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2025 (4) TMI 1001 - AAR - GSTClassification of Geo-Membrane for Water Proof Lining - Type-II as per IS 153151 2015 - to be classified under Chapter Heading 5911 10 00 or under Chapter 39? - HELD THAT - From the process of manufacture as described by the applicant it is apparent that after the process of extrusion and slitting HDPE Tapes/ Strips of width less than 5mm are taken to circular looms and are woven into HDPE Woven Fabrics. The said High Density UV Stabilized Woven Fabrics are manufactured with specific weaving pattern through circular ring on horizontal and vertical direction to impact the essential property of Geomembrane fabrics i.e. impermeable to water for the specific end use of water retention. The said HDPE Tapes/Strips of width less than 5mm in width are appropriately classifiable under Heading 5404. Further Section Note 1 (g) of Section XI excludes only strips of plastic where the width is exceeding 5mm. From the manufacturing process as detailed here-in-above and on perusal of the tariff headings it is clear that the strips of plastic of less than 5 mm width would be appropriately classifiable under Tariff Heading 5404 and the fabric woven out of the said strips would be appropriately classifiable under Tariff Heading 5407 20. Such fabrics would also be considered as a textile fabric - In terms of Section Note 1(h) of Section XI even woven fabrics which are laminated with plastics or articles thereof of Chapter 39 are excluded from the said Section. Section XI covers Chapters 50 to Chapter 63 of the Customs Tariff. Therefore even if during the course of manufacture of the said product any woven fabric emerges and even if the said woven fabric is classified under Chapter 57 as a textile fabric if the said goods are laminated with plastic and can be classified under chapter 39 the same will go out of the purview of Section XI and consequently out of the purview of Chapter 50 to Chapter 63. On going through the method of manufacture and the main use of the product geomembrane it is seen that the said product is a textile fabric laminated on both sides with plastic and is made according to prescribed IS Standards. It is basically used as pond liners. The products falling under Chapter 5911 has been declared as a technical textile under the Notification issued by the Directorate General of Foreign Trade - It is a well settled principle in classification that the wordings of the Section Notes Chapter Notes and then heading itself will have precedence and it is only in case of ambiguity that the commercial understanding or trade parlance will be taken into consideration for the purpose of classification. The use of the product being classified will not have any bearing on the classification unless it is so mandated in the wording of the tariff heading. In the instant case Chapter Heading 5911 clearly envisages the use/functionality test for determination of classification of products under this heading in as much as the tariff heading itself mentions that textile products and articles for technical uses will be classified under the said heading. The product Geo Membrane for Water Proof Lining - Type-II as per IS 153151 2015 is rightly classifiable under Tariff Item 5911 1000. Conclusion - The product Geo Membrane for Water Proof Lining-Type-II as per IS 153151 2015 is classifiable under Tariff item 59111000.
Issues Presented and Considered
The core legal questions considered by the Authority for Advance Ruling (AAR) were:
Issue-wise Detailed Analysis Issue 1: Classification of Geo-Membrane under Chapter 5911 or Chapter 3926 Legal Framework and Precedents: The classification is governed by the First Schedule to the Customs Tariff Act, 1975, read with the GST Tariff Notification No. 01/2017-Central Tax (Rate). The General Rules of Interpretation (GRI) of the Tariff apply, particularly Rule 3(a) which mandates preference to the most specific description. Section Notes and Chapter Notes, including Note 1(g) and 1(h) to Section XI, are critical for determining the scope of textile products versus plastics. Court's Interpretation and Reasoning: The AAR examined the product's manufacturing process, which involves extrusion of HDPE granules into tapes less than 5mm wide, weaving these tapes into fabrics, and laminating the fabrics with plastics to create a water-impermeable membrane. The tapes under 5mm width fall under Chapter 5404 (synthetic monofilament and strips), and the woven fabric from these tapes falls under Chapter 5407, both within Section XI (Textiles). The laminated fabric product is argued by the applicant to fall under Chapter 5911, which covers textile fabrics coated, covered or laminated with plastics for technical purposes. The AAR noted that Section Note 1(h) excludes woven fabrics impregnated or laminated with plastics (Chapter 39) from Section XI. However, the Authority found that since the product does not fall under any specific heading in Chapter 39 and can be specifically classified under Chapter 