TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 528
X X X X Extracts X X X X
X X X X Extracts X X X X
.... provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act/MGST Act would be mentioned as being under the "GST Act" 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus - 1) "M/S National Plastics (hereinafter referred to as the 'applicant') is a company engaged in the manufacture of floor mats made of PVC, known as PVC Carpet Mats, 2) Manufacturing of the same is undertaken in two stages. Stage I being PVC Monofilament production and carpet piling process and stage 2 being Web-lamination and backing process. The prime raw material being used for the aforesaid product is PVC (Poly Vinyl Chloride). The stages or manufacture are as follows: a) Under Stage 1, PVC monofilament yarn with decitex ranging from 1200 to 2800 and filament diameter range 0.38 to 0.75 mm is extruded through a perforated dis plate using T-die extrusion. Extrusion is done through 3 to 4 parallel rows along the entire width of T-die and the vertically extruded yarn immediately falls on a water bed to form a non-woven carpet pile. Also, referred to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification." Thus, for the purpose of GST, Classification of goods under any tariff item/ sub-heading / heading/ chapter shall be done using the general rules of interpretation of the First Schedule of the Customs Tariff Act, 1975 including the Section and Chapter Notes and the General Explanatory Notes to the HSN of the First Schedule of the CTA, 1975. It is submitted that the above explanation are also part of the notification 01/2017-State Tax (Rate) and thus the above ratio will apply to state notifications also. 5) In our view, Chapter Heading 5705 of the Customs Tariff, the heading of which reads as "other carpets and other textile floor coverings, whether or not made up" is the relevant entry in this case. The relevant extract is as follows: Tariff Item Description of goods Unit 5705 OTHER CARPETS AND OTHER TEXTILE FLOOR COVERINGS, WHETHER OR NOT MADE UP 570500 - Other carpets and other textile floor coverings , whether or not made up : --- Carpets : 57050011 ---- Of silk m2 57050019 ---- Ot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that Chapter 57 covers those carpets and floor coverings in which textile material serves as the exposed surface of the article. 8) The term 'textile' or 'textile material' is not defined in the GST Act. Therefore, reference can be taken from various Textile Dictionaries and Encyclopedia to ascertain the meaning of this term. a) "Encyclopedia of Textiles, Fibres and Nonwoven Fabrics" edited by Martin Grayson and published by Wiley-Interscience Publication has defined the term 'textile material' (Relevant extract attached as annexure B). This encyclopedia is another in the series of carefully selected reprints from the world-renowned Kirk-Othmer Encyclopedia of Chemical Technology, designed to provide specific audiences with articles grouped by a central theme. As a handy desk reference, it incorporates all the original articles related to textiles, fibers, and non-woven fabrics, as well as specialty fibers such as elastomeric applications, synthetic leather, artificial turf, and more. The term 'textile material' as defined in this publication is as follows: "Textile materials are among the most ubiquitous in society. They provide shelter and protection from the environment in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Textile Institute has also defined the term 'textile'. The Textile Institute is an international organisation governed by a Council representing members throughout the world. It is legally constituted by a Royal Charter, granted in Britain in 1925. The main central functions are the provision of an operational framework and the maintenance of quality, particularly in regard to professional qualifications and the spread of information to members and others. The term 'textile' as per this publication is defined as follows: "A textile was originally a woven fabric, but the terms textile and the plural textiles are now also applied to fibres, filaments and yarns, naturals and manufactured and most products for which these are a principal raw materials. Note: This definition embraces, for example, fibre based products in the following categories threads, cords, ropes and braids; woven knitted and nonwoven fabrics, lace, nets and embroidery, hosiery, knitwear and made up apparel; household textile, soft furnishing and upholstery; carpets and other floor covering; technical, industrial and engineering textile including geotextiles and medical textiles. Therefore, from the above d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the Explanatory Note to this Chapter. Under note 1 to chapter 54, the term ";man-made fibres", when used in chapter 54 and 55 or elsewhere in the Nomenclature, means filaments or staple fibres composed of organic polymers produced by manufacturing processes, either by: (1) Polymerisation of organic monomers or chemical modification of the resulting polymers (see the General Explanatory Note to the Chapter 39) (synthetic fibres); or by (2) Dissolution or chemical treatment of natural organic polymers, or chemical modification of natural organic polymers (artificial fibres). (1) SYNTHETIC FIBRES The basic material for the manufacture of these fibres are generally derived from coal or oil distillation products or from natural gas. The substances produced by polymerisation are either melted or dissolved in a suitable solvent and then extruded through spinnerets (jets) into air or Into a suitable coagulating bath where they solidify in cooling or evaporation of the solvent, or they may be precipitated from their solution in the from filaments. The main synthetic fibres are: (1) Acrylic: (2) Modacrylic: (3) Polypropylene: (4) Nylon or other polyamidesa: (5) Polyeste....