GST Classification and 5% Rate for Rubberised Cork Sheets
The Rajasthan Authority for Advance Ruling confirmed that rubberised cork sheets fall under HSN 4504, qualifying for a 5% GST rate.
- Ruling
- RAJ/AAR/2026-27/16 dated 19.08.2026
- Dated
- 19 Aug 2026
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Rubberised cork sheets are classified under Tariff Item 45041010.
- Adding binding agents like polymers does not change the cork classification.
- These products qualify for the 5% GST rate under Notification 09/2025.
- The authority refused to rule on inverted duty refund eligibility.
In short
The company asked the Rajasthan Authority for Advance Ruling (AAR) whether their rubberised cork sheets should be taxed at 5% under the cork category or at a higher rate as a rubber product. The tax department argued that because the sheets contain polymers and chemicals, they should be classified as synthetic rubber. The authority disagreed, confirming that the essential character remains cork, regardless of the binding agents used.
What has changed
How it worked before
Manufacturers of composite cork products often faced uncertainty, with tax officers frequently attempting to reclassify these goods as synthetic rubber products under Chapter 40 to apply higher tax rates.
What has changed
The authority ruled that these sheets belong under Heading 4504. This confirms that manufacturers can apply the 5% GST rate to these products. However, the authority clarified that it cannot decide on inverted duty refund claims through this process.
Who this affects
Manufacturers and suppliers of rubberised or agglomerated cork sheets who are facing disputes regarding their GST classification.
An example
A manufacturer in Gujarat produces agglomerated cork sheets using a resin binder. They are worried their local tax officer might classify the product as rubber to charge a higher GST rate. Based on this ruling, they can argue that the essential character of their product is cork. They should prepare technical documentation showing the cork content to support their classification under HSN 4504.
What you should do
If you manufacture similar products, you can use this ruling as a reference for your classification. However, remember that an advance ruling is only legally binding for the company that requested it and their specific tax office. You should consult with your tax advisor to assess your own classification and documentation before changing your tax treatment.
If you do nothing
If you assume this ruling automatically applies to your business, you risk misclassifying your goods and paying the wrong amount of tax. If a tax officer disagrees with your classification, they may issue a demand notice for the tax difference, plus interest and potential penalties. Always seek a professional opinion specific to your own business operations.
The terms explained
- Agglomerated cork
- Cork that has been broken into granules and then bonded together using a binding agent to form a solid sheet or block.
- HSN
- The Harmonized System of Nomenclature is a standardized system used to classify goods for taxation and customs purposes.
- Inverted duty structure
- A situation where the tax rate on the raw materials or inputs is higher than the tax rate on the finished product.
The ruling in detail
Authority for Advance Ruling
M/s Balasaria Agencies Pvt. Ltd.
RAJ/AAR/2026-27/16 dated 19.08.2026 · Rajasthan
Questions before the authority
- Whether the product manufactured and supplied by the Applicant, namely 'Rubberised Cork Sheet' / 'Agglomerated Cork Sheet', is correctly classifiable under Tariff Item 45041010?
- Whether Rubberised Cork Sheet / Agglomerated Cork Sheet classifiable under Tariff Item 45041010 is covered under Sr. No. 310 of Schedule-I of Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025?
- Whether GST at the rate of 5% (CGST @ 2.5% and SGST @ 2.5%) is applicable on the said product?
- Whether the benefit of the said notification can be denied merely because outwards product is not natural cork or cork is not originates from the bark of the Cork Oak Tree?
- Whether the applicant is also eligible for refund under inverted duty structure benefit under section 54(3)(ii) of the RGST Act., 2017 which allows refund where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies?
Facts
The applicant manufactures and supplies Rubberised Cork Sheets and Agglomerated Cork Sheets by mixing cork granules with polymers, chemicals, and other additives. The applicant sought a ruling on the correct HSN classification and the applicability of a 5% GST rate under a specific notification. The jurisdictional officer contended that the product should be classified under Chapter 40 as a synthetic rubber product rather than under Chapter 45 as cork.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of Rubberised/Agglomerated Cork Sheets | Classifiable under Tariff Item 45041010 None |
| Coverage under Notification No. 09/2025-Central Tax (Rate) | Covered under Sr. No. 310 of Schedule-I None |
| Applicability of 5% GST rate | Yes, applicable on supplies on or after 22.09.2025 Subject to discussion in the order |
| Denial of benefit based on natural origin | No, benefit cannot be denied on that ground None |
| Eligibility for inverted duty refund | Not admitted Beyond the scope of Section 97(2) of the GST Act |
The Authority ruled that the products are correctly classifiable under Tariff Item 45041010 as agglomerated cork. It held that the presence of binding substances like polymers does not exclude the product from Heading 4504. Consequently, the products are eligible for the 5% GST rate prescribed under the relevant notification.
Reasoning
The Authority relied on the **General Rules for Interpretation** of the Customs Tariff, noting that Heading 4504 specifically covers agglomerated cork with or without binding substances. It determined that the essential character of the product is derived from cork, and the binding agent does not change its classification. The Authority clarified that the botanical origin of the raw material is irrelevant for classification under Heading 4504. It also noted that the **inverted duty refund** question was rejected as it falls outside the scope of matters eligible for an advance ruling under Section 97(2).
Provisions relied on
- Section 97(2) of the CGST/RGST Act, 2017
- Section 102 of the CGST/RGST Act, 2017
- Section 103(1) of the CGST/RGST Act, 2017
- Section 104(1) of the CGST/RGST Act, 2017
- Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025
- First Schedule to the Customs Tariff Act, 1975
For the practitioner
This ruling confirms that **rubberised or agglomerated cork sheets** are classifiable under HSN 4504 and eligible for the 5% concessional GST rate, regardless of the binding agents used. It provides a strong precedent for manufacturers of composite cork products to resist departmental attempts to reclassify such goods under higher-taxed rubber categories. However, practitioners should note that the Authority **refused to rule on inverted duty refund eligibility**, maintaining that such claims are outside the scope of advance ruling proceedings.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/5-order_16_balsariya_agencies.pdf
Legibility of the scan, as read: high.
Prepared 11-10-2026.
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