PVC raincoats classed as plastic under HSN 3926, not textile HSN 6201; GST 18% applies, 5% textile rate inapplicable

AAAR held that PVC raincoats are articles of plastic and correctly classifiable under HSN 3926 rather than textile HSN 6201, since PVC is a synthetic polymer and the goods are made by sealing plastic sheets. Chapters 39 and 62 are mutually exclusive, so PVC raincoats cannot be treated as woven textile apparel. Consequently, supply of such PVC raincoats attracts GST at 18% under the entry for plastics, and the concessional 5% rate for textile garments (even if priced under Rs.1,000) does not apply.

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Issues: Whether PVC raincoats manufactured by the appellant are classifiable as textile garments under HSN 6201 or as articles of plastic under HSN 3926 and what GST rate applies.

Analysis: The classification must follow the HSN structure and Explanatory Notes. Chapter 62 applies only to made-up articles of textile fabric (woven fabrics) and excludes articles of plastics covered by Chapter 39. Chapter 39 and its Explanatory Notes treat PVC as an "other synthetic polymer" and include "articles of apparel and clothing accessories made by sewing or sealing sheets of plastics" (explicitly citing raincoats). The product at issue is manufactured by fusion/thermal or chemical bonding of PVC sheets, producing a non-woven article made by sealing plastic sheets rather than by weaving yarn into fabric. The entries and rate notifications distinguish items under Chapter 62 (including the concessional 5% entry for certain textile articles of value not exceeding Rs.1000) from "other articles of plastics" under Chapter 39 (at 18%). Because Chapters 39 and 62 are mutually exclusive for the categories at issue, classification turns on the material and manufacturing process showing the product is an article of plastic.

Conclusion: PVC raincoats as manufactured are classifiable under HSN 3926 (articles of plastics) and attract GST at 18% under entry no. 111 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28-06-2017. The appeal is thus decided against the appellant.

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