2022 (11) TMI 206 - AAR - GST

Classification of goods - Geomembranes - whether Geomembranes merits classification under Heading 5911, Sub Heading 59111000 or Sub Heading 59119090, as Textile products, coated, covered or laminated with plastic, used for technical purposes? - HELD THAT - The width of such tapes/strips is below 5 mm, and they are wound on metal pipes bobbin. These tapes/strips of below 5 mm are then loaded on circular looms or flat looms and by employing weft and warp method of weaving, woven fabrics are produced - Rolls of uncoated fabrics loaded on extrusion lamination machine are drawn for feeding into the laminating unit. Mix of Low Density Polythene (LDPE), LLDPE and colour/black master batch is fed into the extruder through a Hopper, and melted by applying heat and friction, for forming a thin film in a molten state. Uncoated fabric is thus coated /laminated on one side by this molten mix, and passed over a chill roll containing chilled water. Edges of coated/laminated fabrics are trimmed and then wound on steel pipes on a winder. Same way, the other side of the fabric is also coated /laminated to form a waterproof fabric. For increasing thickness of such fabric, one side coated/laminated fabrics are sandwiched laminated with a film and then laminated again with one more layer of fabric to form a coated/laminated fabric of higher thickness. Thereafter overlap sealing is done to increase the width of the coated/laminated fabric, and they are cut in required length to obtain required size of Geomembranes. Woven Fabrics from HDPE Strips and Tapes of less than 5 mm of Heading 5404 shall be covered under Heading 5407 20 of the HSN. The above Woven Fabric is subjected to sandwich lamination of plastics and brings into existence a new product viz. Geomembranes pond lining fabrics. The said Geomembranes pond lining fabrics are supplied in piece form or are in cut to length as per the specification of customer. In view of technical uses of Geomembrane, Geomembrane passing the test of Section note XI( 1 )(g) to Section XI, Geomembrane satisfying the test of Chapter 59 Note 7(1 )(a); it is concluded that 'Geomembrane' is a textile article. The view that Geomembrane is a textile article is in compliance to the Hon'ble Apex Court view held in PORRITTS SPENCER (ASIA) LTD. VERSUS STATE OF HARYANA 1978 (9) TMI 72 - SUPREME COURT . Thus, the product viz. Geomembrane merits classification under HSN 59111000.

Summary

Issues Involved:
1. Classification of Geomembranes under the GST Tariff.
2. Determination of whether Geomembranes qualify as textile products for technical uses.
3. Examination of the manufacturing process and materials used.
4. Consideration of relevant legal precedents and definitions.

Detailed Analysis:

1. Classification of Geomembranes under the GST Tariff:
The applicant, engaged in manufacturing and selling textile products like Geomembranes, sought classification under Heading 5911, Sub Heading 59111000, claiming them as textile products for technical uses. The applicant argued that Geomembranes, being textile fabrics coated or laminated with plastic, should be classified under this heading.

2. Determination of whether Geomembranes qualify as textile products for technical uses:
The applicant cited the BIS standards and manufacturing process to support their claim. The process involves using HDPE granules to produce tapes/strips, which are woven into fabrics and then laminated with LDPE, LLDPE, and other materials to create waterproof Geomembranes. These products are used in applications like Biofloc ponds for aquaculture, which necessitate technical uses like disease prevention and ecological sustainability.

3. Examination of the manufacturing process and materials used:
The manufacturing process includes:
- Melting HDPE granules to form thin sheets, which are slit into tapes/strips (width below 5 mm).
- Weaving these tapes/strips into uncoated fabrics using circular or flat looms.
- Laminating these fabrics with LDPE, LLDPE, and other materials to create waterproof Geomembranes.
- Subjecting the laminated fabrics to further processes like trimming, inspection, and sealing to produce the final product.

4. Consideration of relevant legal precedents and definitions:
The applicant referenced several legal precedents, including:
- The Supreme Court's ruling in Porritts & Spencer (Asia) Ltd., which defined textiles as any woven fabrics, regardless of materials used.
- The Gujarat High Court's decision in CTM Technical Textiles Ltd., which classified woven HDPE fabrics as textile products.
- The Fairchild's Dictionary of Textiles, which defines textiles broadly as any material worked into fabric.

Discussion and Findings:
The Authority for Advance Ruling (AAR) considered the submissions and relevant legal precedents. It noted that the manufacturing process of Geomembranes involves creating tapes/strips (less than 5 mm) from HDPE granules, weaving them into fabrics, and laminating them with plastic materials. The AAR emphasized the technical uses of Geomembranes in applications like Biofloc ponds, which align with the criteria for classification under Heading 5911.

The AAR also referred to Note 1(g) of Section XI, which excludes only strips of plastic exceeding 5 mm in width, thus including the applicant's products within the textile category. The technical uses and manufacturing process of Geomembranes were found to comply with the requirements of Heading 5911, as they are textile products coated with plastic for technical purposes.

Ruling:
Geomembrane merits classification at HSN 5911, tariff item 59111000. The AAR concluded that Geomembranes, being textile products for technical uses, should be classified under this heading, consistent with the applicant's submissions and relevant legal precedents.