2018 (5) TMI 528 – AUTHORITY FOR ADVANCE RULINGS MAHARASHTRA – 2018 (12) G. S. T. L. 445 (A. A. R. – GST), [2019] 60 G S.T.R. 451 (AAR) – Classification of the PVC floor mat – applicable rate of GST – whether classified under CTH 5705 or otherwise? – Manufacturing at two stages – Stage I being PVC Monofilament production and carpet piling process and stage 2 being Web-lamination and backing process. The prime raw material being used for the aforesaid product is PVC (Poly Vinyl Chloride). – Whether to be termed as ‘textile’ or ‘textile material’ as defined in dictionary.
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Held that: – PVC falls in Chapter 39, more specifically Heading 39.04, The impugned product is nonwoven and is impregnated with liquid PVC. We have seen above that the Chapter 39 covers substances called polymers and semi-manufactures and articles thereof, provided they are not excluded by Note 2 to the Chapter. The Note 2 reproduced above excludes goods of Section Xl and Section XI excludes nonwovens, impregnat
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adhesive, in rolls or in the form of tiles – the applicant informs that the manufactured product is a product of running length which is then cut into size as given/ specified by the customer. The product is described as being a PVC Carpet Mat and therefore, it is clear that the impugned product would fall in the entry no.104A of Schedule Ill, thereby attracting tax at the rate of 18% (9% each of CGST and SGST).
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Ruling:- PVC floor mat, as described hereinabove, would fall in the Customs Tariff Heading 3918 and the applicable rate of GST theron would be 18% (9% each of CGST and SGST). – GST-ARA-17/2017-18/B-23 Dated:- 2-4-2018 – B.V. BORHADE AND PANKAJ KUMAR (MEMBER) PROCEEDINGS (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as t
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known as PVC Carpet Mats, 2) Manufacturing of the same is undertaken in two stages. Stage I being PVC Monofilament production and carpet piling process and stage 2 being Web-lamination and backing process. The prime raw material being used for the aforesaid product is PVC (Poly Vinyl Chloride). The stages or manufacture are as follows: a) Under Stage 1, PVC monofilament yarn with decitex ranging from 1200 to 2800 and filament diameter range 0.38 to 0.75 mm is extruded through a perforated dis plate using T-die extrusion. Extrusion is done through 3 to 4 parallel rows along the entire width of T-die and the vertically extruded yarn immediately falls on a water bed to form a non-woven carpet pile. Also, referred to as PVC web, non-woven carpet pile is taken up in a horizontal direction on a roller and wound up in rolls. Pile height of the carpet can be varied by changing the process parameters, usually in the range of 8 mm to 16 mm. b) Under Stage 2, the web formed in Stage I is impregn
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-Central Tax (Rate) dated 28.06.2017 (hereinafter referred to as Notification No. 1/2017-CGST ) and Notification no 1/2017-State Tax (Rate) respectively which specifies the rate of CGST/SGST to be levied on different products along with their corresponding Chapter/Heading/Sub-Heading/Tariff item. 3) Entry no 146 of Schedule II of the respective notifications issued under both the Acts cover the chapter heading 5705, the same being reproduced below. 146 5705 Other carpets and other textile floor coverings, whether or not made up; such as Mats and mattings including Bath Mats, where cotton predominates by weight, of handloom Cotton Rugs of handloom 4) Notification No. 1/2017 – CGST specifically provide that- Explanation- For the purposes of this Schedule,- (iii) Tariff item , sub-heading heading and Chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (iv) The rules for the interpretation of the
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t 5705 OTHER CARPETS AND OTHER TEXTILE FLOOR COVERINGS, WHETHER OR NOT MADE UP 570500 – Other carpets and other textile floor coverings , whether or not made up : Carpets : 57050011 Of silk m2 57050019 Other m2 Durries : 57050021 Durries cotton m2 57050022 Durries of man-made fibres m2 57050023 Durries of wool m2 57050024 Cotton Durries of handloom (including Chindi Durries, Cotton Chenille Durries, Rag Rug Durrie, Printed Durries, Druggets) m2 57050029 Other m2 Of jute : 57050031 Of blended jute m2 57050032 Of coir jute m2 57050039 Other m2 Carpets, carpeting, rugs, mats and mattings: 57050041 knitted m2 57050042 Mats and mattings including Bath Mats, where cotton predominates by weight, of Handloom, Cotton Rugs of Handloom m2 57050049 Other m2 57050090 Other m2 6) Also, the relevant extract of HSN explanatory notes for chapter 5705 is reproduced below: 57.05-Other carpets and other textile floor coverings, whether or not made up. Thus heading covers carpets and text
