd 13.02.2018 have submitted their reply wherein the Asstt. Commr.Div-V, Daman, have replied that M/s Western Cablex Engineering Pvt Ltd was engaged in clearing of their manufactured goods, "Heat Shrinkle Components" under Chapter 854790 in the existing law under Central Excise Tariff Act, 1985 and were paying duty @ 12.5% adv.But in GST regime the assessee have changed their classification and started clearing their goods under Chapter 854690 because the rate of duty in GST regime under Chapter 854790 was 28% and under the requested Chapter Head i.e. 85469010 the GST rate was 18%.

3. Defence Submission and Records of Personal Hearing:

To abide by the law of natural justice, the assessee were given a chance to be heard in person vide letter dtd 23.02.2018. They were also requested vide the above said letter to submit documentary evidence in support of their claim, if any.

3.1 In compliance of the said PH letter, Shri Arvind Nair, Director of the applicant assesse appeared for personal hearing on 07.03.2018. During the personal hearing, he submitted that that the major part of their finished goods is "Heat Shrinkable" and, therefore, their product merit classification under CH 8546 and instead of 8547. He also demonstrated/showed Parts/components of some of the product "Heat Shrinkable Jointing Kit" of Power Cable/Telephone Cable. He further submitted that they are classifying their product in the GST regime under Heading 8546 only as per the heading Heat Shrinkle Components provided in the GST Tariff. He, therefore, requested to consider their submission and pass an order classifying their product under HSC 8546 itself & not under HSC 8547.

3.2 Their Application was admitted under Sub Section 2 of Section 98 of the Central Goods and Service Tax Act, 2017 to decide the issue of correct classification as to whether their product i.e. Heat Shrinkable Cable Jointing Kits is to be classified under HS Code 8546 or 8547.

4. scussion and Findings:-

In the present case we, the members of advance Ruling, have to decide as to whether the above said product of the applicant in question i.e. Heat Shrinkable Cable Jointing Kits is to be classified under HS Code 8546 or 8547.

4.1 efore deciding the issue, we refer to the Chapter Note of Heading 8546 under GST Tariff which reads as under -

8546- Electrical Insulators of any material

8546 10 00 - Of glass kg. 9% +9% 18%

8546 20 - Of ceramics: ---

Porcelain discs and strings :

8546 20 11 ---- Porcelain below 6.6 kV kg. 9% +9% 18%

8546 20 19 ---- Other kg. 9% +9% 18%

--- Porcelain post insulators :

8546 20 21 ---- Below 6.6 kVkg. 9% +9% 18%

8546 20 22 ---- 6.6 kV or above but up to 11 kV kg. 9% +9% 18%

8546 20 23 ---- Above 11 kV but up to 66 kV kg. 9% +9% 18%

8546 20 24 ---- Above 66 kV but up to 132 kV kg. 9% +9% 18%

8546 20 29 ---- Above 132 kV kg. 9% +9% 18%

--- Porcelain pin insulators:

8546 20 31 ---- Below 6.6 kV kg. 9% +9% 18%

8546 20 32 ---- 6.6 kV or above but up to 11 kV kg. 9% +9% 18%

8546 20 33 ---- Above 11 kV but up to 66 kV kg. 9% +9% 18%

8546 20 39 ---- Above 66 kV kg. 9% +9% 18%

8546 20 40 ---- Other high tension porcelain solid core kg. 9% +9% 18% insulators

8546 20 50 ---- Other low tension porcelain insulators including kg. 9% +9% 18%

Telegraph and telephone insulators

8546 20 90 --- Other kg. 9%+9% 18%

8546 90 - Other:

8546 90 10 --- Heat Shrinkable Components kg. 9% +9% 18%

8546 90 90 --- Other kg. 9%+9% 18%

4.2 Now we refer to the Chapter Note of Heading 8546 under existing law i.e. under Central Excise Tariff Act, 1985, which reads as under -

