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2018 (9) TMI 1343 - AAR - GSTClassification of goods - Polypropylene Leno Bags (or mesh bags) - Applicant is of the opinion that the PP Leno Bags manufactured is classifiable under Tariff Head 63053300 of the GST Tariff which is aligned to the First Schedule of the Customs Tariff Act 1975. Held that - From the explanatory notes and clarification provided for determination of classification of goods it is seen that two main factors apart from the raw materials 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 - IS 16187 2014 issued by the Bureau of Indian Standards specifies that PP Leno Woven sacks for packaging and storage of fruits and vegetables should have range of width from 2.0 to 2.5 mm. Since the Ruling sought for is specifically for PP Leno Bags used for packing agricultural produce such as potato and onions the BIS for fruits and vegetables is considered solely. Ruling - Leno Bags made by the Applicant and declared by them to be 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 63053300.
Issues Involved: Classification of Polypropylene Leno Bags under the GST Act
Issue 1: Classification of Polypropylene Leno Bags The applicant, a manufacturer of Polypropylene Leno Bags, sought a ruling on the classification of these bags under the CGST/WBGST Acts. The bags are used for packing agricultural produce and are composed of Polypropylene, Calcium, and Color Master Batch. The manufacturing process involves weaving Polypropylene fabric using strips not exceeding 5mm in width without any impregnation, coating, or lamination with plastics. The applicant argued that the bags should be classified under Tariff Sub Heading 63053300 of the GST Tariff, aligning with the Customs Tariff Act. Issue 2: Interpretation of Tariff Codes and Section Notes The absence of a specific Tariff Code for Leno Bags led to an analysis of relevant Tariff Sub Headings under the GST Tariff. It was noted that the product could fall under either Tariff Code based on the provided descriptions. The applicant referred to Section and Chapter Notes to support their classification argument, highlighting exclusions for certain types of plastics and woven fabrics from being classified as textiles. The applicant's interpretation emphasized the width of the tapes used in weaving and the absence of plastic impregnation as key factors in determining classification. Issue 3: Compliance with Bureau of Indian Standards (BIS) Specifications The applicant's claim regarding compliance with IS 16187:2014 standards for PP Leno Woven sacks used for packaging fruits and vegetables was considered. The BIS specifications indicated a specific width range for such sacks, which aligned with the applicant's manufacturing process and product characteristics. Given the bags' intended use for packing agricultural produce like potatoes and onions, the BIS standards were deemed relevant in the classification decision. Judgment Summary: The Authority for Advance Ruling accepted the applicant's interpretation and ruled that Polypropylene Leno Bags made without impregnation, coating, or lamination with plastics and using strips not exceeding 5mm in width are to be classified under Tariff Sub Heading 63053300. The ruling's validity is subject to the provisions under Section 103 of the GST Act unless declared void under Section 104(1). The decision was based on a thorough analysis of Tariff Codes, Section Notes, and BIS specifications, emphasizing the specific characteristics of the bags in question for accurate classification under the GST Tariff.
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