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ore will be covered under chapter heading 5705. 7) Further, the Chapter note to chapter heading 57 reads as follows: For the purposes of this Chapter, the term carpets and other textile floor coverings means floor coverings in which textile materials serve as the exposed surface of the article when in use and Includes articles having the characteristics of textile floor covering but intended for use for other purposes. It can be seen from the chapter note that Chapter 57 covers those carpets and floor coverings in which textile material serves as the exposed surface of the article. 8) The term textile or textile material is not defined in the GST Act. Therefore, reference can be taken from various Textile Dictionaries and Encyclopedia to ascertain the meaning of this term. a) Encyclopedia of Textiles, Fibres and Nonwoven Fabrics edited by Martin Grayson and published by Wiley-Interscience Publication has defined the term textile material (Relevant extract attached as annexure B). This
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(continuous lengths) by a variety of processes to form woven, knitted and nonwoven (felt-like) fabrics. In the case of woven and knitted fabrics the fibres and filaments are formed Into Intermediate continuous length structures known as yarns, which are then either interlaced by weaving or interloped by knitting Into planar flexible sheet like structures known as fabrics. Nonwoven fabrics are formed directly from fibres and filaments by chemically or physically bonding or Interlocking fibres that have been arranged a planar configuration (see Nonwoven textile fabrics, Tire cords). Textile fibres may be classified into two main categories and into a number of sub-categories, as indicated in Table-1. The generic names of man-made fibres are defined and controlled by the Federal Trade commission (1) With the exemption of glass and asbestos fibres and the specialty metallic and ceramic fibres, textile fibres are formed from organic polymers. Cellulose (gv) and proteins (gv) are the only im
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as also defined the term textile . The Textile Institute is an international organisation governed by a Council representing members throughout the world. It is legally constituted by a Royal Charter, granted in Britain in 1925. The main central functions are the provision of an operational framework and the maintenance of quality, particularly in regard to professional qualifications and the spread of information to members and others. The term textile as per this publication is defined as follows: A textile was originally a woven fabric, but the terms textile and the plural textiles are now also applied to fibres, filaments and yarns, naturals and manufactured and most products for which these are a principal raw materials. Note: This definition embraces, for example, fibre based products in the following categories threads, cords, ropes and braids; woven knitted and nonwoven fabrics, lace, nets and embroidery, hosiery, knitwear and made up apparel; household textile, soft furnishing
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o the Textile Dictionaries and Encyclopedia to understand its meaning. a) From the extract of Encyclopedia of Textile Fibres and nonwoven fabrics reproduced above, it is evident that textile fibres may be classified into two main categories i.e. naturally occurring fibres and manmade fibres as indicated in Table-1 of the extract. It can be seen that manmade fibres includes fibres which are based on polyvinyl chloride i.e. PVC. b) Further, the Textile Terms and Definitions Tenth Edition published by the textile institute has an entire flow chart of classification of textile fibres given, copy of which is attached as annexure D. From the flow chart, it is evident that textile fibres can be classified mainly into natural or manmade fibres. Further, manmade fibres include fibres made from synthetic polymer which further includes polyvinyl derivatives. Further, polyvinyl derivatives include chloro-fibre which are manufactured from PVC. Therefore, textile fibres includes fibres of PVC. c) Fu
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or chemical treatment of natural organic polymers, or chemical modification of natural organic polymers (artificial fibres). (1) SYNTHETIC FIBRES The basic material for the manufacture of these fibres are generally derived from coal or oil distillation products or from natural gas. The substances produced by polymerisation are either melted or dissolved in a suitable solvent and then extruded through spinnerets (jets) into air or Into a suitable coagulating bath where they solidify in cooling or evaporation of the solvent, or they may be precipitated from their solution in the from filaments. The main synthetic fibres are: (1) Acrylic: (2) Modacrylic: (3) Polypropylene: (4) Nylon or other polyamidesa: (5) Polyesters (6) Polyethylene: (7) Polyurethane: Other synthetic fibres include: chlorofibre, fluorofibre, polycarbamaide, trivinyl and vinylal. In the present Case, PVC is produced by polymerization of vinyl chloride monomer (VCM) which is an organic monomer and thus will be known as
