Dismissed

06/WBAAAR/APPEAL/2019 of M/S Shiva Writing Company Pvt. Ltd.

GST AAAR17 Apr 201906/WBAAAR/APPEAL/2019

Case brief

AI extract

What is this about?

The West Bengal Appellate Authority for Advance Ruling, in a final order, dismissed an appeal against an advance ruling. The Appellant, an entity manufacturing ball point pens and trading in pen tips, challenged a ruling that classified pen tips and balls under HSN code 9608 99 90, making them taxable at 18%.

What did the court decide?

The appeal was disposed of without any order without passing any other orders as held proper in the facts and circumstances of the case

06/WBAAAR/APPEAL/2019 of M/S Shiva Writing Company Pvt… — GST and Indirect Tax | GST AAAR (2019)

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WEST BENGAL APPELLATE AUTHORITY FOR ADVANCE RULING AT 14, BELIAGHATA ROAD, KOLKATA-7OOOI5

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Before:

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Mr. A.P.S Suri, Member

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Ms. Smaraki Mahapatra, Member

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In the matter of

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Appeal Case No. 06/WBAAAR/APPEALl20l9 dated 17.04.2019

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-And-

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In the matter of:

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An Appeal filed under Section 100(l) of the West Bengal Goods and Services Tax Act.20l7l Central Goods and Services Tax Act.2017. by M/s Shiva Writing Cornpany Pvt l-td. S K lndtrstriaI Plaza. Sankaripota Road, Kalagachia, Thakurpukur. Kolkata-700063 against the I{Lrling passed by the West Bengal Advance Ruling Authority vide OrderNo.44/WBAAR/2018l9 dated 13.03.2019.

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Present for the Appellarrt: Sri Sandip Choraria, Advocate & Sri Al<shat Agarwal, Advocate

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Present for the Respondent: Sri SLrjan Shome, Superintendent, Range I, Maheshtala Division, Central Tax

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Matter heard on: 03.07 .2019 Date of Order: IL07.2019

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t. This Appeal has been filed by M/s Shiva Writing Cornpany Pvt. Ltd. (hereinafter ref'erred to as "the Appellant") on 17.04.2019 against Advance RLrling Order No. 44IWBAARl20l8-19 dated 13.03.2019, pronounced by the West Bengal ALrthoritv fbr Advance Ruling (hereinafter ref-erred to as the'WBAAR') in the matter of M/s. Shiva Writing Company Pvt. Ltd.

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The Appellant holding GSTIN l9AAECS4l99PlZE is stated to be in the business of rtanufacturing and supplying of ball point pens, for which pen tips and balls to be used inside the tips are required in order to make the same tips worl<ing. The Appellant also trades and supplies ball point pen tips arrd reflllsto various dealers.

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Page 1 of 6

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The Appellant sought an advance ruling under section 97 of the West Bengal Goods and Services Tax Act, 20171 the Central Goods and Services Tax Act, 2017. (hereinafter collectively referred to as "the GST'Act") on the following questions:

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a) Whether tips and balls, both being pen parts under HSN Chapter Head 9608. used in manufacturing process of ball point pens. are taxable at tlre rate of l2oh:

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b) If the tips and balls used in the manufacturing of ball point pens are not taxable at the rate of l2o/o under HSN 9608. then at what rate shall they be taxable and under which HSN Chapter.

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The WBAAR passed an advance ruling by an orderdated 13.03.2019. wherein it beerr pronounced inter alia that "Tips and Balls" of Ball Point Pens are to be classified under GST Tariff Heading 9608 99 90 and included under Sl No.453 of SchedLrle III of Notification No. 0112017-Central Tax (Rate) dated 28.06.2017 (corresponding State Notification No. I 125-FT dated 28.06 .2017).

