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2019 (5) TMI 1398 - AAAR - GSTClassification of goods - rate of tax - Polypropylene Non-woven Bags - whether classified under Sub Heading 3923 29 or not - taxability at 18 % rate under Serial No. 108 of Schedule III of Notification no. 01/2017-C.T (Rate) dated 28-06-2017 under the CGST Act, 2017 Notification No.1125-FT dated 28/06/2017 - challenge to AAR decision - HELD THAT - The P P Non-woven bags manufactured by the Applicant from Non-woven fabric under HSN 5603 falls under HSN 6305 33 00 and the applicable rate for the bags of value not exceeding ₹ 1000/ per piece is taxable at the rate of 5% under Serial No. 224 of Schedule-I of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 and Serial No. 224 of Schedule-I of Notification No 1125-FT dated 28/06/2017 under WBGST Act, 2017. In the instant case the polypropylene non-woven bags are manufactured from the non-woven polypropylene fabrics. Hence, the WBAAR erred in holding that PP Non-woven Bags , specifically made from non woven Polypropylene fabric are plastic goods to be classified under Sub Heading 3923 29. The decision of Advance Ruling is modified - application allowed in part.
Issues: Classification and Rate of Tax for Polypropylene Non-woven Bags under GST Act
Issue 1: Classification of Polypropylene Non-woven Bags The Appellant, a manufacturer of Polypropylene Non-woven Bags, sought a ruling on the classification and tax rate applicable to their goods under the GST Act. The WBAAR classified the bags as plastic goods under Sub Heading 3923 29, taxed at 18%. The Appellant contended that the bags should be classified under heading 6305 39 00 as made-up textile articles, not plastic goods. Issue 2: Interpretation of Customs Tariff The Appellant argued that the non-woven bags should be considered as textile articles based on Section Note 7 of Section XI of the Customs Tariff, as the bags are made from processed non-woven fabric. They cited relevant case law to support their interpretation of the classification. Issue 3: Nature of Polypropylene Non-woven Fabrics The Appellant asserted that polypropylene non-woven fabrics are textile materials, not plastics, relying on the definition of "textile" provided by the Hon'ble Apex Court. They argued that the process of forming the fabric did not involve molding like traditional plastics, thus should not be classified under Chapter 39 of the Customs Tariff. Issue 4: Common Parlance Interpretation The Appellant contended that the bags should be considered as "cloth bags" based on common parlance usage, supported by various court cases. They emphasized the importance of interpreting expressions in their popular or common sense. Issue 5: Comparison with Previous Rulings The Appellant highlighted rulings from other Advance Ruling authorities classifying similar bags under heading 6305 and subject to GST. They argued against the reliance on a previous ruling by the WBAAR concerning polypropylene leno bags, stating that the bags should be classified as textile products under heading 5603. Conclusion The WBAAR, after considering the submissions and examining the manufacturing process of the bags, concluded that the Polypropylene Non-woven Bags fall under HSN 6305 33 00 and are taxable at 5% for bags not exceeding a certain value. The WBAAR modified the original ruling based on the misinterpretation of the primary raw materials used in manufacturing the bags. The Appeal was disposed of accordingly, with directions to inform both parties of the decision.
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