2018 (9) TMI 1770 - AAR - GST

Classification of goods - Polypropylene Leno Bags - Applicant is of the opinion that the PP Leno Bags manufactured is classifiable under Tariff Head 63053300 of the GST Tariff which is aligned to the First Schedule of the Customs Tariff Act, 1975. Held that - To be included in Chapter 63, the width of the tapes, manufactured from Plastics or articles thereof of Chapter 39, used to weave the fabric should be less than or equal to 5mm and should not be impregnated, coated, covered or laminated with plastics or articles thereof, of chapter 39 - From the explanatory notes and clarification provided for determination of classification of goods it is seen that two more factors are to be considered, namely, the width of the tape used in the weaving and whether or not there is a layer/lining in these bags. The specifications of the PP Leno Bags being manufactured by the Applicant, therefore, become an important feature for determining their classification for the purpose of GST. To classify the product PP Leno Bags both the Explanatory Notes, as well as the clarifications in the Tariff, and the specifications as per IS 16187 2014 should be taken into consideration - Tariff head 63053300 includes the goods that are classifiable as sacks and bags, of the kind used for packing of goods, made from polyethylene or polypropylene strips and the like that qualifies as man-made textile materials. Only those PP strips and the like are considered as textile materials width of which do not exceed 5 mm refer to Note 1(g) to Section XI of the Tariff Act - The above-mentioned Tariff head is not applicable if the sacks made from PP woven fabric are impregnated, coated, covered or laminated with plastics or articles of plastics covered under Chapter 39 Note 1(h) to Section XI . Ruling - PP Leno Bags , if specifically made from woven Polypropylene fabric using strips or the like of width not exceeding 5 mm and without any impregnation, coating, covering, or lamination with plastics, are to be classified under Tariff Sub Heading 63053300.

Summary

Issues: Classification of Polypropylene Leno Bags under the CGST/WBGST Acts

Issue 1: Admissibility of Advance Ruling
The Applicant sought a ruling on the classification of Polypropylene Leno Bags under the CGST/WBGST Acts, claiming that the question raised had not been decided by any authority under the GST Act. The Application was admitted as the officer concerned raised no objection to its admission.

Issue 2: Composition and Manufacturing Process
The Applicant manufactures Polypropylene Leno Bags primarily used for packing various goods. The bags are composed of Polypropylene, Linear Low Density Polyethylene, and Colour Master Batch. The manufacturing process involves extrusion, weaving, and stitching to form the bags.

Issue 3: Supporting Documents
The Applicant submitted test reports from various institutes and a communication regarding a capital subsidy under the Technology Upgradation Fund Scheme. However, certain reports were deemed inadmissible due to restrictions on reproduction and use for litigation.

Issue 4: Classification Criteria
The absence of a specific Tariff Code for PP Leno Bags led to an analysis of relevant Tariff Sub Headings. The classification depended on whether the bags met specific criteria regarding composition, weaving width, and absence of impregnation or coating with plastics.

Issue 5: Interpretation of Tariff Headings
The ruling considered the distinctions between plastic articles and textile products under the GST Tariff. Explanatory notes and clarifications were crucial in determining the appropriate classification for PP Leno Bags.

Issue 6: Compliance with Specifications
The classification hinged on whether the PP Leno Bags met the width and composition specifications outlined in relevant Indian Standards. The bags had to align with specific requirements to be classified accurately.

Judgment:
The ruling determined that PP Leno Bags, made from woven Polypropylene fabric with specified width and without plastic impregnation, coating, or lamination, should be classified under Tariff Sub Heading 63053300. The decision was subject to the provisions of the GST Act until declared void.

This detailed analysis of the judgment highlights the intricate considerations involved in classifying Polypropylene Leno Bags under the CGST/WBGST Acts, emphasizing the importance of composition, manufacturing process, supporting documents, and compliance with classification criteria and specifications.