2019 (2) TMI 833 – AUTHORITY FOR ADVANCE RULING, WEST BENGAL – TMI – Classification of goods – PP Leno Bags – whether classified under Chapter 63 or under Chapter 39 of Tariff Act? – challenge to advance ruling decision.
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Held that:- 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 – the goods i.e., woven, knitted or crocheted fabrics, felt or nonwovens, impregnated, coated, covered or laminated, made from the plastics or articles thereof are excluded from the Section XI of Tariff Act. If the impugned goods were made
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ces 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 No. 19/WBAAR/2018-19 dated 28.09.2018, pronounced by the West Bengal Authority for Advance Ruling in the matter of M/s. RLJ Woven Sacks Pvt. Ltd. 2. M/S RLJ Woven Sacks Pvt. Ltd., holding GSTIN No. 19AABCJ8866B1ZD, a manufacturer of Polypropylene Leno Bags (PP Leno Bags) having its address at Flat IA, Radiant Park Building, 201, New Market Road, Kolkata-700017 in West Bengal (hereinafter referred to as the Respondent ), sought an Advance Ruling on the classification of PP
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riff 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 the word woven should have been considered as an exclusion word in its own right. Hence, the Advance Ruling is not legally tenable. (iii) The learned Advance Ruling Authority has failed to take note of the judgment delivered by the Hon ble Madhya Pradesh High Court in the case of M/s. Raj Pack Well Ltd Vs Union of India referred in 1990 (50) ELT 201 (M.P) = 1989 (9) TMI 120 – HIGH COURT OF MADHYA PRADESH AT INDORE where the Hon ble High Court has observed in Para 21 that in the result we hold tha
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t 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. Sri Indra Pal Singh (Dead) by Irs., AIR 1998 SC 3021 = 1998 (8) TMI 605 – SUPREME COURT, and P.R.Deshpande vs. Maruti Balramhaibatti, AIR 1998 SC 2979 = 1998 (8) TMI 604 – SUPREME COURT wherein the Apex Court has observed that such a self-serving action or conduct violates the doctrine of estoppels. (v) The said taxpayer has relied on the classification given by the Bureau of Indian Standards to classify their products Leno bags under Chapter 63 only when the tax rate has been reduced to 5% against 18%
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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 points as stated in Grounds in Appeal. The Appellant also referred to an order passed in appeal by this forum on 25.10.2018 in Appeal Case No. 06/WBAAAR/Appeal/2018 = 2018 (11) TMI 663 – APPELLATE AUTHORITY FOR ADVANCE RULING, WEST BENGAL wherein PP Leno Bags of similar description, manufactured by M/S Mega Flex Plastics Ltd., were classified under Tariff Heading 3923 29 90. 6. During the course of the hearing the Respondent opposed the appeal and submitted the following: (i) The Respondent pointed out
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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 Respondent manufacture PP Leno Bags specifically made from woven Polypropylene fabric using strips or the like of width not exceeding 5 mm and without any impregnation, coating, covering, or lamination with plastics and such bags were clearly classifiable under Tariff heading 6305 33 00 which includes sacks and bags of the kind used for packing of goods, made from polyethylene or polypropylene strips and the like that qualifies as man-made textile materials. It was further added that this Tariff heading is not appli
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arlier 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 (Tri-Dei)] = 2005 (2) TMI 183 – CESTAT, NEW DELHI b. Commissioner of Central Excise, Bhopal Vs. Perfect Refractories [2005 (185) ELT 163 (Tri-Dei)) = 2005 (2) TMI 597 – CESTAT, NEW DELHI c. Commissioner of Central Excise, Mumbai-Ill Vs. Nozzle Auto Association Pvt. Ltd. [2013 (290) ELT 731 (Tri-Mumbai)] = 2011 (8) TMI 756 – CESTAT, MUMBAI d. Commissioner of Customs, Central Excise & Service Tax, Hyderabad-IV vs Lamtuf Plastics Ltd. [2016 (343) ELT 618 (Tri-Bang)] = 2015 (5) TMI 1094 – CESTAT BANGALORE e. Commissi
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er, 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 the above, it is evident from the above that to qualify under Chapter Sub-Heading 63053300 the goods i.e., Bags/ Sack should be made of man-made textile material of polyethylene or polypropylene strip or the like , whereas for qualification under the Chapter Sub-Heading 39232990 the goods i.e., Bags/ Sack should be made of plastics and articles thereof. In the instant case, as discussed in para 2 of Advance Ruling Order dated 28-09-2018, the Respondent used the raw materials like Polypropylene, Linear Low Density Polyethylene, Colour Master Batch
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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 Section Note, it transpires that the goods i.e., woven, knitted or crocheted fabrics, felt or nonwovens, impregnated, coated, covered or laminated, made from the plastics or articles thereof are excluded from the Section XI of Tariff Act. If the impugned goods were made of textile material of polypropylene, then only the same would be classifiable under Chapter 63 and the aforesaid fact is absent in the instant case. Therefore, the impugned goods cannot be classified under Chapter 63 and shall be classifiable under Chapter 39, as discussed supra. 10. The
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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 determined in accordance to the relevant Section Notes and Chapter Notes of the GST Tariff Act. The Respondent failed to bring out any submissions as to how the aforesaid references i.e., Bureau of Indian Standards and Technical Textile Unit are relevant to the Section Notes and Chapter Notes of the GST Tariff Act to determine the classification of the impugned goods. 12. A different Bench of this Appellate Forum passed an Order dated 25.10.2018 and classified the impugned Item under Tariff Heading 39232990 in the case of M/s. Mega Flex Plastics Ltd. In sa
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hellip;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 impugned goods appears to enjoy of the lower Tariff rate of GST. In this regard, on the similar issue, the Order of the Hon ble Supreme Court, in the matter of P.R. Deshpande vs. Maruti Balram Haibatti, as reported in AIR 1998 SC 2979 = 1998 (8) TMI 604 – SUPREME COURT, is relevant, wherein the Hon ble Supreme Court has observed that : …….the doctrine of election is based on the rule of estoppel- the principle that one cannot approbate and reprobate inheres in it. The doctrine of estoppel by election is one of the species of estoppel in pa
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cludes 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 shapes which are retained on the removal of the external influence. 7.4 Thus it is clarified that Polypropylene Woven and Non-Woven Bags and PP Woven and Non-Woven Bags laminated with BOPP would be classified as plastic bags under HS code 3923 and would attract 18% GST. From the above, it is evident that Polypropylene Leno Bags whether laminated with BOPP or not would be classified as plastic bags under HS code 3923 and would attract 18% GST. 14. In view of the above discussion we find that Polypropylene Leno Bags shall be classifiable under Heading
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