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2019 (5) TMI 1037 - AAR - GSTClassification of goods - rate of tax - Polypropylene Mat which are plaited using Polypropylene Straw - Whether HSN Code for Polypropylene Mat which are plaited using Polypropylene Straw falls under Chapter Heading 4601 or 3902? - HELD THAT - In the case at hand as per the manufacturing process furnished, it is seen that pellets on application of heat air on an extruder machine are converted into the polypropylene tubes(straws)which is used as plaiting material. These are then woven or bound together in sheet form by placing them parallel to each other. After weaving the mats are cut into market size requirement. The subject goods are not classifiable under the chapter 39 as per Chapter Note 2 to chapter 39. Further, they are covered under chapter 46 and more specifically under CTH 46019900. Whether Polypropylene Mats fall under Chapter 39 or Chapter 46 of Central Excise Tariff is considered by the CBEC in Circular F.No. 93/24/87-CX-3 dated 16/06/1987? - HELD THAT - The Central Excise Tariff was aligned with Customs Tariff after the enactment of the Central Excise Tariff Act 1985 which are in alignment with the HSN. Further, in the case at hand the process of manufacture of the Propylene Mat is similar to that considered in the Circular. Therefore we hold that the Polypropylene Mats supplied by the applicant is classifiable under CTH 46019900 - It is pertinent to note that the classification of the Propylene Mats under CTH 4601 is in line with the classification in the Drawback Schedule in respect of Polypropylene Mats . Applicable rate of tax - HELD THAT - The product in hand is classified under CTH 4601 - CTH 4601 covers plaits and similar products, whether or not being finished articles but made of vegetable materials such as of Bamboo, of rattan, of Other Vegetable materials. In the case at hand, the mats are made of Polypropylene, which are definitely not of vegetable materials and therefore are not covered under SI.No. 103 of Schedule - II above. As the Polypropylene mats are not specified elsewhere in the rate schedules, the applicable rate CGST @ 9% as per Sl.No. 453 of Schedule - III of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 and SGST @ 9% as per Sl.No. 453 of Schedule -III of Notification No. vide G.O. (Ms) No. 62 dated 29.06.2017. The applicable tax rate from 1.7.2017 to 24.1.2018 is 9% CGST as per Sl.No. 453 of Schedule -III of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 as amended and 9% SGST as per SI.No. 453 of Schedule -III of Notification No. II (2)/CTR/532 (d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. The rate from 25.01.2018 to 31.12.2018 is 2.5% CGST as per Sl No 198A of Schedule I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 as amended and 2.5% SGST as per SI No 198A of Schedule I of Notification No. II (2)/CTR/532 (d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. The rate from 01.1.2019 onwards is 2.5% CGST as per SI.No.198AA of Schedule I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 as amended and 2.5% SGST as per Sl No 198AA of Schedule 1 of Notification No. II (2)/CTR/532 (d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended.
Issues Involved:
1. Classification of Polypropylene Mats under the appropriate Harmonized System of Nomenclature (HSN) Code. 2. Applicable tax rate for Polypropylene Mats. Issue-Wise Detailed Analysis: 1. Classification of Polypropylene Mats under the appropriate HSN Code: - Applicant's Position: The applicant, engaged in trading Polypropylene Mats, contended that the correct HSN Code for Polypropylene Mats is 460101, as indicated by the manufacturers and supported by various circulars and judgments. - Supporting Documents: The applicant provided several documents, including Circular No. 4/2018-Customs, F.No. 609/12/2018-DBK, and a judgment from the Customs, Excise, and Service Tax Tribunal (CESTAT) in the case of Supreme Industries Ltd. vs. Commissioner of Central Excise. - Manufacturing Process: The mats are made from Polypropylene pellets, which are converted into hollow tubes (straws) through heat and air application. These tubes are then woven or bound together to form mats. - Authority's Examination: The Authority examined the relevant Chapter Notes of Chapter 39 and Chapter 46 of the Customs Tariff Act, 1975. Chapter 39 does not cover plaits, wickerwork, or other articles of Chapter 46. Chapter 46 includes materials suitable for plaiting, such as monofilament and strips of plastics. - Conclusion: Based on the manufacturing process and the Chapter Notes, the Authority concluded that Polypropylene Mats fall under CTH 46019900, not under Chapter 39. 2. Applicable tax rate for Polypropylene Mats: - Initial Tax Rate (1.7.2017 to 24.1.2018): The applicable tax rate was 9% CGST and 9% SGST as per Sl.No. 453 of Schedule III of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017. - Revised Tax Rate (25.01.2018 to 31.12.2018): The tax rate was revised to 2.5% CGST and 2.5% SGST as per Sl No 198A of Schedule I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017, amended by Notification No. 6/2018-C.T.(Rate) dated 25.01.2018. - Current Tax Rate (from 01.01.2019 onwards): The tax rate remains at 2.5% CGST and 2.5% SGST as per Sl.No. 198AA of Schedule I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017, amended by Notification No. 24/2018 dated 31.12.2018. Ruling: 1. Classification: The Polypropylene Mat, plaited using Polypropylene Straw, is classifiable under CTH 46019900. 2. Applicable Tax Rates: - From 1.7.2017 to 24.1.2018: 9% CGST and 9% SGST. - From 25.01.2018 to 31.12.2018: 2.5% CGST and 2.5% SGST. - From 01.1.2019 onwards: 2.5% CGST and 2.5% SGST.
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