2019 (4) TMI 1939 - AAR - GST

Classification of goods - rate of GST - non-woven bags made up of polypropylene manufactured by the applicant and the price of which is below ₹ 1000/- per unit - Whether the product manufactured by the applicant will fall under Chapter 63 Heading 6305 or otherwise? - HELD THAT - The Sub-heading 6305 33 00 includes sacks and bags, of a kind used for the packing of goods of man-made textile materials, other than flexible intermediate bulk containers but of polyethylene or polypropylene strip or the like. The article falling under sub-heading are taxed at 5%, if their sale value does not exceed ₹ 1000/- per piece, otherwise taxed at 12%. But the PP non-woven bags manufactured by the applicant are not made up of polypropylene strip rather they are carved out of sheets through cutting - Heading 3923 articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics. The goods covered under this Heading are taxable at 18%. Polypropylene (PP), also known as polypropene, is a thermoplastic polymer used in a wide variety of applications. It is produced via chain-growth polymerization from the monomer propylene. Polypropylene belongs to the group of polyolefins and is partially crystalline and non-polar. As per this definition, it is amply clear that the PP non-woven bags fall under the category of plastics - Also, Circular No. 80/54/2018-GST issued by Tax Research Unit, Department of Revenue, Ministry of Finance, Government of India dated 31.12.2018 clarifies that Polypropylene woven and non-woven bags and PP woven and non-woven bags laminated with BOPP would be classified as plastic bags under HS code 3923 and would attract 18% GST.

Summary

Issues:
Determining the correct GST rate and HSN Code for non-woven bags made of polypropylene with a price below ?1000 per unit.

Analysis:

Business Activity:
The applicant, a partnership firm engaged in manufacturing non-woven bags, sought clarification on the GST rate and HSN Code applicable to their products.

Submission of the Applicant:
The applicant purchases non-woven fabric rolls from the market, which are then converted into sheets through cutting and printing before being sealed by machines using a heating process.

Questions on which ruling is sought:
The applicant specifically inquired about the GST rate and HSN Code for non-woven bags made of polypropylene with a price below ?1000 per unit, questioning if the product falls under Chapter 63 Heading 6305.

Discussion:
Chapter 39 of the GST Tariff covers plastics and articles thereof, while Chapter 63 pertains to other made-up textile articles. The sub-heading 6305 33 00 includes sacks and bags made of man-made textile materials, taxed at 5% if the sale value is below ?1000 per piece.

Finding:
The Authority for Advance Ruling determined that the PP non-woven bags manufactured by the applicant fall under Heading 3923 in the sub-heading 3923 29 90, classified as plastic bags and taxable at 18% GST.

Conclusion:
The ruling clarifies the classification and tax rate applicable to the applicant's PP non-woven bags, providing clarity on their GST liability.