2018 (8) TMI 874 - AAR - GST

Classification of goods - tarpaulins made from High Density Polyethylene, a woven fabric - whether HDPE Woven Tarpaulin will be classified under HSN 6306 of the GST Tariff? Held that - Since HDPE falls under Chapter 39, keeping in mind the Section Notes and the Tariff Heading description it is, therefore, important to ascertain, both, the width of the fabric strip that goes into the weaving and whether or not the tapes are impregnated, coated, covered or laminated with plastics or articles thereof, of Chapter 39 - Nowhere in the Application, nor in the report submitted by the officer concerned are these two conditions, namely, the width of the tape used for weaving and whether or not the tapes are impregnated, coated, covered or laminated with plastics or articles thereof, of chapter 39, stated. Tarpaulins made of HDPE woven fabrics are, therefore, laminate of two materials HDPE tapes woven into fabrics and LDPE sheets/film, and therefore, as per Section Note 1(h) of Section XI (Textile and Textile Articles) cannot fall under Chapter 63. Ruling - Tarpaulins made of HDPE woven fabrics will not be classified under HSN 6306 of the GST Tariff.

Issues: Classification of "HDPE Woven Tarpaulin" under HSN 6306 of the GST Tariff

Analysis:
1. The Applicant, a manufacturer of tarpaulins made from High Density Polyethylene (HDPE) woven fabric, sought a ruling on the classification of "HDPE Woven Tarpaulin" under HSN 6306 of the GST Tariff. The ruling was sought under Section 97(2)(a) of the CGST/WBGST Acts, as the question was not previously decided by any authority under the GST Act.
2. The Applicant distinguished between tarpaulins made from HDPE woven fabrics and plastic tarpaulins, stating that the former involves weaving HDPE using power looms after textile processing, while the latter is made from plain plastic sheets cut into shapes and stitched. The Applicant argued that HDPE Woven Tarpaulins, being textile articles, should be classified under HSN 6306.
3. Supporting documents provided by the Applicant included an Eligibility Cum Registration Certificate for MSMEs in the Textile Sector, a letter confirming technical unit allotment, and a license issued by the Bureau of Indian Standards for the product "Tarpaulin made from High Density Polyethylene Woven Fabric, Multi Layer."
4. The issue arose whether the licenses obtained from the Ministry of Textiles and the Bureau of Indian Standards align with the Tariff Classification under the GST.
5. Reference was made to the Explanatory Notes of the Rate Notification of GST, which highlighted the rules for interpreting the Customs Tariff Act and its applicability to GST.
6. Noteworthy was Note 1(g) and Note 1(h) to Section XI of the Tariff Act, excluding certain plastic materials from the textile category. The analysis emphasized the importance of the width of fabric strips used in weaving and the absence of plastic impregnation for classification under Chapter 63.
7. Considering that HDPE falls under Chapter 39, the width of fabric strips and the absence of plastic impregnation were deemed crucial for classification.
8. Specifications under IS 7903:2017 required lamination of HDPE woven fabrics with LDPE film, as well as specific manufacturing processes, which were detailed in the Applicant's submission.
9. Specifications under IS 6899:1997 set standards for HDPE woven fabrics, emphasizing breaking load requirements per 5 cm width of the tape.
10. The officer's report confirmed the Applicant's manufacturing processes and classification of tarpaulins under HSN 3926 90 99 in tax invoices before and after GST implementation.
11. The ruling concluded that "Tarpaulins made of HDPE woven fabrics" do not fall under HSN 6306 of the GST Tariff due to the laminate structure involving HDPE tapes and LDPE sheets/film, as per Section Note 1(h) of Section XI.

Conclusion:
The ruling clarified the classification of "HDPE Woven Tarpaulin" under the GST Tariff, emphasizing the distinction between textile and plastic materials and the specific requirements for classification under Chapter 63. The decision was based on a detailed analysis of the manufacturing processes, specifications, and legal provisions governing tariff classification under the GST Act.

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