2025 (7) TMI 1602 - AAAR - GST

Classification of PVC raincoats - to be classified as plastic (HSN Code 3926) or textile (HSN Code 6201) items under GST? - GST rate of PVC raincoat - If the price of PVC raincoat comes under Rs. 1000/- then does it attract 5% tax on it? - HELD THAT - PVC is nothing but a synthetically prepared plastic - the Explanatory Notes of both Chapters 39 and 62 categorizing goods under such HSNs being mutually exclusive clearly indicate that plastic raincoats under Chapter 39 are not to be treated as raincoats covered under chapter 62. It is evident that PVC is correctly classified as a synthetic polymer of plastic and not a woven textile. Hence classification of PVC raincoats as textile apparel under HSN Code 6201 would be erroneous insofar as PVC is not a woven textile. The entry in sl. No. 223 of Schedule I of CGST Rate N/N. 1/2017-Central Tax (Rate) dated 28-06-2017 read with corresponding WBGST Rate N/N. 1125-F.T. dated 28-06-2017 being Articles of clothing accessories not knitted or crocheted of sale value not exceeding Rs. 1000 per piece attracting GST @5% is specifically relating to items under HSN Chapter Code 62 whereas the entry in sl. No. 111 of Schedule III of CGST Rate N/N. 1/2017-Central Tax (Rate) dated 28-06-2017 read with corresponding WBGST Rate Notification No. 1125-F.T. dated 28-06-2017 Other articles of plastics and articles of other materials of heading 3901 to 3914 (other than plastic bangles plastic beads and feeding bottles) attracting GST @ 18% pertains to HSN Code 39.26. It is already clear that PVC raincoats are articles made by sealing sheets of plastics and hence are to be classified under HSN Code 39.26. Chapters 39 and 62 categorizing goods under such HSNs being mutually exclusive thus clearly indicate that plastic raincoats under Chapter 39 cannot be treated as raincoats covered under chapter 62 - the item PVC raincoat being apparel which is primarily composed of polyvinyl chloride (PVC) would be classified under HSN Code 3926 and not under HSN Code 6201. Supply of PVC raincoat as manufactured by the appellant would be covered under HSN Code 3926 and attract tax @ 18% vide entry no. 111 of Schedule III of CGST Rate N/N. 1/2017-Central Tax (Rate) dated 28-06-2017 read with corresponding WBGST Rate N/N. 1125-F.T. dated 28-06-2017 as amended from time to time.

Summary

ISSUES:

Whether PVC raincoats should be classified as plastic articles under HSN Code 3926 or as textile articles under HSN Code 6201 for GST purposes.The applicable GST rate on PVC raincoats, specifically whether a 5% tax applies if the price is below Rs. 1000/-.Whether delay in filing the appeal beyond the prescribed period under section 100(2) of the GST Act can be condoned.

RULINGS / HOLDINGS:

PVC raincoats are classified under HSN Code 3926 as "articles of plastics and articles of other materials of heading 3901 to 3914" and not under HSN Code 6201 which applies only to "made up articles of any textile fabric".The applicable GST rate on PVC raincoats is 18% under entry no. 111 of Schedule III of the CGST Rate Notification, not 5% which applies to textile articles under HSN Code 6201 priced below Rs. 1000/-.The delay in filing the appeal beyond thirty days is condoned under the proviso to sub-section (2) of section 100 of the GST Act on sufficient cause shown.

RATIONALE:

The classification under GST is governed by the Harmonized System Nomenclature (HSN) as adopted internationally by the World Customs Organization (WCO), which provides authoritative Explanatory Notes for classification.HSN Chapter 62 applies exclusively to articles of textile fabrics, which are defined as "made up articles of any textile fabric other than wadding, excluding knitted or crocheted," and require the article to be "woven" fabric as per the Supreme Court's interpretation that "textiles" means any woven fabric.HSN Chapter 39 covers plastics and articles thereof, including synthetic polymers such as polyvinyl chloride (PVC), which are not woven fabrics but are manufactured by sealing sheets of plastic, making PVC raincoats non-woven plastic articles.The Supreme Court precedent clarifies that the term "textiles" is derived from the Latin "texere" meaning "to weave," and only woven fabrics qualify as textiles; thus, non-woven PVC sheets do not qualify as textile fabric.The GST classification must be based on the material composition and manufacturing process rather than solely on the intended use or commercial nomenclature; the Explanatory Notes and judicial precedents emphasize the primacy of material and manufacturing characteristics in classification.The classification entries for plastics and textiles under HSN are mutually exclusive; hence, PVC raincoats cannot be classified under textile headings.The appellant's reliance on popular or commercial usage and certain advance rulings was considered but found insufficient to override the statutory and explanatory note-based classification supported by judicial authority.The principle that a specific tariff heading prevails over a general one (Rule 3(a) of General Rules of Interpretation) was applied, but since PVC raincoats are not textile fabrics, the specific entry under plastics applies.The delay in filing the appeal was condoned recognizing the complexity and voluminous nature of interpretational issues involved, consistent with the proviso to section 100(2) of the GST Act.