TaxTMI 
TaxTMI 
2019 (5) TMI 1213
X X X X Extracts X X X X
X X X X Extracts X X X X
....ounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a). On the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b). On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void sb-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specificall....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... communication of the ruling and therefore, the appeal is filed within the prescribed time-limit. 3. The Appellant manufactures Stick-Bags / Wedding Gift Bags / Packing Bags made of Non-woven Fabrics of Polypropylene/ 100% Cotton (Grey Fabrics). They have stated that Bags made of Non-woven Fabrics of Polypropylene are rightly classifiable under Tariff item No. 63 05 33 00, as 'sacks and bags, of a kind used for packing of goods, of man-made textile materials, of polypropylene strip or the like and Bags made of cotton are rightly classifiable under Tariff Item No.63 05 20 00 as Sacks and bags, of a kind used for packing of goods, of cotton respectively. They have further stated that the above said classification under the Customs Tariff is aligned with the HSN Code and it appears both in Schedule I and Schedule II of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017 as amended and G.O. Ms. 157 dated 14.11.2017 of the Government of Tamil Nadu and the rate of tax levied is based on the value of the product. i.e.,@ 2.5% CGST and 2.5% SGST- for value not exceeding Rs. 1000 per piece and @ 6% CGST and 6% SGST - for sale value exceeding Rs. 1000 per piece.; In their case, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and 'Cotton bags'. In the present appeal, the Appellant is contesting only the classification of 'Cotton bags' manufactured by them. The various contentions raised by the Appellant in the grounds of appeal are as follows: • Chapters 41 to 43 of the Customs Tariff comes under Section VIII of the Tariff, which covers "Raw hides and skins, Leather, Furskins and Articles thereof; Saddlery and Harness; Travel goods, handbags and similar containers; Articles of animal gut(other than silk-worm gut)". While Chapter 41 covers "Raw hides and Skins(other than furskins) and leather", Chapter 42 covers "Articles of Leather; Saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silk worm gut)", chapter 43 covers "Furskins and artificial fur; manufacturers thereof'; • The products covered under Section VIII are made out of raw materials originating from animal skins. The articles covered under Chapter 42 are of leather or composition leather or articles which are characteristically of leather trade. Cotton fabric has no characteristics of leather • Headings 4202 22 is based on constituent material of the oute....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d be 2.5% CGST and 2.5% SGST, if their sale price does not exceed Rs. 1000 per piece as per S.No. 224 of Schedule I of Notification 1/2017 Central Tax (Rate) dated 28.06.2017 and same rate of SGST as per the relevant State notification. • Accordingly, the decision of the AAR, to the effect that the cotton bags manufactured by them merit classification under Chapter 4202 2220 and attract 9% CGST and 9% SGST, as per S.No. 124 of Schedule III of Notification 1/2017 ibid as amended and equal amount of SGST is neither legal nor proper and deserves to be set aside. The Appellant has prayed to set aside/modify the impugned advance ruling passed by the Authority for Advance Ruling. 5. The Appellant was granted personal hearing as required under law before this Appellate Authority on 7th March 2019. The authorized representatives Shri. G.Natarajan Advocate and Shri. J. Senthilkumar of the appellant company appeared on behalf of the Appellant. The learned representatives reiterated the various contentions submitted along with the Application for Appeal. 6. We have carefully considered the various submissions made by the Appellant and the applicable statutory provisions.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tes or any interpretative rules. In the absence of any such distinction recognized in the chapter headings, the observation of the AAR is totally without the authority of law. • As per Para 2.5 of Circular No. 80/54/2018 dated 31.12.2018 issued by CBEC, Non-laminated woven bags would be classified as per their constituting materials. The above clarifications are based on the reasoning that the classification has to be decided on the basis of the constituent material. Applying this test, the woven cotton bags manufactured by them merits classification only under Chapter 63052000 only. 6.2 The contentions of the Appellant are taken one by one for consideration. The first contention of the Appellant is that Chapter 42 of Customs Tariff covers only articles of leather or composition leather or articles which are characteristically of leather trade. Classification of goods for the purposes of GST is based on the entries in the First Schedule to the custom Tariff Act 1975. In terms of explanation (iii) and (iv) to Notification No. 1/2017 - Central Tax (Rate) dated: 28-06-2017, tariff heading, sub-heading, heading and chapter shall mean respectively a tariff item, sub-head....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Hand-bags and shopping bags, of cotton u 10% - 42022230 --- Hand-bags and shopping bags, of Jute u 10% - 42022240 --- Vanity-bags u 10% - 42022290 --- Other u 10% - 420229 -- Other : 42022910 --- Hand bags of other materials excluding wicker -work or basket work u 10% - 42022990 --- Other u 10% - It is seen that 'Shopping bags of textile material' is specified in the Chapter Heading 4202 itself. Further, those shopping bags with outer surface of textile material is classified under CTH 4202 22 and thereupon depending on the constituent material, the bags are sub-classified. Applying the Interpretative Rule 1, we find that Chapter heading 4202 above, specifically classifies Shopping Bags of cotton with outer surface of textile material. In the case at hand the bags are 'shopping bags' made of Cotton having an outer and inner surface made of cotton, a textile material and merits classification under CTH 4202 22 20. Further, the Customs Tariff is based on the Harmonious System of Nomenclature(HSN) which is a dependable guide for interpretin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... per para 2.5 of the Circular, 'Non-laminated Woven bags would be classified as per their constituting materials.' Applying the test, the Appellant contends that the woven cotton bags manufactured by them merits classification only under Chapter 63052000 only. We find that the Circular mentioned is based on the deliberations in the 31^st Meeting of the GST Council. The deliberations related to the clarification as to the classification of Polypropylene Woven and Non-Woven Bags and PP Woven and PP Woven and Non-Woven Bags laminated with BOPP(Proposal SI.No. 9 of Part B of Annexure I of the Agenda). The comments proposed by the fitment Committee is '1. As per the explanatory notes to the HSN, all types of Polypropylene woven and non-woven bags and Polypropylene woven and non-woven bags laminated with BOPP (except FIBC(Flexible Intermediate Bulky Container)) are manufactured by using plastic granules (Polypropylene) which is a thermo plastic polymer and falls under HSN Code 3923. 2. In Central Excise, the Central Government had issued a Circular No. 54/12/91 dated 24.09.1992 to clarify that these items are classified under Chapter 39. 3. Fitment committee re....