TaxTMI 
TaxTMI 
2021 (1) TMI 587
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....ne non-woven bags. 2. The applicant has submitted that prior to the introduction of Goods and Service Tax Act, the polypropylene non-woven bags were being classified under Heading No.6305 being the product manufactured through non-woven fabric classifiable under Heading No.5603; that prior to the introduction of Goods and Services Act, the classification of Polypropylene non-woven bags was in question before the authority under Section 94 of the Kerala Value Added Tax Act, 2003 in the case of M/s. Malabar Treads, Manjeri and the authority after considering the Heading No.5603 as appearing in the Schedule to the Central Excise Tariff concluded that the said product would appropriately be classifiable under HSN Code 6305.33.00 of the Customs Tariff Act which corresponds to Entry No.174(7)(1) of List A of the third Schedule to the KVAT Act, 2003(copy of order submitted); that after the introduction of Goods and Services Act, 2017 also, the issue of classification was under consideration by various manufacturers and representations were being made; that one of the manufacturers namely M/s. Karam Green Bags had approached DKTE CENTER OF EXCELLENCE IN NON WOVENS (Government Department....
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.... to be considered as textile article and classifiable under Heading No.63.05; that in view of the Rules of Interpretation, Heading 6305.3300 being specific heading would prevail over the General Heading of 3923; that the Honorable Advance Ruling Authority as referred above as well as the Honorable Appellate Advance Ruling Authority have settled the law and have confirmed the classification of polypropylene non-woven bags under Heading No.6305.3300 and therefore the same would be binding; that the decision of Honorable Appellate Authority for Advance Ruling is 13.05.2019, i.e. after the clarification issued by TRU section of Ministry of Finance, and therefore the same would prevail over the clarification; that the Director of DKTE Center of Excellence in non-wovens have also clarified beyond doubt that the polypropylene non-woven fabric is textile material and not plastic and therefore the product manufactured out of such material could never be classified as plastic material; that the same issue had come up before the Honorable Supreme Court in the case of Porritts and Spencers(Asia) Limited v/s State of Haryana reported in 1983 (13) ELT 1607 and the Honorable Supreme Court after c....
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.... is called Polypropylene Non Woven Fabric. The issue for decision before us is the appropriate Rate of Tax and HSN code for Nonwoven Bags manufactured by the applicant. 9. We will first discuss the appropriate classification of the goods viz. Non Woven Polypropylene Bag The applicant claims that their product is classifiable under CTH 6305. The relevant chapter Note, headings, HSN Explanatory Notes are examined as under : 6305 SACKS AND BAGS, OF A KIND USED FOR THE PACKING OF GOODS 6305 10 - Of jute or of other textile bast fibres of heading 5303 : 6305 10 10 --- Jute bagging for raw cotton 6305 10 20 --- Jute corn (grains) sacks 6305 10 30 --- Jute hessian bags 6305 10 40 --- Jute sacking bags 6305 10 50 --- Jute wool sacks 6305 10 60 --- Plastic coated or paper cum polythene lined jute bags and sacks 6305 10 70 --- Paper laminated hessian jute 6305 10 80 --- Jute soil savers 6305 10 90 --- Other 6305 20 00 - Of cotton - Of man-made textile materials : 6305 32 00 -- Flexible intermediate bulk containers 6305 33 00 -- Other, of polyethylene or po....
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....acking for accommodating connectors 3923 10 90 --- Other kg. 10% - Sacks and bags (including cones): 3923 21 00 -- Of polymers of ethylene 3923 29 -- Of other plastics: 3923 29 10 --- Of poly (vinyl chloride) 3923 29 90--- Other 3923 30 - Carboys, bottles, flasks and similar articles: 3923 30 10 --- Insulated ware 3923 30 90 --- Other 3923 40 00 - Spools, cops, bobbins and similar supports 3923 50 - Stoppers, lids, caps and other closures : 3923 50 10--- Caps and closures for bottles 3923 50 90--- Other 3923 90 - Other : 3923 90 10--- Insulated ware 3923 90 20--- Aseptic bags 3923 90 90--- Other Explanatory notes to HSN: This heading covers all articles of plastics commonly used for the packing or conveyance of all kinds of products. The articles covered include : (a) Containers such as boxes, cases, crates, sacks and bags (including cones and refuse sacks), casks, cans, carboys, bottles and flasks. The heading also covers : (i) Cups without handles having the character of containers used for the packing ....
