Appellate Authority affirms PVC floor mat classification under Chapter 3918 with 18% GST rate.

The Appellate Authority affirmed the classification of the PVC floor mat under Chapter 3918 as "Floor Coverings of PVC" and upheld the applicable GST rate of 18%. The product was deemed to be entirely made of plastic without identifiable textile fibers, leading to its classification under Chapter 3918 instead of Chapter 5705. The Authority's decision was based on the composition and manufacturing process of the product, concluding that it did not qualify as a textile material.

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Issues Involved:
1. Classification of the product under the applicable tariff heading.
2. Determination of the correct GST rate applicable to the product.

Detailed Analysis:

Issue 1: Classification of the Product

Appellant's Argument:
- The appellant, engaged in manufacturing PVC carpet mats, argued that their product should be classified under Chapter 5705, which covers "Other carpets and other textile floor coverings, whether or not made up."
- They contended that their product is a textile material because it is made from PVC fibres, which are considered man-made fibres.
- They cited various definitions and sources, including the "Encyclopaedia of Textiles, Fibres and Nonwoven Fabrics" and "Textile Terms and Definitions," to argue that PVC fibres qualify as textile materials.
- They also referenced HSN explanatory notes and case laws to support their claim that PVC fibres are synthetic fibres and thus should be classified under Chapter 5705.

Authority's Argument:
- The Authority for Advance Ruling (AAR) classified the product under Chapter 3918, which pertains to "Floor coverings of plastics, whether or not self-adhesive, in rolls or in form of tiles; wall or ceiling coverings of plastics."
- The AAR reasoned that the product is made entirely of PVC, a type of plastic, and thus falls under Chapter 3918.
- They referred to Note 1(h) of Section XI, which excludes non-wovens impregnated/coated with plastics from being classified under textile chapters.

Appellate Authority's Findings:
- The Appellate Authority examined the definitions of "floor coverings" and "carpets" from sources like Encyclopaedia Britannica and Wikipedia, concluding that floor coverings include a wide range of materials, including plastics.
- They noted that the product is a web of PVC with a plastic backing, manufactured in two stages involving the impregnation of PVC.
- The Authority emphasized that the product is made of 100% plastic, and there are no identifiable fibres, filaments, or yarns in the exposed surface.
- They concluded that the product does not qualify as a textile material under Chapter 57, given the absence of textile fibres or yarns in the exposed surface.
- They also noted that the appellant had previously classified the product under Chapter 39 in the pre-GST era, indicating no change in the product's composition or manufacturing process.

Conclusion:
- The Appellate Authority upheld the AAR's classification of the product under Chapter 3918, stating that the product is specifically covered under this heading as "Floor Coverings of PVC."

Issue 2: Determination of the Correct GST Rate

Appellant's Argument:
- The appellant argued that their product should attract a GST rate of 12%, as applicable to goods classified under Chapter 5705.
- They cited entry no. 146 of Schedule II of Notification No. 1/2017-CT (Rate), which covers "Other carpets and other textile floor coverings."

Authority's Argument:
- The AAR determined that the product falls under Chapter 3918, which attracts a GST rate of 18%.

Appellate Authority's Findings:
- The Appellate Authority agreed with the AAR's classification under Chapter 3918, which specifies an 18% GST rate (9% CGST and 9% SGST).
- They noted that the appellant's argument regarding the semi-colon in entry no. 146 was irrelevant, as the product does not qualify as a textile floor covering.

Conclusion:
- The Appellate Authority confirmed the GST rate of 18% for the product, as it falls under Chapter 3918.

Order:
- The Appellate Authority upheld the AAR's order classifying the PVC floor mat under Chapter 3918, with an applicable GST rate of 18%. This order is specific to the types of PVC floor coverings/mats manufactured by the appellant as per the submitted manufacturing process and the sample produced.

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