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2021 (1) TMI 550 - AAR - GSTClassification of goods - Non Woven Bags manufactured through the intermediate product Non Woven fabric - classifiable under Heading No. 5603 are properly classifiable under Heading o. 6305 or under Heading No. 3923 - benefit of N/N. 01/2017-CT (Rate) and 01/2017-I.T. (Rate) dated 28.06.2017 as amended - HELD THAT - Fabric made of other than the yarn of cotton, silk, rayon or nylon and similar type of material is not a textile. The word used in the sentence is similar type of material and the meaning of said word can only be drawn in reference of the words used before the above word. The fabric made of Fiber grade Poly Propylene granules is not a similar type of material of cotton, silk, rayon or nylon. Hence fabric made of Fiber grade Poly Propylene granules cannot be considered as textile. Hence, ratio of above case law is not squarely applicable to the present case - Reference is also invited to CBIC (TRU) Circular No.80/54/2018-GST issued from F. No. 354/432/2018-TRU dated 31st December, 2018, clarifying GST rates classification in respect of various goods. Para 7 of subject Circular has clarified that the goods viz. polypropylene woven and non-woven bags are classifiable under HS code 3923 and attracts GST @ 18%. Polypropylene Woven and Non-Woven Bags would be classified as plastic bags under HS code 3923 and would attract 18% GST - Non-Woven Bags manufactured through the intermediate product, i.e. Non-Woven fabric manufactured from Fiber grade poly propylene granules by adopting the Spun Bond technology, merits classification under HS code 3923, as also clarified by the CBIC in the Board Circular No.80/54/2018-GST issued from F. No. 354/432/2018-TRU dated 31st December, 2018. Applicable rate of GST on product in hand - HELD THAT - The rates of GST applicable on said products during different periods. Period 01.07.2017 to 30.09.2019 - rate of CGST and SGST @ 9% each totalling 18%. Period 01.10.2019 to 31.12.2019 - rate of CGST and SGST @ 6% each totalling 12%. 01.01.2020 to till date - rate of CGST and SGST @ 9% each totalling 18%.
Issues Involved:
1. Classification of Non Woven Bags under GST. 2. Eligibility for exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate). Issue-wise Analysis: 1. Classification of Non Woven Bags under GST: The applicant, engaged in manufacturing Non Woven Bags from Polypropylene Non Woven Fabrics, sought clarification on whether these bags should be classified under Heading No. 6305 or 3923. The applicant argued that: - Polypropylene Non Woven Bags are manufactured from Non Woven fabrics classifiable under Heading No. 5603, thus should be considered textile articles and classified under Heading No. 6305. - The Appellate Authority for Advance Ruling had previously settled that Polypropylene Non Woven Bags should be classified under Heading No. 6305. - The Director of DKTE Center of Excellence in Non Wovens confirmed that Polypropylene Non Woven Fabric is a textile material, not plastic. Upon review, the Authority noted: - The manufacturing process involves polypropylene granules forming Non Woven Fabrics, which are then used to make Non Woven Bags. - Chapter 39 covers plastics and articles thereof, explicitly excluding materials regarded as textiles of Section XI. - The Hon’ble High Court of Madhya Pradesh in M/s. Raj Packwell Ltd. v. UOI classified HDPE woven bags as plastic articles under Heading 3923. - The Supreme Court in M/s. Porrits and Spencers (Asia) Limited v. State of Haryana defined textiles as woven fabrics from yarns like cotton, silk, rayon, or nylon, not including plastic materials. The Authority concluded that Non Woven Bags made from Fiber grade polypropylene granules are plastic materials, thus classifiable under Heading 3923. 2. Eligibility for Exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate): The applicant sought to know if Non Woven Bags would be eligible for exemption under the specified notifications. The Authority clarified: - The GST rates for goods under Heading 3923 varied over time: - From 01.07.2017 to 30.09.2019: 18% GST (CGST @ 9% + SGST @ 9%). - From 01.10.2019 to 31.12.2019: 12% GST (CGST @ 6% + SGST @ 6%). - From 01.01.2020 onwards: 18% GST (CGST @ 9% + SGST @ 9%). - The CBIC Circular No. 80/54/2018-GST clarified that Polypropylene Woven and Non-Woven Bags are classifiable under HS code 3923 and attract 18% GST. Thus, the Authority ruled that Non Woven Bags are not eligible for exemption under the mentioned notifications. Ruling: 1. Non Woven Bags manufactured from Non Woven plastic material made from Fiber grade polypropylene granules are classified under Heading No. 3923. 2. The applicable GST rates are: - 01.07.2017 to 30.09.2019: 18% - 01.10.2019 to 31.12.2019: 12% - 01.01.2020 onwards: 18% 3. Non Woven Bags are not eligible for exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate).
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