2019 (6) TMI 1064 - AAR - GST

Classification of goods - rate of tax - packaging materials viz cut to size blanks manufactured by TCPL with corrugation and having requisite creases at designated places, supplied to the Customers in flat form with folding - classified under Tariff Item Code no 4819 and subject to GST@ 12% or not? - HELD THAT - T he samples in respect of packaging materials viz. cut to size blanks with corrugation and having requisite creases at designated places and we find that the said products are with corrugations/ perforations and therefore foldable on three sides and glued on the fourth side. These blanks can be folded into cartons at the requisite creases manually or mechanically without any further processes. We also find that the said blanks can be used by their customers only as cartons/ boxes, after the folding takes place, without the use of technical expertise. We further find that the said products are dispatched by the applicant to their customers only when they receive orders for cartons/ boxes for packing in DVD players belonging to their customer. Hence at the time of receiving the order and dispatching of the said products both, the applicant and their customer are aware that what will be sent by the applicant and received by the customers are cartons/ boxes. We agree with the contention of the applicant that the essential character of such items remains as cartons or boxes to hold goods, though certain manual or mechanical activity has to be carried out on the same to achieve the required objective. We also agree the said packaging materials supplied to their customers in flat form cannot be used by the customers in any form other than as cartons or boxes to hold goods. The case laws cited by the applicant in respect of ATUL GLASS INDUSTRIES LTD. VERSUS COLLECTOR OF CENTRAL EXCISE 1986 (7) TMI 90 - SUPREME COURT support their contention that the packaging materials viz cut to size blanks and supplied in flat form manufactured by TCPL with corrugation and having requisite creases at designated places, supplied in flat form shall be classifiable under Tariff Item Code 4819 chargeable to GST at 12% and we agree with the same. The packaging materials viz. cut to size blanks manufactured by TCPL with corrugation and having requisite creases at designated places, supplied to the Customers in flat form with folding, can be categorized under Tariff Item Code no 4819 and subject to GST @ 12%. Classification of goods - rate of tax - printed materials which are in flat form, e.g. hanging cards, without creases having corrugation and supplied to customer in flat form - HELD THAT - No doubt that they are clearly covered under Chapter Heading 4823 and chargeable to GST @ 18%.

Summary

Issues Involved:
1. Classification and GST rate of packaging materials (cut to size blanks with corrugation and requisite creases, supplied in flat form).
2. Classification and GST rate of printed materials in flat form (e.g., hanging cards, without creases and having corrugation).

Issue-wise Detailed Analysis:

1. Classification and GST Rate of Packaging Materials:
The applicant, TCPL Packaging Limited, sought an advance ruling on whether packaging materials, specifically cut to size blanks with corrugation and requisite creases supplied in flat form, fall under Tariff Item Code 4819 and are subject to 12% GST. The applicant contended that these materials, although supplied flat, are ultimately used as cartons or boxes to hold goods and should be classified under Chapter Heading 4819, which pertains to cartons, boxes, and cases of corrugated paper or paperboard.

The applicant referenced Rule 2(a) of the General Rules for the Interpretation of the Harmonised System, which states that incomplete or unfinished articles that have the essential character of the complete or finished article should be classified as such. The applicant argued that the transformation of the flat packaging materials into cartons or boxes is a simple process that does not require technical expertise or sophisticated machinery.

The Authority for Advance Ruling (AAR) examined the samples provided and agreed with the applicant. The AAR noted that the essential character of the packaging materials remains as cartons or boxes to hold goods, even though some manual or mechanical activity is needed to achieve the final form. The AAR concluded that the packaging materials in flat form are classifiable under Tariff Item Code 4819 and subject to 12% GST.

2. Classification and GST Rate of Printed Materials:
The applicant also sought a ruling on the appropriate categorization and GST rate for printed materials in flat form, such as hanging cards, without creases but having corrugation. The applicant had been classifying these items under Chapter Heading 4823, which pertains to other paper, paperboard, cellulose wadding, and webs of cellulose fibers, cut to size or shape, and had been paying 18% GST.

The AAR reviewed the samples and found that these items are indeed articles of paper cut to size or shape and do not fit the description of cartons or boxes. The AAR agreed with the applicant's classification under Chapter Heading 4823 and confirmed that these printed materials are subject to 18% GST.

Conclusion:
The AAR ruled that the packaging materials (cut to size blanks with corrugation and requisite creases, supplied in flat form) are classifiable under Tariff Item Code 4819 and subject to 12% GST. The printed materials in flat form (e.g., hanging cards, without creases and having corrugation) fall under Chapter Heading 4823 and are subject to 18% GST.