The Tamil Nadu Appellate Authority of Advance Ruling (AAAR) ruled that 28% GST payable on Motor Car Air Springs (shock absorber).
The Appellant, SI AIR Springs Private Limited 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, bead wire, 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 has sought advance ruling on the issue of 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 that “Air Springs” Manufactured and supplied by the applicant are rightly classified under CTH 8708 and more specifically under CTH 8708 8000″.
The appellant has claimed that the HSN Explanatory Notes to Section XVII specifically excludes ‘Springs’ from the scope of ‘Parts and Accessories’ under CTH 8708. The relevant note seeks to exclude ‘Parts of General use- springs (including leaf springs for vehicles) such goods of base metal fall in Chapter 73 to 76 and 78 to 81, and similar goods of Plastics fall in Chapter 39″. The product in hand is air below the utility of which is to act as a ‘Shock absorbent. 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 an 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 and this claim is not valid.
The two members consisting of M.A. Siddique and G.V. Krishna Rao while upholding the ruling of AAR ruled that Air Springs manufactured by the appellant is classifiable under CTH 8708 as rightly held by the Lower Authority.
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