In Re: Mega Flex Plastics Ltd.
GST
2018 (7) TMI 391 – AUTHORITY FOR ADVANCE RULINGS, WEST BENGAL – 2018 (15) G. S. T. L. 90 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULINGS, WEST BENGAL – AAR
Dated:- 6-7-2018
ARN No. 12 of 2018 – 09/WBAAR/2018-19
GST
VISHWANATH AND PARTHASARATHI DEY MEMBER
Applicant's representative heard : Sri Vinay K Shah, Advocate
1. The Applicant stated to be, inter alia, a manufacturer of Polypropylene Leno Bags seeks a Ruling on Classification of the above goods under the CGST/WBGST Acts, 2017 (hereinafter referred to as the “the said GST Act”).
Advance Ruling is admissible under Section 97(2) (a) of the said GST Act.
The Applicant submits that the question raised in the Application has neither been decided by nor is pending before any authority under any provisions of the GST Act.
The officer concerned raises no objection to the admission of the Application.
The Application is, therefore, admitted.
2. The Application states that the App
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ed to form the bags.
The Applicant is of the opinion that the PP Leno Bags manufactured is classifiable under Tariff Head 6305 33 00 of the GST Tariff which is aligned to the First Schedule of the Customs Tariff Act, 1975 (hereinafter referred to as the “the said Tariff Act”).
3. In Statement dated 01.06.2018 before the Superintendent of Central Tax, Range-III, Sankrail Division. Howrah CGST & CX Commissionerate, Shri Hukum Chand Bothra, Director of Mega Flex Plastics Ltd, the Applicant, informed that before the implementation of GST the product, PP Leno Bags were cleared under both Tariff Sub-Headings, 39232990 as well as under 63053300, whereas, on and after the implementation of GST the same product is being cleared under Tariff Sub-Heading 63053300 in the domestic market and under Tariff Sub-Heading 39232990 during export.
The explanation provided by the Applicant for classifying the same product under Different Tariff Codes is that the Advance License issued to the Applicant by
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he Indian Institute of Packaging that the Test Certificates dated 15.03.2018 and 27.03.2018, respectively, that the reports are not to be reproduced without written approval, and that the report dated 27.03.2018 cannot be used for litigation, the above references will not be considered when at the Ruling.
5. The Applicant has also submitted a communication from State Bank of India dated 29.09.2008 granting 10% capital subsidy under TUFS. The Technology Upgradation Fund Scheme is a scheme under the Ministry of Textiles for providing capital for modernization of Indian Textile Industry at international interest rate. The Applicant has availed of subsidy to the tune of about 22 lakhs in 2008.
On being specifically asked the Applicant has admitted during Hearing that despite availing of subsidy under a scheme of the Ministry of Textiles aimed at providing capital for modernization of Indian textile industry, the product PP Leno Bags have been cleared from their factory under Chapter 39 (
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which the same products, PP Leno Bags were being cleared till then. The officer concerned also submits that the Applicant had not provided any information to the Revenue regarding the reasons for this change in Tariff Code.
It is significant to note here that the very month in which an Advance License was issued to the Applicant for export clearance of goods under Tariff Code 3923 29 90 the Applicant decided to change the Tariff Code for the same product, PP Leno Bags, to 6305 33 00 without citing any reasons for the change.
Nor has the Applicant applied to DGFT for any amendment with respect to the Tariff Code. Clearly, the Applicant has been either indulging in supplying the same product in the domestic market and the overseas market by classifying under more than one Tariff Code, in violation of the laws laid down by the Ministry of Finance, or there is a significant difference in the PP Leno Bags which are being cleared for home consumption and which are being exported.
It may
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vers sacks and bags, of a kind used for packing of goods, made, not of jute or of other textile fibres of Heading 5303, but of man-made textile materials which are not flexible intermediate bulk containers but are of polyethylene or polypropylene strip or the like.
The product PP Leno Bags, if described as only such, can be placed under either Tariff Code if merely these Tariff descriptions are referred to. However, it is to be seen if “PP Leno bags” have any variation in their composition or specification which may have a bearing on the Tariff Code under which the product is placed. It is, thus, obvious, that to correctly determine the classification of the product explanatory notes and clarifications beyond these Tariff descriptions.
9. Note 2(p) of Chapter 39 of the GST Tariff (Plastics and articles thereof) does not cover goods of Section XI (textiles and textile products). There is no other criterion stated to exclude goods from being included as Plastics and articles thereof vi
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plastics or articles thereof, of chapter 39.
11. The Application states that the Applicant manufactures PP Leno Bags, as well as PP Woven Sacks, which are used, or may be used for packing a variety of materials. The inputs, the manufacturing process and the type of looms used for the manufacture of these Bags are the same.
12. From the explanatory notes and clarification provided for determination of classification of goods it is seen that two more factors are to be considered, namely, the width of the tape used in the weaving and whether or not there is a layer/lining in these bags. The specifications of the PP Leno Bags being manufactured by the Applicant, therefore, become an important feature for determining their classification for the purpose of GST.
13. IS 16187:2014 issued by the Bureau of Indian Standards specifies that, PP Leno Woven sacks for packaging and storage of fruits and vegetables should have range of width from 2.0 to 2.5 mm. IS 9755:2003, IS 14887:2014,
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