TaxTMI 
TaxTMI 
2019 (10) TMI 314
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2.1 The applicant is engaged in the manufacturing of various products which are used in packaging process and in agro based water conservation. The applicants have been carrying out activity of manufacturing various types of packaging material falling under Headings 6305, 3923 and 3926 and the description of the said goods are as under; Sr. No. Item Description HSN Code. 1. Flexible Intermediate Bulk Containers i.e. FIBC Bags 6305 32 00 2. PP Woven Bags/HDPE Woven Bags 6305 33 00 3. PP Stitching Yarn 6305 90 00 4. HDPE/LDPE/LLDPE/PP Extruded &/or Co- extruded Plastic Film Rolls. 3920 10 12/ 3920 10 92/ 3920 20 20 5. HDPE/LDPE/LLDPE Poly Bags. 3923 21 00/ 3923 29 90 2.2 In addition to the above, the applicant is also manufacturing and supplying products for water conservation and other water preserving products which are predominantly used for agricultural sector. The applicant is a leading manufacturer of the products namely "Geo Membrane for Water Proof Lining-Type-ll as per IS:15351:2015" which is used for Water Proof Lining of Ponds. Canal....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sheet which is further uniformly slitted into no. of tapes. These tapes are then passed through hot air oven for twist stretching with proper orientation to the tapes to achieve the required tape width and desired strength. Width of the tape/ strip is between (2.1 mm to 3.7 mm.) and the Linear Density of the tape/ strip is 1900 - 2100 Denier. Tapes/ strips are wound on bobbins for further processing. Fabric Weaving : HDPE woven fabrics are manufactured on circular looms. As per design of woven fabric creels & shuttle of loom is loaded with bobbins. As per requirement of fabric adjust the size of ring and mesh. These tapes are then passed through circular ring on horizontal & vertical direction. Set the all parameter as per geomembrane fabric standard. Liner Film Extrusion : Film is manufactured from Polyethylene (PE) granules and required suitable UV stabilizer is added. Granules are then extruded through circular die to produce blowing film which further uniformly passed through take up roller to get the required film width & micron. Tubular film is made on surface winder & it flatten with help of guide roller. Lamination Coating : The HDPE woven fabric....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stomer to provide complete water resistance so as to be used for water proof linings. 3.2.2 As regards to the flow of classification for the above products which are arising during the course of manufacturing, they clarified as under; (A) The first product which comes into existence is the "HDPE Tapes Less Than 5 mm In Width" and it is the claim of the applicant that the same are covered under HSN 5404 90 20. In support of the said classification, they referred the following : (i) Chapter Note 2(p) to Chapter 39 of HSN/GST Tariff visualizes exclusion of "Goods of Section-XI (Textile & Textile Articles)" from the scope of the Chapter 39. (ii) Section XI covers Textile & Textile Articles and Section Note 1 (g) excludes only strips of plastic where the width is exceeding 5 mm. The said wording read as under : "1. This Section does not cover : (a)...................... (g) Monofilament of which any cross sectional dimension exceeds 1 mm or strip or the like (for example, artificial straw) of an apparent width exceeding 5 mm, of plastics (Chapter 39), or plaits or fabrics or other basket ware or wickerwork of such mono....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an 5 mm" of 5404 90 20 are Woven into Fabrics on special circular looms and the said HDPE Strips Woven Fabrics shall be covered under Heading 5407 and under sub-heading 5407 20. To substantiate the said claim, the applicants are reproducing the description of both the Headings as under : • "5407 - Woven Fabrics of Synthetic Filament Yarn, including Woven Fabrics obtained from materials of Heading 5404". • "5407 20 - Woven Fabrics obtained from strip or the like" The said Heading and sub-heading clearly visualizes that the Woven Fabricsfrom HDPE Strips and Tapes of less than 5 mm of Heading 5404 shall be covered under Heading 5407 20 of the HSN. (C) The above Woven Fabrics covered under Heading 5407 20 is subjected to sandwich lamination of plastics as explained above and brings into existence Geomembrane pond lining fabrics which is a textile fabrics of a kind used for technical purposes. The said Industrial Technical Fabrics are supplied in piece form or are in cut to length as per the specification of the customer and supplied in pieces and are covered under Heading 5911, for which they refer to the