Classification of Non-Woven Bags for GST: Heading No. 3923, Not 6305. GST Rates: 18% (9% CGST + 9% SGST) from 07/17.

The Non Woven Bags manufactured from Fibre grade poly propylene granules are classified under Heading No. 3923, not Heading No. 6305. As per the ruling, the bags are subject to GST rates as follows: 18% (9% CGST + 9% SGST) from 01.07.2017 to 30.09.2019, 12% (6% CGST + 6% SGST) from 01.10.2019 to 31.12.2019, and 18% (9% CGST + 9% SGST) from 01.01.2020 onwards. Additionally, the product is not eligible for exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate).

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Issues Involved:
1. Classification of Non Woven Bags under GST.
2. Eligibility for exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate).

Detailed Analysis:

1. Classification of Non Woven Bags under GST

Applicant's Submission:
- The applicant manufactures Non Woven Bags from Non Woven Fabrics, which are made from Fibre grade poly propylene granules using Spun Bond technology.
- The applicant argued that these bags should be classified under Heading No. 6305, as they are made from Non Woven fabrics classifiable under Heading No. 5603.
- They referenced various authorities and previous rulings, including the Hon'ble Supreme Court and the Tax Research Unit (TRU), to support their claim that the bags should be classified as textile articles.

Authority's Findings:
- The Authority examined relevant chapter notes, headings, and HSN Explanatory Notes for both Heading No. 6305 and Heading No. 3923.
- Chapter 39 notes define "plastics" and exclude materials regarded as textile materials of Section XI.
- The Authority cited the Madhya Pradesh High Court's decision in M/s. Raj Packwell Ltd. v. UOI, which clarified that HDPE bags made from plastic strips are classified under Heading 3923.
- The Authority concluded that Non Woven Polypropylene Bags are not made from textile materials but from plastic materials, classifiable under Heading No. 3923.

Conclusion:
- Non Woven Bags manufactured from Fibre grade poly propylene granules merit classification under Heading No. 3923, not Heading No. 6305.

2. Eligibility for Exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate)

Applicant's Submission:
- The applicant claimed that since the bags should be classified under Heading No. 6305, they would be eligible for exemption under the relevant notifications.

Authority's Findings:
- The Authority referred to CBIC (TRU) Circular No. 80/54/2018-GST, which clarified that Polypropylene Woven and Non-Woven Bags are classifiable under HS code 3923 and attract 18% GST.
- The Authority reviewed the applicable GST rates over different periods:
- From 01.07.2017 to 30.09.2019: 18% GST (9% CGST + 9% SGST).
- From 01.10.2019 to 31.12.2019: 12% GST (6% CGST + 6% SGST).
- From 01.01.2020 onwards: 18% GST (9% CGST + 9% SGST).
- Based on the classification under Heading No. 3923, the product does not qualify for exemption under the mentioned notifications.

Conclusion:
- The product Non Woven Bags is not eligible for exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate).

Ruling:
1. Classification: Non Woven Bags manufactured from Fibre grade poly propylene granules are classifiable under Heading No. 3923.
2. GST Rates: The applicable GST rates are:
- 01.07.2017 to 30.09.2019: 18% (9% CGST + 9% SGST)
- 01.10.2019 to 31.12.2019: 12% (6% CGST + 6% SGST)
- 01.01.2020 onwards: 18% (9% CGST + 9% SGST)
3. Exemption: The product is not eligible for exemption under Notification No. 01/2017-CT (Rate) and 01/2017-I.T. (Rate).

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