TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1617
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.... Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression "GST Act" would mean the CGST Act and the WBGST Act both. 1.2 Ms. Waterproof Products Manufacturers & Traders Welfare Association, the applicant, is a Registered Association, bearing Registration No. SOO12038 of 2020-2021, consisting of members who are engaged in manufacturing and trading of various Waterproof Products. The registered office of the Applicant is 115, College Street, White Tower, 1st Floor, Room No. M, Kolkata 700 012. 1.3 The applicant has made this application under sub section (1) of section 97 of the GST Act and the rules made there under seeking an advan....
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....iled an application for advance ruling on classification and rate of tax of 'Rain coat made of PVC sheetings'. 1.6 The aforesaid questions on which the advance ruling is sought for are found to be covered under clause (a) of sub-section (2) of section 97 of the GST Act. 1.7 The application is, therefore, admitted. 2. Submission of the applicant 2.1 The captioned advance ruling is being filed for obtaining clarity on applicability of HSN and GST Rates on Raincoats made of PVC Sheetings. A PVC raincoat is a waterproof outer jacket made from polyvinyl chloride (PVC). The PVC raincoats are made from PVC rolls/sheets, wherein such sheets undergoes panel cutting process, wherein the rolls/sheets are cut into smaller sheets for front and back portion, sleeves, pockets, etc. The PVC seams are welded with heat. Once all the material are permanently bounded the stitching of font zipper (made from polyester tape/ plastic teeth), draw cord (made from polyester), button (made from plastic or metal) or stopper (made from plastic) is carried out. The finished product is then sent for packing and the final product is ready to be transferred to the warehouse for dispatching the same to ....
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....to elucidate relevant extract of Chapter 6201 for your kind perusal - 6201 Men's or boys' overcoats, car-coats, capes, cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles, other than those of heading 6203 6201 20 - Of wool or fine animal hair: 6201 10 20 --- Overcoats, raincoats, car-coats, cloaks and similar articles capes, 6201 30 - Of cotton: 6201 30 10 --- Overcoats, raincoats, car-coats, capes, cloaks and similar articles 6201 40 - Of man-made fibres 6201 40 10 --- Overcoats, raincoats, car-coats, capes, cloaks and similar articles 6201 90 - Of other textile materials 6201 10 90 --- Overcoats, raincoats, car-coats, cloaks and similar articles capes, Similar classification is applicable for Chapter 6202 being applicable to Women's or girls' overcoats, car-coats, capes, cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles. 2.5 From the aforesaid, it is evident that Chapter 6201 includes raincoats made of (a) wool or fine animal hair; (b) cotton; (c) man-made fibres; and (d) other textile materials. Pl....
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....d that when yarn of any material and description was woven into fabrics, what came out into being was a "textile" and it was known as such. Phenomenal advancement in science and technology resulting in a large variety of fabrics manufactured from materials till then unknown or un-thought of and new techniques invented for making fabric out of yarn have also been taken into consideration by the Hon'ble Supreme Court while laying down the law that any woven fabrics were "textiles" irrespective of the materials used, technique of weaving adopted and the end-use of the product. further, it was held that, Plastic is a well-known textile8 material and various varieties of yarns and fabrics are produced out of plastic materials, namely, terelene, polyester, nylon, acrylic, texturized yarns, silicon yarns, etc. 2.9 PVC raincoats are made of PVC material. PVC material normally consists of strong synthetic plastic polymer, thus, on perusal of the characteristics of the product, it is safe to infer that PVC raincoat is made of textile material. 2.10 Further, it is submitted that PVC Sheeting, commonly known as vinyl Sheeting, is shiny Sheeting made of the plastic polyvinyl chloride ....
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....Interpretation of the Custom Tariff Act, 1975, that the heading which provides the most specific description shall be preferred to headings providing a more general interpretation. 2.14 It is most humbly submitted that Chapter 6201 and Chapter 6202 specifically covers raincoats within its ambit. Please note that Rule 3(a) of General Rules for the Interpretation of The Harmonized System [here-in-after referred to as 'GIR'], would be applicable in the interest case, which is elucidated here-in-below for ease of reference - "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 to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, 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." 2.15 On perusal of relevant extract of Chapter 6201, as cited here-in-above in Para No. 4.1, it is evident that raincoats are categorically included in Chapter 6201 and Chapter 62....
