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2019 (3) TMI 1472 - AAR - GSTClassification of goods - rate of tax - Polypropylene Mats (Floor Mats) - whether classified under 4601 or otherwise? - whether CGST / SGST Tax Rate is to be considered as 2.5% or 6%? - Held that - The expression plaiting materials covers monofilament, strip and the likes of plastics . Further, Chapter 46 contain articles made by interlacing, weaving or by similar methods of assembling unspun materials particularly including monofilament and strip and the like of plastics of Chapter 39 and that it covers products of plaiting materials, bound together in parallel strands or woven, in sheet form, whether or not being finished articles for example mats, matting, screens either obtained directly from plaiting materials or products of plaiting materials - In the present case and as submitted by the applicant, plastic mat is manufactured out of plastic tubes of diameter 1.5 mm inter-woven in to sheets forming mats. The plastic tubes of diameter of 1.5 mm used for the manufacture of PP mat would be covered within the expression Plaiting materials including strips and the likes of plastics as per Chapter Note 1 of chapter 46 and the terms of heading 4601 that covers plaiting materials bound together in parallel strands or woven in sheet form as finished articles (for example, mats, mattings, screens) - In the instant case we find that the extruded fine plastic tubes are woven into sheet forms and finished into articles as mats and hence covered in heading 4601. We further find from the note to heading 4602 that the mats being products of plaiting materials, which have acquired the character of finished articles by reason of being bound together in parallel strands or woven in sheet form, are excluded from the scope of heading 4602. Hence the items in question do not go beyond the heading 4601. Circular No. 4/2018 dated 24.01.2018, amending All Industry Rates of Duty Drawback effective from 25.01.2018 (Customs) issued from File No. 609/12/2018- DBK re-confirms the classification of Polypropylene Mats under tariff Item 460101 in Part 2 (c) of the same and deletes any other entry from the drawback schedule for Polypropylene Mats. On comparison of the HSN and First Schedule to the Indian Customs Tariff, we find that there is an inadvertent error in the First Schedule to the Indian Customs Tariff at heading 4601. The HSN contains two single dash entries in heading 4601 that divides the items into two groups (i) Mats, matting and screens of vegetable materials and (ii) Other In the Indian Customs Tariff however, the second single dash entry - Other is missing. In the absence of the second single dash -Other after the tariff item 4601 29 00, all the tariff items having double dashes in the heading 4601 will come under the scope of single dash having the description Mats, matting and screens of vegetable materials and as a result, ambiguity arose as to whether mats made of plastic materials would fall outside the scope of heading 4601. If the single dash -Other is included after the tariff item 4601 29 00, in alignment with the HS, the mats made of plastics would fall under the sub-heading 4601 99 - Notwithstanding the above mentioned discrepancy, in pursuance of Note 1 to Chapter 46, the General Note 3 Of the Explanatory Notes of Chapter 46, and the terms of heading 4601, we come to the finding that the heading appropriate for Polypropylene Mats made from plaiting materials is 4601 and the relevant sub-heading is 4601 99. However as it is not necessary to go beyond four digit level for the purpose of this Advance Ruling, we hold that the product of manufactured by the applicant falls in heading 4601 of First Schedule of the Indian Customs Tariff Act, 1975. Other question not answered as the question is withdrawn by the applicant in view of Notification No. 6/2018 - Central Tax (Rate) -dated 25/01/2018.
Issues Involved:
1. Whether 4601 as the HSN Classification of Polypropylene Mats is correct? 2. If the answer to the above question is in the affirmative, whether entry No. 198A (inserted vide Notification No. 27/2017) is to be applied or Entry No. 103 should be considered for determining the CGST / SGST Tax Rate. Issue-Wise Detailed Analysis: 1. HSN Classification of Polypropylene Mats: The applicant, a manufacturer of Polypropylene Mats (PP Mats), sought clarification on whether the correct HSN classification for their product is 4601. The manufacturing process involves interweaving straws made from the extrusion of PP Granules. The mats are also known as 'Plastic Satranj'. The applicant argued that based on the duty drawback schedule and various notifications, Polypropylene Mats fall under HSN 4601. They cited multiple sources including: - Notification No.1/2017-Central Tax (Rate) - Circular No 4/2018 dated 24.01.2018 - Notification No.131/2016-Cus (NT), dt. 31-10-2016 - CESTAT judgment in Supreme Industries Ltd. VS Commissioner of Central Excise-2004-(170) ELT 432 = 2004 (5) TMI 378 - CESTAT, NEW DELHI The concerned officer concurred with the applicant, stating that the manufacturing process and the product description align with the definition of plaiting materials under Chapter 46, specifically HSN 4601. The Authority for Advance Ruling (AAR) examined the definitions and notes under Chapter 46, which include materials suitable for plaiting such as monofilament and strips of plastics. The AAR concluded that the Polypropylene Mats fit the description under HSN 4601 as they are made by weaving or binding parallel strands of plaiting materials. 2. Applicable Tax Rate: Initially, the applicant sought clarification on whether to apply entry No. 198A (2.5% CGST) or entry No. 103 (6% CGST) for the tax rate on Polypropylene Mats. However, this question was withdrawn by the applicant in light of Notification No. 6/2018 - Central Tax (Rate) dated 25/01/2018, which clarified the applicable tax rate. Conclusion: Order: 1. The HSN Classification of Polypropylene Mats is confirmed as 4601. 2. The question regarding the applicable tax rate was not answered as it was withdrawn by the applicant due to the clarification provided by Notification No. 6/2018 - Central Tax (Rate) dated 25/01/2018.
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