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TMI Blog2021 (1) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant has submitted that the company is currently engaged in manufacturing of below mentioned products for which they are proposing HSN code as mentioned against the respective products: Sr.No. Name of the product Proposed HSN code Proposed rate of tax 01. HDPE Tarpaulin/PE laminated fabric 59039090 12 02. PP Ropes 56074900 12 03. Pondliner 54072090 5 04. Vermibed 54072090 5 05. Weed mat 54072090 5 06. Wagon cover 59039090 12 07. Fumigation cover 59039090 12 08. Azolla Bed 54072090 5 09. Grow bags 54072090 5 10. Agro shade net 54072090 5 11. HDPE woven laminated fabrics 59039090 12 12. PP/HDPE woven fabric 59039090 12 3. The applicant has submitted the details of the raw materials involved and the process involved in the manufacturing of goods, as under: (a) Raw materials consumed: One or more of the following raw materials or combination thereof in different proportion is used depending upon the nature and use of the products such as HDPE/PP Granules, LLDPE and LDPE. (b) Process involved: Following process is involved in the manufacture of goods for which advance ruling is filed: (i) Raw material storage: The applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he opinion that based on process and raw material consumed for the production of goods in which their company is engaged, their products should be charged at the rate proposed as at para-2; that as few of their products are used for farming, agriculture and support activity for the farming, lower rate of GST will ultimately help farmers as they are ultimately bearing the GST being the ultimate user of the goods; that they are enclosing bills for the products of PP woven fabrics and HDPE woven fabrics laminated of another company cum competitor namely Agriplast Tech India pvt.ltd. who have been charging GST at the same rate as they have proposed for their company under this application of advance ruling and that for the said company, order determining classification of goods under said HSN code has already been issued by the Advance Ruling authority. The applicant has also stated that it is undoubtedly clear that their product should be charged at the rate as specified in para-2 above as order for the same product has been passed by the Advance Ruling Authority. 7. The applicant has made some additional submission which was received through email on 19.08.2020. They have submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence under Chapter 59 of the GST, they propose to re-classify their product from Chapter 39 to 59 and have submitted the following points for reclassification under the Act: Chapter 59 (Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use). Heading 5903 applies to: (a)Textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square metre and whatever the nature of the plastic material(compact or cellular), other than: 1. Fabrics in which the impregnation, coating or covering cannot be seen with the naked eye(usually Chapters 50 to 55, Chapter 58 or 60); for the purpose of this provision, no account should be taken of any resulting change of colour; 2. 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). 8.1 The applicant has submitted that heading 5903 covers Textile fabrics, impregnated, coated, covered or laminated with plastics, other th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net 54072090 5 11. HDPE woven laminated fabrics 59039090 12 12. PP/HDPE woven fabric 59039090 12 Please determine the proper classification and rate of GST of above products." DISCUSSION & FINDINGS: 9. We have considered the submissions made by the applicant in their application for advance ruling as well as the arguments/discussions made by their representative Shri Dhaval Patel, C.S. at the time of personal hearing. We have also considered the issues involved on which Advance Ruling is sought by the applicant. 10. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to similar provisions of the GGST Act. 11. Based on the submission of the applicant as well as the arguments/discussions made by the representative of the applicant during the course of personal hearing, we find that the main issue to be decided is the classification of the products (mentioned at para 8.3 above) manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5407 10 21 ---- Parachute fabrics 5407 10 22 ---- Tent fabrics 5407 10 23 ---- Nylon furnishing fabrics 5407 10 24 ---- Umbrella cloth panel fabrics 5407 10 25 ---- Other nylon and polyamide fabrics of filament yarn 5407 10 26 ---- Polyester suitings 5407 10 29 ---- Other --- Dyed : 5407 10 31 ---- Parachute fabric 5407 10 32 ---- Tent fabrics 5407 10 33 ---- Nylon furnishing fabrics 5407 10 34 ---- Umbrella cloth panel fabrics 5407 10 35 ---- Other nylon and polyamide fabrics (filament) 5407 10 36 ---- Polyester suitings 5407 10 39 ---- Other --- Printed : 5407 10 41 ---- Parachute fabrics 5407 10 42 ---- Tent fabrics 5407 10 43 ---- Nylon furnishing fabrics 5407 10 44 ---- Umbrella cloth panel fabrics 5407 10 45 ---- Other nylon and polyamide fabrics(filament) 5407 10 46 ---- Polyester suitings 5407 10 49 ---- Other --- Other : 5407 10 91 ---- Parachute fabrics 5407 10 92 ---- Tent fabrics 5407 10 93 ---- Nylon furnishing fabrics 5407 10 94 ---- Umbrella cloth panel fabrics 5407 10 95 ---- Other nylon and polyamide fabrics of filament yarn 5407 10 96 ---- Polyester suitings 5407 10 99 ---- Other 5407 20 - Woven fabri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Notes