8546 ELECTRICAL INSULATORS OF ANY MATERIAL

8546 10 00 - Of glass kg. 12.5%

8546 20 - Of ceramics: --- Porcelain discs and strings :

8546 20 11 ---- Porcelain below 6.6 kV kg. 12.5%

8546 20 19 ---- Other kg. 12.5%

---- Porcelain post insulators :

8546 20 21 ---- Below 6.6 kV kg. 12.5%

8546 20 22 ---- 6.6 kV or above but up to 11 kV kg. 12.5%

8546 20 23 ---- Above 11 kV but up to 66 kV kg. 12.5%

8546 20 24- ---- Above 66 kVbut up to 132 kVkg. 12.5%

8546 20 29 ---- Above 132 kV kg. 12.5%

--- Porcelain pin insulators:

8546 20 31 ---- Below 6.6 kV kg. 12.5%

8546 20 32 ---- 6.6 kV or above but up to 11 kV kg. 12.5%

8546 20 33 ---- Above 11 kV but up to 66 kV kg. 12.5%

8546 20 39 ---- Above 66 kV kg. 12.5%

8546 20 40 ---- Other high tension porcelain solid core kg. 12.5% insulators

8546 20 50 ---- Other low tension porcelain insulators including kg. 12.5%

telegraph and telephone insulators

8546 20 90 --- Other kg. 12.5%

8546 90 - Other:

8546 90 10 --- Heat shrinkable components kg. 12.5%

8546 90 90 --- Other kg. 12.5%

4.3. Further, under Indian Customs Tariff, the classification of the product in question have been similar as under GST and Central Excise viz. Under Chapter heading 8546 which read as ELECTRICAL INSULATORS OF ANY MATERIAL. Even the sub headings of the head 8546 are same as in the case of Central Excise and GST.

4.4 We note that Harmonized System of Nomenclature (HSN) is internationally recognized product/items coding system which has also been accepted in India. From the above detailed Chapter Sub Heading wise classification of the product in the existing law i.e. under Central Excise it is found that the classification of the above said product is one and the same under GST regime as well as under Customs law. No change in the classification under all the entire three "Act" have been noticed. Therefore, we do not find any change under Chapter heading 8546 under Central Excise and GST regime. It proves that there is no change in the classification of the product in existing Central Excise law as well as the newly introduced GST law under major head 8546.

From 1stJuly, 2017, with the introduction of GST law from the existing law i.e. Central Excise, no change in the basic characteristics of the product is found, therefore, a sudden change in the classification of the product without having legal and reasonable backing is not tenable. The applicant further contended that the major part of their finished goods is "Heat Shrinkable" and, therefore, their product merit classification under CH 8546 and instead of 8547. Their contention is finds no force because there was no sudden change in the characteristic and use of their product with the introduction of new GST law. The product and its usage remains the same as in the existing law. Hence, advance Ruling cannot be pronounced on the basis of their contention.

5. Now, as enquired in second option by the applicant assessee, we are forced to discuss classification merit for the said product under Chapter Heading 8547. Before reaching on any conclusion, it will be in the interest of justice to discuss the Chapter Heading 8547, hence, we reproduce the Headings 8547 under GST law & act which read as under:

"8547"Insulating fittings for electrical machines, appliances or equipment, being fittings wholly insulating material apart from any minor components of metal (for example, threaded sockets) incorporated during moulding solely for purposes of assembly, other than insulators of heading No. 8546; electrical conduit tubing and joints therefor, of base metal lined with insulating material".

