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2022 (7) TMI 907 - AAAR - GSTClassification of goods - Poly Propylene Non-Woven Bags - the bags are manufactured from intermediate product i.e. Poly Propylene Non-Woven fabrics which in turn is manufactured from Fiber grade poly propylene granules by adopting the Spun Bond technology - classifiable under Heading No. 5603 or under Heading No.6305 or under Heading 3923? - eligibility for exemption under Notification No.01/2017-CT(Rate) and 01/2017-1T(Rate) dated 28.06.2017, as amended - HELD THAT - In the present case, Non-woven bags are made from polypropylene granules which is also a type of plastics made from polymerization of propylene. As mentioned in General Notes to Chapter Heading 39 of Custom Tariff Act, 1975, Plastics include materials which are capable of polymerization at some stage and therefore, in view of findings of Madhya Pradesh High Court in RAJ PACK WELL LTD. VERSUS UNION OF INDIA 1989 (9) TMI 120 - MADHYA PRADESH HIGH COURT , fabric made from polypropylene, by no stretch of imagination construed as textile but merits classification as plastic or article of plastic under Chapter Heading No. 3923. From perusal of findings of Supreme Court in PORRITTS SPENCER (ASIA) LTD. VERSUS STATE OF HARYANA 1978 (9) TMI 72 - SUPREME COURT , it is very clear that the product in question in above case viz. dryer felts is made from cotton and wollen which is covered in the ambit of 'textile' and in present case Non-woven bags are made from polypropylene which is a type of plastic and on this ground alone it can be said that the above case law relied by appellant is not applicable in present case. Thus, the product in question viz. Polypropylene Non-woven bags merits classification under Chapter Heading 3923 of the HSN/Customs Tariff Act, 1975. Appeal dismissed.
Issues Involved:
1. Classification of Non-Woven Bags: Heading No. 6305 vs. Heading 3923. 2. Eligibility for GST exemption under Notification No.01/2017-CT(Rate) and 01/2017-IT(Rate). Issue-Wise Detailed Analysis: 1. Classification of Non-Woven Bags: Heading No. 6305 vs. Heading 3923 - Appellant's Argument: The appellant argued that their product, Non-Woven Bags manufactured from Non-Woven Fabrics, should be classified under Heading No. 6305.3300. They cited the general rules of interpretation and various judgments, including the Supreme Court's ruling in Porritts and Spencers (Asia) Ltd V/s State of Haryana, which stated that the term 'textile' includes fabrics made from any material. - GAAR's Ruling: The GAAR classified the Non-Woven Bags under HS code 3923, based on the Madhya Pradesh High Court's judgment in the case of M/s Raj Packwell Ltd, which held that fibers manufactured from polypropylene granules cannot be considered textiles under the Textiles Committee Act, 1963. The GAAR also relied on CBIC (TRU) Circular No. 80/54/2018-GST, which classifies polypropylene woven and non-woven bags under Chapter Heading 3923. - Appellate Authority's Findings: The authority upheld GAAR's classification under HS code 3923. They emphasized that the classification of goods under GST should align with the Customs Tariff Act, 1975, which is based on the Harmonized System of Nomenclature (HSN). The authority also noted that the TRU Circular dated 31.12.2018 clearly classifies Polypropylene Woven and Non-Woven Bags under HS code 3923, which is applicable to the appellant's product. 2. Eligibility for GST Exemption under Notification No.01/2017-CT(Rate) and 01/2017-IT(Rate) - Appellant's Argument: The appellant argued that their product should be eligible for exemption under the specified notifications. They cited various rulings and judgments to support their claim, including the West Bengal Appellate Authority for Advance Ruling's decision, which classified polypropylene non-woven bags under Heading No. 6305.3300. - GAAR's Ruling: The GAAR answered this question in the negative, stating that the product does not qualify for the exemption. - Appellate Authority's Findings: The authority agreed with GAAR's decision, noting that the ruling of Advance Ruling Authorities is binding only on the applicant who sought it, as per Section 103 of the CGST Act, 2017. They dismissed the appellant's interpretation that the ruling should prevail over the TRU Circular. Conclusion: The Appellate Authority for Advance Ruling upheld the GAAR's decision, classifying the Non-Woven Bags under HS code 3923 and denying the eligibility for GST exemption under Notification No.01/2017-CT(Rate) and 01/2017-IT(Rate). The appeal filed by the appellant was rejected, affirming the Advance Ruling No. GUJ/GAAR/R/84/2020 dated 17.09.2020.
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