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2022 (7) TMI 908 - AAAR - GSTClassification of goods - Non-woven Bags - the bags are manufactured through the intermediate product, Non-Woven Fabrics classifiable under Heading No. 5603 - whether the bags are properly classifiable under Heading No.6305 or under Heading 3923? - eligibility for exemption under Notification No.01/2017-CT (Rate) and 01/2017-IT(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 found that 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.
Issues Involved:
1. Classification of Non-woven Bags under appropriate Heading. 2. Eligibility for exemption under Notification No.01/2017-CT(Rate) and 01/2017-IT(Rate). Issue-wise Analysis: 1. Classification of Non-woven Bags: The appellant, engaged in manufacturing Non-Woven Bags from Non-Woven fabrics, sought to classify these bags under Heading 6305.3300, arguing that polypropylene non-woven fabrics are textiles, not plastics. They cited various authoritative clarifications and judicial precedents to support their claim, including a Supreme Court judgment in Porritts and Spencers (Asia) Ltd V/s State of Haryana. The Gujarat Authority for Advance Ruling (GAAR) disagreed, classifying the bags under HS code 3923, based on the Madhya Pradesh High Court judgment in M/s Raj Packwell Ltd, which stated that polypropylene granules cannot be considered textiles under the Textiles Committee Act, 1963. GAAR also relied on CBIC Circular No. 80/54/2018-GST, classifying polypropylene woven and non-woven bags under Chapter Heading 3923. The appellant contended that GAAR erred in its reliance on the Madhya Pradesh High Court judgment, as it pertained to woven bags, not non-woven bags, and ignored authoritative clarifications and judicial precedents supporting their classification under Heading 6305.3300. They also argued that GAAR misinterpreted the binding nature of Advance Ruling Authority decisions under Section 103 of the CGST Act. The appellate authority upheld GAAR's ruling, emphasizing the applicability of the Customs Tariff Act, 1975, and the Harmonized System of Nomenclature (HSN) for classification under GST. It noted that the TRU Circular dated 31.12.2018 clarified that polypropylene woven and non-woven bags are classifiable under HS code 3923, and this classification was binding. The authority dismissed the appellant's reliance on the Supreme Court judgment in Porritts and Spencers, as the case involved textiles made from cotton and wool, not polypropylene. 2. Eligibility for Exemption: The appellant sought exemption for Non-woven Bags under Notification No.01/2017-CT(Rate) and 01/2017-IT(Rate). GAAR ruled against this, stating that the bags did not qualify for exemption under the specified notifications. The appellate authority upheld GAAR's decision, noting that the classification of the bags under HS code 3923 rendered them ineligible for the claimed exemptions. Conclusion: The appellate authority rejected the appeal, affirming GAAR's classification of Non-woven Bags under HS code 3923 and denying the exemption under Notification No.01/2017-CT(Rate) and 01/2017-IT(Rate). The authority emphasized the binding nature of the TRU Circular and the inapplicability of the Supreme Court judgment in Porritts and Spencers to the present case.
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