of Chapter 56 read as under: 1. This Chapter does not cover: (a) wadding, felt or nonwovens, impregnated, coated or covered with substances or preparations (e.g., perfumes or cosmetics of Chapter 33, soaps or detergents of heading 3401, polishes, creams or similar preparations of heading 3405, fabric softeners of heading 3809) where the textile material is present merely as a carrying medium; (b) textile products of heading 5811; (c) natural or artificial abrasive powder or grain, on a backing of felt or nonwovens (heading 6805); (d) agglomerated or reconstituted mica, on a backing of felt or nonwovens (heading 6814); (e) metal foil on a backing of felt or nonwovens (generally Section XIV or XV).; (f) Sanitary towels (pads) and tampons, napkins and napkin liners for babies and similar articles of heading 9619. 2. The term "felt" includes needleloom felt and fabrics consisting of a web of textile fibres the cohesion of which has been enhanced by a stitch-bonding process using fibres from the web itself. 3. Headings 5602 and 5603 cover respectively felt and nonwovens, impregnated, coated, covered or laminated with plastics or rubber whatever the nature of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs of headings 6002 to 6006. 2. Heading 5903 applies to: (a) textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square metre and whatever the nature of the plastic material (compact or cellular), other than: (1) fabrics in which the impregnation, coating or covering cannot be seen with the naked eye (usually Chapters 50 to 55, 58 or 60); for the purpose of this provision, no account should be taken of any resulting change of colour; (2) products which cannot, without fracturing, be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15oC and 30oC (usually Chapter 39); (3) 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); (4) fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments (usually Chapters 50 to 55, 58 or 60); (5) plates, sheets or strip of cellular plastics, combined with textile fabric, where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (g) agglomerated or reconstituted mica, on a backing of textile fabrics (heading 6814); or (h) metal foil on a backing of textile fabrics (generally Section XIV or XV). 6. Heading 5910 does not apply to: (a) transmission or conveyor belting, of textile material, of a thickness of less than 3 mm; or (b) transmission or conveyor belts or belting of textile fabric impregnated, coated, covered or laminated with rubber or made from textile yarn or cord impregnated, coated, covered or sheathed with rubber (heading 4010). 7. Heading 5911 applies to the following goods, which do not fall in any other heading of Section XI: (a) textile products in the piece, cut to length or simply cut to rectangular (including square)shape (other than those having the character of the products of headings 5908 to 5910), the following only: (i) textile fabrics, felt and felt-lined woven fabrics, coated, covered or laminated with rubber, leather or other material, of a kind used for card clothing, and similar fabrics of a kind used for other technical purposes, including narrow fabrics made of velvet impregnated with rubber, for covering weaving spindles (weaving beams); (ii) bolting cloth; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing process is the printing on laminated fabric pieces as per buyer requirement and thereafter Aluminium eyelet fitted depending on the requirements of the buyer. (viii) Packing/Final checking for Inspection/Store stuffing loading shipment: After above all process, finished products is ready for dispatch and after inspection of all parameters, the laminated plastic sheeting is ready for dispatch. 12.1 The applicant has submitted that they propose to re-classify their products namely: (i) pondliner, vermibed, weed mat, azolla bed, grow bags and agro shade net from Chapter 39 to sub-heading 54072090. (ii) PP ropes from Chapter 39 to the sub-heading 56074900. (iii) HDPE Tarpaulin, PE laminated fabric, wagon cover, fumigation cover, HDPE woven laminated fabrics and PP/HDPE woven fabric from Chapter 39 to sub-heading 59039090 and claim that they have supporting evidence for the same. However, on going through the submission, we do not find any supporting evidence having been submitted by them. HDPE fabrics manufactured by the applicant are made by weaving the HDPE tapes into a fabric. These HDPE tapes are manufactured from HDPE Granules which are mixed with additives and passed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment of India issued Circular 32/85 - A.U. dated 20th November, 1985. In the Circular it was said that the Board had decided that HDPE woven sacks should be considered as articles of plastic and that the Tribunal's decision in Shellya Industries v. Collector, Central Excise (supra) can be accepted. This circular further said that in view of the dismissal of Government's appeal against CEGAT's order dated 30-12-1982 in M/s. Shree Radhe Industries v. Collector of Customs and Central Excise (supra) wherein the CEGAT has held that the HDPE tape is a plastic material, the tape shall fall in Tariff Item 15A(2) and not under Tariff Item No. 18. Therefore, in view of the aforesaid decisions on facts by the two Tribunals as confirmed by the Supreme Court and accepted by the Department there is no dispute that the HDPE woven sacks are articles of plastic. The learned Assistant Collector Central Excise, and the Collector Appeals have not given any reason as to why