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2020 (1) TMI 179 - AAAR - GSTClassification of goods - HDPE woven fabric coated with HDPE melt - whether classified under either of HSN 6306/6301/5903 of the Tariff Act or not? - challenge to AAR decision - WBAAR pronounced its advance ruling stating that HDPE woven fabric coated with HDPE melt is not a textile fabric and tarpaulins made from the said laminated fabric is not classified under either of HSN 6306/6301/5903 of the Tariff Act. HELD THAT - As the principal characteristic of tarpaulin is water proofing. unless the HDPE woven fabric is laminated it cannot be used to make tarpaulin. The process of lamination cannot be ignored or treated in isolation. It is an integral and vital process in manufacturing tarpaulin from HDPE, woven fabric - in view or Note 1(h) to Section XI of the GST Tariff Act mentioned above, the tarpaulins of HDPE woven fabric. laminated as per specification of IS 7903 2017, being expressly excluded, do not merit classification under Chapter 63. The question as to whether the product can be classified under HSN 5903, Note 2 to Chapter 59 is relevant which excludes products in which the textile fabric is either completely embedded in plastics or entirely coated or covered on both sides with such material, provided that such coating or covering can be seen with the naked eye with no account being taken of any resulting change of colour (Chapter 39) - The sample produced by the Appellant was seen with the naked eye to be completely coated on both sides by plastic material and thus the laminated HDPE woven fabric in the instant case is not a textile material and does not merit classification under HSN 5903. The ruling pronounced by the WBAAR upheld - appeal dismissed.
Issues:
Classification of HDPE woven tarpaulins under Customs Tariff Act and GST Tariff Act. Analysis: 1. The appeal was filed against the Advance Ruling Order stating that HDPE woven fabric coated with HDPE melt is not a textile fabric and tarpaulins made from it are not classified under specific headings of the Tariff Act. 2. The Appellant argued that the manufacturing process of HDPE woven tarpaulins differs significantly from plastic tarpaulins, emphasizing that their product fits under HSN 6306. 3. The Appellant presented evidence of obtaining BIS authentication under IS 7903:2017 and eligibility cum registration certificate from the Directorate of Textiles, supporting their claim for classification under specific headings. 4. The Appellant contended that the presence of plastic granules as input does not categorize the final product as a plastic good, citing relevant judgments. 5. The WBAAR's ruling was challenged on the grounds of misinterpretation of rules of interpretation, Section Notes, and general Explanatory Notes of the Tariff Act. Analysis Continued: 6. During the hearing, the Appellant reiterated their arguments, highlighting the differences in manufacturing processes between their product and plastic tarpaulins, which led to a larger tax burden due to misclassification. 7. The Respondent referred to Note 1(h) to Section XI of the Tariff Act, stating that HDPE woven tarpaulins laminated with plastic materials do not qualify as Textile and Textile Articles under specific chapters. 8. The Respondent cited a previous ruling involving a similar case, where tarpaulins made from HDPE woven fabrics were not classified under HSN 6306, which was upheld by the Appellate Authority for Advance Ruling. 9. After considering written and oral submissions, the examination of samples revealed that lamination is an essential process in manufacturing tarpaulins from HDPE woven fabric for waterproofing. 10. Based on Note 1(h) to Section XI and Note 2 to Chapter 59 of the GST Tariff Act, the laminated HDPE woven fabric did not qualify as a textile material under specific headings, leading to the dismissal of the appeal. This detailed analysis covers the arguments presented, legal interpretations, and the final decision of the Appellate Authority for Advance Ruling regarding the classification of HDPE woven tarpaulins under the Customs and GST Tariff Acts.
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