2018 (6) TMI 517 – AUTHORITY FOR ADVANCE RULINGS, GUJARAT – 2018 (14) G. S. T. L. 124 (A. A. R. – GST), 2018] 2 GSTL (AAR) 83 (AAR) – Classification of goods – Electrically operated Drum with Bell and Zalar – whether the said product is eligible for exemption vide Sl. No. 143 of N/No. 2/2017-Central Tax (Rate), dated 28-6-2017 issued under the Central Goods and Services Tax Act, 2017 and corresponding Notification issued under the Gujarat Goods and Services Tax Act, 2017, which provided exemption to ‘Indigenous handmade musical instruments’ of Chapter 92?
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Held that:- The product manufactured by the applicant is distinctly known in the market as ‘Electrically operated Drum with Bell and Zalar’ and the Drum, Bell and Zalar used in the said product are played in a rhythm by mechanical operation of electric motor run by electricity – the said product is appropriately classifiable under Heading 9208 of the First Schedule to the Customs Tariff Act, 1975, which inter-alia covers the pr
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n No. 2/2017-Central Tax (Rate), dated 28-6-2017 is not admissible to the product ‘Electrically operated Drum with Bell and Zalar’ manufactured and supplied by the applicant.
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Also, the Sl. No. 143 of Notification No. 2/2017-Central Tax (Rate), dated 28-6-2017, as amended, is not pari-materia to Entry 43 under the Gujarat VAT Act. Therefore, the Determination Order issued in respect of Entry 43 of the Gujarat VAT Act, is not found to be applicable in the present case.
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Ruling:- The product ‘Electrically operated Drum with Bell and Zalar’ manufactured and supplied by the applicant is classifiable under Heading 9208 of the First Schedule to the Customs Tariff Act, 1975 – the product is not eligible for exemption provided vide Sl. No. 143 of N/N. 2/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the Central Goods and Services Tax Act, 2017 and corresponding Notification issued under the Gujarat Goods and Services Tax Act, 2017. – ADVANCE RULING NO. GUJ/GAAR/RU
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ubmitted that the electrically operated drum with bell and zalar was exempted from tax under the Gujarat Sales Tax Act, 1969 vide Determination Order dated 26.02.1990 given in the case of M/s. Jagdish Industries, reported at 1989/D/144. Subsequently, the said instrument was held as covered under entry 43 of Schedule I of the VAT Act vide Determination Order dated 31.05.2013 passed under section 80 in the case of the applicant. Accordingly, it was exempted from tax even under the VAT Act. The relevant entry 43 under the VAT Act was as under. Entry 43 – Musical instruments (handmade and other than electronic musical instruments) and harmonium reeds 3. The applicant submitted that the Chapter 92 of GST Tariff provides musical instruments, parts and accessories of such articles. The Chapter 92 provides various kinds of musical instruments which are subject to tax under the GST Act. The Chapter 92 also provides the Indigenous handmade musical instrument subject to NIL rate of GST. They subm
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nous and is handmade musical instrument. Accordingly, the instrument should be a musical instrument, should be handmade and indigenous. If all these three conditions are fulfilled then the NIL rate of tax is applicable. 5. It is submitted by the applicant that normally in every Hindu Temple, during morning and evening Aarti, Drum and Zalar is played by a person with the help of small wooden stick. The instrument of the applicant, which is combination of drum and zalar, is played by using electric power during morning and evening Aarti. It creates rhythm during performing of Aarti. Accordingly, as per meaning given in Wikipedia – Encyclopedia, Musical Instrument means – A musical instrument is an instrument created or adapted to make musical sound. In principle any object that produces sound can be consider a musical instrument. It is through purpose that the object becomes a musical instrument . Accordingly, the disputed item manufactured by the applicant is musical instrument as cover
