2018 (7) TMI 391 - AAR - GST

Classification of Polypropylene Leno Bags under Tariff Sub Heading 6305 33 00

The ruling determined that Polypropylene Leno Bags made from woven Polypropylene fabric without certain coatings or laminations should be classified under ... Classification of goods - Tariff classification - Distinction between Chapter 39 and Chapter 63 - Width of strips as determinant - Impregnation, coating or lamination exclusion - Interpretation of Explanatory Notes and Section NotesClassification of goods - Tariff classification - Distinction between Chapter 39 and Chapter 63 - Width of strips as determinant - Impregnation, coating or lamination exclusion - Interpretation of Explanatory Notes and Section Notes - Classification of 'PP Leno Bags' for GST purposes as falling under Tariff Sub Heading 6305 33 00 or under Tariff Sub Heading 3923 29 90. - HELD THAT: - The Authority examined the descriptions in the tariff headings, the Section and Chapter Notes and the relevant explanatory material and standards. Note 1(g) to Section XI excludes from textile chapters any strip or the like of plastics of apparent width exceeding 5 mm, and Note 1(h) excludes fabrics impregnated, coated, covered or laminated with plastics from Section XI. The explanatory notes show that sacks and bags of polyethylene or polypropylene strips qualify as man made textile materials for Chapter 63 only where the strips have width not exceeding 5 mm and are not impregnated, coated, covered or laminated with plastics (Chapter 39). The BIS specification for PP Leno Woven sacks for fruits and vegetables indicates typical tape widths in the 2.0-2.5 mm range, and the classification therefore depends on the physical characteristics of the product actually manufactured. Applying these principles, where PP Leno Bags are specifically made from woven polypropylene strips or the like of width not exceeding 5 mm and without any impregnation, coating, covering or lamination with plastics, they fall within the scope of Tariff Sub Heading 6305 33 00; otherwise they remain within Chapter 39.'PP Leno Bags' made from woven polypropylene strips of width not exceeding 5 mm and without impregnation, coating, covering or lamination with plastics are classifiable under Tariff Sub Heading 6305 33 00; bags not meeting these criteria are not covered by that heading.Final Conclusion: The Advance Ruling: PP Leno Bags composed of woven polypropylene strips of width 5 mm and not impregnated/coated/covered/laminated with plastics are classifiable under Tariff Sub Heading 6305 33 00; the Ruling is subject to the provisions of Section 103 and may be declared void under Section 104(1) of the GST Act. Issues: Classification of Polypropylene Leno Bags under CGST/WBGST ActsIssue 1: Admissibility of Advance RulingThe Applicant, a manufacturer of Polypropylene Leno Bags, sought a ruling on the classification of the goods under the CGST/WBGST Acts. The application was admitted under Section 97(2)(a) of the said GST Act as the question raised had not been decided or was pending before any authority.Issue 2: Classification of Polypropylene Leno BagsThe Applicant manufactures Polypropylene Leno Bags primarily used for packing various products. The composition includes Polypropylene, Linear Low Density Polyethylene, and Color Master Batch. The manufacturing process involves extrusion, weaving, and stitching to form the bags. The Applicant believed the bags should be classified under Tariff Head 6305 33 00 of the GST Tariff.Issue 3: Changes in Tariff ClassificationBefore GST implementation, the Applicant cleared the bags under different Tariff Sub-Headings for domestic and export markets. The Applicant later shifted to a single Tariff Sub-Heading post-GST implementation without citing reasons for the change, leading to potential dual classification issues.Issue 4: Consideration of Test Reports and SubsidyThe Applicant submitted test reports and a subsidy communication related to the bags. However, the reports were specific to samples provided and had restrictions on reproduction for litigation purposes. The Applicant also availed a subsidy for modernization despite clearing the bags under a different chapter for Central Excise purposes.Issue 5: Interpretation of Tariff CodesThere was a lack of a specific Tariff Code for PP Leno Bags. The classification under Tariff Sub-Headings 3923 29 90 and 6305 33 00 was discussed in detail, emphasizing the need for clarity on product composition and specifications to determine the correct classification.Issue 6: Compliance with Explanatory Notes and SpecificationsExplanatory notes and specifications from the Bureau of Indian Standards were crucial in determining the classification of PP Leno Bags. Factors such as tape width and the presence of a lining in the bags were highlighted as essential features for classification.JudgmentThe ruling stated that PP Leno Bags made from woven Polypropylene fabric using strips not exceeding 5 mm in width and without any impregnation, coating, covering, or lamination with plastics should be classified under Tariff Sub Heading 6305 33 00. This classification was subject to the provisions of the GST Act unless declared void under specific sections.This detailed analysis covered the issues of admissibility, classification, changes in Tariff codes, consideration of test reports and subsidies, interpretation of Tariff codes, compliance with explanatory notes, and the final judgment on the classification of Polypropylene Leno Bags under the CGST/WBGST Acts.