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2021 (1) TMI 583 - AAR - GSTClassification of goods - product Non Woven Bags manufactured through the intermediate product Non Woven fabric - classifiable under Heading No. 5603 or under 6305 or under Heading No. 3923? - exemption under N/N. 01/2017-CT (Rate) and 01/2017-I.T. (Rate) dated 28.06.2017 as amended - HELD THAT - Applicant has relied upon decision of Hon ble Supreme Court of India in PORRITTS SPENCER (ASIA) LTD. VERSUS STATE OF HARYANA 1978 (9) TMI 72 - SUPREME COURT has stated that textile is woven fabric, which is emerged by weaving of yarn of cotton, silk, rayon or nylon and similar type of material. The said textile may be used for making apparel, bed sheet or tapestry or upholstery or as towel. Therefore, fabric made of other than the yarn of cotton, silk, rayon or nylon and similar type of material is not a textile. The word used in the sentence is similar type of material and the meaning of said word can only be drawn in reference of the words used before the above word. The fabric made of Fiber grade Poly Propylene granules is not a similar type of material of cotton, silk, rayon or nylon. Hence fabric made of Fiber grade Poly Propylene granules cannot be considered as textile. Hence, ratio of above case law is not squarely applicable to the present case. Non-Woven Bags manufactured through the intermediate product, i.e. Non-Woven fabric manufactured from Fiber grade poly propylene granules by adopting the Spun Bond technology, merits classification under HS code 3923, as also clarified by the CBIC in the Board Circular No.80/54/2018-GST issued from F. No. 354/432/2018-TRU dated 31st December, 2018 Applicable rate of GST on product - Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT - The rates of GST leviable on above product were changed from time to time, as below (a) Period 01.07.2017 to 30.09.2019 - rate of CGST and SGST @ 9% each, totalling to 18%. (b) Period 01.10.2017 to 31.12.2019 - rate of CGST and SGST @ 6% each, totalling to 12%. (c) Period 01.01.2020 to till date - rate of CGST and SGST @ 9% each, totalling to 18%.
Issues Involved:
1. Classification of Non Woven Bags under GST. 2. Eligibility for exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate). Detailed Analysis: 1. Classification of Non Woven Bags under GST Applicant's Submission: - The applicant manufactures Non Woven Bags from Non Woven Fabrics, which are made from Fibre grade poly propylene granules using Spun Bond technology. - The applicant argued that these bags should be classified under Heading No. 6305, as they are made from Non Woven fabrics classifiable under Heading No. 5603. - They referenced various authorities and previous rulings, including the Hon'ble Supreme Court and the Tax Research Unit (TRU), to support their claim that the bags should be classified as textile articles. Authority's Findings: - The Authority examined relevant chapter notes, headings, and HSN Explanatory Notes for both Heading No. 6305 and Heading No. 3923. - Chapter 39 notes define "plastics" and exclude materials regarded as textile materials of Section XI. - The Authority cited the Madhya Pradesh High Court's decision in M/s. Raj Packwell Ltd. v. UOI, which clarified that HDPE bags made from plastic strips are classified under Heading 3923. - The Authority concluded that Non Woven Polypropylene Bags are not made from textile materials but from plastic materials, classifiable under Heading No. 3923. Conclusion: - Non Woven Bags manufactured from Fibre grade poly propylene granules merit classification under Heading No. 3923, not Heading No. 6305. 2. Eligibility for Exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate) Applicant's Submission: - The applicant claimed that since the bags should be classified under Heading No. 6305, they would be eligible for exemption under the relevant notifications. Authority's Findings: - The Authority referred to CBIC (TRU) Circular No. 80/54/2018-GST, which clarified that Polypropylene Woven and Non-Woven Bags are classifiable under HS code 3923 and attract 18% GST. - The Authority reviewed the applicable GST rates over different periods: - From 01.07.2017 to 30.09.2019: 18% GST (9% CGST + 9% SGST). - From 01.10.2019 to 31.12.2019: 12% GST (6% CGST + 6% SGST). - From 01.01.2020 onwards: 18% GST (9% CGST + 9% SGST). - Based on the classification under Heading No. 3923, the product does not qualify for exemption under the mentioned notifications. Conclusion: - The product Non Woven Bags is not eligible for exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate). Ruling: 1. Classification: Non Woven Bags manufactured from Fibre grade poly propylene granules are classifiable under Heading No. 3923. 2. GST Rates: The applicable GST rates are: - 01.07.2017 to 30.09.2019: 18% (9% CGST + 9% SGST) - 01.10.2019 to 31.12.2019: 12% (6% CGST + 6% SGST) - 01.01.2020 onwards: 18% (9% CGST + 9% SGST) 3. Exemption: The product is not eligible for exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate).
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