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2025 (3) TMI 239 - AAR - GSTClassification of goods - PVC raincoats - to be classified as plastic (HSN Code 3926) or textile (HSN Code 6201) items under GST? - GST rate of PVC raincoat - If the price of PVC raincoat comes under Rs. 1000/- then does it attract 5% tax on it? - HELD THAT - Hon ble Supreme Court in case of Commercial Tax Officer v Binani Cement Ltd 2014 (3) TMI 905 - SUPREME COURT emphasized on latin maxim of generalia specialibus non derogant i.e general law yields to special law when operate in the same field on same subject. In the case in hand there can be no denying that the only function of using raincoat is to take shield from rain and therefore it is used as garment/apparel in common parlance. PVC sheet cannot be regarded as a woven fabric. Even in common parlance the item PVC sheet is not considered as textile materials. The contention of the applicant canot be accepted that the item PVC raincoat would be classified under HSN 6201 40 10 since to qualify to be an item under chapter 62 it must be an article of textile fabric. It is not disputed that the item PVC raincoat in common parlance is known as apparel. The item being an apparel which is primarily composed of polyvinyl chloride (PVC) would be classified under HSN 3926 20 as Articles of apparel and clothing accessories (including gloves mittens and mitts). Conclusion - Supply of PVC raincoat as manufactured by the applicant would be covered under Heading 3926 and would attract tax @ 18% vide entry no. 111 of Schedule-III of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 corresponding West Bengal State Notification No.1125 F.T. dated 28.06.2017 as amended.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS Classification of PVC Raincoats Relevant legal framework and precedents: The classification of goods under GST is guided by the Customs Tariff Act, 1975, and the corresponding GST notifications. The interpretative rules and chapter notes of the Customs Tariff Act are crucial in determining the classification. The applicant relies on the Customs Authority for Advance Rulings (CAAR) decision in NZ Seasonal Wear Pvt. Ltd., which classified similar PVC raincoats under HSN Code 6201 as textile articles. Court's interpretation and reasoning: The Authority analyzed the manufacturing process of PVC raincoats, which involves using polyvinyl chloride (PVC), a synthetic polymer, to create a non-woven, seamless garment through thermal or chemical bonding. The Authority considered the applicant's argument that PVC raincoats should be classified as textile articles due to their function as garments and the precedent set by CAAR. Key evidence and findings: The Authority examined the definition of "textiles" and "plastics" as per the Customs Tariff Act and GST notifications. It noted that PVC, being a synthetic polymer, is generally classified under plastics. The manufacturing process and the nature of PVC as a material were crucial in the Authority's analysis. Application of law to facts: The Authority applied the legal definitions and chapter notes to the facts of the case, focusing on the nature of PVC as a material and its typical classification under plastics. The Authority also considered the exclusionary provisions in Chapter 39, which exclude textile articles from being classified as plastics. Treatment of competing arguments: The applicant argued for classification under HSN Code 6201 based on the function and commercial understanding of raincoats as garments. The Revenue contended that PVC, being a synthetic polymer, should be classified under plastics, HSN Code 3926. The Authority evaluated both positions, considering the material composition and the function of the raincoats. Conclusions: The Authority concluded that PVC raincoats should be classified as plastic articles under HSN Code 3926. It emphasized that the primary material, PVC, is a synthetic polymer classified under plastics, and the manufacturing process does not align with traditional textile production. Determination of GST Rate Relevant legal framework and precedents: The GST rate is determined based on the classification of goods. The applicant argued for a 5% GST rate under HSN Code 6201, while the Revenue suggested an 18% rate under HSN Code 3926. Court's interpretation and reasoning: Given the classification under HSN Code 3926, the Authority referred to the relevant GST notifications and schedules to determine the applicable tax rate. Key evidence and findings: The Authority examined the GST schedules and notifications, particularly Entry No. 111 of Schedule III of Notification No. 01/2017-Central Tax (Rate), which specifies the tax rate for plastic articles. Application of law to facts: Based on the classification under HSN Code 3926, the Authority applied the GST rate specified for plastic articles in the relevant notification. Treatment of competing arguments: The Authority considered the applicant's argument for a lower tax rate based on classification as a textile article but ultimately found the classification under plastics more appropriate. Conclusions: The Authority ruled that PVC raincoats, classified under HSN Code 3926, attract an 18% GST rate as per the relevant notification. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: The Authority emphasized, "Supply of PVC raincoat as manufactured by the applicant would be covered under Heading 3926 and would attract tax @ 18% vide entry no. 111 of Schedule-III of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017." Core principles established: The classification of goods under GST should adhere to the material composition and manufacturing process as guided by the Customs Tariff Act and GST notifications. The specific classification of synthetic polymers like PVC under plastics takes precedence over functional arguments for classification as textile articles. Final determinations on each issue:
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