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....xing statute the word must be held to have been used, unless contrary intention is clearly expressed by the Legislature. The reason is that as pointed out by Story, J., in 200 Chest. (of Tea (supra), the Legislature does "not suppose our merchants to be naturalists, or geologists, or botanists" 2.20 The judgement of the Hon'ble Apex Court provides that legislature also understands that the classification of the goods has to be made by a common man and not by a scientist, botanist or a geologist. The Hon'ble Apex Court in the matter of Atul Glass Industries (Pvt) Ltd. vs Collector Of Central Excise, Etc on 10 July, 1986 Equivalent citations: 1986 AIR 1730, 1986 SCR (3) 126 has held that it is a matter of common experience that the identity of an article is associated with its primary function. It is only logical that it should be so. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identified it in his mind. 2.21 In view of the principle of Common Parlance Test as well....
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.... question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item." 2.26 The said principles was affirmed by the Hon'ble Supreme Court in the following cases as well - • Commissioner of C. Ex., Bhubaneswar-I v. Champdany industries Ltd. [2009 (241) E.L.T. 481 (S.C.)]; and • State Of Karnataka v. Durga Projects Inc [2018 (10) G.S.T.L. 513 (S.C.)] 2.27 In view of aforesaid submission, it is most humbly submitted that The PVC Raincoats cannot fall under Chapter 39 (Plastic and Articles Thereof) under residual entry in as much as PVC Raincoats being in the nature of Textile and Textile Articles thereof is squarely covered under specific Chapter 62.' Written Submission being filed pursuant to PH held on 18-02-2025 2.28 A PVC raincoat is a waterproof outer jacket made from polyvinyl chloride (PVC). The PVC raincoats are made from PVC rolls/sheets, wherein such sheets undergo panel cutting process, wherein the rolls/sheets are cut into smaller sheets for front and back portion, sleeves, pockets, etc. The PVC seams are welded with heat. Once all the material are permanently bounded....
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.... evident that Chapter 6201 includes raincoats made of- (a) wool or fine animal hair; (b) cotton; (c) man-made fibres; and (d) other textile materials. Now the only issue under consideration is whether PVC Sheetings would fall under man-made fibres or other textile materials. 2.32 It is important to understand the meaning of the term 'fibre', to conclude that the PVC raincoat is produced of man-made fibres or other textile materials or not. The term 'fibre', yet again, is not statutorily defined. However, from the extract of "Encyclopedia" of Textile Fibres and non-woven fabrics, reproduced here-in-below, it is evident that textile fibres may be classified into two main categories i.e. naturally occurring fibres and manmade fibres and that man-made fibres includes fibres which are based on polyvinyl chloride i.e. PVC - Table 1. Classification of Textile Fibres Naturally occurring fibres vegetable (based on cellulose), cotton, linen, hemp, jute, namieanimal (based on proteins), wood, mohair, vicuna, other animal hairs, silk mineral, asbestos Man-made fibres based on natural organic polymers rayon, regenerated....
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....t the requirement of ready-made wear and are available in the market in different sizes so that they can be made use of according to specific requirement of the buyer without any further changes. Accordingly, the Raincoats would fall within the definition of the word "ready to wear garments", which is further substantiated by taking reference to Customs Cooperation Council Nomenclature (Explanatory Notes) wherein under the heading "garments" (Volume II), both with reference to men and boys wear as well as women and girls that raincoats have been enumerated, inter alia, as items constituting garments. The Supreme Court held that a reasonable approach has been adopted by the Tribunal in classifying raincoats and caps as articles of ready to wear apparel (known commercially as ready-made garments) and no interference with the classification is called for. 2.35 Further, please note that similar view was held Bengal Waterproof Limited v. Commissioner Of C. Ex., Kolkata-III [2007 (215) E.L.T. 200 (Tri. - Kolkata)]. Further, the Hon'ble CESTAT in the case of CCE, Kolkata-II v. Trimurti Water Proof (P) Ltd. had held that the goods i.e. "Raincoats" are made up of rubberized fabrics and a....