5.1 We note that the Chapter Head description under existing law i.e. Central Excise, GST and Customs are one and the same. Further, it is worth mentioning here that, at all the material times the said goods were classified for the purposes of basic and other Customs Duty by the Customs deptt. under heading 85.47 of Customs Tariff Act. We further note that the kit in question comprises of more than 15 independent articles/items. Therefore, selection of its classification on the basis of single product out of 15-17 items, will be improper without considering individual and joint value of the remaining articles of the kit. We further note that the assessee, during the course of personal hearing, have accepted that they are running the same business for the last many years and were classifying the goods under Chapter Heading 8547 for their product Heat Shrinkable Wrap Around Sleeve in the existing law. This fact has been verified from the ER-1 Return filed by the applicant for the month of April, 2017. In this regard it is worth mentioning here that the Apex Court have already accepted the classification of the product in question as 8547 in the case of XL Telecom P. Ltd. v. Union of India, 1994 (70) ELT 530 (Bombay), wherein the Court while considering classification of cable jointing kits in the said judgment has observed as under:

"Chapter 39 of CTA covers "plastics and articles thereof. Heading 39.26 is an omninbus and generic entry. Chapter 85 covers, inter alia, Insulating Fittings, Heading 85.47 contains a specific description of insulating fitting. The principle of 'Generalia Specialibus non Derogant" is well known and also applies to classifications of articles under the Customs Tariff. The thread of this principle runs all through even in the General Rules of Interpretation of Entries under the CTA.

"10. In the circumstances, we declare that the subject goods merit classification under Heading 85-47 of the CTA and we quash the impugned decision of classifying them under Heading 39.26"

5.2 The aforesaid judgment clearly answers the issue raised in the present application which is unambiguously covered by the ratio of the above referred judgment. We note that in Para 8 of the said judgment it is specifically observed by the Division Bench that raw material for manufacturing of components for cable jointing kits is described sometimes as insulating materials and sometime as unexpanded sleeves. The fact remains that said material is used as insulating material. The aforesaid judgment of the Division Bench has been accepted by the Revenue wherein it is specifically mentioned that certain doubts have been expressed regarding the classification of Cable Jointing Kits assembled from duty paid components as to whether they are classifiable under Chapter Heading No. 8547.00

5.3 From the verdict imparted by the apex court in the case of M/s XL Telecom P. Ltd. V. Union of India, 1994 (70) ELT 530 (Bombay), it can be seen in the said judgment Supra referred in Para 10 wherein no scope of classification dispute is left,that the Cable jointing Kit is classifiable under Head 8547 of the GST Tariff.The other test for deciding classification issue is, how the article is identified by the class or section of people dealing with or using the same. In this connection no dispute is made that the Articles is being heat srinkeble insulating material for cable jointing used for that purpose only. Even the applicant assessee have not disputed this fact and declared in their application that the goods in question is comprises of 15 to 20 items assembled in a kit which is used in joining a telephone/electric cable with special characteristic of insulation.

5.4 The fact remains that said material i.e. Cable Jointing Kits assembled from various components are classifiable under Chapter Heading No. 8547.00. We find that the Circular No 583/20/2001-CX dtd 20.08.2001 makes it clear that the judgment in the case of M/s XL Telecom P. Ltd. v. Union of India (cited supra) observed that the materials assembled in the kit has been uniformly classified at all departmental levels under (chapter Heading No. 85.47 of C.E.T.A 1985. The Court in the case of XL Telecom Ltd., (supra) has held that the components for cable jointing kits are classifiable under chapter heading 8547.

6. In view of the above discussing and findings, we hereby pronounce Advance Ruling under Sub Section 2 of Section 97 using power vested in us under sub Section 6 of Section 98, Section 96 of the Central Goods and Service Tax Act, 2017 read with Rule 103 of the Central GST Rules, 2017as under-

Order/ Advance Ruling

We hereby take decision against application dtd 22.07.2017 of M/s Western Cablex Engineering Pvt Ltd, Plot No. 7, Silver Industrial Estate, Bhimpore, Daman, and pronounce Advance Ruling that Heat Shrinkable Cable Jointing Kits is to be classified under HS Code 8547. Their application dtd 22.07.2017 is disposed off accordingly. Present decision will be applicable for the payment of all types of taxes i.e. CGST/IGST and UTGST.