TaxTMI 
TaxTMI 
2022 (7) TMI 908
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....nt has raised the following questions for advance ruling in the application for Advance Ruling filed by it.- "1. Whether the product Non-woven Bags manufactured through the intermediate product, Non-Woven Fabrics classifiable under Heading No. 5603 are properly classifiable under Heading No.6305 or under Heading 3923? 2. Whether the product Non-woven Bags would be eligible for exemption under Notification No.01/2017-CT (Rate) and 01/2017-IT(Rate) dated 28.06.2017, as amended? " 4. The appellant has submitted that they are engaged in the manufacturing of Non-Woven Bags through the intermediate product i.e. Non-Woven fabrics manufactured from Fiber Grade poly propylene granules by adopting Spun Bond technology, in which poly propylene granules are fed to the hopper and passed through extruder at certain temperature and the melted material after filtering passed through the spinning unit to obtain a continuous single filament which arc subjected to lying on the continuous web and under control pressure thermal bonding resulting in product namely Non-Woven fabric which is used in manufacturing of Non-Woven Bags. 5. The appellant has submitted that in view of gen....
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....diate product i.e. Non-Woven fabric manufactured from fiber grade polypropylene granules by adopting the Spun Bond technology, merits classification under HS code 3923. The rate of GST applicable on said products during different periods are as below: Sr.No. Period Rate of CGST Rate of SGST Total rate of GST 1. 01.07.2017 to 30.09.2019 9% 9% 18% 2. 01.10.2019 to 30.12.2019 6% 6% 12% 3. 01.01.2020 to till date 9% 9% 18% Ques. 2. Whether the product Non-woven Bags would be eligible for exemption under Notification No.01/2017-CT(Rate) and 0172017-IT(Rate) dated 28.06.2017, as amended? Ans: Answered in negative..." 7. Aggrieved by the aforesaid advance ruling, the appellant has filed the present appeal. 7.1 The appellant in the ground of appeal has submitted that the GAAR erred in holding that polypropylene non-woven and non-laminated bags are classifiable under Chapter Heading 3923 and in not considering their submission, in view of Rules of Interpretation, Chapter Heading 6305.3300 being specific heading would prevail over the general Chapter Heading 3923. 7.2 The appellant submitted that the GAAR ....
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....n, nylon or made out of any other material is woven into fabric and the method of weaving may be warp and woof pattern as adopted generally in most of the textiles, or it may be another process. Duc to advance in technology, variety of fabrics are manufactured from various unknown materials using new techniques invented for making fabric out of yarn so, it would be unwise to confine the weaving process to the warp and woof pattern; weaving of yarn would mean binding or putting together by some process to form a fabric. 8.1 The appellant vide their additional submission submitted that GAAR erred while dealing with decision of Appellate Authority for Advance Ruling in case of M/s U.S. Polytech observing that said ruling is not applicable in view of Section 103 of CGST Act. It is settled law that any decision of Higher Appellate Authority is binding on lower authority and therefore, finding of GAAR is misapprehension of law as Section 103 of CGST Act does not speak that the order of Appellate Advance Ruling Authority would not be binding on the Advance Ruling Authority. 8.2 The appellant further submitted the Audit objection, raised in case of M/s Girivarya Non-Woven Fabrics Pvt....
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....y adopting Spun Bond technology in which polypropylene granules are passed through extruder at certain temperature, the melted material is converted into single filament after passing through spinning unit. Then, these filaments are laid on continuous web under control pressure thermal bonding resulting in non-woven fabric and the said intermediate product "poly propylene non-woven fabrics" is classifiable under Chapter Heading 5603 and subsequently Poly Propylene Non-woven Bags is classifiable under Chapter Heading 6305 of Customs Tariff Act, 1975. 13. We find that the classification of goods under GST regime has to be done in accordance with the Customs Tariff Act, 1975, which in turn is based on Harmonized System of Nomenclature, popularly known as 'HSN'. The rules of interpretation, section notes and chapter notes as specified under the Customs Tariff Act, 1975 are also applicable for classification of Goods under GST regime. However, once an item is classified in accordance with the Customs Tariff Act, 1975, the rate of lax applicable would be arrived at on the basis of notifications issued under GST by respective Governments. 14. The appellant claimed that Poly ....
