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TMI Blog2019 (2) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 Leno Bags under the GST Tariff which is aligned to the First Schedule of the Customs Tariff Act, 1975 (hereinafter referred to as "the Tariff Act"). 3. The Advance Ruling Authority after considering Section Notes 1 (g) and 1 (h) of Section XI of the Tariff Act and specifications issued by the Bureau of Indian Standards ruled that 'PP Leno Bags', if 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, 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 followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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% under Chapter 39 which was the previous classification made by the assessee. In a judgment of Hon'ble Apex Court in the case of M/s. Novopan India Ltd Vs Collector of Central Excise and Customs, Hyderabad, as reported in 1994 (73) ELT 769 (S.C) =1994 (9) TMI 67 - SUPREME COURT OF INDIA , the Hon'ble Apex Court observed "Classification of goods-Commercial understanding is the true test and not what scientific books like Encyclopedia Britannica may say". The Hon'ble Apex Court also obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes 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 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 applicable if the sacks made from PP woven fabric are impregnated, coated, covered or la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yeast 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 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 polypro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (g) of Section XI of the Tariff Act, relevant to Textiles and Textile Articles, which interalia states that this Section Note does not cover the monofilament of which any cross-sectional dimension 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 basketware or wickerwork of such monofilament or strip (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... batti, 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 pais (or equitable estoppel), which is a rule in equity. By that law, a person may be precluded by his actions or conduct or silence when it is his duty to speak, from asserting a right which he otherwise would have had." Therefore, it is settled law that the principle set by the Apex Court, the Respondent cannot be allowed to change the classification which they had pursued for last 9 years in view of the fact that they are now intended to avail lower 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 expl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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