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....m synthetic polymer which further includes polyvinyl derivatives. Further, polyvinyl derivatives include chloro-fiber which are manufactured from PVC. Therefore, textile fibers include fibers of PVC. 2.38 In view of aforesaid submission, it is evident that PVC raincoat is produced of man-made fibres and that the same is also covered under other textile materials. Therefore, in our humble submission, the Raincoats made up of PVC Sheeting would fall under Chapter 62 [Schedule - I] of Notification no. 1/2017 dated - Central Tax (Rate), dated 28th June, 2017 taxable at GST of 5%, if the sales price is less than INR 1000/- per piece and 12%, if the sales price exceeds INR 1000/- per piece in as much as the PVC raincoats are squarely covered being manufactured from 'man-made fibre' or 'other textile material'. 2.39 Please note that the Authority for Advance Ruling, Madhya Pradesh in the case of Ms. NZ Seasonal Wear Private Limited in Case No. 05/2024 and vide Order No. 06/2024 dated 07-08-2024 has dealt with the same issue of classification as well as GST Rate applicable on Raincoat made of PVC Sheetings, wherein the following ruling was delivered - "Question: What is the ....
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....cific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, 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." 2.44 On perusal of relevant extract of Chapter 6201, as cited here-in-above in Para No. 4.1, it is evident that raincoats are categorically included in Chapter 6201 and Chapter 6202. Hence, in our humble view that PVC Raincoats would be classifiable under Chapter 62014010 (for Men's or boys' raincoats) or Chapter 62024010 (for Women's or girls' raincoats). 2.45 On Plain Reading of HSN Explanatory Notes, it is evident that Chapter 6201 and Chapter 6202 includes garments for men/boys or women/girls, characteristics by the fact that they are generally worn over all other clothing for protection against the weather, which would include PVC Raincoats by virtue of functionality test 2.46 From perusal of items classified under Chapter 62....
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....t is a matter of common experience that the identity of an article is associated with its primary function. It is only logical that it should be so. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identified it in his mind. 2.50 In view of the principle of Common Parlance Test as well as functionality test as laid by Apex Court in various judicial pronouncements, PVC Raincoats would be classified under Chapter 6201 and Chapter 6202 as the same is the nature of articles, which are worn over all other clothing for protection against the weather. 2.51 The PVC Raincoats cannot fall under Chapter 39 (Plastic and Articles Thereof) in as much as PVC Raincoats being in the nature of Textile and Textile Articles thereof is squarely covered under specific Chapter 62 and also specifically excluded from Chapter 39 2.52 We are skeptical that the department may seek to classify PVC Raincoats under Chapter 39 being "PLASTICS AND ARTICLES THEREOF" leviable to GST at 18% instead o....
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....industries Ltd. [2009 (241) E.L.T. 481 (S.C.)]; and • State Of Karnataka v. Durga Projects Inc [2018 (10) G.S.T.L. 513 (S.C.)] 2.57 In view of aforesaid submission, it is most humbly submitted that The PVC Raincoats cannot fall under Chapter 39 (Plastic and Articles Thereof) under residual entry in as much as PVC Raincoats being in the nature of Textile and Textile Articles thereof is squarely covered under specific Chapter 62. Submission being filed pursuant to final hearing held on 05-05-2025 2.58 During the personal hearing held on 05-05-2025, the recent advance ruling passed by this Authority of Advance Ruling in the case of Ms. Aristocrat Industries Private Limited [WBAAR 24 of 2024] & 2 others were discussed, wherein the Authority vide Order dated 27-02-2025 has held that supply of PVC raincoat would be covered under Heading 3926 and would attract tax @ 18% vide entry no. 111 of Schedule -III of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 [corresponding West Bengal State Notification No. 1125 F.T. dated 28.06.2017], as amended. In this regard, as appraised during the course of hearing held on 05-05-2025 as well, the captioned order pa....