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n be seen that the mats and mattings where cotton is predominant is placed after the use of semi-colon. The applicant relies on the following judgments wherein has been held that when two sentences are separated by a semi-colon, they have to be read disjunctively: a) Heidelberg Cement (India) Ltd. 2014 (8) TMI 251 - CESTAT Mumbai b) Mc Dowell Co. Ltd. 1997 (94) ELT 215 (Tribunal) = 1997 (5) TMI 149 - CEGAT, NEW DELHI Therefore, in the present case, since semi-colon has been used, the condition of predomination of cotton will only apply to mats and mattings, including bath mats covered by the clause after use of semi-colon. It has been contended in the advance ruling application that our product is covered under the term 'Other textile floor coverings' which is used prior to the use of semi-colon. Thus, the condition of use of cotton will not apply. 2) Even if it is assumed that the semi-colon does not separate the entry and it is to be read conjunctively. still the impugned product will be classified under serial no 146 of the notification. It is submitted that the entry intends to cover carpets and other textile floor coverings. The entry uses the term 'such as' and mentions....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ifiable under chapter heading 3924. However, it was lately realised that the main ingredient in the product is PVC fibre which is a textile material. Detailed submission on the same has been made in the advance ruling application. Thus, the applicant now wants to obtain the ruling from the authority for ascertaining the correct classification. It is submitted that there is no principle of estoppel in taxation. The applicant relies on the case of MICRO TIPS PV., LTD. 1998 (104) E.L.T. 76 (Tribunal)= 1998 (6) TMI 195 - CEGAT, NEW DELHI wherein the CESTAT has held that the principle of estoppel and res judication are not applicable in tax matter. The relevant extract reads as follows: 15. The appellant also relied upon the classification of the goods in earlier assessment order. We find that is a settled issue that estoppel and res judication are not applicable in tax matter. Hon'ble Delhi High Court In the case of Metal Forgings Pvt. Ltd. v. Union of India reported in 1985 (20) E.L.T. 280 = 1984 (12) TMI 68 - HIGH COURT OF DELHI AT NEW DELHI held as under: 16. There is no merit to the plea of estoppel raised by the parties the different contexts. There is no as estoppel in a taxing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ED, WHETHER OR NOT MADE UP. It is submitted that artificial turfs also made up of PVC fibres but is sewed on the backing fabric with the help of-specialized multi-needle sewing machines. This process is called tufting. Therefore, the product is classifiable under chapter heading 5703. However, in the case of product under dispute in the present case, there is no tufting carried out. In the present case, the PVC fibres are extruded and the pile is then bonded on to the backing material with the help of adhesives, Thus, the product is classifiable under chapter heading 5705." 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- "Submission of NIL date as signed on dt.05.02.2018 1. It IS submitted at the outset that the applicant ought to have furnished all the relevant information and details in his application necessary to decide the issue. However scrutiny of the documents received has revealed that the applicant has not provided following information/details which are crucial for taking decision in the matter:- i) The applicant has requested to classify their products i.e. PVC carpet mal (PVC Floor mats) under Ch. 5705 wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct of running length. It is then cut into size as given specified by the customer. However, it is not coming out from the above reasoning as to what is their product/product-range and how the same merits classification under chapter heading 5704. 3. As per the GST Tariff, the products which are classifiable under 5705 have been clearly mentioned as "other carpets and other textile floor covering, whether or not made up [such us mats, & mattings including bath Mats, where cotton predominates by weight, of handlooms, cotton rugs handlooms]". From the Annexure-1 submitted by the applicant, it is observed that they have clearly mentioned that the prime raw material being used for PVC carpet mats PVC (Poly vinyl Chloride). However, the requirements of chapter 5705, are such that cotton should predominate by weight. In these circumstances, it is not clear as to how the product of Applicant can be classified under CH 5705. 