2018 (10) TMI 1872 - AAR - GST

Classification of goods - man-made textile Non-Woven Geo bags from Polypropylene - classified under heading - 6305 having description or otherwise? - HELD THAT - CHAPTER 63 of the first schedule to the Customs Tariff Act 1975 covers Other made up textile articles; sets; worn clothing and worn textile articles; rags and heading 6305 provides for SACKS AND BAGS OF A KIND USED FOR THE PACKING OF GOODS. Further subheading 6305 33 00 covers sacks and bags of polyethylene or polypropylene or the like - Sr. No. 224 of schedule I of Notification No. 01/2017-CentraI Tax (Rate) dt.28.06.2017 provides for CGST @2.5% on goods of chapter 63 provided the said goods are of value not exceeding Rs. 1000/- per piece. Whereas S.No.171 of Schedule II of Notification No.01/2017-CentraI Tax (Rate) dt.28.06, 2017 provides for CGST @6% on goods of chapter 63 provided the said goods are sets of sale value exceeding Rs. 1000/- per piece. Thus in the instant case the sacks and bags (of a kind used for packing of goods) are covered by chapter 63 and the same are liable to GST as under (a). - 5% IGST OR 2.5% CGST 2.5% SGST S.No. 224 of schedule I of Notification No.01/2017-Central Tax (Rate) dt.28.06.2017 refers where the goods are of value not exceeding Rs. 1000/- per piece. (b). 12% IGST OR 6% CGST 6% SGST S.No.171 of Schedule II of Notification No. 01/2017-CentraI Tax (Rate) dt.28.06.2017 refers where the goods are sets of value exceeding Rs 1000/-per Piece.

Summary

Issues Involved: Classification of man-made textile Non-Woven Geo bags under HSN code 6305 for GST purposes.

Detailed Analysis:

Issue 1: Classification of Non-Woven Geo bags under HSN code 6305
The applicant, a manufacturer of man-made textile Non-Woven Geo Textile Bags from Polyester & Polypropylene used in Coastal Protection, sought an advance ruling on the classification of their product under heading 6305 of the GST tariff. The bags are designed for filling with soil and used in the construction of marine and hydraulic structures for erosion protection. The applicant referred to relevant notifications and previous rulings to support their contention that the product falls under HSN code 6305 and should be taxed accordingly.

Issue 2: Interpretation of Relevant Notifications and Rulings
The applicant relied on Notification No. 01/20117 Central Tax (Rate) and State Notification 360/2017, which specified different tax rates based on the sales value of the product under HSN code 6305. Additionally, reference was made to a clarification issued by the Commissioner of CGST and Central Excise, Madurai, and a previous ruling by AAR Kerala regarding the classification of similar products under the GST tariff. These references were crucial in determining the applicable tax rates for the Non-Woven Geo bags.

Issue 3: Examination of Tariff Acts and Classification Criteria
A detailed analysis of various statutes, including the Customs Tariff Act, 1975, the Central Excise Tariff Act, 1985, and the Integrated Goods & Service Tax Act, 2017, was conducted to ascertain the appropriate classification of the Non-Woven Geo bags. The product was found to primarily fall under chapter heading 6305 in all relevant acts, supporting the applicant's argument for classification under this heading for GST purposes.

Issue 4: Authority's Findings and Ruling
After considering the facts and records of the case, the Authority determined that the Non-Woven Geo bags indeed fall under chapter 63 of the Customs Tariff Act, specifically under the heading covering sacks and bags used for packing goods. The applicable GST rates were specified based on the value of the goods per piece, as outlined in the relevant notifications. The ruling clarified that the bags would attract either 5% or 12% GST, depending on the sale value per piece, as per the provisions of the notifications.

Conclusion:
The Authority for Advance Ruling, Haryana, provided a comprehensive analysis of the classification of man-made textile Non-Woven Geo bags under HSN code 6305 for GST purposes. By examining relevant notifications, previous rulings, and tariff acts, the Authority made a definitive ruling on the applicable GST rates based on the value of the goods per piece. This detailed judgment offers clarity on the tax treatment of such products and sets a precedent for similar cases in the future.