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2018 (11) TMI 663 - AAAR - GSTClassification of goods - PP Leno Bags - whether classified under CTH 39232990 or under CTH 63053300 - Benefit of Duty Drawback - Doctrine of equitable estoppels - Held that - Polypropylene Leno Bags are manufactured by the Respondent by weaving polypropylene strips (tapes). Polypropylene is a variety of plastic and it is a fact that the Respondent declared the Polypropylene Leno Bags voluntarily under Tariff Heading 3923 29 90 and enjoyed the duty drawback. No cogent reason could be offered by the Respondent as to why and how the Tariff Heading is now sought to be changed from 3923 29 90 to 6305 33 00. Since the Respondent declared that Polypropylene Leno Bags manufactured by weaving polypropylene strips (tapes) under Tariff Heading 3923 29 90 for claiming duty drawback, and no explanation could be offered as to why the Tariff Heading should be changed now to 6305 33 00, it is not permissible under the doctrine of equitable estoppels that the Respondent is allowed to take such a divergent stand now. Ruling - The item Polypropylene Leno Bags (PP Leno Bags) manufactured by the respondent be classified under Tariff Heading 39232990.
Issues: Classification of PP Leno Bags under GST Tariff
Detailed Analysis: 1. Issue: Classification of PP Leno Bags under GST Tariff. - Background: M/s. Mega Flex Plastics Ltd. sought an Advance Ruling on the classification of PP Leno Bags under the GST Tariff. - Ruling: The Advance Ruling Authority classified PP Leno Bags under Tariff Sub-Heading 6305 33 00 based on specific criteria. 2. Grounds of Appeal by Appellant: - i) Appellant argued that the Advance Ruling Authority erred in interpreting Chapter Notes of the Tariff Act. - ii) Appellant contended that the word 'woven' should be considered as an exclusion word. - iii) Appellant highlighted the discrepancy in the classification of the product under different Tariff Headings. 3. Appellant's Arguments: - Appellant emphasized the significance of the Advance Licence issued by DGFT classifying the product under a specific Chapter. - Appellant invoked the rule of estoppel by election regarding the change in Tariff Heading by the Respondent. 4. Respondent's Submissions: - Respondent explained the manufacturing process of PP Leno Bags involving woven polypropylene strips. - Respondent cited relevant Tariff Act notes and industry standards to support their classification. - Respondent mentioned the international classification of polypropylene leno bags under a specific HSN code. 5. Test Reports and Examination: - Test reports submitted by the Respondent were considered, but some were not deemed as supporting evidence. - The examination included arguments from both parties and a thorough review of the case. 6. Judicial Precedent and Decision: - The judgment of the Madhya Pradesh High Court regarding the classification of similar products was cited. - The West Bengal Authority for Advance Ruling was criticized for not considering the relevant judicial precedent. - The doctrine of equitable estoppels was invoked to prevent the Respondent from changing the Tariff Heading. 7. Final Decision: - The Advance Ruling was set aside, and PP Leno Bags were classified under Tariff Heading 3923 29 90. - The Appellant's appeal was allowed, and the matter was disposed of accordingly. This detailed analysis covers the issues related to the classification of PP Leno Bags under the GST Tariff, including the arguments presented by both parties, relevant legal provisions, industry standards, test reports, judicial precedents, and the final decision of the Appellate Authority for Advance Ruling, West Bengal.
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