following : (i) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed or laminated with rubber, leather or other material, of a kind used for card clothing, and similar fabrics of a kind used for other technical purposes, including narrow fabrics made of velvet impregnated with rubber, for covering weaving spindles (weaving beams)" 3.3 They submitted that on perusal of the above, it would be observed that the, "Laminated High Density Poly Ethylene HDPE Woven Geomembrane for water proof lining - IS:15351:2015", are made from HDPE Tapes/ Strips of less than 5 mm which are specifically covered under Heading 5404 as Synthetic Textile Material and the specially woven fabrics from the said HDPE Tapes/ Strips are covered under Heading 5407 20. 3.3.1 The applicant submitted that it is the said HDPE Woven Fabrics which is referred as Woven Fabrics made from Synthetic Textile Material which is subjected to LDPE Coating and Lamination referred as Sandwich Lamination. After the said process two or more pieces of said Sandwiched Laminated Geomembrane fabrics are joined/ seamed together by a suitable heat air blower sealing process keeping into the requirement of the customer based on which the said fabrics are cut and joint and cut sealed as per standard....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Tapes and Fabrics are covered under Section XI and they are out of the scope of Chapter 39 and accordingly the same cannot be covered under the scope of Heading 3926 of the HSN. 3.6 The applicant reserve their right to produce copies of all the GST tariff/HSN Pages and the relevant pages of the Explanatory Notes to HSN which have been referred above, at the time of hearing or as and when directed as a separate paper book. 3.6.1 Without prejudice to the above, the Applicant further submit that on perusal of various sub-headings and elements covered under the Heading 3926 dearly illustrates that the "Laminated High Density Poly Ethylene HDPE Woven Geomembranefor water proof lining - IS:15351:2015", would not be covered under any of the sub-heading under 3926. 3.7 In addition to the above submissions, the applicants wish to refer and rely on the following Notifications and Circulars which substantiate that the relevant Government authorities also considered the said product i.e. "Laminated High Density Poly Ethylene HDPE Woven Geomembrane for water proof lining IS:15351:2015", as Textile Fabrics for technical purposes and technical uses and is considered as a part of Textile ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es Ltd. v. U.O.I, reported at 2008 (223) E.L.T. 44 (Raj.). 3.10 The applicant submitted that the said two High Court decisions shall not apply to the facts of the case as the products are different and further the scope of Section XI and Chapters 54 & 55 for the relevant period before the High Courts and before your Honour during the tenure of GST i.e. in HSN is different. 3.10.1 It is observed that the product in case of Raj Pack Well Ltd. before M.P. High Court was classification of HDPE Tapes and HDPE Woven Bags and Sacks. Similarly in Rajasthan Synthetic Industries Ltd., before Rajasthan High Court, the products were HDPE/PP tapes and HDPE/PP Woven Sacks respectively. None of the said High Courts had an opportunity to evaluate the classification under Heading 5911 for Textile Fabrics duly laminated and coated with plastics for technical purpose and technical uses as enumerated above. Accordingly the said High Court decisions cannot be applied to the facts of the case. 3.11 Without prejudice to the above, the applicant further submitted that the period before both the Hon'ble High Courts were 1988-89 & 1989-90, wherein the scope of Chapter 54 was different as compar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Plastics. The applicant requested to pass appropriate order confirming the said classification and requested to grant the PH. 4. Records of personal hearing : To abide by the law of natural justice personal hearing in the case was fixed on 22-7-2019 vide this office letter F. No. V/AR-01/Emmbi/DMN/2019-20/ , dated 15-7-2019. But they requested for another date. Hence, one more chance of personal hearing was given to them and PH in this case was fixed on 30-7-2019. Shri S.T. Manimarpan, GM (Commercial) of the applicant appeared for personal hearing before us. He submitted sample of the product manufactured by them alongwith supporting literature. Further he argued that the raw material used for the product is LDPE and its further process is to convert into tape to fabrics which is later on laminated. In the market their product is used for lining of Pond and water bodies. They further contested that their product is laminated fabrics, hence, falls under Ch. 59 instead of 39 of GST Tariff and requested that their application may be decided accordingly. 