Classification of "Geo Membrane for Waterproof Lining Fabrics" under GST with changing rates

The product "Geo Membrane for Waterproof Lining Fabrics" was classified under Heading 3926 of Chapter 39 as an article of plastic, specifically under Sub-heading 39269099. The applicable GST rate for the product was determined to be 28% (14% SGST + 14% CGST) up to 14.11.2017 and 18% (9% SGST + 9% CGST) from 15.11.2017 onwards. This ruling was in line with a similar case where a comparable product was classified under the same sub-heading.

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Issues Involved:
1. Classification of the product "Geo Membrane for Waterproof Lining Fabrics" (Pond Liner).
2. Determination of the applicable GST rate for the product.

Issue-wise Detailed Analysis:

1. Classification of the Product:

The applicant, M/s. Ananta Synthetic Innovations, manufactures and supplies "Geo Membrane for Waterproof Lining Fabrics" (Pond Liners). The product is made from HDPE granules and is used for waterproof lining of ponds, canals, and other water storage places. The applicant sought classification under HSN 59039090 or HSN 59119090.

Upon examination, the Authority found that the HDPE fabrics are made by weaving HDPE tapes, which are derived from HDPE granules (a plastic material). The Authority referred to the judgment of the Hon’ble High Court of Madhya Pradesh in M/s. Raj Packwell Ltd. v. UOI [1990 (50) E.L.T. 201 (M.P.)], which concluded that HDPE woven sacks are articles of plastic and not textile material. Therefore, the HDPE fabrics manufactured by the applicant cannot be considered textile material and should be classified under Chapter 39 of the Customs Tariff Act, 1975, which covers plastic materials.

The Authority further referred to the case of THE RUBY MILLS LTD., where cotton fabrics coated with plastics were discussed. However, this case was found inapplicable as the applicant's product is made from plastic material (HDPE tapes) and not cotton.

Based on the manufacturing process and the materials used, the Authority concluded that the product "Geo Membrane for Waterproof Lining Fabrics" should be classified under Heading 3926 of Chapter 39, specifically under Sub-heading 39269099, as it is an article of plastic.

2. Determination of the Applicable GST Rate:

To determine the GST rate, the Authority referred to Notification No.01/2017-Central Tax (Rate) dated 28.06.2017, which lists the applicable GST rates for various goods. The relevant entries in the notification were:

- Entry No. 111 in Schedule-III (GST rate 18%): "Other articles of plastics and articles of other materials of headings 3901 to 3914 [other than bangles of plastic, plastic beads and feeding bottles]."
- Entry No. 45 in Schedule-IV (GST rate 28%): "Other articles of plastics and articles of other materials of headings 3901 to 3914 [other than bangles of plastic, PVC Belt Conveyor, plastic beads and plastic tarpaulins]."

The Authority noted that Entry No. 45 in Schedule-IV was omitted with effect from 15.11.2017, and Entry No. 111 in Schedule-III was amended to include "Other articles of plastics and articles of other materials of headings 3901 to 3914."

Therefore, the product "Geo Membrane for Waterproof Lining Fabrics" was liable to GST at 28% (14% SGST + 14% CGST) up to 14.11.2017. From 15.11.2017 onwards, the product is liable to GST at 18% (9% SGST + 9% CGST).

Ruling:

The classification and GST rate for the product "Geo Membrane for Waterproof Lining Fabrics" (Pond Liner) are as follows:

| Sr.No. | Name of the Product | Classification | Rate of Tax (GST) |
|--------|----------------------|----------------|-------------------|
| 01. | Geo Membrane for Waterproof Lining Fabrics (Pond Liner) | 39269099 | (i) 28% (14% SGST + 14% CGST) up to 14.11.2017. (ii) 18% (9% SGST + 9% CGST) from 15.11.2017 onwards. |

This ruling aligns with the decision in the case of M/s. Gujarat Raffia Industries, where a similar product was classified under Sub-heading 39269099.

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