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The Appellant has filed the instant Appeal against the above Advance Ruling with the prayer to set aside/modify the impLrgned Advance Ruling passed by the WBAAR or pass any such further or other orders as may deerned tlt arrd proper in the f-acts and circurnstances of the case, on the fbllowing grounds:

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a) The Appellant stressed on the Notifrcation No l2l20l7-CT dated 28.06.2017 (corresponding State Notification No. ll52-FT dated 29.06.2017) r.vhere it has been specifically stated that HSN codes are to be merrtioned only up to the flrst 4 digits on a tax invoice and no more than that. Minutes of the l4t1' GSI- Council Meeting Para29.l clearly stated that GST Rates would generally be prescribed at the 4 digit HS Classification unless it is required to specify the rate for a good at 6 or 8 digit levels. This would mean that different rates of tax are applicable for items at 6 or 8 digit levels, otherwise prescribed rate at 4-digit HSN Code shall be applicable for all goods. The WBAAR had gone beyond such rule of law and arbitrarily stated that pen tips and balls were to be classified under HSN 9608 99 90 and taxable at the rate of l8% which is completely vindictive and bad in law. The WBAAR has erred in its.iLrdgement and classified tips and balls at a higlier rate of tax.

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b) The Appellant is only in the business of manufacturing ball poirrt pens and does not matrufacture fbuntain perrs and other pens rvhich are taxable at the rate of l8%. Ball point pens are taxable at the rate of 12o/o. Being the manufactLrrer of ball point pens it imports and manufactures pen pafts only usable in the ball point pens. The said parts cannot be used in the rnanufacturing of fountain pens. Therefore. the pen tips and balls can only be taxable at the rate of l2o/o since the same are used only in the manufacturing of ball point pens. Had they been used in the manufacturing of fountairr pens, the same would have also been taxable at the rate of l8% according

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Page 2 of 5

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to the manufacturing ratio, but this is not so in the Appellant's case. lf a specific rate has not been provided for the parts of pen used fbr manr.rfacturing ball point pens, then the rate of tax applicable on the finished product should be made applicable on the said raw materials, as both the raw materials and the finished goods are under the sarne Chapter Heading of 9608. The Appellant also submitted that as per the Errgineering Export Prornotion Council of India. rvhich is sponsored by the Ministry of Commerce and lndustry. Governmerrt of lndia. under tlre Chapter Heading of 9608. pen tips are declared to be taxable at the rate of l2Yo.

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c) The Appellant also stated that it is no longer re.s inlegru that if a particular entrv or a provision has two irrterpretations, the interpretatiorr which is berreflcial to the assessee shall be taken into consideration. Based on this very jLrdicial precedent, the rate of tax of pen tips and balls should be taxable at the rate of l2%. Initially. the Customs Authorities also allowed imports and exports at the rate of 12o/o but from December 2018 onwards, the Customs Authorities started questioning sr.rch rate of tax and then levied IGST at the rate of l8% without any cogent and valid reason. In such a case, due to such excess levy of IGST, the cost of each ball point pen has increased which in turn, has made the pen tips and the pen itself costlier. Further, various competitors of the Appellant are imporling balls and selling the pen tips at lower rate of l2o/o whiclt is hampering the bLrsiness of the Appellant.

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During the course of the hearing the Appellant reiterated the poirrts as stated in Grounds of Appeal. Fufther, the representatives of the Appellant stressed that tips and balls are parts of the retlll which in turn is a part of the ball point pen. Hence. tips arrd balls are parts of the ball point pen. In support of their claim they cited the judgment of the Hon"ble Customs. Excise and Cold Tribunal - Delhi in the case of Nalarrda Pen Mfg. Co. Pvt. Ltd vs. Collector of Central Excise, Baroda [998(102)ELT 289].

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7 . The Respondent rnade a written submission commenting on the "Grounds of Appeal" submitted by the Appellant, wherein he stated that:

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a) The Appellant mis-interpreted the Notification No. 1212017-CT dated 28.06.2017 (corresponding State Notification No. ll52-FT dated 29.06.2017). ln the said notification, Department of Revenue on the basis of recontmendation of CST Council issued gLridelines regarding mentioning the HSN codes on the tace of the invoice issr"red by the class of registered persor.r depending Llpon the Annual Turnover in the preceding financial year. As per this notiflcation. use of "Ni1". "2digits" or "4-digits" HSN code sirnply indicates the range of annual turnover in the preceding financial year of the registered person rvho has issued the invoice. This notification has no relation',vith classiflcatiorr of goocls. Hence Appellant's representation regarding r.rse of 4- digit HSN code for classiflcation only fbr "Tips and balls" is completely wrong.