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under Chapter Heading 5705. As per Notification NO. 1/2017-CT (Rate) the Chapter Heading 5705 is covered under the Schedule-II where the goods are taxable @ 6% CGST and 6% SGST or 12% IGST. Submission dt. 19.02.2018 In addition to the submissions made in the application for advance ruling, the applicant would like to submit the following countering the submissions made from departmental authority: 1) Use of semi-colon between two entries makes the two sentences separate and they have to be read disjunctively. The departmental authorities have construed that entry number 146 in notification no. 1/2017-CT(Rates) applies only to product where cotton predominates by weight. Since the product for which classification is under dispute is not made up of cotton, it will not be classified under entry number 146. The description of entry number 146 In notification no 1/2017-CT(Rate) is reproduced below: Other carpets and other textile floor coverings, whether or not made up; such as Mats and mat
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mi-colon does not separate the entry and it is to be read conjunctively. still the impugned product will be classified under serial no 146 of the notification. It is submitted that the entry intends to cover carpets and other textile floor coverings. The entry uses the term such as and mentions specific products. It is submitted that it is a settled principle of interpretation that the items mentioned after the term such as are only illustrative in nature and are not exhaustive. a) Goodyear India Limited v. Collector of Customs, Bombay, 1997 (95) E.L.T. 450 (SC). = 1997 (9) TMI 100 – Supreme Court of India b) T.T.K, PHARMA LTD. 1993 (63) E.L.T. 446 (Tribunal) = 1992 (8) TMI 183 – CEGAT, NEW DELHI It is submitted that the mats and mattings with predomination of cotton is only an example. Also, there is one more product mentioned i.e. cotton rugs of handloom. Thus, cotton rugs is a separate item and the predomination of cotton does not apply to such article. Therefore, it can be interpre
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(S.C.) = 1993 (4) TMI 73 – SUPREME COURT OF INDIA b) Trimurti Weldmesh (P) Ltd. 1993 (64) ELT 419 (Tri-Del)= 1992 (11) TMI 171 – CEGAT, NEW DELHI approved by the Supreme Court in the Trimurti Weldmesh (P) Ltd. 1996 (82) E.L.T. A168 (S.C.) = 1995 (12) TMI 397 – SUPREME COURT 4) There is no res-judicata in taxation. It has been contended in para 6 of the departmental submission made during the hearing that in the pre-GST period the applicant was classifying the product under chapter heading 39249090 and thus now why is the applicant classifying the product under Chapter heading 5705. It is submitted that the applicant was under the impression that the product would be classifiable under chapter heading 3924. However, it was lately realised that the main ingredient in the product is PVC fibre which is a textile material. Detailed submission on the same has been made in the advance ruling application. Thus, the applicant now wants to obtain the ruling from the authority for ascertaining th
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ot paid due to incorrect interpretation, still the Central Excise authorities are empowered to recover the duty due and payable by an assessee by virtue of Section 11A. If an assessee has wrongly classified his goods, then it cannot be taken by an authority in respect of any assessment period will not be binding for subsequent periods. In view of above discussion, we find no merit in the. Appeal is dismissed. The above case has been upheld by the Supreme Court in the case of Micron Tips Pvt. Ltd. v. Collector- 1999 (106) ELT. A189 (S.C.) = 1998 (11) TMI 690 – SUPREME COURT The applicant also relies on the case of PERFECT REFRACTORIES 2005 (185) E.L.T. 163 (Tri. – Del.) = 2005 (2) TMI 597 – CESTAT, NEW DELHI wherein the mere wrong classification of the goods in question by the respondents at one stage, did not operate as estoppel/res judicata against them for claiming the classification under the correct tariff heading/sub-heading of the CETA. The relevant extract is as follows: 5. Mere
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urchase invoice is attached as annexure 2 The bill of entry clearly mentions the item as artificial turf (made of plastic raw material). The product has been classified under chapter heading 57033090 which covers CARPETS AND OTHER TEXITLE FLOOR COVERINGS, TUFTED, WHETHER OR NOT MADE UP. It is submitted that artificial turfs also made up of PVC fibres but is sewed on the backing fabric with the help of-specialized multi-needle sewing machines. This process is called tufting. Therefore, the product is classifiable under chapter heading 5703. However, in the case of product under dispute in the present case, there is no tufting carried out. In the present case, the PVC fibres are extruded and the pile is then bonded on to the backing material with the help of adhesives, Thus, the product is classifiable under chapter heading 5705. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- Submission of NIL date as signed on dt.05.02.2018 1. I
