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2025 (3) TMI 240 - AAR - GSTClassification of goods - PVC raincoats - to be classified as plastic (HSN Code 3926) or textile (HSN Code 6201) items under GST? - GST rate of PVC raincoat - If the price of PVC raincoat comes under Rs. 1000/- then does it attract 5% tax on it? - HELD THAT - Hon ble Supreme Court in case of Commercial Tax Officer v Binani Cement Ltd 2014 (3) TMI 905 - SUPREME COURT emphasized on latin maxim of generalia specialibus non derogant i.e general law yields to special law when operate in the same field on same subject. In the case in hand there can be no denying that the only function of using raincoat is to take shield from rain and therefore it is used as garment/apparel in common parlance. PVC sheet cannot be regarded as a woven fabric. Even in common parlance the item PVC sheet is not considered as textile materials. The contention of the applicant canot be accepted that the item PVC raincoat would be classified under HSN 6201 40 10 since to qualify to be an item under chapter 62 it must be an article of textile fabric. It is not disputed that the item PVC raincoat in common parlance is known as apparel. The item being an apparel which is primarily composed of polyvinyl chloride (PVC) would be classified under HSN 3926 20 as Articles of apparel and clothing accessories (including gloves mittens and mitts). Conclusion - Supply of PVC raincoat as manufactured by the applicant would be covered under Heading 3926 and would attract tax @ 18% vide entry no. 111 of Schedule-III of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 corresponding West Bengal State Notification No.1125 F.T. dated 28.06.2017 as amended.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment were:
ISSUE-WISE DETAILED ANALYSIS Classification of PVC Raincoats Relevant Legal Framework and Precedents The classification issue hinges on the interpretative provisions of the Customs Tariff Act, 1975, and the explanatory notes under CGST Notification 01/2017 - Central Tax (Rate). The applicant relied on the Customs Authority for Advance Rulings (CAAR) decision in NZ Seasonal Wear Pvt. Ltd., which classified similar PVC raincoats under HSN Code 6201 as textile garments. Court's Interpretation and Reasoning The Authority examined the definitions and characteristics of textiles and plastics. It noted that PVC is a synthetic polymer known for its durability and water resistance, often used in raincoats. The Authority considered the manufacturing process of PVC raincoats, which involves thermal or chemical bonding rather than traditional stitching, to maintain waterproof integrity. Key Evidence and Findings The applicant argued that PVC raincoats, although made from synthetic materials, should be classified as textile garments due to their function as apparel. They cited the CAAR ruling and judicial precedents supporting the classification of such garments under HSN Code 6201. Application of Law to Facts The Authority analyzed the manufacturing process of PVC raincoats and the characteristics of PVC sheets. It found that PVC sheets are not considered woven fabrics and thus do not qualify as textile materials under Chapter 62. The Authority also noted the exclusionary provisions in Chapter 39, which exclude textile articles from being classified as plastics. Treatment of Competing Arguments The applicant's argument for classification under HSN Code 6201 was based on the functional characteristics of raincoats as apparel. However, the Authority emphasized the material composition and manufacturing process, which align more closely with the definition of plastics under Chapter 39. Conclusions The Authority concluded that PVC raincoats should be classified under HSN Code 3926 as articles of plastic, given their material composition and manufacturing process. Applicable GST Rate Relevant Legal Framework The GST rate for PVC raincoats is determined by the classification under the HSN Code. The applicant argued for a 5% GST rate if classified under HSN Code 6201 and priced below Rs. 1000. Court's Interpretation and Reasoning Since the Authority classified PVC raincoats under HSN Code 3926, it referred to the applicable GST rate for plastic articles, which is 18% as per entry no. 111 of Schedule-III of Notification No. 01/2017-Central Tax (Rate). Conclusions The Authority ruled that PVC raincoats attract a GST rate of 18% under HSN Code 3926. SIGNIFICANT HOLDINGS Core Principles Established
Final Determinations on Each Issue The Authority determined that PVC raincoats are classified under HSN Code 3926 as articles of plastic and attract a GST rate of 18%.
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