In Re: Assistant Commissioner of Central Tax (T & R), Howrah CGST & CX Commissionerate (M/s. RLJ Woven Sacks Pvt. Ltd.)
GST
2019 (2) TMI 833 – AUTHORITY FOR ADVANCE RULING, WEST BENGAL – 2019 (22) G. S. T. L. 120 (App. A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, WEST BENGAL – AAAR
Dated:- 31-1-2019
Appeal Case No. 08/WBAAAR/Appeal/2018
GST
MR. A.P.S SURI, AND MS. SMARAKI MAHAPATRA, MEMBER
An Appeal filed under Section 100(1) of the West Bengal Goods and Services Tax Act, 2017/ Central Goods and Services Tax Act, 2017, by the Assistant Commissioner of Central Tax, Howrah CGST & CX Commissionerate.
Present for the Appellant: Sri Dipankar Mukherjee, Superintendent (T&R), Central Tax, Howrah CGST & CX Commissionerate
Present for the Respondent: Sri Vinay Kumar Shraff, Advocate
This Appeal has been filed by the Assistant Commissioner of Central Tax, Howrah CGST & CX Commissionerate (hereinafter referred to as “the Appellant”) on 05.11.2018 against Advance Ruling
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or lamination with plastics, are to be classified under Tariff Sub-Heading 6305 33 00.
4. The Appellant has filed an Appeal against the above Advance Ruling with the prayer to set aside/ modify the impugned Advance Ruling passed by the Authority for Advance Ruling or pass any such further or other orders as may be deemed fit and proper in the facts and circumstances of the case on the following grounds:
(i) The learned Advance Ruling Authority has referred to Note 1 (h) to Section XI of the tariff Act which covers textile and textile articles from Chapter 50 to 63 and does not include woven, knitted or crocheted fabrics of Chapter 39, hence the learned Advance Ruling authority has erred in interpreting the true essence of this Chapter Note.
(ii) The learned Advance Ruling Authority has erred in reading the legality of the Section Note in so far as when every word in the above Chapter note is separated by comma then each word should be given equal weightage and from that perspective
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ngly. No other points pertaining to other issues were raised before us during the course of the arguments. There shall be no order as to costs.”
This order has not been superceded by any decision of any Hon'ble High Court or the Hon'ble apex Court. Hence the judgment delivered by the Advance Ruling Authority is not proper and legal.
(iv) The said taxpayer has been following this practice of classifying both their products-PP Leno Bags & PP woven sacks-under Chapter 39 for the last 9 years. It is not cogent why the taxpayer did not seek advance Ruling at any point of time, earlier. Under self-assessment regime, the taxpayer is the active agent in seeking such Ruling in case of doubts related to classification, or otherwise. The taxpayer's action of their seeking advance Ruling in this case and a sudden change in classification betrays their self- serving intent of taking undue advantage of a lower tax rate. This was also held by the Apex Court in Sri Babu Ram alias Durga Prasad vs. Sr
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“….. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H.Dave [1978(2) E.L.T (J 350) 1969 (2) S.C.R 253) = 1968 (9) TMI 112 – SUPREME COURT OF INDIA that such a Notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the Notification, i.e, by plain terms of exemption.”
5. During the course of the hearing the Appellant reiterated the poi
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nsion exceeds 1 mm or strip or the like (for example, artificial straw) of an apparent width exceeding 5 mm, of plastics (Chapter 39), or plaits or fabrics or other basket-ware or wickerwork of such monofilament or strip (Chapter 46).
(ii) Further, the Respondent referred to Note 1 (h) to Section XI of the Tariff Act, which states that Textile and Textile Articles covering Chapters 50 to 63, does not include “Woven, knitted or crocheted fabrics, felt or nonwovens, impregnated coated, covered or laminated with plastics, or articles thereof, of Chapter 39”. It was further submitted that from the bare perusal of Chapter and Section notes it is clear that in order to be included in Chapter 63, the width of the tapes, manufactured from plastics or articles of Chapter 39, used to weave the fabric should be less than or equal to 5 mm and should not be impregnated, coated, covered or laminated with plastics or articles thereof, of Chapter 39.
(iii) It was further submitted that the Responden
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Further, the unit of the Respondent was also registered as a Technical Textile Unit with the Textile Commissioner.
(vi) The Respondent added that any expert's opinion cannot be discarded without producing contrary opinion of another expert and cited the judgment of the Apex Court in the matter of Parle Agro (P) Ltd. Vs. Commissioner of Commercial taxes, Trivandrum reported in 2017 (352) ELT 113 (SC) = 2017 (5) TMI 592 – SUPREME COURT OF INDIA, in support of his submission.
