2018 (12) TMI 1090 - AAR - GST

Classification of goods - P P Leno Bags - whether classified under Tariff code 63053300 or otherwise? - Held that - In Chapter 39, in Tariff heading 3923, under sub-heading 39232990, PP sacks and bags are very well covered. There being a clear sub-heading in Chapter 39 assigned to PP Sacks and bags, the same can not be included in Chapter 63 and more specifically under subheading 63053300. Polypropylene Leno Bags, as stated by the applicant, are manufactured by weaving polypropylene strips (tapes), Linear Low Density Polyethylene (LLDPE) and Plastic Master Batch. Polypropylene is a wide variety of plastic. LLDPE is a plastic that is softer and more flexible and has lower tensile strength. These raw materials are made from Plastic Granules. The strips of plastic (polypropylene) are used for weaving PP Leno Bags which are clearly classifiable under Tariff Item 39232990 of GST Tariff. PP Leno Bags are classifiable under heading 39232990 and not under 63053300. It is a fact that both the headings bear reference to Sacks and Bags but, in view of the exclusion in the Chapter Note I(h) appearing under Chapter X , Woven Fabrics and articles thereof specified under Chapter 39 are not to be covered by the articles mentioned against the heading 63053300 - Further, as per the existing CBEC Revised Duty Drawback rates schedule applicable w.e.f. 01.10.2017, polypropylene woven fabrics/bags/sacks, whether or not laminated, with or without C.V. stabilization, with or without liners/fasteners are specifically classified under drawback chapter 39 under Tariff Item 392302 - The item under consideration being woven bags of polypropylene therefore merits classification under this Chapter as it stands today without any ambiguity. Ruling - The item Polypropylene Leno Bags (PP leno Bags) , be classified under GST Tariff Heading 3923 29 90 .

Summary

Issues: Classification of Polypropylene Leno Bags under GST Tariff Heading

Analysis:

1. Filing of Application: M/s. Utkal Polyweave Industries filed an application seeking an Advance Ruling on the 'Classification of P P Leno Bags' under Section 97 of CGST Act, 2017 & OGST Act, 2017. The application was admitted as the question raised was not decided by any authority under the GST Act.

2. Applicant's Submission: The applicant, engaged in manufacturing P P Leno Bags, claimed that their product should be classified under Tariff code 63053300. They detailed the manufacturing process and composition of raw materials used in making the bags.

3. Personal Hearing and Additional Submissions: During the personal hearing, the applicant's advocate argued that previous misclassification of goods does not prevent correct classification later. Reference was made to relevant judgments supporting this argument. The jurisdictional officers informed about a similar case in West Bengal where the classification of P P Leno Bags was under dispute.

4. Consideration of Submissions: The Authority considered all submissions and relevant facts. The key issue was to determine the correct HSN Code for the applicant's product. Despite certifications and standards compliance, the focus was on classification under the GST Tariff.

5. Ruling and Reasoning: The Authority ruled that P P Leno Bags should be classified under GST Tariff Heading '3923 29 90'. This decision was based on the exclusion of woven fabrics of plastics from Section XI, which includes textile articles. The ruling also considered the CBEC Revised Duty Drawback rates and relevant judgments supporting the classification decision.

6. Final Disposition: The ruling disposed of the application, providing the classification for Polypropylene Leno Bags. The applicant or jurisdictional officer could appeal to the Odisha State Appellate Authority for Advance Ruling within 30 days if aggrieved by the decision.