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....The Advance Ruling Order dated 27-02-2025 passed in the case of Ms. Aristocrat Industries Private Limited [WBAAR 24 of 2024] & 2 others has not considered the aspect that raincoats made out of polyvinyl chloride (PVC sheets/rolls) is a mad-made fibre duly covered under Chapter 6201 & 6202 - At the outset, we would like to elucidate relevant extract of Chapter 6201 for your kind perusal - 6201 Men's or boys' overcoats, car-coats, capes, cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles, other than those of heading 6203 6201 20 - Of wool or fine animal hair: 6201 20 10 --- Overcoats, raincoats, car-coats, capes, cloaks and similar articles 6201 30 - Of cotton: 6201 30 10 --- Overcoats, raincoats, car-coats, capes, cloaks and similar articles 6201 40 - Of man-made fibres 6201 40 10 --- Overcoats, raincoats, car-coats, capes, cloaks and similar articles 6201 90 - Of other textile materials 6201 90 10 --- Overcoats, raincoats, car-coats, capes, cloaks and similar articles Similar classification is applicable for Chapter 6202 being applicable to Wo....
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....ther: (a) by polymerisation of organic monomers to produce polymers such as polyamides, polyesters, polyolefins or polyurethanes, or by chemical modification of polymers produced by this process (for example, poly (vinyl alcohol) prepared by the hydrolysis of poly(vinyl acetate)); or ............ The terms "man-made", "synthetic" and "artificial" shall have the same meaning when used in relation to "textile materials". In view of aforesaid, polymers like polyester and polyvinyl will fall under the category of man- made fibers. Consequently, Applicants product (viz. PVC raincoat) will fall under the category of manmade fibers since the same is made up of Poly Vinyl Chloride (PVC). Further, please note that the "Textile Terms and Definitions Tenth Edition" published by the Textile Institute provide an entire flow chart of classification of textile fibers. From the flow chart, it is evident that textile fibers can be classified mainly into natural or manmade fibers. Further, manmade fibers include fibers made from synthetic polymer which further includes polyvinyl derivatives. Further, polyvinyl derivatives include chloro-fiber which are manufactured from....
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...., wherein such sheets undergo panel cutting process (the rolls/ sheets are cut into smaller sheets for front and back portion, sleeves, pockets etc.). The PVC seams are welded with heat. Once all the materials are permanently bound, the stitching of front zipper (made from polyester tape/ plastic teeth), draw cord (made from polyester), button (made from plastic or metal) or stopper (made from plastic) is carried out. The finished product is then sent for packing and the final product is ready to be transferred to the warehouse for dispatching the same to various distributors, retailers, wholesalers etc. 4.4 The applicant's interpretations of law and/or facts are as under: * The Raincoats made from PVC sheet will fall under Chapter 62 included in Notification no. 1/2017- Central Tax (Rate) dt. 28.06.2017and is taxable @5% if the sales price is less than Rs. 1,000/- per piece (vide serial no. 223 of Schedule I) and 12% if the sales price exceeds Rs. 1,000/- per piece (vide serial no. 170 of Schedule II). * The applicant states that classification question rests on the interpretative provisions of the Customs Tariff Act, 1975, along with the explanatory notes and....
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....es and filaments of organic polymers produced by manufacturing processes either: (a) by polymerisation of organic monomers to produce polymers such as polyamides, polyesters, polyolefins or polyurethanes, or by chemical modification of polymers produced by this process (for example, poly(vinyl alcohol) prepared by the hydrolysis of poly(vinyl acetate) ); or (b) by dissolution or chemical treatment of natural organic polymers (for example, cellulose) to produce polymers such as cuprammonium rayon (cupro) or viscose rayon, or by chemical modification of natural organic polymers (for example, cellulose, casein and other proteins, or alginic acid), to produce polymers such as cellulose acetate or alginates. * The applicant argues that man-made fibres which are based on PVC would be classifiable under chapter 6201 which he has already mentioned. Therefore, It can be observed that the PVC Raincoats would fall within Section XI (textiles and textile articles), whereas Note 2 of the Chapter Notes to Chapter 39 does not cover- goods of Section XI (textiles and textiles articles". Thus the raincoat made of PVC does not render it to be considered as article of plast....
