2019 (10) TMI 314 - AAR - GST

Classification of goods - Laminated High Density Poly Ethylene HDPE Woven Geomembrane for water proof Lining Type-Il, IS 15351 2015 - whether classifiable under HSN Code 5911 10 OO or under HSN Code 3926 90 99? - HELD THAT - The, Laminated High Density Poly Ethylene HDPE Woven Geomembrane for water proof lining IS 15351 2015 , are made from HDPE Tapes/ Strips of less than 5 mm which are specifically covered under Heading 5404 as Synthetic Textile Material and the specially woven fabrics from the said HDPE Tapes/Strips are covered under Heading 5407 20. It is the said HDPE Woven Fabrics which is referred as Woven Fabrics made from Synthetic Textile Material which is subjected to LDPE Coating and Lamination referred as Sandwich Lamination. After the said process two or more pieces of said Sandwiched Laminated Geomembrane fabrics are joined/ seamed together by a suitable heat air blower scaling process keeping into the requirement of the customer based on which the said fabrics are cut and joint and cut sealed as per standard sealing process to be used as pond liner. The said Laminated Coated Fabrics is used for technical purpose and is specifically covered under scope of Heading 5911 10 00. The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. According to Rule 3(a), a heading which provides the most specific description shall be preferred to heading providing a more general description. The Laminated High Density Poly Ethylene HDPE Woven Geomembrane for water proof lining - IS 15351 2015 , made from HDPE Tapes/Strips of less than 5 mm and specially woven fabrics from the said HDPE Tapes/ Strips and subjected to LDPE Coating and Lamination referred as Sandwich Lamination and further fit for using as pond liner laminated textiles products and correctly classifiable under HSN Code 5911.

Summary

Issues Involved:
1. Classification of "Laminated High Density Poly Ethylene HDPE Woven Geomembrane for Water Proof Lining Type-II, IS:15351:2015" under HSN Code 5911 10 00 or HSN Code 3926 90 99.
2. Determination of the correct GST rate applicable to the product.

Issue-Wise Detailed Analysis:

1. Classification of the Product:

Applicant's Submission:
The applicant, M/s. Emmbi Industries Ltd., contended that their product, "Laminated High Density Poly Ethylene HDPE Woven Geomembrane for Water Proof Lining Type-II, IS:15351:2015," should be classified under HSN Code 5911 10 00 as "Textile Fabrics Coated, Covered or Laminated with Plastics, of a Kind Used for Technical Purposes" with IGST @ 12% [CGST @ 6% + UGST @ 6%]. They argued that the product is known in the market as agro textiles and is used for water-proof lining in ponds, canals, and other water bodies, primarily for agricultural purposes.

Manufacturing Process:
The manufacturing process involves several stages:
- Tape/Strip Extrusion: HDPE granules are extruded, slitted, and stretched to produce tapes/strips of width 2.1 mm to 3.7 mm.
- Fabric Weaving: The tapes/strips are woven into HDPE woven fabrics on circular looms.
- Liner Film Extrusion: Polyethylene granules are extruded to produce a film.
- Lamination Coating: The HDPE woven fabric is laminated on both sides with LDPE.
- Sealing: The laminated fabrics are joined/sealed together by a heat air blower sealing process.

Classification Flow:
- HDPE Tapes/Strips: Classified under HSN 5404 90 20.
- Woven Fabrics: Classified under HSN 5407 20.
- Laminated Coated Fabrics: Classified under HSN 5911 10 00.

Applicant's Justification:
The applicant referred to various notifications and publications to substantiate their claim:
- Notification No. 54/2015-2020: Issued by the Directorate General of Foreign Trade, recognizing the product as Technical Textiles.
- Publication by Ministry of Textiles: Recognizing "Geomembranes" as part of the Technical Textile Segment.

Authority's Discussion:
The Authority examined the manufacturing process and the classification flow provided by the applicant. They noted that the product is made from HDPE tapes/strips of less than 5 mm, which are woven into fabrics and then laminated. The product is used for technical purposes, specifically for water-proof lining.

HSN Code 3926:
The Authority considered HSN Code 3926 90 99, which refers to "Other Articles of Plastics." However, they noted that Chapter Note 1 to Chapter 39 excludes textile materials of Section XI from the scope of plastics.

Conclusion:
The Authority concluded that the product "Laminated High Density Poly Ethylene HDPE Woven Geomembrane for Water Proof Lining Type-II, IS:15351:2015" is correctly classifiable under HSN Code 5911 10 00 as "Textile Fabrics Coated, Covered or Laminated with Plastics, of a Kind Used for Technical Purposes."

2. Determination of the Correct GST Rate:

The classification under HSN Code 5911 10 00 implies that the product attracts IGST @ 12% [CGST @ 6% + UGST @ 6%].

Advance Ruling:
The Authority for Advance Ruling pronounced that the "Technical Laminated Fabrics woven out of strips below 5 mm fit for use as Pond liner are 'Laminated Textiles Products' and are covered under HSN Code 5911."