(vii) The Respondent admitted that earlier the Leno bags in question were being classified by them under Chapter 39 instead of Chapter 63 not for claiming any benefit but out of ignorance but that does not operate as estoppels/ res judicata against them for claiming classification under the correct tariff/ subheading of GST Tariff. In support of this submission the Respondent referred to following judgments/ orders namely;
a. Commissioner of Central Excise, Bhopal Vs. Mahakoshal Potteries [2005 (183) ELT 289 (Tr
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ast India Pvt. Ltd. vs. State of UP reported in [2008] 14 VST 259(SC) = 2008 (4) TMI 101 – SUPREME COURT.
7. The matter is examined and written and oral submissions made before us are considered.
8. The Chapter 63 covers 'Other made up textile articles; sets; worn clothing and worn textile articles; rags'. For sake of clarity, the relevant text of the Tariff Heading 6305 3300 is reproduced as under:
“6305
Sacks and bags, of a kind used for the packing of goods
……
-Of man-made textile materials
6305 3300
Other, of polyethylene or polypropylene strip or the like”
Further Chapter 39 covers “Plastics and Articles thereof'. For sake of clarity the relevant text of Chapter Sub-Heading 3923 2990 is reproduced as under:
“3923
Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics
……..
-Sacks and bags (including cones)
392329
Of other plastics
39232990
Other”
From the plain reading of
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opylene/ Linear Low Density Polyethylene (i.e., made of plastics) as defined under Chapter Sub-Heading 3923. Hence, the impugned goods are clearly classifiable under Chapter Sub-Heading 39232990.
9. It is pertinent to mention that the Note 2(p) of the Chapter 39 of GST Tariff (plastics and Articles thereof) does not cover the goods of Section XI (Textiles & Textile Products). In the instant case, the impugned product, by no way of stretch of imagination, could be termed as Textiles or Textile Products. Therefore, unless the impugned goods have been manufactured from the material which qualifies as Textiles of the Chapter 63, it would not be proper to consider the same to be classifiable under Chapter 63053300. Further, Section Note 1 (h) of Section XI of the Tariff Act, specifically excludes:
“woven, knitted or crocheted fabrics, felt or nonwovens, impregnated, coated, covered or laminated with plastics, or articles thereof, of Chapter 39;”
From the plain reading of the above Sectio
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p (Chapter 46). From the plain reading of the aforesaid Section Note, it transpires that it relates to classification of Monofilament having cross-sectional dimension exceeding 1 mm of an apparent width exceeding 5 mm of plastics and any Articles made from such Monofilament only. If Monofilament having cross-sectional dimension more than 1 mm of an apparent width exceeding more than 5mm of plastics then the same would qualify under Chapter 39. If the goods are plaits or fabrics or other basketware or wickerwork of such monofilament or strip, then the same would be classifiable under Chapter 46. Hence, the above said Section Note 1 (g) of Section XI of the Tariff Act does not help the Respondent in the instant case.
11. The Respondent has also made references of Bureau of Indian Standards and Technical Textile Unit for substantiating the classification of the impugned goods under Chapter 63. However, it is pertinent to mention that the classifications of the goods shall always be deter
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be classifiable under Chapter 39. Now, in the instant case the Respondent has been classifying the impugned goods under Sub-Heading No. 3923.90 of the Central Excise Tariff for last 9 (nine) years and their present appeal has the only aim to enjoy lower tax rate of tax under GST. In both the cases, the factual matrix is identical.
13. In the matter of Gujarat Raffia Industries Ltd. vs Commr. of C. Ex. (CESTAT Delhi) on 14 January, 2003 = 2003 (1) TMI 146 – CEGAT, NEW DELHI, vide para 6, the Hon'ble CESTAT has observed and held the following:
“……If the strip is a strip of plastic only and not a synthetic material and is also known in the common parlance as a commodity of plastic, and the finished goods that is the HOPE woven sacks are also known in the common parlance as plastic woven sacks, then it cannot be held that the strips with which such bags are woven are the strips of synthetic textile material.”
14. The Respondent's intention to change the classification of the impugn
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tariff rate of GST, which is devoid of merit.
15. CBIC, vide para 7 of the Circular 80/54/2018-GST dated 31-08-2018, addressed the following issue:-
Applicability of GST on Supply of Polypropylene Woven and Non-Woven Bags and PP Woven and Non-Woven Bags laminated with BOPP.
CBIC, vide Para 7 of the above said Circular, has clarified the issue as reads hereunder:
“7.2 As per the explanatory notes to the HSN to HS Code 39.23, the heading covers all articles of plastics commonly used for the packing or conveyance of all kinds of products and includes boxes, crates, cases, sacks and bags.
7.3 Further as per the Chapter note to Chapter 39, the expression 'plastics' means those materials of heading 39.01 to 39.14 which are or have been capable, either at the moment of polymerization or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent of plasticizer) by moulding, casting, extruding, rolling or other process into s
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