5911, the exclusion does not apply. The product is not a mere plastic article but a textile fabric coated with plastic for technical use. Key Evidence and Findings: The detailed manufacturing process, IS specification 153151:2015, and recognition of the product as a technical textile by the Directorate General of Foreign Trade and Ministry of Textiles were pivotal. The product's use as a pond liner and its technical properties such as water impermeability, abrasion resistance, and UV stability were also considered. Application of Law to Facts: The AAR applied the GRI, giving precedence to the specific heading 5911 over the residual heading 3926. The product's technical textile nature and manufacturing process supported classification under Chapter 5911 rather than as a general plastic article under Chapter 39. Treatment of Competing Arguments: The jurisdictional officer argued for classification under Chapter 3926, citing the product's plastic composition and reliance on a Gujarat AAR ruling classifying similar products under Chapter 3926. The AAR distinguished this by referring to a recent Gujarat High Court order setting aside that ruling and affirming classification under Chapter 5911, as well as other AAR decisions supporting the applicant's position. Conclusions: The product is classified under Chapter Heading 5911 10 00 as a textile fabric laminated with plastics for technical use. Issue 2: Applicability of Section Notes 1(g) and 1(h) to Section XI Legal Framework: Section Note 1(g) excludes monofilament or strips of plastics exceeding certain dimensions from textiles, and Note 1(h) excludes woven, knitted, or crocheted fabrics impregnated or laminated with plastics from textiles if they fall under Chapter 39. Court's Interpretation: The AAR found that the HDPE tapes used are less than 5mm in width and thus not excluded by Note 1(g). Regarding Note 1(h), since the laminated product does not fall under any specific Chapter 39 heading, the exclusion does not apply. Therefore, the product remains within the textile classification. Application to Facts: The product's tapes and woven fabric fall under textile headings 5404 and 5407. The lamination with plastics does not shift the product into Chapter 39, as it is not otherwise classifiable there. Conclusion: The Section Notes do not exclude the product from classification under Chapter 5911. Issue 3: Interpretation of General Rules of Tariff Classification Legal Framework: Rule 3(a) of the General Rules of Interpretation mandates that the heading providing the most specific description be preferred over a general or residual heading. Court's Reasoning: The AAR emphasized that the product's specific characteristics and technical use justify classification under the specific heading 5911 rather than the residual heading 3926. Reliance was placed on judicial precedents affirming this interpretative approach. Conclusion: The specific heading 5911 10 00 is preferred over the more general residual heading 3926 90 99. Issue 4: Relevance of Precedents and Authoritative Rulings Legal Framework: Decisions of other Advance Ruling Authorities and High Courts are relevant for consistency and guidance. Court's Reasoning: The AAR noted that the Gujarat High Court set aside an earlier Gujarat AAR ruling that classified similar products under Chapter 39, holding instead that Geo Membranes are classifiable under Chapter 59. The AAR also cited other rulings by the Gujarat AAR supporting classification under 5911. Conclusion: The AAR followed the authoritative precedents favoring classification under Chapter 5911. Significant Holdings "The product Geo Membrane for Water Proof Lining - Type-II as per IS 153151:2015 is an article of textile, laminated with plastic, of a kind used for technical purposes. This product can be classified under Tariff Item 59111000." "When a classification based on the specification and use of any product is possible, it would not be proper to classify it in the general and residuary entry of 'Other articles of plastic and articles of other materials of Heading 3901 to 3914'." "The word 'textiles' is derived from the Latin 'texere' which means 'to weave' and it means any woven fabric. Whatever be the mode of weaving employed, woven fabric would be 'textiles'. The use to which it may be put is immaterial and does not bear on its character as a textile." "Section Note 1(h) of Section XI excludes woven fabrics laminated with plastics under Chapter 39 only if such goods find mention under Chapter 39 headings. Since the product does not find mention under Chapter 39, the exclusion does not apply." "Rule 3(a) of the General Rules of Interpretation mandates that a heading which provides the most specific description shall be preferred to a heading providing a more general description." Final determination: The product 'Geo-Membrane for Water Proof Lining-Type-II as per IS:153151:2015' is classifiable under Chapter Heading 5911 10 00 and is not to be classified under Chapter 3926 90 99.
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