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.... Overcoats, raincoats, car-coats, capes, cloaks and similar articles 62013090 Other 620140 Of man-made fibres: 62014010 Overcoats, raincoats, car-coats, capes, cloaks and similar articles 62014090 Other 620190 Of other textile materials: 62019010 Overcoats, raincoats, car-coats, capes, cloaks and similar articles 62019090 Other The similar entries are to be found under HSN 6202 in respect of women or girls. To avoid repetition the said table is not reproduced here. 4.7 Chapter 62 of the Customs Tariff Act, 1975 is included in Section XI of the said act and the section deals with 'Textiles and Textile Articles'. Therefore PVC raincoat must have to be textile articles for inclusion into Section XI or for that matter to be categorized under tariff item no. 6201. In order to understand whether PVC raincoats will come under 'Textiles and Textile Articles' we have to discuss the process of preparation of PVC sheet which is the basic raw materials for PVC raincoats. The process is as under: Polymerization The first step to manufacture PVC sheet begins with polymerization. In this stage, the vinyl chloride monomers (VC....
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....d as 'originally a woven fabric, now generally applied to: (1) staple fibers and filaments suitable for conversion to or use as yarns, or for the preparation of nonwoven fabrics, (2) yarns made from natural or manufactured fibers, (3) fabrics and other manufactured products made from fibers as defined above, and from yarns, and (4) garments and other articles fabricated wholly from one or more of the above elements, and articles made principally from the above when the products retain the characteristic flexibility and drape of the original fabrics'. In view of the above, we are not inclined to accept PVC sheet as textiles since no fibre or filament or yarns whatsoever is formed during the process of manufacture of PVC sheet. So any article made of PVC sheet cannot be textile article. There is hardly any scope that PVC raincoat will be included in Section XI of the Customs Tariff Act, 1975. 4.8 From the table presented in paragraph 4.6 it is evident that four kinds of raincoats have been referred to there. 1. Raincoats made of wool or fine animal hair (62012010) 2. Raincoats made of cotton (62013010) 3. Raincoats ....
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....gh a series of heated rollers in the calendaring machine where it is flattened into thin sheets or films. So neither any fibre nor any filament is formed in this entire process of preparing PVC sheet. Note 1 to Chapter 54 of the Customs Tariff Act, 1975 which the applicant has referred to for definition of man-made fibre has clearly described the term 'man made fibres' as staple fibres and filaments of organic polymers. Undoubtedly PVC is an organic polymer. But in the production process of PVC sheet from which PVC raincoat is made no fibre or filament is formed at any stage. This clearly disqualifies PVC as man-made fibre as defined in the aforementioned chapter of the Customs Tariff Act, 1975. So we are of the considered view that PVC raincoat will not come under Chapter 62 of Section XI of the Customs Tariff Act, 1975. 4.11 The basic raw material for plastic raincoat is Poly Vinyl Chloride (PVC) sheet. Since PVC is a synthetic plastic polymer we should refer to Chapter 39 of Section VII of the Customs Tariff Act, 1975. This section refers to 'Plastics and articles thereof; Rubber and articles thereof'. From the Notes of Chapter 39 it appears that the chapter does not in....
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....tuettes and other ornamental articles 3926.90 - Other The said Explanatory Note also specifies that the aforesaid heading covers articles including (1) Articles of apparel and clothing accessories (other than toys) made by sewing or sealing sheets of plastics e.g., aprons, belts, babies' bibs, raincoats, dress shields, etc. Detachable plastic hoods remain classified in this heading if presented with the plastic raincoats to which they belong. [emphasis added] The persuasive value of HSN Explanatory Notes in classification matters have been repeatedly upheld by the Honourable Supreme Court of India in various decisions. In the judgment dated 07.02.2008 in the matter of the Commissioner of Customs and Central Excise, Goa vs. Phil Corporation in Civil Appeal number 2215 of 2002, the Honourable Apex Court held that: "28. We have heard the learned counsel for the parties at length and carefully analysed the judgments cited at the Bar. The Central Excise Tariff Act is broadly based on the system of classification from the International Convention called the Brussels' Convention on the Harmonised Commodity Description and Coding System (Harmonised....