2018 (6) TMI 560 - AAR - GST

Rate of GST - poly propylene non-woven fabrics - Held that - The Test Report of the Centre for Biopolymer Science & Technology reveals that the product of the applicant i.e., non woven carry bag is made of polypropylene. In Customs Tariff Act, sacks and bags made of polypropylene strip or the like is classified under Chapter 63 of the Act. In the present case, since the sale value of non-woven carry bags made of polypropylene is less than ₹ 1,000/- per piece, it will attract tax @ 5% vide entry No. 224 of schedule 1 of both CGST and SGST notification. Ruling - Carry bags made of polypropylene non-woven fabrics is classified under entry 224 of Schedule 1 of the Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 and State Notification 360/2017 dated 30.06.2017, and hence taxable @ 5% SGST -2.5%; CGST-2.5% .

Summary

Issues:
Classification of carry bags made of polypropylene non-woven fabrics under the GST tax rate.

Analysis:
The case involves an application for Advance Ruling on the tax rate applicable to carry bags made of polypropylene non-woven fabrics. The applicant detailed the manufacturing process, highlighting the use of primary raw materials like polypropylene granules, color master batches, and filter content. The bags are intended for industrial units, retail outlets, and textile shops, with certifications from textile authorities confirming the technical textile nature of the fabrics produced. A test report from the Centre for Biopolymer Science & Technology certified the product as a polypropylene item with filler content. The applicant referenced clarifications from the Commissioner of CGST and Central Excise, Madurai, and an order specifying the classification of such bags under the Customs Tariff Act.

The ruling considered the test report confirming the product as a polypropylene non-woven carry bag and the Customs Tariff Act's classification of sacks and bags made of polypropylene strip. The relevant HSN code appeared in both Schedule I and Schedule II of the GST notifications, with specific entries based on the sale value of the product. Since the sale value of the bags was below ?1,000 per piece, they were classified under entry 224 of Schedule 1, attracting a tax rate of 5% under both CGST and SGST notifications.

In conclusion, the Authority for Advance Rulings classified carry bags made of polypropylene non-woven fabrics under entry 224 of Schedule 1 of the GST notifications, subjecting them to a tax rate of 5% (SGST - 2.5% and CGST - 2.5%).