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....ases, crates and similar articles: 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 40 Spools, cops, bobbins and similar supports 3923 50 Stoppers, lids, caps and other closures 3923 90 Other 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 or conveyance of certain foodstuffs, whether or not they have a secondary use as tableware or toilet articles; (ii) Bottle preforms of plastics being intermediate products having tubular shape, with one closed end and one open end threaded to secure a screw type closure, the portion below the threaded end being intended to be expanded to a desired s....
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....ically stated that non-laminated bags would merit classification as per their constituent materials. From the bare perusal of the above TRU Circular, it is forthcoming from Para 7.4 that there has been mention of two product viz. Polypropylene Woven and Non-Woven Bags' and 'PP (Polypropylene) Woven and Non-Woven Bags laminated with BOPP' (both made from polypropylene and separated by using word 'and') and both the products merit classification under HS code 3923 as mentioned in circular. In the above said circular, it is further stated at Para 7.5 that Non-laminated woven bags (made from materials other than polypropylene) would be classified as per their constituting materials. What is manufactured by the appellant is non-woven bags and hence Para 7.4 is relevant. In view of above we find that TRU Circular dated 31.12.2018 is squarely applicable on the product of appellant viz. Poly Propylene Non-Woven bag and the same is classifiable under USN Code 3923. 17. As regard to appellant's submission that GAAR erred in holding that decisions of Advance Ruling Authority and Appellate Advance Ruling Authority is not binding on applicant under Section 103 of C....
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.... not taken into consideration the above referred TRU circular dated 31.12.2018 issued by the Department of Revenue as there is no finding on the same. 18. The appellant submitted that the GAAR erred in placing reliance upon the decision of Madhya Pradesh High Court in case of M/s Raj Pack Well Ltd as product under consideration before High Court was Woven Bags and therefore the said decision is not applicable in present case. We find that issue of classification of HDPE (High Density Poly-Ethylene, a kind of plastic) Bags or sacks is discussed at length in finding of Madhya Pradesh High Court in said judgement. Relevant portion of the same is reproduced below:- "19. Now, textile material has not been defined in the Tariff Act. However, in the Textiles Committee Act, 1963 (Act 41 of 63) the word 'fibre' has been defined in S. 2(a) as under : "fibre" means man-made fibre including regenerated cellulose rayon, nylon and the like." "Textiles" has been defined in S .2(g) as under: "textiles" means any fabric or cloth or yarn or garment or any other article made wholly or in part of - (i) cotton; or (ii) wool; or (....
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....le by the Commissioner of Textiles and the DGTD (Plastic and Polymer Directorates) has registered it as an Industry producing HDPE woven sacks. The raw material used for the production of the HDPE strips is covered under Chapter 39 and in absence of anything on the record to show that the HDPE strips are synthetic textile material the only fact that their width is less than 5 mm would not automatically put that item under entry No. 54.06 of Chapter 54 of the Central Excise Tariff of India. What the learned Asst. Collector, C. Excise and the Collector Appeals, Central Excise have done is that they have considered only the width of the strip and have come to the conclusion that since the strip is of less than 5 mm, therefore, it falls within 54.06 ignoring the fact that in addition to this there should be something to arrive at a conclusion that the aforesaid strip is of synthetic textile material. If the strip is a strip of plastic only and not a synthetic textile material and is also known in the common parlance as a commodity of plastic, and the finished goods i.e. the HDPE woven sacks are also known in the common parlance as plastic woven sacks, then it cannot be h....
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....trips are synthetic textiles materials, product is not classifiable under Chapter 5406. Therefore the product Poly Propylene Non-Woven Bags manufactured by the appellant would be covered under Chapter 39 as discussed herein above. 19. In the present case, Non-woven bags are made from polypropylene granules which is also a type of plastics made from polymerization of propylene. As mentioned in General Notes to Chapter Heading 39 of Custom Tariff Act, 1975, Plastics include materials which are capable of polymerization at some stage and therefore, in view of findings of Madhya Pradesh High Court, fabric made from polypropylene, by no stretch of imagination construed as textile but merits classification as plastic or article of plastic under Chapter Heading No. 3923. 20. The appellant submitted that the GAAR. failed in considering the fact that while referring to the decision in case of Porritts and Spencers (Asia) Limited V/s State of Haryana [1983 (13) ELT 1607 (S.C.)], it is not the intention but the finding is to be looked into. The Supreme Court in above case settled the law that textile means when yarn, whether cotton, silk, woolen, rayon, nylon or made out of any other ma....