The Gujarat Appellate Authority of Advance Ruling (AAAR) in the case of M/s Adarsh Plant Protect Ltd. Advance Ruling (Appeal) No. GUJ/GAAAR/APPEAL/2022/19 dated 28.08.2022, has held that the manually operated seed dressing, coating, and treating drum is covered within the description provided under the HSN Code 8436.
The AAAR in this case has observed that, as per HSN 843, other agricultural machinery includes seed dusting machines consisting of a revolving drum in which the seeds are coated with insecticidal or fungicidal powders.
The appellant applied for an Advance Ruling to determine the HSN and applicable tax on “Agricultural manually hand-operated seed dressing, coating, and treating drum”.
The appellant has submitted that the manually operated machines are used by the farmer in agriculture to cover, coat, and treat chemicals on seeds before sowing. They fall under HSN 8201 and attract a nil rate of GST. The applicant submitted that other manufacturers of similar kinds of machines that operate on power are charging 5% GST under HS code 84371000.
The Gujarat Authority for Advance Ruling (AAR) observed that chapters 8201 to 8205 include tools which are used in hand and these tools almost always have a spring which forces the shafts apart from cutting and a hook or other fastening so that they can be easily opened and closed with one hand. The appellant's product is not a hand tool; rather, it is a machine used for seed dressing, coating, and treating the seed with chemicals. Classifying the subject goods at HSN 8201 is pointless. The AAR ruled that seed dressing, coating, and treating drum machines are classified as HSN 84368090 tariff items and are liable to GST at the rate of 12% GST.
The appellant, aggrieved by the ruling of the AAR, appealed before the AAAR. The appellant submitted that because their manually operated seed dressing drum does consist of a drum in which seeds are coated with chemicals before sowing, it is not a correct basis to classify the product under HSN Code 8436.
The appellant submitted that the manually operated seed dressing drum should be classified under HSN 8201, which attracts a nil rate of GST. Manually operated agriculture or animal-driven tools are classified under HSN 8437, which attracts a 5% rate of GST where machinery for cleaning, sorting, or grading of seed or grain is included.
The AAR held that machinery under HSN code 8436 operates with the use of additional power of either mechanical or thermal kind. The manually operated seed dressing drum is not fitted with any mechanical or thermal equipment but it is rotated with hand and opened or closed with hand and, therefore, cannot be classified under HSN 8436.
