Agricultural tray would be taxable @18% -AAR Tamil Nadu

Facts of the Case:

• M/s. Saro Enterprises, are manufacturing Hard Nursery Trays used for the Rice transportation. Saro Enterprises has sought Advance Ruling on the “Applicable tax on Agricultural trays”.
• Saro Enterprises manufacture and market disposable plastic items like lunch trays, spoons and other plastic packaging products including Plastic Seedling Trays which is used for paddy transplantation. The trays are solely used for agricultural purpose for growing paddy, and generally called ‘Agricultural Seedling Trays’. They market the trays to the end users, basically farmers as well as small dealers who further make the sale of these trays to farmers. ‘Agricultural Seedling Trays’ are used manually for preparing seedling and it is neither a part of any machine nor it is used with any machine/ electronically driven.
• The applicant states that the trays are also compatible to various rice transplantation machinery. However, the tray itself is not a part of any machine or used with any machine or electronically driven. It is seen from the invoices produced that the goods are being sold as “Agriculture Paddy Seedling Tray”.
• The issue before us is to determine the classification of -Agricultural SeedlingTrays.

Held:

• The Applicant claims that the goods are to be classifiable under Tariff heading 82OI. Chapter 82 falls under Section XV of Customs Tariff which covers “Base Metals an articles of Base Metals”.
• Authority held that if we combined reading of section and chapter notes and description of goods covered under Tariff heading 82OI reveals that the goods covered under this Section XV have to be made of base metals or should be articles of base metals. ‘Base metals as per Section Note above do not include plastics’.
• Further, chapter 82 covering ‘Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal’ should necessarily have a blade, working edge, working surface or other working part of base metal or others as above.
• The product in question is Seedling Trays made of fully of plastic i.e. polypropylene and hence it cannot be classified under chapter 82 or anywhere under Section XV and accordingly it cannot be classified under 82or as Hand tools, such as spades, shovels, mattocks, picks, hoes, forks and rakes; axes, bill hooks and similar hewing tools; secateurs and pruners of any kind; scythes, sickles, hay knives, hedge shears, timber wedges and other tools of a kind used in agriculture, horticulture or forestry.
• On examination of the product brochure submitted by the applicant the product is Agricultural seeding tray’ made of hard plastic or polypropylene with dimensions 600 mm x 30 mm x 30 mm with grooves dividing the tray into small squares each of which have holes of 1 mm or 3 mm size, depending on the variety of the tray. Paddy seedlings are grown in these trays after suitable soil is placed in them. The holes are designed to ensure optimum drainage of water and to prevent the roots from getting damaged. Once the seedlings are grown as a single mat, the trays used to transport the seedlings to the land for transplantation. This may be done directly by the farmer or the seedling mats may be placed in rice transplant machinery which will carry on the transplantation work.
• The Applicant states that the trays are sold to end users who are farmers and also small dealers who make the sale to farmers. These trays are also compatible to various rice transplantation machinery in terms of the dimension of the seedlings mat grown, spacing between each seedling etc.
• The trays help in growing and transporting the seedlings in an organized, labor-saving manner so that the seedling mats grown can be fed into the machines or planted as such by hand. However, the tray itself is not a part of any machine or used with any machine or electronically driven nor is it an accessory of any agricultural machinery. Rice planting machinery do not need these seedling trays to function and hence cannot be classified as parts or accessories of agricultural machinery. The goods are trays made of
• In light of the above, It is held that Agricultural Seedling Trays made of Plastic manufactured by the Applicant are classifiable under CTH 39269099 and the applicable tax rate is 18%