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TMI Blog2024 (8) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... hya Pradesh High Court in case of Raj Packwell Ltd. The petitioner, therefore, is liable to pay the GST @ 12% from 15.11.2017 onwards and not @ 18%. The respondent authority is, therefore, directed to apply the discounted rate of 12% of the GST on the product manufactured by the petitioner under HSN Code 59111000 of the Tariff. Petition allowed. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHTA Appearance : For the Petitioner(s) No. 1,2 : Amal Paresh Dave (8961). For the Petitioner(s) No. 1,2 : Mr Paresh M Dave (260). For the Respondent(s) No. 1 : Government Pleader. For the Respondent(s) No. 2 : Ms Hetvi H Sancheti (5618). For the Respondent(s) No. 4 : Notice Served For the Respondent(s) No. 3 : Notice Served by DS ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Heard learned advocate Mr. Paresh M. Dave for the petitioner and learned advocate Ms. Hetvi Sancheti for the respondent No. 2. 2. Rule returnable forthwith. Learned advocate Ms. Hetvi Sancheti waives service of notice of Rule on behalf of respondent No. 2. 3. Having regard to the controversy involved which is in a narrow compass, with the consent of both the learned advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es/strips are then loaded on circular looms or flat looms for weaving purpose. By employing weft and warp method of weaving, woven fabrics are produced by using the tapes/strips of width below 5 mm. These are uncoated woven fabrics of plastic: and such fabrics in rolls are further processed for producing coated/laminated fabrics on extrusion lamination machine within the applicant's factory. c) 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. d) 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 to 5910. Textile products and articles for technical use were covered under Heading 5911 of the Tariff. Geo fabrics being goods in the nature of coated textile fabrics for technical use, they specifically fall under Heading 5911 of the new Central Excise Tariff. 8. The petitioner has started the commercial production and supply of goods in its factory by the month of August, 2020 which attracted levy of GST and the rate of GST in accordance with the classification of the goods under the tariff which is based on the Customs Tariff framed by the Parliament on the basis of Harmonious System of Nomenclature (HSN). Under Chapter 17 of the GST Act, a Scheme of Advance Ruling is framed by the Parliament. The petitioner, therefore, made an application for Advance Ruling on the question whether Geo Membrane was classifiable under HSN Code 59039090 or under HSN Code 59119090, on 20.11.2020. 9. The Gujarat Authority for Advance Ruling - respondent No. 4, after hearing the application of the petitioner, passed an order dated 23.12.2020 rendering the Advance Ruling No. GUJ/GAAR/R/107/2020 dated 13.12.2020 relying upon the decision of the Hon ble Madhya Pradesh High Court in case of Raj Packwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adv. However, in view of advance ruling in case of the petitioner, the petitioner is subjected to the rate of 18% classified under Chapter 39 of the Tariff. 14. The petitioner, therefore, has preferred this petition challenging the order passed by the Gujarat Advance Ruling Authority i.e. respondent No. 4, so that the product being Geo Membrane manufactured by the petitioner is also subjected to the GST rate @ 12% under HSN Code 59111000 under Chapter 59 of the Tariff. 15. Learned advocate Mr. Dave for the petitioner submitted that the petitioner has been suffering a grave prejudice because of the above narrated facts inasmuch as the other similarly situated manufacturers are discharging GST liability at reduced rate of 12%, whereas the petitioner has to pay GST @ 18%, although the goods of all such manufacturers are the same. It was further submitted that the buyers and customers of the product are Government departments and Government corporations, because the work of providing water proof lining in respect of ponds, canals etc. is undertaken by such Government agencies in various States and the suppliers of the goods in question are recognized and registered for supplying these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, therefore, the order directing for collection of GST on fabrics manufactured by the petitioner under Chapter 39 by treating them as other goods of plastics is wholly illegal and without jurisdiction. 19. It was submitted that the Hon ble Madhya Pradesh High Court in case of M/s. Raj Packwell Ltd. (supra) as relied upon by the respondent No. 4 is not in accordance with the facts of the case as the question of fabrics had not fallen for consideration before the Hon'ble Madhya Pradesh High Court and there is no authoritative pronouncement that woven fabrics manufactured out of plastic or synthetic raw materials were to be treated as articles of plastic under the Central Excise Tariff. The only issue was arose before the Hon'ble Madhya Pradesh High Court was in respect of HDPE tape and HDPE sacks and consequently, the judgment is only for those two products and not for woven fabrics. Learned advocate, therefore, submitted that the issue of classification as decided by this Court in case of CTM Textiles Ltd. (supra) is required to be applied in the facts of the case. However, the petitioner was not aware about such judgment in the said case was pronounced on 24.12.2020 after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct would apply to the petitioner and as such, it is clear that the orders of Advance Ruling Authority are binding for the petitioner. 21. It was, therefore, submitted that the petition being devoid of any merits, is liable to be dismissed. 