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2018 (7) TMI 391 - AAR - GSTClassification of goods - Polypropylene Leno Bags - Applicant is of the opinion that the PP Leno Bags manufactured is classifiable under Tariff Head 6305 33 00 of the GST Tariff which is aligned to the First Schedule of the Customs Tariff Act, 1975 - Held that - To be included in Chapter 63, the width of the tapes, manufactured from Plastics or articles thereof of Chapter 39, used to weave the fabric should be less than or equal to 5mm and should not be impregnated, coated, covered or laminated with plastics or articles thereof, of chapter 39 - From the explanatory notes and clarification provided for determination of classification of goods it is seen that two more factors are to be considered, namely, the width of the tape used in the weaving and whether or not there is a layer/lining in these bags - The specifications of the PP Leno Bags being manufactured by the Applicant, therefore, become an important feature for determining their classification for the purpose of GST. Ruling - PP Leno Bags , if specifically made from woven Polypropylene fabric using strips or the like of width not exceeding 5 mm and without any impregnation, coating, covering, or lamination with plastics, are to be classified under Tariff Sub Heading 6305 33 00.
Issues: Classification of Polypropylene Leno Bags under CGST/WBGST Acts
Issue 1: Admissibility of Advance Ruling The Applicant, a manufacturer of Polypropylene Leno Bags, sought a ruling on the classification of the goods under the CGST/WBGST Acts. The application was admitted under Section 97(2)(a) of the said GST Act as the question raised had not been decided or was pending before any authority. Issue 2: Classification of Polypropylene Leno Bags The Applicant manufactures Polypropylene Leno Bags primarily used for packing various products. The composition includes Polypropylene, Linear Low Density Polyethylene, and Color Master Batch. The manufacturing process involves extrusion, weaving, and stitching to form the bags. The Applicant believed the bags should be classified under Tariff Head 6305 33 00 of the GST Tariff. Issue 3: Changes in Tariff Classification Before GST implementation, the Applicant cleared the bags under different Tariff Sub-Headings for domestic and export markets. The Applicant later shifted to a single Tariff Sub-Heading post-GST implementation without citing reasons for the change, leading to potential dual classification issues. Issue 4: Consideration of Test Reports and Subsidy The Applicant submitted test reports and a subsidy communication related to the bags. However, the reports were specific to samples provided and had restrictions on reproduction for litigation purposes. The Applicant also availed a subsidy for modernization despite clearing the bags under a different chapter for Central Excise purposes. Issue 5: Interpretation of Tariff Codes There was a lack of a specific Tariff Code for PP Leno Bags. The classification under Tariff Sub-Headings 3923 29 90 and 6305 33 00 was discussed in detail, emphasizing the need for clarity on product composition and specifications to determine the correct classification. Issue 6: Compliance with Explanatory Notes and Specifications Explanatory notes and specifications from the Bureau of Indian Standards were crucial in determining the classification of PP Leno Bags. Factors such as tape width and the presence of a lining in the bags were highlighted as essential features for classification. Judgment The ruling stated that PP Leno Bags made from woven Polypropylene fabric using strips not exceeding 5 mm in width and without any impregnation, coating, covering, or lamination with plastics should be classified under Tariff Sub Heading 6305 33 00. This classification was subject to the provisions of the GST Act unless declared void under specific sections. This detailed analysis covered the issues of admissibility, classification, changes in Tariff codes, consideration of test reports and subsidies, interpretation of Tariff codes, compliance with explanatory notes, and the final judgment on the classification of Polypropylene Leno Bags under the CGST/WBGST Acts.
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