5. Discussion and Findings : 5.1 In the present case we have to decide the correct classification of the ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Circular looms. As per design of woven fabric creels & shuttle of loom is loaded with bobbins. As per requirement of fabric adjust the size of ring and mesh. These tapes are then passed through circular ring on horizontal & vertical direction. Set the all parameter as per geomembrane fabric standard. 5.2.3 The third stage is Liner Film Extrusion. Film is manufactured from Polyethylene (PE) granules and required suitable UV stabilizer is added. Granules are then extruded through circular die to produce blowing film which further uniformly passed through take up roller to get the required film width & micron. Tubular Film is made on surface winder & it flatten with help of guide roller. 5.2.4 Fourth stage of manufacturing of the product in question is Lamination Coating. The HDPE woven fabric is laminated on both sides with LDPE with suitable combination of LLDPE. The coating film is UV stabilized by incorporating 2.5 +/- 0.5 percent of carbon black with uniform dispersion. HDPE woven fabric is bonded with single side LDPE coating. Similarly other side of the fabric is bonded together by sandwich lamination. For sandwich lamination, HDPE woven fabric is bonded with LDPE coatin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Other articles of plastics and articles of other materials of Heading 3901 to 3914 [other than bangles of Plastics, plastic beads and feeding bottlies]" 6.1 On perusal of the Heading 3926, it is observed that HSN code 3926 covers the goods Articles of plastics or of materials covered under Heading 3901 to 3914. The scope of the said term "Plastics" has to refer to Chapter Note 1 to Chapter 39 which reads as under : "1. Throughout this schedule, the expression "plastics" means those material of Heading 3901 to 3914 which am or have been capable, either at the movement of polymerization or at some subsequent stage, of being formed under external influence (usually heat and pressure; if necessary with a solvent or plasticizer) by moulding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence. Throughout the schedule any reference to "plastics" also includes vulcanized fibre. The expression, however, does not apply to materials regarded as textile material of Section XI". 6.2 On perusal of the above Chapter Note 1 to Chapter-39, it is amply clear that the textile materials of Section XI are excluded from th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g spindles (weaving beams); 7.2 Now we refer and reproduce the Heading and sub-heading of 5911. "5911 - Textile products and articles, for technical uses, specified in Note 7 to this Chapter; such as Textile fabrics, felt and feltlined woven fabrics, coated, covered or laminated with rubber, leather or other material of a kind used for card clothing, and similar fabrics of a kind used for other technical purposes, including narrow fabrics made of velvet impregnated with rubber, for covering weaving spindles (weaving beams); Bolting doth, whether or not made up; whether or not impregnated or coated, of a kind commonly used in other machines, Cotton fabrics and articles used in machinery and plant, Jute fabrics and articles used in machinery and plant, Textile fabrics of metalized yarn of a kind commonly used in paper making or other machinery, Straining cloth of a kind used in oil presses or the like, including that of human hair, Paper maker's felt, woven, Gaskets, washers, polishing discs and other machinery parts of textile articles" 5911 10 00 - Textile fabrics, felt and feltlined woven fabrics, coated, covered or laminated with rubber, leather or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ature, have precedence over functional test and commercial parlance for the purpose of classification. This principle was reaffirmed by the Supreme Court in CCE v. wood Polymers Ltd. - 1998 (97) E.L.T. 193 (S.C.), wherein it was reiterated that classification should be done as per the rules of interpretation contained in the Tariff and not as per trade parlance and commercial understanding. Trade parlance was to be examined only if the tariff entry is ambiguous - Nirlon Synthetic Fibres v. UOI - 1999 (110) E.L.T. 445 (Bom.) or if the statute did not define the words - Indo International Industrial v. CST - 47 STC 359 (S.C.) = 1981 (8) E.L.T. 325 (S.C.). 8.1 We further note that the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. According to Rule 3(a), a heading which provides the most s....