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ples have been provided to the respondent. The applicant also required to provide iii) What is the weight of cotton/or cotton fabric material. iv) Whether the above weight of cotton will be constant or change product to product or time to time ? v) The applicant has claimed in Para 2 of Annexure-I of their application that the prime raw material is PVC for their products. However. the applicant has no where mentioned the quantity in terms of weight of PVC and cotton which is crucial to decide the classification. vi) The applicant has mentioned their manufacturing process, however, it is not clear as to how the said process mentioned at Para 2 (a) and (b) of Annexure-1 is relevant to decide the classification. 2. It is observed from the applicant s submission that the product is manufactured using predominantly polyvinyl chloride in the manufacturing process. The stages of manufacture given by the applicant are as follows:- a) Under stage 1, P VC monofilamentyart with decitex ranging fr
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roduct/product-range and how the same merits classification under chapter heading 5704. 3. As per the GST Tariff, the products which are classifiable under 5705 have been clearly mentioned as other carpets and other textile floor covering, whether or not made up [such us mats, & mattings including bath Mats, where cotton predominates by weight, of handlooms, cotton rugs handlooms] . From the Annexure-1 submitted by the applicant, it is observed that they have clearly mentioned that the prime raw material being used for PVC carpet mats PVC (Poly vinyl Chloride). However, the requirements of chapter 5705, are such that cotton should predominate by weight. In these circumstances, it is not clear as to how the product of Applicant can be classified under CH 5705. 4. The classification under Chapter Heading 3924 and Chapter heading 5705 are mutually exclusive as Chapter heading 3924 is for certain articles of plastics whereas Chapter heading 5705 is for articles of cotton. However, the
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sehold articles and hygienic or toilet articles of plastic. If their product qualify under CH. 5705 as to why they were earlier classifying the same under CH 39249090 which is mainly for household or hygienic articles of plastics. 7. Since the applicant has not made a full disclosure of relevant facts, as discussed above, it appears that the application deserves to be rejected under the provisions of Section 98 of the CGST, Act, 2017 8. The above submissions are made only as preliminary submissions about the admissibility of the application and detailed submissions would be filed at a later Mage. PRAYERS Since the applicant has not provided the vital information as discussed above, necessary to decide the issue, it is prayed that the application may be rejected at this stage only. Additional Written Submissions or NIL date as received on dt. 05.03.2018 In addition to the submissions made on the application of M/s. National Plastic Industries Ltd., in respect of advance ruling, the depa
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fibers are extruded and the pile is then bonded on to the backing material with the help of adhesives, hence the product is classifiable under CH 5705, so it is not understood why the applicant has submitted the said sample, which has no bearing with the instant case. 2]. Further, they were again emphasizing that their product namely PVC carpet should be classifiable under chapter 5705. However, chapter 5705 clearly states that other carpets and other textile floor covering, whether or not made up; such as mats, & mattings including bath Mats, where cotton predominates by weight, of handlooms, cotton rugs handlooms , which they themselves agreed that as already mentioned in point No. 2 of ANNEXURE-1 of their application, the prime raw material being used for their product is polyvinyl chloride. However, it is again mentioned by he applicant that they have relied on various textile dictionaries and encyclopedia to ascertain the meaning of term textile, as the term textile or textil
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following case laws for the word such as that this word is only illustrative in nature and is not exhaustive. i] Goodyear India Limited v. Collector of Customs, Bombay, 1997 (95) ELT, 450 (S.C) = 1997 (9) TMI 100 – Supreme Court of India ii] T.T.K. Pharma Ltd. 1993 (63) ELT 446 (Tribunal) = 1992 (8) TMI 183 – CEGAT, NEW DELHI iii] Jalal Plastic industries 1981 (8) ELT 653(Guj) = 1980 (12) TMI 51 – HIGH COURT OF GUJARAT AT AHMEDABAD iv] M/s. Varroc Engineering Pvt. Ltd. 2015 (10) TMI 54-CESTAT Mumbai It is observed that the applicant s intention is that the mats and mattings with predomination of cotton is only an example. Also, there is one more product mentioned i.e. cotton rugs of handloom. Thus, cotton rug is a separate item and the predomination of cotton does not apply to such article. Therefore, it can be interpreted that the predomination of cotton will only apply to mats and mattings, including bath mats. Therefore, by way of the example, the scope of the other textile floor c
