2021 (1) TMI 695 - AAR - GST

Classification of Applicant's Products under Customs Tariff Act: GST Rates and Sub-Headings

In Re: M/s. Gujarat Raffia Industries Limited,

The products manufactured by the applicant, including HDPE Tarpaulin, PE laminated fabrics, PP ropes, pondliner, vermibed, weed mat, and others, were ... Classification of goods - pondliner - vermibed - weed mat - azolla bed - grow bags - agro shade net - classificable under sub-heading 54072090 or otherwise - liability of GST - N/N. 01/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- Applicant are manufacturing and supplying HDPE woven fabrics falling under Chapter 39(Plastics and articles thereof) and Tariff items 3926 (other articles of plastics and articles of other materials of heading 3901 to 3914) and sub tariff item 39269099; that the manufacturing process involves manufacturing of HDPE tapes, which are weaved into a piece of fabric and the HDPE granules are mixed with additives and passed through an HDPE tape line plant to obtain HDPE tapes(mono-axially oriented HDPE tapes); that the HDPE tapes wound into spools, are passed through power looms for weaving HDPE woven fabric. None of the (except ‘grow bags’) is covered under the Headings 3901 to 3925 of Chapter 39 as there is no specific mention of any of these products under any of the aforementioned headings. Since heading 3926 reads as ‘Other articles of plastics and articles of other materials of headings 3901 to 3914’, it implies that articles of plastics or articles of other materials not covered in any of the headings from 3901 to 3925 would be covered under heading 3926 which is a residuary entry. As per the explanatory notes to HSN with regard to heading 3926, the heading 3926 covers articles, not elsewhere specified or included, of plastics or of other materials of headings 39.01 to 39.14 - thus, the products namely HDPE Tarpaulin, PE laminated fabric PP ropes, pondliner, vermibed, weed mat, wagon cover, fumigation cover, azolla bed, agro shade net, HDPE woven laminated fabrics and PP/HDPE woven fabric would invariably be covered under heading 3926 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). Further, looking to the use of ‘Grow bags’, we find that they would be rightly classifiable under Heading 3923. Grow Bags - HELD THAT:- ‘Grow bags’ is classifiable under Sub-heading No.39232990. The other products namely HDPE Tarpaulin, PE laminated fabric, PP ropes, pondliner, vermibed, weed mat, wagon cover, fumigation cover, azolla bed, agro shade net, HDPE woven laminated fabrics and PP/HDPE woven fabric would be classifiable under Sub-heading No.39269099 of Chapter 39 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) as we do not find the specific mention of any of these products in any of the other sub-headings of Heading 3926. Liability of GST - N/N. 01/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The classification of the products manufactured and supplied by the applicant M/s. Gujarat Raffia Industries ltd., Ahmedabad (as per the First Schedule to the Customs Tariff Act, 1975(51 of 1975)) as well as the corresponding rate of GST(as per Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time)) is as detailed in the table below: HDPE Tarpaulin - Heading 39269099 - rate of GST 18%(9% SGST + 9% CGST). PE laminated fabric - PP Ropes - Pondliner - Vermibed - Weed mat - Wagon cover - Fumigation Cover - Azolla Bed - Heading 39269099 - rate of tax 28%(14% SGST + 14% CGST) upto 14.11.2017 and 18%(9% SGST + 9% CGST) from 15.11.2017 onwards. Grow Bags - Heading - 39232990 - rate of GST 18%(9% SGST + 9% CGST). Agro shade net - HDPE woven laminated fabrics - PP/HDPE woven fabric - Heading 39269099 - rate of GST 28%(14% SGST + 14% CGST) upto 14.11.2017 and 18%(9% SGST + 9% CGST) from 15.11.2017 onwards. Issues Involved:1. Classification of various products manufactured by the applicant.2. Determination of the GST rate applicable to each product.Detailed Analysis:1. Classification of Various Products:The applicant, M/s. Gujarat Raffia Industries Ltd., sought advance ruling on the classification of their products and the corresponding GST rates. The products include HDPE Tarpaulin, PE laminated fabrics, PP ropes, pondliner, vermibed, weed mat, wagon cover, fumigation cover, azolla beds, grow bags, agro shade nets, HDPE woven laminated fabrics, and PP/HDPE woven fabrics.The applicant proposed HSN codes for these products, suggesting their classification under different chapters of the Customs Tariff Act, 1975. Specifically, they proposed classifications under sub-headings 54072090, 56074900, and 59039090, which correspond to textile and textile articles.However, upon review, it was determined that the products are made from HDPE tapes, which are plastic materials. According to the First Schedule to the Customs Tariff Act, 1975, HDPE tapes and products made from them fall under Chapter 39, which covers plastics and articles thereof. The relevant sub-headings for classification were identified as follows:- HDPE Tarpaulin: 39269099- PE laminated fabric: 39269099- PP ropes: 39269099- Pondliner: 39269099- Vermibed: 39269099- Weed mat: 39269099- Wagon cover: 39269099- Fumigation cover: 39269099- Azolla Bed: 39269099- Grow bags: 39232990- Agro shade net: 39269099- HDPE woven laminated fabrics: 39269099- PP/HDPE woven fabric: 39269099The classification was based on the nature of the raw materials (HDPE granules) and the manufacturing process, which involves weaving HDPE tapes into fabrics, laminating them, and further processing.2. Determination of GST Rate:To determine the GST rate, the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017, as amended, was referred to. This notification specifies the GST rates applicable to various goods under different schedules.- For products classified under sub-heading 3923 (Grow bags), the GST rate is 18% (9% SGST + 9% CGST).- For products classified under sub-heading 3926 (all other products), the GST rate was initially 28% (14% SGST + 14% CGST) up to 14.11.2017, and 18% (9% SGST + 9% CGST) from 15.11.2017 onwards.The applicable GST rates for each product are summarized as follows:- HDPE Tarpaulin: 18%- PE laminated fabric: 28% up to 14.11.2017, 18% from 15.11.2017 onwards- PP ropes: 28% up to 14.11.2017, 18% from 15.11.2017 onwards- Pondliner: 28% up to 14.11.2017, 18% from 15.11.2017 onwards- Vermibed: 28% up to 14.11.2017, 18% from 15.11.2017 onwards- Weed mat: 28% up to 14.11.2017, 18% from 15.11.2017 onwards- Wagon cover: 28% up to 14.11.2017, 18% from 15.11.2017 onwards- Fumigation cover: 28% up to 14.11.2017, 18% from 15.11.2017 onwards- Azolla Bed: 28% up to 14.11.2017, 18% from 15.11.2017 onwards- Grow bags: 18%- Agro shade net: 28% up to 14.11.2017, 18% from 15.11.2017 onwards- HDPE woven laminated fabrics: 28% up to 14.11.2017, 18% from 15.11.2017 onwards- PP/HDPE woven fabric: 28% up to 14.11.2017, 18% from 15.11.2017 onwardsConclusion:The products manufactured by the applicant are classified under Chapter 39 of the Customs Tariff Act, 1975, specifically under sub-headings 39269099 and 39232990. The corresponding GST rates are 18% for Grow bags and 28% (up to 14.11.2017) and 18% (from 15.11.2017 onwards) for all other products.