2018 (5) TMI 528 - AAR - GST

Classification Dispute: GST Rate for PVC Floor Mats

In Re: M/s. National Plastic Industries Ltd.

The case involved the classification and applicable rate of GST on PVC floor mats. The applicant argued for classification under Chapter 5705 as textile ... Classification of the PVC floor mat - applicable rate of GST - whether classified under CTH 5705 or otherwise? - Manufacturing at two stages - Stage I being PVC Monofilament production and carpet piling process and stage 2 being Web-lamination and backing process. The prime raw material being used for the aforesaid product is PVC (Poly Vinyl Chloride). - Whether to be termed as ‘textile’ or ‘textile material’ as defined in dictionary. Held that: - PVC falls in Chapter 39, more specifically Heading 39.04, The impugned product is nonwoven and is impregnated with liquid PVC. We have seen above that the Chapter 39 covers substances called polymers and semi-manufactures and articles thereof, provided they are not excluded by Note 2 to the Chapter. The Note 2 reproduced above excludes goods of Section Xl and Section XI excludes nonwovens, impregnated, coated, covered or laminated with plastics, or articles thereof, of Chapter 39. The impugned product is not only impregnated but also coated with PVC, which is a plastics of Chapter 39. - The present product is made from PVC only and there should be no doubt whatsoever that the same would fall in Chapter 39 which covers PVC, a polymer and articles thereof. Having seen thus, there arises no occasion for us to discuss the Heading 5705 which is claimed as being applicable. The case laws being buttressed in respect of the applicability of the Heading 5705 also need no discussion as to their applicability or otherwise. However, we would like to observe herein that we are not at all disagreeable to the point that there are man-made textiles but the same are not required to be referred to here in view of the impugned product being clearly classifiable under Chapter 39 as per discussions held hereinabove. The Heading 3918 covers floor coverings of plastics, whether or not self-adhesive, in rolls or in the form of tiles - the applicant informs that the manufactured product is a product of running length which is then cut into size as given/ specified by the customer. The product is described as being a PVC Carpet Mat and therefore, it is clear that the impugned product would fall in the entry no.104A of Schedule Ill, thereby attracting tax at the rate of 18% (9% each of CGST and SGST). Ruling:- PVC floor mat, as described hereinabove, would fall in the Customs Tariff Heading 3918 and the applicable rate of GST theron would be 18% (9% each of CGST and SGST). Issues Involved:1. Classification of PVC floor mat.2. Applicable rate of GST on PVC floor mat.Detailed Analysis:1. Classification of PVC Floor Mat:The applicant sought an advance ruling on the classification of PVC floor mats, proposing that they should be classified under Chapter 5705 of the Customs Tariff, which pertains to 'other carpets and other textile floor coverings.' The applicant provided a detailed description of their manufacturing process, emphasizing that the product is made from PVC monofilament yarn and liquid PVC.Applicant's Argument:- The applicant argued that their product should be classified under Chapter 5705, citing various definitions and explanations from textile dictionaries and encyclopedias to support their claim that PVC fibers should be considered textile materials.- They also referred to the HSN explanatory notes for Chapter 5705, which include bonded pile carpets where the pile surface is bonded to a substrate, and argued that their product fits this description.- The applicant contended that the term 'textile' should include PVC fibers, as per various technical definitions and classifications in textile literature.Department's Argument:- The department argued that the product should be classified under Chapter 3924 (articles of plastics) or Chapter 3918 (floor coverings of plastics), emphasizing that the primary raw material is PVC.- They pointed out that the product does not meet the requirement of Chapter 5705, which includes carpets and floor coverings where cotton predominates by weight.- The department also noted the lack of detailed information and samples from the applicant to support their claim.Authority's Observations:- The authority reviewed the manufacturing process and the composition of the product, noting that it is made from PVC yarn impregnated with liquid PVC.- The HSN Notes to Chapter 39 define PVC as a polymer and state that the chapter covers substances called polymers and articles thereof, provided they are not excluded by Note 2 to the Chapter, which excludes goods of Section XI (textiles and textile articles).- The authority concluded that the product is a nonwoven material impregnated with PVC, falling under Chapter 39, specifically Heading 3918, which covers floor coverings of plastics.2. Applicable Rate of GST on PVC Floor Mat:Having classified the product under Heading 3918, the authority then determined the applicable GST rate.Authority's Decision:- The authority referred to Notification No. 1/2017-Central/State Tax (Rate), which specifies the GST rates for various products.- They identified entry 104A of Schedule III, which covers 'floor coverings of plastics, whether or not self-adhesive, in rolls or in the form of tiles,' attracting a GST rate of 18% (9% CGST + 9% SGST).Conclusion:The PVC floor mat is classified under Customs Tariff Heading 3918, and the applicable rate of GST is 18% (9% CGST + 9% SGST).Order:For reasons discussed, the PVC floor mat falls under Customs Tariff Heading 3918, and the applicable GST rate is 18% (9% each of CGST and SGST).