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le under GST regime. The applicant has failed to provide any reasons as to how the said case law will be applicable under GST regime. 7] Further, from the enquiries made with the trade, it is learnt that the PVC carpet is classified under Custom CHSH 3918 which reads as under Floor coverings of plastics, whether or not self-adhesive, in rolls or in the forms of tiles; wall or ceiling coverings of plastics The explanatory notes provided under each HSN is as following: – 3918: The said HSN covers Floor coverings of polymers of vinyl chloride in rolls or forms of tiles. In the present case, primary raw material used in the manufacturing the goods in consideration is PVC , hence a view can be formed that the goods are specifically classified in the said entry. It appears that Chapter heading 5705 covers carpets and textile floor coverings, and not PVC, which is the main raw material used by the applicant. 8] In view of the above, it appears that the product of applicant should be rightly c
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rocess once again – a) Under Stage 1, PVC monofilament yarn with decitex ranging from 1200 to 2800 and filament diameter range 0.38 to 0.75 mm is extruded through a perforated dis plate using T-die extrusion. Extrusion is done through 3 to 4 parallel rows along the entire width of T-die and the vertically extruded yarn immediately falls on a water bed to form a non-woven carpet pile. Also, referred to as PVC web, non-woven carpet pile is taken up in a horizontal direction on a roller and wound up in rolls. Pile height of the carpet can be varied by changing the process parameters, usually in the range of 8 mm to 16 mm. b) Under Stage 2, the web formed in Stage 1 is impregnated with a lamination of clear coat of liquid PVC and is further made to fall over the liquid PVC layer on a conveyer belt, Then it passes through the heated conveyor oven to solidity the liquid PVC backing to the web. c) The resultant product is a product of running length. It is then cut into Size as specified by t
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r other process into Shapes which are retained on the removal of the external influence. Throughout the Nomenclature any reference to plastics also includes vulcanised flbre. The expression, however. does not apply to materials regarded as textile materials of Section XI. The applicant has laid claim to the Customs Tariff Heading (CTH) 5705 as being applicable to the impugned product. Chapter 57 falls in Section Xl of the scheme of the Customs Tariff, Section Xl is about TEXTILES AND TEXTILE ARTICLES and Chapter 57 is about Carpets and other textile floor coverings . With the understanding that the impugned product is composed only of PVC monofilament yarn and liquid PVC, we look at the HSN Notes to Section XI which say thus Notes, 1.- This Section does not cover : (h) Woven, knitted or crocheted fabrics. fells or nonwovens, impregnated, coated, covered or laminated with plastics, or articles thereof of Chapter 39, PVC falls in Chapter 39, more specifically Heading 39.04, The impugned
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5 which is claimed as being applicable. The case laws being buttressed in respect of the applicability of the Heading 5705 also need no discussion as to their applicability or otherwise. However, we would like to observe herein that we are not at all disagreeable to the point that there are man-made textiles but the same are not required to be referred to here in view of the impugned product being clearly classifiable under Chapter 39 as per discussions held hereinabove. Now as can be seen that the applicant s query is in respect of the classification of the PVC floor mat and the applicable rate of GST on the same, we would now move on to decide the rate on the impugned product. There is no specific entry in the Schedule for goods exempted from GST as found in the Notification no. 2/2017-Central/State Tax (Rate) which would cover the impugned product. In the Schedule for goods taxable to GST at various rates as found in the Notification no. 1/2017-Central/State Tax (Rate), the followin
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following products as under – 3918 FLOOR COVERINGS OF PLASTICS, WHETHER OR NOT SELF-ADHESIVE, IN ROLLS OR IN THE FORM OF TILES; WALL OR CEILING COVERINGS OF PLASTICS, AS DEFINED IN NOTE 9 TO THIS CHAPTER 3918 10 – Of polymers of vinyl chloride: 3918 10 10 Wall or ceiling coverings combined with kg. 10% – knitted or woven fabrics, nonwovens or felts 3918 10 90 Other 3918 90 – Of other plastics : 3918 90 10 Floor coverings of linoxyn 3918 90 20 Wall or ceiling coverings combined with kg. 10% – knitted or woven fabrics, non wovens or felts 3918 90 90 Other Note 9. For the purposes of heading 3918, the expression wall or ceiling coverings of plastics applies to products in rolls, of a width not less than 45 cm, suitable for wall or ceiling decoration, consisting of plastics fixed permanently on a backing of any material other than paper, the layer of plastics (on the face side) being grained, embossed, coloured design-primed or otherwise decorated. From the details of the Tariff Head
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