the articles of plastic should be treated as articles made of textile material or that the HDPE tapes are textile material. They have simply refused to go into the aforesaid decisions in view of the fact that under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners that the HDPE/PP weaving activity on regular looms as well as circular looms manufacturing fall under the purview of DGTD and no installation permission or registration of circular looms is required under Textile (Control) Order, 1986. Therefore, the petitioner was advised to approach DGTD. The D.G.T.D. certificate is Annexure P-18 which has registered the Company of one of the petitioners for weaving HDPE woven sacks. As such the woven sacks are not treated as an item of textile by the Commissioner of Textiles and the DGTD (Plastic and Polymer Directorates) has registered it as an Industry producing HDPE woven sacks. The raw material used for the production of the HDPE strips is covered under Chapter 39 and in absence of anything on the record to show that the HDPE strips are synthetic textile material the only fact that their width is less than 5 mm would not automatically put that item under entry No. 54.06 of Chapter 54 of the Central Excise Tariff of India. What the learned Asst. Collector, C. Excise and the Collector Appeals, Central Excise have done is that they have considered only the width of the strip and have come to the conclusion that since the strip is of less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss than 5 mm, therefore, it falls within 54.06 ignoring the fact that in addition to this there should be something to arrive at a conclusion that the aforesaid strip is of synthetic textile material, that if the strip is a strip of plastic only and not a synthetic textile material and is also known in the common parlance as a commodity of plastic, and the finished goods i.e. the HDPE woven sacks are also known in the common parlance as plastic woven sacks, then it cannot be held that the strips with which such bags are woven are the strips of synthetic textile material. Therefore it can be concluded that HDPE fabrics manufactured by the weaving of High Density Polyethelene (HDPE) tapes cannot be considered as "textile" material irrespective of the fact as to whether it is obtained by weaving method using power looms or hot pressed or is made from HDPE strip of width less than or more than 5 mm. Chapters No.54, 56 and 59 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) covers textile and textile articles only, whereas applicant's products/goods are not manufactured from textile material as discussed above but from HDPE tapes which are plastic material. Hence applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired, usually for a shorter length of time, like Monsoon Sheds, Wedding Mandaps, etc. (8) Fumigation covers: To protect the food grains and cereals, superior quality of polythene sheets are used in a cover form shape and for the same, fumigation is done to kill the pest. Fumigation cover is used to provide safety to the wide gamut of agricultural products from rain, water, dust, heat and insecticides. (9) A growbag is a large plastic bag filled with a growing medium and used for growing plants, usually tomatoes or other salad crops. The growing medium is usually based on a soilless organic material such as peat, coir, composted green waste, composted bark or composted wood chips, or a mixture of these. (10) Agro shade nets: These nets are classified by the amount of sunlight that can pass through it. These products are mainly used in applications related to crop protection and agriculture. (11) Azolla beds: Durable and easy to install, these Bags are suitable for Azolla cultivation and has multi uses like duck pond, fish pond. Quality of this product is 450 GSM and the size is 9ft X 6ft X 1ft. (12) HDPE woven laminated fabrics: Paper Laminated HDPE / PP woven fabric is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D OTHER CLOSURES, OF PLASTICS 3923 10 - Boxes, cases, crates and similar articles: 3923 10 10--- Plastic containers for audio or videocassettes, cassette tapes, floppy disk and similar articles 3923 10 20--- Watch-box, jewellery box and similar containers of plastics 3923 10 30 --- Insulated ware 3923 10 40 --- Packing for accommodating connectors 3923 10 90 --- Other - Sacks and bags (including cones): 3923 21 00-- Of polymers of ethylene 3923 29 -- Of other plastics: 3923 29 10--- Of poly (vinyl chloride) 3923 29 90 --- Other 3923 30 - Carboys, bottles, flasks and similar articles: 3923 30 10 --- Insulated ware 3923 30 90 --- Other 3923 40 00 - Spools, cops, bobbins and similar supports 3923 50 - Stoppers, lids, caps and other closures : 3923 50 10 --- Caps and closures for bottles kg. 10% - 3923 50 90 --- Other kg. 10% - 3923 90 - Other : 3923 90 10--- Insulated ware 3923 90 20 --- Aseptic bags 3923 90 90--- Other 3926 OTHER ARTICLES OF PLASTICS AND ARTICLES OF OTHER MATERIALS OF HEADINGS 3901 TO 3914 3926 10 - Office or school supplies : --- Office supplies of a kind classified as stationery other than pins, clips, and writing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e foam 3926 90 79 ---- Other 3926 90 80 ---- Polypropylene articles, not elsewhere specified or included --- Other: 3926 90 91 ---- Of polyurethane foam 3926 90 99 ---- Other 13.2 Chapter notes to Chapter 39 read as under: 1. Throughout this Schedule, the expression "plastics" means those materials of headings 3901 to 3914 which are or have been capable, either at the moment