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ually. The Hon ble Supreme Court in the case of Collector of Central Excise V/s. Louis Shoppe & Another, 102 STC Pare 129 while interpreting the item as handicraft product has held that it must be predominantly made by hand. It does not matter if some machinery is also used in the process . Accordingly, the disputed item of the applicant is handmade musical instrument. 8. It is submitted by the applicant that the item electrically operated drum with bell and zalar is an indigenous handmade musical instrument covered under Chapter 92 subject to NIL rate of tax. They submitted that there is a principle for interpretation of schedule entry that under which entry the product is covered is to be determined by following the test of common parlance or commercial parlance and relied on the judgment of Hon ble Supreme Court in the case of M/s. Indo International Industries, reported at 45 STC Page 359. They submitted that the disputed item of the applicant is Page 2 of 5 popularly known as
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ding to the applicant, the disputed instrument is consisting of zalar and nagara and hence they are covered by item No. 4, 43 and 117 of the list and hence NIL rate of tax is applicable to it. 10. We have considered the submissions made by the applicant in their application for advance ruling and additional written submissions as well as submissions made at the time of personal hearing. 11. The issue involved in this case is regarding (i) appropriate classification of the product Electrically operated Drum with Bell and Zalar ; and (ii) whether the said product is eligible for exemption vide Sl. No. 143 of Notification No. 2/2017-Central Tax (Rate), dated 28-6-2017 issued under the Central Goods and Services Tax Act, 2017 and corresponding Notification issued under the Gujarat Goods and Services Tax Act, 2017, which provided exemption to Indigenous handmade musical instruments of Chapter 92. 12.1 It is observed that the Explanation (iii) and (iv) of the Notification No. 1/2017-Central
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statements of objects and reasons of the Central Excise Tariff Act, 1985, the Central Excise Tariffs are based on the Harmonious System of Nomenclature Page 3 of 5 (HSN) and the internationally accepted nomenclature was taken into account to reduce disputes on account of tariff classification. Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the Harmonious System of Nomenclature (HSN). Although, the decision in the case of Woodcraft Products (supra) dealt with the interpretation of the provisions of the Central Excise Tariff there can be no doubt that the HSN Explanatory Notes are a dependable guide even while interpreting the Customs Tariff. 13.1 As per the submissions of the applicant, for manufacture of product Electrically operated Drum with Bell and Zalar , they prepare body by using Lathe Machine, Drill Machine and Welding Machine, wherein different parts are manually assembled. In t
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eading 9208 of the First Schedule to the Customs Tariff Act, 1975, which inter-alia covers the products musical boxes, fairground organs, mechanical street organs, mechanical singing birds, musical saws and other musical instruments not falling within any other heading of Chapter 92. 14.1 Sl. No. 143 of Notification No. 2/2017-Central Tax (Rate), dated 28-6-2017 issued under the Central Goods and Services Tax Act, 2017 and corresponding Notification issued under the Gujarat Goods and Services Tax Act, 2017, provided exemption to Indigenous handmade musical instruments of Chapter 92. The said Notification No. 2/2017-Central Tax (Rate), dated 28-6-2017 was amended vide Notification No. 28/2017-Central Tax (Rate), dated 22.09.2017, whereby, inter-alia, in Sl. No. 143, entry Indigenous handmade musical instruments as listed in ANNEXURE II , has been substituted and Annexure – II containing list of 134 indigenous handmade musical instruments, was inserted. Thus, the exemption vide Sl. No. 1
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items of said Annexure – II. As Page 4 of 5 the list of indigenous handmade musical instruments given in Annexure-II of Notification No. 2/2017-Central Tax (Rate) is exhaustive and the wordings of Entry at Sl. No. 143 of said Notification are very clear, we hold that the benefit of Sl. No. 143 of Notification No. 2/2017-Central Tax (Rate), dated 28-6-2017 is not admissible to the product Electrically operated Drum with Bell and Zalar manufactured and supplied by the applicant. 14.3 We also note that Sl. No. 143 of Notification No. 2/2017-Central Tax (Rate), dated 28-6-2017, as amended, is not pari-materia to Entry 43 under the Gujarat VAT Act. Therefore, the Determination Order issued in respect of Entry 43 of the Gujarat VAT Act, is not found to be applicable in the present case. 15. In view of the foregoing, we rule as under :- RULING (i) The product Electrically operated Drum with Bell and Zalar manufactured and supplied by the applicant is classifiable under Heading 9208 of the Fi
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