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.... the HDPE sacks are articles made of plastic; they are made of high density polyethylene which is a plastic raw material and it has further been held that they are not man-made, filament yarn but are articles of plastic. The circular of the Central Board of Direct Taxes dated 20-1-1985 also clearly says that the Board has decided that so long as the finished articles of plastic is made out of plastic material falling under Tariff No. 15A(i), even if at the intermediate stage articles classifiable under Item No. 15A(ii) if any tariff item emerges, the said product would be considered to have been produced out of plastic material falling under Tariff Item No. 15A(i) and, therefore, the HDPE woven sacks should be considered as articles of plastic." Having so discussed and defined the words 'Man-made Fibre' and 'Textile' for the purpose of arriving at the appropriate classification of HDPE Woven Bags/Sacks, the Hon'ble High Court has opined; '..............the process of manufacture of HDPE tapes, the earlier judgments of the CEGAT approved by the Supreme Court and accepted by the department clearly go to show that HDPE bags are the bags woven by plastic strips and they, there....
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....er, the Appellate Authority of Advance Ruling {Order No. 02/WBAAAR/Appeal/2019 dated 13.05.2019} has reversed the said order and Ruled that the Polypropylene Non Woven Bag would appropriately be classifiable under heading No. 6305. The said Ruling is not applicable in the applicant's case because as per Section 103 of the CGST Act, any Advance Ruling is binding on the Applicant, who has sought it and on the concerned officer or the jurisdictional officer in respect of the Applicant. Accordingly, AAAR's Ruling as cited above can't be relied upon in the present case of the Applicant. 15. Further, applicant has relied upon the Hon'ble Supreme Court's decision in the case of M/s. PORRITTS & SPENCER (ASIA) LTD Vs. State of Haryana reported in ELT 1983 (13) ELT 1607 (S.C.) stating that the Hon'ble Supreme Court has settled the law that the word "Textile" would also cover the fabric manufactured through any material. The applicant has failed to understand the intention of the Hon'ble Supreme Court and therefore relied upon the specific last line of the Paragraph of the order. Whereas, in order to understand the meaning of said Paragraph, it is necessary to read the order thoroughly and....
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....t is not the use which determines its character as textile. It is, therefore, no argument against the assessee that `dryer felts' are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit. That cannot militate against `dryer felts' falling within the category of `textiles', if otherwise they satisfy the description of `textiles'. 16. From the simple and plain reading of the above para, it is very much clear that Hon'ble Supreme Court of India has stated that textile is woven fabric, which is emerged by weaving of yarn of cotton, silk, rayon or nylon and similar type of material. The said textile may be used for making apparel, bed sheet or tapestry or upholstery or as towel. Therefore, fabric made of other than the yarn of cotton, silk, rayon or nylon and similar type of material is not a textile. The word used in the sentence is "similar type of material" and the meaning of said word can only be drawn in reference of the words used before the above word. The fabric made of Fiber grade Poly Propylene granules is not a "similar type of material" of cotton, silk, rayon or nylon. Hence fabric made of Fiber grade Poly Propylene granules cann....
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..... 354/432/2018-TRU dated 31st December, 2018 and discussed herein above. 19. Having decided the classification, the next issue to be decided is of the applicable rate of GST on poly propylene non-woven bags. In order to determine the tax liability on said goods, we are required to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017, as amended, containing the headings, sub-headings as well as the rates of Central Tax GST applicable to various goods, which are covered under 6 schedules as under: (i) 2.5 per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule II, (iii) 9 per cent. in respect of goods specified in Schedule III, (iv) 14 per cent. in respect of goods specified in Schedule IV, (v) 1.5 per cent. in respect of goods specified in Schedule V, and (vi) 0.125 per cent. in respect of goods specified in Schedule VI. Further, Explanations (iii) and (iv) of the said Notification read as under: (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter a....