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2019 (1) TMI 420 - AAR - GSTClassification of goods - P.P. Bags which are made from strips having width of less than 5mm - whether the aforesaid PP bags would classify under chapter heading 63 or chapter 39 of the GST Tariff and what shall be the rate of GST on the same? - Notification No. F-A3-33-2017-1V (42) dt. 29.06.2017. Held that - The issue of classification of PP/HDPE Bags or sacks, made of HDPE tapes and fabrics, has been dealt with at length by the Hon ble High Court of Madhya Pradesh in case of M/s. Raj Packwell Ltd. Vs. UoI 1989 (9) TMI 120 - HIGH COURT OF MADHYA PRADESH AT INDORE , where it was held that HDPE strips or tapes fall under the Head. 39.20, sub-heading 3920.32 of the Central Excise Tariff Act and not under Head. 54.06, sub-heading 5406.90. Similarly the HDPE sacks fall into Heading 39.23, sub-heading 3923.90 - thus it can be concluded that the impugned goods viz. PP Woven Bags/Sacks shall be classifiable under chapter 39 of the GST Tariff and not under Chapter 63. Ruling - The goods in question shall be classifiable under Chapter 39 of the GST tariff as articles of Plastic and would attract appropriate rate prevailing at the date and time of supply.
Issues Involved:
1. Classification of PP Bags under GST Tariff. 2. Determination of applicable GST rate for PP Bags. Issue-wise Detailed Analysis: 1. Classification of PP Bags under GST Tariff: The applicant, M/S Nagrani Warehousing Private Limited, sought an advance ruling to determine whether PP Bags made from strips less than 5mm wide should be classified under Chapter 63 or Chapter 39 of the GST Tariff. Department’s Viewpoint: The department referenced previous judgments, including the Hon’ble Tribunal’s decision in the case of Gujrat Raffia Industries Ltd. and the Hon’ble High Court of Madhya Pradesh in the case of Raj Packwell Ltd. Both cases concluded that HDPE/PP bags made from plastic strips are classifiable under Chapter 39 as articles of plastics. The department emphasized that these products do not fall under textile classifications. Applicant’s Argument: The applicant argued that PP strips of less than 5mm width used to manufacture woven fabrics and subsequently PP bags should be classified under Chapter 54 as synthetic textile materials. They referenced various chapter notes and HSN explanatory notes to support their claim that such strips and fabrics are textile materials. The applicant also cited the Advance Ruling Authority of West Bengal's decision in the Mega Flex Plastic Ltd. case, which classified similar goods under Chapter 63. Authority’s Findings: The authority noted that the applicant had previously classified the goods under Chapter 39 and found no compelling reason for the change in classification. The authority also referenced the Hon’ble High Court of Madhya Pradesh’s decision in Raj Packwell Ltd., which held that HDPE woven bags/sacks are made from plastic strips and should be classified under Chapter 39. The authority emphasized that this judgment is binding and applicable to the present case. 2. Determination of Applicable GST Rate for PP Bags: The authority concluded that the goods in question should be classified under Chapter 39 of the GST Tariff as articles of plastic. Consequently, they would attract the appropriate GST rate prevailing at the time of supply. Ruling: 1. The goods in question shall be classifiable under Chapter 39 of the GST tariff as articles of plastic. 2. The applicable GST rate will be the rate prevailing at the date and time of supply. Validity: This ruling is valid subject to the provisions under section 103(2) until and unless declared void under section 104(1) of the GST Act.
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