12% GST on Manufacture of PVC Tufted Coir Mats / Mattings / Floor coverings by the process of embedding coir yarn into PVC: AAR [Read Order]

AAR - PVC Tufted Coir Mats - Mattings - GST - Taxscan

The Kerala Authority of Advance Ruling (AAR) ruled that 12% GST is applicable on the Manufacture of PVC Tufted Coir Mats / Mattings / Floor coverings by the process of embedding coir yarn into PVC.

The applicant is engaged in the manufacture of PVC backed coir mats/mattings/floor coverings by a special molding process. There is confusion among the industry and trade as to whether the mats manufactured by them are to be classified as tufted under Heading 5703 or under 5705.

The applicant has sought advance ruling on various issues.

Firstly, whether the process of manufacturing embedding coir yarn into vinyl (PVC) compound and curing by heating or cooling, which is called “Tufting” or a process “other than those processes mentioned in Headings 5701 to 5704” of the Customs Tariff and the HSN Explanatory Notes to Chapter 57.

Secondly, Whether “coir mats or matting or floor covering with Vinyl (PVC) backing” manufactured by the process of embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling is rightly covered under the description “coir mats, mattings and floor covering”.

Thirdly, Whether “coir mats or mattings or floor covering with vinyl (PVC) backing” manufactured by the process of embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling, would merit classification under the Heading 5705 (more specifically under CTH 5705 00 49) of Chapter 57 of the 1st Schedule to the Customs Tariff.

The Authority consisting of Joint Commissioner of Central Tax, Shivprasad S. IRS and Additional Commissioner of State Tax, B.S. Thyagarajababu, while addressing the first issue ruled that Manufacture of PVC Tufted Coir Mats / Mattings / Floor coverings by the process of embedding coir yam into PVC cannot be considered as textile floor coverings of coir covered under HSN 5702, 5703 or 5705. The process undertaken is a tufting process and if any, PVC or rubber or any other materials are tufted on the textile of coir, which is used as floor mats or mattings, it will come under the Customs Tariff Head 5703 90 90 and is liable to GST at the rate of 12% as per Entry at SI No. 144 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated June 28, 2017.

“No, PVC Tufted Coir Mats and Matting cannot be considered as coir mats, mattings and floor coverings covered under HSN 5702 or 5705 and is appropriately classifiable under HSN 5703 90 90 as tufted mats / matting / floor coverings of coir,” the AAR said.

“No, The PVC Tufted Coir mats/mattings/floor coverings are classifiable under Customs Tariff Heading 5703 90 90 and attracts GST at the rate of 12% as per SI No. 144 of Schedule II of Notification No.01/2017-CT (‘Rate’) dated 28-06-2017,” the AAR, while ruling on the last issue said.

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