Key Pointers –

• The Applicant, M/s. Zuha Leather Private Limited, is carrying out the activity of tanning process on hides and skins (Chapter 41) and selling the finished product viz., finished leather both in local and as well as overseas markets by way of exports. Apart from their own manufacturing activity, the Applicant is carrying out job tanning (work) i.e., carrying out the activity of tanning process on the hides and skins owned by others.
• The issue involved here is whether the activity of treatment or processing undertaken on goods owned by other person falls within the purview of Heading 9988?
• The AAR held that it is clear that the Applicant in the instant case is the job worker, who has to process the raw hide supplied by the principal and after tanning process (job work) return the same to the principal. It is pertinent to note in the instant case that both the raw material (hides & skins) and finished product (finished leather) fall in Chapter 41. 
• if the activity of the Applicant is a service by way of treatment or processing undertaken by a person on goods belonging to another registered person, it is rightly classifiable as processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and as per (i)(e) (para 6.7) and applicable CGST rate is 2.5% and applicable SGST rate is 2.5%.
• However, if the activity of Applicant is undertaken on physical inputs (goods) which are owned by persons other than those registered under the CGST Act, then it falls within entry at item (iv) and applicable CGST rate is 9% and applicable SGST rate is 9%.