2019 (3) TMI 834 - AAR - GST

Classification of goods - rate of GST - Poly Propylene Leno Bags - Held that - As per Introduction to GST Tariff , Customs Tariff is adopted for classification of the goods that are not classified anywhere in GST tariff. To avoid classification disputes, notifications issued by Government indicate that Customs Tariff has been adopted for descriptive classification of goods under GST. The Section Notes, Chapter Notes and Rules of interpretation of Customs Tariff have also been adopted - the subject goods i.e. 'Poly Propylene Leno Bags' is classified under HS Code 3923 of the Customs Tariff. The 'Poly Propylene Leno Bags' is classified under HS Code 3923 of the Customs Tariff and, as per relevant chapter note of GST tariff, the tax is leviable @ 18% on supply of the subject goods i.e. 'Poly Propylene Leno Bags' - Further, as per the existing CBEC Revised Duty Drawback rates schedule applicable w.e.f.01.10.2017, polypropylene woven fabric/ bags/ sacks, whether or not laminated, with or without U. 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.

Summary

Issues:
Identification of correct classification of Poly Propylene Leno Bags among heading no. 63063300 and 39232990.
Identification of rate of duty applicable as per respective HSN of Poly Propylene Leno Bags.

Analysis:

Issue 1: Identification of correct classification of Poly Propylene Leno Bags

The applicant sought an advance ruling on the classification of Poly Propylene Leno Bags under heading no. 63063300 and 39232990. The ruling authority admitted the application under Section 97(2)(a) & (e) of the CGST/SGST Act, 2017. Despite the absence of the applicant during a scheduled hearing, the ruling proceeded based on the assumption that the subject sample provided was indeed Poly Propylene Leno Bags. The Customs Tariff was consulted, revealing that Poly Propylene Leno Bags fall under HS Code 3923, specifically under the category of "Sacks and bags" of plastics. It was concluded that the subject goods were correctly classified under HS Code 3923 of the Customs Tariff.

Issue 2: Identification of rate of duty applicable

To determine the rate of GST levied on the supply of Poly Propylene Leno Bags, the ruling authority referred to the corresponding HS Code 3923 of the GST Tariff. The relevant chapter note indicated a tax rate of 18% on the supply of such goods. Relying on a previous advance ruling by the Odisha Authority and the West Bengal Appellate Authority, it was established that Polypropylene Leno Bags are classified under GST Tariff Heading '39232990'. Additionally, the CBEC Revised Duty Drawback rates schedule from 01.10.2017 also supported the classification of woven bags of polypropylene under Chapter 39 without ambiguity. Consequently, the ruling determined that the supply of Poly Propylene Leno Bags would be subject to GST at 18% (CGST @ 9% and SGST @ 9%).

In conclusion, the ruling clarified the correct classification of Poly Propylene Leno Bags under HS Code 3923 and established the applicable GST rate of 18% for the supply of such goods.