Classification ruling: PP bags <5mm wide under Chapter 39, not Chapter 54.

The authority ruled that PP bags made from strips less than 5mm wide are classified under Chapter 39 of the GST Tariff as articles of plastic, attracting the prevailing GST rate at the time of supply. The applicant's argument to classify them as synthetic textile materials under Chapter 54 was rejected based on previous judgments, including one from the Hon'ble High Court of Madhya Pradesh. The ruling is valid unless declared void under the GST Act provisions.

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Issues Involved:
1. Classification of PP Bags under GST Tariff.
2. Determination of applicable GST rate for PP Bags.

Issue-wise Detailed Analysis:

1. Classification of PP Bags under GST Tariff:

The applicant, M/S Nagrani Warehousing Private Limited, sought an advance ruling to determine whether PP Bags made from strips less than 5mm wide should be classified under Chapter 63 or Chapter 39 of the GST Tariff.

Department’s Viewpoint:
The department referenced previous judgments, including the Hon’ble Tribunal’s decision in the case of Gujrat Raffia Industries Ltd. and the Hon’ble High Court of Madhya Pradesh in the case of Raj Packwell Ltd. Both cases concluded that HDPE/PP bags made from plastic strips are classifiable under Chapter 39 as articles of plastics. The department emphasized that these products do not fall under textile classifications.

Applicant’s Argument:
The applicant argued that PP strips of less than 5mm width used to manufacture woven fabrics and subsequently PP bags should be classified under Chapter 54 as synthetic textile materials. They referenced various chapter notes and HSN explanatory notes to support their claim that such strips and fabrics are textile materials. The applicant also cited the Advance Ruling Authority of West Bengal's decision in the Mega Flex Plastic Ltd. case, which classified similar goods under Chapter 63.

Authority’s Findings:
The authority noted that the applicant had previously classified the goods under Chapter 39 and found no compelling reason for the change in classification. The authority also referenced the Hon’ble High Court of Madhya Pradesh’s decision in Raj Packwell Ltd., which held that HDPE woven bags/sacks are made from plastic strips and should be classified under Chapter 39. The authority emphasized that this judgment is binding and applicable to the present case.

2. Determination of Applicable GST Rate for PP Bags:

The authority concluded that the goods in question should be classified under Chapter 39 of the GST Tariff as articles of plastic. Consequently, they would attract the appropriate GST rate prevailing at the time of supply.

Ruling:
1. The goods in question shall be classifiable under Chapter 39 of the GST tariff as articles of plastic.
2. The applicable GST rate will be the rate prevailing at the date and time of supply.

Validity:
This ruling is valid subject to the provisions under section 103(2) until and unless declared void under section 104(1) of the GST Act.

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