The Tamil Nadu Authority of Advance Ruling (AAR) ruled that 28% GST is payable on Motor Car Air Springs (shock absorber).
The applicant, SI Air Springs Pvt. Ltd. engaged in the manufacture and sale of “Air Springs” which are used in air suspension systems for buses, trucks and trailers.
The ‘Air Springs’ manufactured and sold by the Applicant are 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 product is made up of sealed fabric-reinforced rubber bellows and is sealed with a steel plate. 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. The vulcanised rubber component of the ‘Air Springs’ is the heart of the product and gives the product its key functionality. The steel component provides support for the same.
The applicant has sought the advance ruling on the issue whether “Air Springs” manufactured and supplied by them will be correctly classifiable under Tariff heading 40169990 as opposed to Tariff heading 8708 9900 and attract GST at the rate of 18%.
The coram of Thiru Kurinji Selvaan and Senthilvelavan B. found that the product as a whole is not an article of vulcanized rubber other than hard rubber and not classifiable under Customs Tariff entry at 40169990. Customs heading entry at 87088000 specifically covers Suspension systems and parts thereof of Motor Vehicles classifiable under CTH 8701 to 8705 and the functional utility of the ‘Air Springs being extending suspension or acting as shock absorber designed specifically for Motor Vehicles, the said entry is to be preferred to the residual entry of CTH 8708 9900.
However, the AAR noted that the GST rates for the purposes of Notification No. 01/2017-C.T.(Rate) dated June 28, 2017 are based on the descriptions in the notification with the CTH at the four-digit level.
Therefore the AAR held that the ‘Air Springs’ manufactured by the applicant are rightly classifiable under CTH 8708 and more specifically under CTH 8708 8000.
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