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Page 3 of 6

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b) The appellant stated that since ball point pens are taxable at the rate of l2o/o. parts of ball points pen specifically'tips and balls' should be classified in such a manner so that rate of tax on these items would also be 12o/o, as there is no specific rate prescribed for parts of ball point pens vide Notification No. 0112017 - Central Tax (Rate) dated 28.06.2017 (corresponding State Notification No. 1125-FT dated 28.06.2017). The Appellant's submission is not correct due to the fbllowing reasons:

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(i) Under 04-digits headin-e 9608. ball point pens have been classitied along with other pens. pencils. pen/pencil holders and parts of the said amiclesl

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(ii) Ball point pens are specifically classified under 6-digits sub-heading 9608 l0 havirrg rate of duty l2% (CCST -6% & SCST -6%),

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(iii) Refills fbr ball point pens are classified under 6-digits sLrb-heading 9608 60 having rate of duty l8% (CGST-9% & SGST-9%)I

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( iv) Tips and balls are sometimes used directly in sorne ball point perrs and sometimes used in refills. So, tips and balls are parts of both ball point pens and refills having different 6-digits sub-headings;

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(v) Now, there is no specific 8-digits "Tariff ltem" HSN code for 'tips and balls' - which are parts of both ball point pens and refills, thoLrgh these have been classified under 4-digits heading 9608. Hence as per system of classification. 'tips and balls' are classifiable r.rnder residuary sLrb-heading 9608 99 as "Other" and specifically under 8-digits "Tariff item heading" 9608 99 90 as "Other". having rate of tax of l8% (CGST-9% & SGSTe%).

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B. The matter is examined and written and oral subrnissions made before us are considered. It is observed that the Appellant frled Appeal against the order of the WBAAR based on two aspects. whether the tips and balls. both being pen parts urrder HSN Chapter Head 9608, used in manufacturing process of ball point pens are taxable at the rate of 12o/o, and if the tips and balls used in the rnanLrfactr,rring of ball poirrt pens are not taxable at the rate of 12%o under HSN 9608, then at what rate they shall be taxable and under which HSN Chapter they will be classified.

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For the sake of clarity these entries of the following Chapter Headings are reproduced below:

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ChaDterlleadins		DescrintionofGoods
9608	AaLLpor,tp.rrr;f.t	tt,ppeaa pfis;a
	markers;fbuntain	pens,stylographpensandotherpens:
	duplicating stylos;	propellingorslidingpencils: penholders.
	encilholdersand	sirnilarholders;ports(ilrclr"rdirrgcapsand

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Page 4 of 5

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	clips)oftheforegoing articles.other than thoseofheadirrg 9609
9608r0	Ballpointpens
960830	For;ntainpens,stylographicpensandotherpens
960860	Refillsforballpointpens, con'rprisirrgtheballpoirrt andirrl< reservoir
96089r	Pennibs andnibpoirrts
960899	Other
9609	Pencils(other thanpencilsofheading9608).,crayons.pencil leads, pastels,drawingcharcoals,writingor drawingchall<sand tailors'chall<s

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The Appellant's interpretation of Notiflcation no. l2l20l7-Cerrtral^-lax datecl 28.06.2017 (correspondirrg State Notification No. ll52-FT dated 29.06.2017) fbr classification of any item up to 4 digits and not beyond is on the wrong footing as the said Notifications were issued for mentioning of ilSN codes on the invoice by the registered person depending on the Annual Turnover in the preceding financial year and hence, not applicable in their present case.

