2021 (1) TMI 367 - AAR - GST

Classification of goods - rate of tax - HSN Code - grinding of plastic material - HELD THAT - The applicant purchase the plastic scrap of different colors and thereafter said scrap is sorted color-wise. The applicant undertakes the further process on said plastic scrap and new product plastic grinding in small pieces emerges. It is evident that adopting certain process on plastic scrap, plastic scrap loses its identity and new product i.e. plastic grinding comes into existence. The new product plastic grinding in small pieces does not fall under the category of plastic scrap; as such it is the primary form of plastic. In view of the Notes 6 (b) of Chapter 39 of HSN, primary form of plastic covers blocks or irregular shapes of lumps, powders, granules, flakes and similar bulk forms. The product plastic grinding in small pieces are in irregular shapes of lumps and flakes. Therefore, said product i.e. plastic grinding in small pieces is no more scrap and is primary forms of plastic. Therefore, in terms of Notes 6 of Chapter 39 of Harmonised System of Nomenclature product grinding of plastic in small pieces is merit classifiable under heading 39.01 to 39.14 - the HSN code of goods viz plastic of grind would depend upon the type of primary form of polymers of said goods. Accordingly, GST rate of the goods viz. grind of plastic would be determined according to the classification of the product. To determine the GST rate of plastic grind of small pieces in primary form, we refer to the Notification No. 01/2017-Ct (Rate) dated 28.06.2017. The relevant entry of the said product i.e. plastic grind, which would fall under the Tariff Heading 3901 to 3914 The goods viz. grind of plastic in small pieces merit classifiable under HSN code of 3901 to 3914 depends upon the primary form of polymer of the goods and GST rate for the heading No. 3901 to 3914 is 18% as per the entry No. 100 and 101 of Notification No. 01/2017-CT (Rate) dated 28.06.2017 and corresponding SGST Notification.

Summary

Issues Involved: Determination of HSN code and tax rate for grinding of plastic material.

Analysis:

1. Facts of the Case: The applicant, a proprietorship company, sought an advance ruling on the HSN code and tax rate for grinding plastic scrap into small pieces after sorting them color-wise.

2. Interpretation of Law: The Authority considered the provisions of the CGST Act and GGST Act to be the same, unless specifically mentioned otherwise. The key issue was whether the ground plastic material should be classified as primary forms of plastic or remain as scrap.

3. Classification of Product: The Authority referred to Chapter 39 of the Harmonised System of Nomenclature, noting that primary forms of plastic cover irregular shapes like lumps, powders, granules, and flakes. As the ground plastic was in irregular shapes of lumps and flakes, it was deemed to be a primary form of plastic.

4. HSN Code Determination: The Authority then looked at the Custom Tariff Act, 1975, specifically Chapter headings 3901 to 3914, to determine the appropriate HSN code for the ground plastic material. It concluded that the HSN code would depend on the type of primary form of polymers present in the goods.

5. GST Rate Determination: To ascertain the GST rate for the ground plastic material, the Authority referred to Notification No. 01/2017-Ct (Rate) dated 28.06.2017. The applicable GST rate was found to be 18% (9% CGST + 9% SGST) based on the classification under Chapter headings 3901 to 3914.

6. Final Ruling: The Authority ruled that the HSN code for grinding of plastic material depends on the primary form of polymers present in the goods, falling under Chapter headings 3901 to 3914. The GST rate applicable to such goods was determined to be 18% as per the relevant notifications.

In conclusion, the judgment clarified the classification and tax treatment of ground plastic material based on the primary form of polymers, providing a clear ruling on the HSN code and GST rate for such goods.