Does Mehandi/Henna powder fall under Chapter 33 or under chapter 14?

PJ/Case Study/2020-21/154

16 May 2020

Case: M/s Sunil Kumar Gehlot (AAR No. RAJ/AAR/2020-21/01)
Introduction: M/s Sunil Kumar Gehlot is engaged in manufacture of hair dye powder and registered under GST.

Issue involved: Does Mehandi/Henna powder fall under Chapter 33 or under chapter 14?
Brief Facts: M/s Sunil Kumar Gehlot is engaged in manufacture of hair dye powder and registered under GST. The applicant intends to manufacture mehandi/henna powder in future and so clarification is required on classification and rate of the tax applicable.

Assessee’s Contention:
The assesse has contended in the following manner

The present application for advance ruling has been filed to confirm the classification of henna powder and the rate of GST applicable thereon. In order to arrive at perfect conclusion, it is pertinent to make reference to various aspects that aid in the classification of their product henna powder under GST regime.

At the outset, it is worth noting that while filing application for registration under GST Laws, the list of goods mentions the Chapter 14 for henna powder. The HSN code no. 14041019 specifically mentions “Henna Powder” and so the applicant has mentioned the classification of their product henna powder under chapter 14 and accordingly, the rate of GST applicable is 5%. The applicant submits that when the GST portal itself specifies the HSN code for henna powder as 14041019, there is no doubt that the said product is covered under chapter 33. Therefore, the classification of the product mehandi/henna powder should be confirmed under HSN code 14041019.
In continuation to the above, reference may be made to amendment made vide insertion of serial no. 78A by Notification No. 06/2018-Central Tax (Rate) dated 25.01.2018 which amended the principal notification no. 01/2017-Central Tax (Rate) dated 28.06.2017 which reads as follows:-

78A

1404 or 3305

Mehandi paste in cones

The applicant submits that after the above cited amendment, it is being interpreted that the above amendment is specific for Mehandi paste in cones and cannot be considered with reference to mehandi powder. In this regard, the applicant submits that the rate of GST applicable on henna powder was 5% since inception and this fact is confirmed by the Agenda Item No. 10 of the issues recommended by the Fitment Committee for the consideration of the GST Council. The extracts from the Agenda Item are produced for the sake of convenient reference as follows:-

*S. No.*	*Description*	*HSN*	*Present GST Rate*	*Recommended GST rate*	*Comments of the Fitment Committee*
13.	Mehandi paste in cones	3305/1404	18%	5%	*Henna powder falling under heading 1404 attracts 5% GST.* Henna used as preparation for hair is classified under heading 3305 and attracts GST at the rate of 18%. To avoid disputes, fitment committee recommends 5% GST rate for mehandi paste in cones.

We submit that the above extracts clearly indicate that as far as product mehandi/henna powder is concerned, there is no doubt that the said product is classifiable under chapter 14 with applicable GST rate of 5%. Therefore, in light of the above cited extracts, which are relevant in the present case, the classification should be confirmed under HSN code 1404 with GST rate of 5%.
Decision:The tariff items 14041011 to 14041090 has already been omitted from the Custom Tariff Act, 1975 vide the finance act,2006( no.21 of 2006 ) dated 18.04.2006 and hence no such tariff item is available in Customs Tariff Act,1975.
We further observe that it is well known fact that Henna/Mehendi powder has a natural property of dye/tanning and is generally as hair dye. Therefore,we observe that the product is rightly classifiable under chapter heading 3305 as preparations for use on the hair and covered under amended Notification no. 41/2017-Central tax dated 14.11.2017 and attract 18% GST.
The Rajasthan AAR has ruled that Mehendi/Henna powder is covered under Chapter 33 and will attract GST @ 18%.
Conclusion: The classification dispute as regards mehandi/henna powder was prevalent since Central Excise Laws and the confusion still persists in GST regime. The amendments made in the notifications specifying rate of GST creates dispute as regards classification of henna powder in the GST regime.

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PJ/Case Study/2020-21/154
16 May 2020

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