2018 (12) TMI 710 - AAAR - GST

Appeal Dismissed: HDPE Woven Tarpaulin Classification Upheld under GST

The appeal by M/s. East Hooghly Polyplast Pvt. Ltd. against the West Bengal Authority for Advance Ruling's decision regarding the classification of 'HDPE ... Classification of HDPE laminated tarpaulins under Chapter 63 (HSN 6306) - Exclusion of textiles impregnated, coated, covered or laminated with plastics by Note 1(h) to Section XI - Scope of Note 1(g) to Section XI regarding monofilament/strip width - Relevance of BIS specifications (IS 7903:2017 and IS 6192:1994) to tariff classification - Alignment of GST Tariff with the First Schedule of the Customs Tariff ActClassification of HDPE laminated tarpaulins under Chapter 63 (HSN 6306) - Exclusion of textiles impregnated, coated, covered or laminated with plastics by Note 1(h) to Section XI - Relevance of BIS specifications (IS 7903:2017) to product characterisation - Tarpaulins made from HDPE woven fabrics which are laminated as per IS 7903:2017 are not classifiable under Chapter 63 (HSN 6306) of the GST Tariff. - HELD THAT: - The Advance Ruling correctly applied Note 1(h) to Section XI, which excludes from Chapters 50-63 'Woven, knitted or crocheted fabrics, felt or nonwovens, impregnated, coated, covered or laminated with plastics, or articles thereof, of Chapter 39.' The material produced by the appellant was shown by sample and supporting documents to be HDPE woven fabric laminated with LLDPE in conformity with IS 7903:2017; lamination is an integral and determinative step for the product to function as a waterproof tarpaulin. Consequently the lamination cannot be disregarded and the laminated fabric falls within the exclusion in Note 1(h), precluding classification under Chapter 63. The AAR's application of the tariff notes to deny classification under HSN 6306 is therefore justified. [Paras 7, 8, 9, 10]The tarpaulins in question, being HDPE woven fabrics laminated as per IS 7903:2017, are excluded from Chapter 63 by Note 1(h) and therefore are not classifiable under HSN 6306; the AAR ruling is upheld.Final Conclusion: The appeal is dismissed; the Advance Ruling (Order No. 12/WBAAR/2018-19 dated 20.07.2018) is affirmed in its entirety and the tarpaulins laminated as per IS 7903:2017 do not fall under Chapter 63 (HSN 6306). Issues:Classification of 'HDPE Woven Tarpaulin' under HSN 6306 of GST tariff.Detailed Analysis:1. Background and Appeal: M/s. East Hooghly Polyplast Pvt. Ltd. appealed against the Advance Ruling No. 12/WBAAR/2018-19 dated 20.07.2018 by the West Bengal Authority for Advance Ruling (AAR). The company sought clarification on whether 'HDPE Woven Tarpaulin' should be classified under HSN 6306 of the GST tariff.2. AAR Ruling: The AAR, after considering relevant Section Notes of the Tariff Act and BIS specifications, ruled that 'Tarpaulins made of HDPE woven fabrics' do not fall under HSN 6306 of the GST Tariff. The GST Tariff aligns with the First Schedule of the Customs Tariff Act, 1975.3. Grounds of Appeal: The Appellant contested the AAR's decision on various grounds, including the classification of tarpaulin under Chapter 63 based on the manufacturing process and materials used. They argued that the product should be classified under Textiles rather than Plastics as per IS standards.4. Appellant's Arguments: The Appellant emphasized that the tarpaulins were made from HDPE woven fabric for agricultural and disaster management purposes. They detailed the manufacturing process involving HDPE tapes conforming to BIS standards and lamination with LDPE or LLDPE as per IS specifications.5. AAR Observations: The AAR noted that the width of tapes used for weaving, lamination process, and compliance with IS standards were crucial factors for classification. They highlighted that the tarpaulin in question was laminated with LLDPE, making it ineligible for classification under Chapter 63.6. Conclusion: Considering the provisions of Note 1(h) to Section XI of the GST Tariff Act, the AAR upheld its ruling that tarpaulins made from HDPE woven fabrics and laminated as per IS 7903:2017 do not qualify for classification under Chapter 63. The appeal by M/s. East Hooghly Polyplast Pvt. Ltd. was dismissed, and the AAR's decision was deemed correct and justified.7. Disposition: The judgment confirmed the ruling of the West Bengal Authority for Advance Ruling, emphasizing the importance of the lamination process in determining the classification of tarpaulins. The decision was communicated to both the Appellant and the Respondent for information.