of polymerisation or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or lasticiser) by moulding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence. Throughout this Schedule any reference to "plastics" also includes vulcanised fibre. The expression, however, does not apply to materials regarded as textile materials of Section XI. 2. This Chapter does not cover: (a) lubricating preparations of heading 2710 or 3403; (b) waxes of heading 2712 or 3404; (c) separate chemically defined organic compounds (Chapter 29); (d) heparin or its salts (heading 3001); (e) solutions (other than collodions) consisting of any of the products specified in headings 3901 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith an average of at least 5 monomer units; (d) silicones (heading 3910); (e) resols (heading 3909) and other prepolymers. 4. The expressions "copolymers" covers all polymers in which no single monomer unit contributes 95% or more by weight to the total polymer content. For the purposes of this Chapter, except where the context otherwise requires, copolymers (including co-polycondensates, co-polyaddition products, block copolymers and graft copolymers) and polymer bends are to be classified in the heading covering polymers of that comonomer unit which predominates by weight over every other single comonomer unit. For the purposes of this Note, constituent comonomer units of polymers falling in the same heading shall be taken together. If no single comonomer unit predominates, copolymers or polymer blends, as the case may be, are to be classified in the heading which occurs last in numerical order among those which equally merit consideration. 5. Chemically modified polymers, that is those in which only appendages to the main polymer chain have been changed by chemical reaction, are to be classified in the heading appropriate to the unmodified polymer. This provision does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, fencing, gates and similar barriers ; (f) shutters, blinds (including Venetian blinds) and similar articles and parts and fittings thereof; (g) large scale shelving for assembly and permanent installation, for example, in shops, workshops, warehouses; (h) ornamental architectural features, for example, flutings, cupolas, dovecotes; and (ij) fittings and mountings intended for permanent installation in or on doors, windows, staircases, walls or other parts of buildings, for example, knobs, handles, hooks, brackets, towel rails, switch plates and other protective plates. SUB-HEADING NOTES : 1. Within any one heading of this Chapter, polymers (including copolymers) and chemically modified polymers are to be classified according to the following provisions: (a) where there is a sub-heading named "Other" in the same series: (1) the designation in a sub-heading of a polymer by the prefix "poly" (for example polyethylene and polyamide -6,6) means that the constituent monomer unit or monomer units of the named polymer taken together must contribute 95% or more by weight of the total polymer content; (2) the copolymers named in sub-headings 3901 30, 3903 20, 3903 30 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms Tariff Act, 1975(51 of 1975) 01. HDPE Tarpaulin 39269099 02. PE laminated fabric 39269099 03. PP Ropes 39269099 04. Pondliner 39269099 05. Vermibed 39269099 06. Weed mat 39269099 07. Wagon cover 39269099 08. Fumigation cover 39269099 09. Azolla Bed 39269099 10. Grow bags 39232990 11. Agro shade net 39269099 12. HDPE woven laminated fabrics 39269099 13. PP/HDPE woven fabric 39269099 14. Now, in order to find out the tax liability of the aforementioned products, we will be required to refer to Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 which contains the headings, sub-headings as well as the rates of Central Tax GST applicable to various goods which are covered under 6 schedules as under: (i) 2.5 per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule II, (iii) 9 per cent. in respect of goods specified in Schedule III, (iv) 14 per cent. in respect of goods specified in Schedule IV, (v) 1.5 per cent. in respect of goods specified in Schedule V, and (vi) 0.125 per cent. in respect of goods specified in Schedule VI On going through the aforementioned notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing amendments have been made: In Schedule-III (ii). against S. No. 108, in column (3), after the words "other closures, of plastics", the brackets, words, letters and figures "(except the items covered in Sl. No. 80AA in Schedule II]), shall be inserted; 14.4 In view of the above, we conclude that the classification of each of the products manufactured by the applicant as well as the corresponding rates of GST is as mentioned in the table below: Sr.No. Name of the product Classification as per the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) Rate of tax(GST) 01. HDPE Tarpaulin 39269099 18%(9% SGST + 9% CGST) 02. PE laminated fabric 39269099 (i) 28%(14% SGST + 14% CGST) upto 14.11.2017. (ii) 18%(9% SGST + 9% CGST) from 15.11.2017 onwards. 03. PP Ropes 39269099 04. Pondliner 39269099 05. Vermibed 39269099 06. Weed mat 39269099 07. Wagon cover 39269099 08. Fumigation cover 39269099 09. Azolla Bed 39269099 10. Grow bags 39232990 18%(9% SGST + 9% CGST) 11. Agro shade net 39269099 (i)28%(14% SGST + 14% CGST) upto 14.11.2017. (ii) 18%(9% SGST + 9% CGST) from 15.11.2017 onwards. 12. HDPE woven laminated fabrics 39269099 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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