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ll. For clarity the following entries of Notification No. 0ll20l7-Central Tax (Rate) dated 28.06.2017 (corresponding State Notification No. Il25-FT dated 28.06,2017) as amended are reproduced below:

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ScheduleNo.	SerialNo.	ChapterHeading	DescriptionofGoo(ls
II	232	9608	Pens[otherthanFourrtainpelts. stylograpl'rpens]
II	-!a1 z)_)	9608,9609	Pencils(including propellingor slidirrg pencils). crayons.pastels. drawingcharcoalsandtailor's chall<
III	411	e60B	Fountainpelts" stylographpens andother pelts [otherpens otlittedvideCorrigendumdated 27 .07.2017(correspondingState NotificationNo.l35l-FTdated 27 .07.20t7))
III	4s3	AnyChapter	Goodswhicharenotspecifledin SchedurleI,II,IV, Vor VI

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From the written and oral submission of the Appellant it is observed that the'tips and balls of ball point pens'are essentially'parts of refills' and the refills are parts of ball point pens. "Ball point pens" are classified under Sub-lreading no.9608 l0 attracting tax @ l2o/o while "Refills fbr ball poirrt pens comprising tlre ball point and inlireservoir" are classified under Sub-heading no. 9608 60 attracting tax @ l8%. Pen

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nihs antl nib poirrts as per l{SN entr'1'960.3^{9l are vcrv difi'erenttiorrr hall} anil hulls as useci tr,tlte i\ppcllunt. Primarilr"Tips and^{L:alls'arepeirts tll} since tlrerc is rro spccitlc Sub-hea.ling allotted^{to thesc;ratts.these shtrttlcl bc} Lrnder residuarl.'Sub-heilcling as'Others'in 9608 99.^{attracling tax O 189/0.} l'rom tlre tahlc irT para lI ilrat the tips and balls dcalt^{rvith bv tlre r\ppellant} entr-, r1o. 453 of'Schedr"rle lll.

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13.^{-flre.iirdgrlenr} ol'the l{orr'ble^{Clustorns. [.rcise arrd Cold Triburtnl - Delhiin tlte crsc} qt' Nalanda Pcn Iv1 g. Co. ['vt. Ltd \js. C]ollectr:rr of Cerrtral F.xcise. l]aroda f^{l99S(10:)ELT ?ti9las cited tr1,'the appellantis not applicable in the present cilseas} the snicl case lnr.r,relatecl to^the extcusion^{of exetnptiitn Notifrcaticirl to pafis ol"rellllsirl} pe riod pliot' to enactnrent o{'the CST Act.

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I'lre Aclr,ance llulilg ALrt[o1itv^{has g6ncinto the trattcr thorougltlyanrl passetl a u'cll} rears<lrred specl<ing Order and lrcnce. there^{is no reuson to intet'['et'ewiththe Orclcr.}

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Irr ,ir'\, ol'' r'ltrrlvc cl iscttssitllt \"e llrrcl lt() inflrrriitv in tlrc ruling prolt()uttt:ccl bv thc^{\'BAAIt.'['hc} il[]pt)al tliu: tails ilntl sturtrls clisprlsccl itccrlrtl^irruly.

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Sc:ntl 11 ct.)p) 01'this tlt'rlt:t'ttt^tl'rc Appcllant^{{lntl tltt'I{esp()nrlcltt tbr in I'itt'trtittit-t11.}

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r tl -' ,/ (-\ i e* ,q,r'-'\.-( S rrutt'ali i \lahapatrl) (,\ .P. S S trri ) \1cnlbcr N Ic ttt bt: t' \, est Ilcn si.l l,r\ppel Iatc Arrtltorit)' West Flc:ngal Appel latc .,\uthnritt' fbr Atlvance [{.ulins {'i'rr',{clvancc Ru I i rr u

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06/WBAAAR/APPEAL/2019 of M/S Shiva Writing Company Pvt. Ltd.

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06/WBAAAR/APPEAL/2019 of M/S Shiva Writing Company Pvt. Ltd.

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