4. The classification under Chapter Heading 3924 and Chapter heading 5705 are mutually exclusive as Chapter heading 3924 is for certain articles of plastics whereas Chapter heading 5705 is for articles of cotton. However, the application of the applicant and th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....03067382 dt. 26.10.2017 for import of artificial turf by sister concern M/s. Rayzon Global LLP. The product has been classified under CH 57033090 which covers carpets other textile floorings, Tufted, whether or not made up. It is submitted by them that artificial turfs also made up of PVC fibres but is sewed on the backing fabric with the help of specialised multi-needle sewing machine. This process is called tufting. Therefore, the product is classifiable under CH 5703. However, they have further stated that in the subject case, to the product under dispute, tufting is not carried out, the PVC fibers are extruded and the pile is then bonded on to the backing material with the help of adhesives, hence the product is classifiable under CH 5705, so it is not understood why the applicant has submitted the said sample, which has no bearing with the instant case. 2]. Further, they were again emphasizing that their product namely PVC carpet should be classifiable under chapter 5705. However, chapter 5705 clearly states that "other carpets and other textile floor covering, whether or not made up; such as mats, & mattings including bath Mats, where cotton predominates by weight, of handlo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'other textile floor coverings' cannot be restricted. However, on going through the decisions of the above case laws, it is found irrelevant with above referred case, as the decisions of these cases are based on the facts of the said cases. 5] The applicant has failed to provide samples of each products with all the details so that relevant facts of each products would he analysed in the light of existing GST Law and applicability of any other case law under erstwhile Central Excise Regime. 6] The applicant has banked on above case laws in their submission at the time of hearing which is misplaced and not applicable mutatis mutandis in their case because the details of the products of the applicant has not been provided. The decisions in these cases are specific to the facts of those cases and cannot be a generalised without comparing the products of the appellant with that of the above said case laws. Further, it has also to be seen as to how the case law pronounced for Central Excise regime may be applicable under GST regime. The applicant has failed to provide any reasons as to how the said case law will be applicable under GST regime. 7] Further, from the enquiries made wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y changing the process parameters, usually in the range of 8 mm to 16 mm. b) Under Stage 2, the web formed in Stage 1 is impregnated with a lamination of clear coat of liquid PVC and is further made to fall over the liquid PVC layer on a conveyer belt, Then it passes through the heated conveyor oven to solidity the liquid PVC backing to the web. c) The resultant product is a product of running length. It is then cut into Size as specified by the customer. As can be seen, the product is made from PVC yarn which is impregnated with liquid PVC. PVC is poly(vinyl chloride). The Harmonized System of Nomenclature Explanatory (HSN) Notes to Chapter 39 (General Notes) say that PVC is a polymer. The HSN - General Notes to Chapter 39 say that "In general, this Chapter covers substances called polymers and semi-manufactures and articles thereof, provided they are not excluded by Note 2 to the Chapter". This Note 2 to the Chapter 39 says- 2. This Chapter does not cover : (p) goods of section Xl (textiles textile articles); The HSN Notes to Chapter 39 have defined the word "plastics" as - 1. Throughout the Nomenclature the expression "plastics" means the materials of headings 39.01 to 3....
X X X X Extracts X X X X
X X X X Extracts X X X X
....need no discussion as to their applicability or otherwise. However, we would like to observe herein that we are not at all disagreeable to the point that there are man-made textiles but the same are not required to be referred to here in view of the impugned product being clearly classifiable under Chapter 39 as per discussions held hereinabove. Now as can be seen that the applicant's query is in respect of the classification of the PVC floor mat and the applicable rate of GST on the same, we would now move on to decide the rate on the impugned product. There is no specific entry in the Schedule for goods exempted from GST as found in the Notification no. 2/2017-Central/State Tax (Rate) which would cover the impugned product. In the Schedule for goods taxable to GST at various rates as found in the Notification no. 1/2017-Central/State Tax (Rate), the following entries may be looked at - S.No. Chapter/Heading/Sub-heading/Tariff item Description of Goods GST Rate [CGST + MGST] 104A. 3918 Floor coverings of plastics, whether or not self-adhesive, in rolls or in form of tiles; wall or ceiling coverings of plastics 18% [9% + 9%] 109 3924 Tableware, kitchenware, other ....