22. Having heard the learned advocates for the respective parties and having considered the facts of the case as emerging from the record, the short question which arises for consideration of this Court is as to whether the product, namely, Geo Membrane manufactured by the petitioner would fall under Chapter 59 or Chapter 39 of the Tariff. This issue is no more res-integra in view of the decision of the Coordinate Bench of this Court in case of M/s. CTM Technical Textiles Ltd. v. Union of India rendered on 24.12.2020 in Special Civil Application No. 8332 of 2020, wherein the Coordinate Bench after considering the issue of alternative remedy as well as entertainability of the writ petition with regard to merits of the case, has held as under : 47. In view of the aforesaid discussion, we are convinced that we should quash and set-aside the impugned Order in Original passed by the respondent No. 2 dated 30.6.2020 and remit the entire matter to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing process of both the products is recorded in the show cause notice and also in the order passed subsequently. 52. Thus, prima facie it appears that both the products are woven fabrics, and they are brought into existence by weaving method. 53. The raw materials used for both the products is High Density Polyethylene (HDPE) strips which is a plastic material. But, plastic is used for producing textile fabrics. Polyester fabrics, terelene fabrics, nylon fabrics, etc. are well known varieties of fabrics, and the raw material for all such fabrics is plastic. 54. The term textile is derived from the Latin texere which means to weave , and it means any woven fabric. The Apex Court has observed as under at para 6 of judgment in Porritts Spencer (Asia) Ltd. (supra) : There can, therefore, be no doubt that the word textiles in Item 30 of Schedule B must be interpreted according to its popular sense, meaning that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it . There we are in complete agreement with the Judges who held in favour of the Revenue and against the assessee. But the question is : What result does the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word textiles in common parlance has not been considered by the Board as well as by the Ahmedabad Collector while issuing the impugned Order and the Trade Notice respectively. Instead of considering the method of weaving as a relevant factor, the nature of the raw material seems to have been taken into consideration while issuing such Order and Trade Notice. The Board s Circular and the Collector s Trade Notice prima facie appear to be contrary to the law laid down by the Apex Court about what is textiles , and cannot be relied upon for classifying woven fabric. 57. Both the goods in question are being manufactured by the writ-applicants by weaving; it being warp knitting in case of the Agro Shade Net and weaving by warp and weft in case of the Geo Grid fabrics. Both these commodities are in the nature of fabrics, and the respondents have also accepted the fact that the Agro Shade Net are fabrics manufactured on the Raschel knitting machine, whereas the Geo Grid fabrics are woven fabrics manufactured on the weaving machines. 58. The judgment in Raj Pack Well Ltd. (supra) relied upon on behalf of the respondents has nothing to do with the HDPE fabric, but it relates to the HDPE stri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refer to the decision of this Court in the case of M/s. Darshan Boardlams Ltd. (supra), more particularly, the following observations : 103. We have also noticed that the clarifications in the present case were followed by the Central Excise Officers in charge of the Commissionerate in Uttar Pradesh, Maharashtra, Andhra Pradesh, etc. The communications were issued by the Board to the Chief Commissioner of Patna, Chief Commissioner of Hyderabad and Chief Commissioner of Pune. 104. Under such circumstances, when other Central Excise authorities of equal and higher rank have followed and acted as per the clarifications, the Commissioner, Surat, could not have taken a contrary view on the assumption that the clarifications were only letters and not orders under Section 37B. Therefore, in our view, the action on the part of the respondents in denying the benefit of Notification No.6/2006 being contrary to the Board's circulars can be termed as without jurisdiction. 105. Mr. Dave is quite justified in submitting that the Central Excise is a central levy and, therefore, such a levy has to be collected uniformly from all similarly situated manufacturers located all throughout the coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f hearing to the writ-applicants and decide the matter afresh in accordance with law, more particularly, keeping in mind the observations made by this Court. 64. We also direct the Union of India to re-look into the CBEC Circular/ Order No. 8/92 dated 24.9.1992 and the Ahmedabad Collectorate Trade Notice No.78/94 dated 9.5.1994 respectively in light of the observations made by this Court and take an appropriate decision in that regard. It will be in the fitness of things if the Union of India first apply its mind to the CBEC Circular/Order No. 8/92 dated 24.9.1992 and the Ahmedabad Collectorate Trade Notice No. 78/94 dated 9.5.1994 and take an appropriate decision in accordance with law so as to enable the respondent No. 2 to arrive at an appropriate conclusion in the fresh round of hearing. This time we make it explicitly clear that the issue of discrimination raised by the writ-applicants shall be specifically dealt with by the respondent No. 2 in an appropriate manner in accordance with law. 65. Let this entire exercise be undertaken at the earliest and be completed within a period of six months from the date of receipt of the writ of this order. 66. It is needless to clarify th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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