Classification of goods— The Applicant, stated to be a Manufacturer of the item “Rakhi”, is seeking a Ruling on classification of “Rakhi”, on whether exemption under Notification No. 2/2017-Central Tax (Rate) dated 28/06/2017 (1126-FT dated 28/06/2017 of State Tax), (hereinafter referred to, collectively, as “Exemption Notification”) is applicable for such manufacture, and if not, the taxability of the same.
Held that— “Rakhi” is not an essential part of any Puja or Religious Ceremony to pay obeisance to any deity. Mere inclusion of “Rakhi” in a Puja Thali at the discretion of either the Customer or the Supplier does not make it an integral and essential part of Puja Samagri. Serial number 148 of the Exemption Notification lists the items to be considered as Puja Samagri and “Rakhi” is not listed therein.
The “Rakhi”s the Applicant intends to make, therefore, are not in the form of “kalava” and hence, cannot attract NIL rate of duty under Serial No 92(2) of the TRU Clarification.
It is seen that “Rakhi” is an independently identifiable product and is also known to be so in common and commercial parlance. The multifarious constituents that go into the making of the “Rakhi” cannot be considered as accessories; the material which provides the essential character to “Rakhi” is varied and the buyer may also be motivated to purchase the same as much for its for its designer/decorative/fancy part, as for its symbolic characteristic of a bond of protection.
Ruling— The Applicant has to classify the goods “Rakhi” as per its constituent materials in accordance with Rule 3(c) of Rules for Interpretation of the Customs Tariff Act, 1975, as laid down in Explanatory Notes (iv) of Notification No 1/2017-CT(Rate) dated 28.06.2017 (Note (v) of 1125 – FT dated 28/06/2017 of State Tax).
Rakhi will attract GST in accordance to its classification as stated above.
Exemption under Notification No.2/2017-Central Tax (Rate) dated 28/06/2017 (1126-FT dated 28/06/2017 of State Tax) is not applicable for “Rakhi”. [2018] 2 TAXLOK.COM 70 (AAR-WB)