TMI Blog2019 (5) TMI 1213X X X X Extracts X X X X X X X X Extracts X X X X ..... otes of the First Schedule shall be applied for the interpretation and classification of goods. Shopping bags of textile material is specified in the Chapter Heading 4202 itself. Further, those shopping bags with outer surface of textile material is classified under CTH 4202 22 and thereupon depending on the constituent material, the bags are sub-classified. Applying the Interpretative Rule 1, we find that Chapter heading 4202 above, specifically classifies Shopping Bags of cotton with outer surface of textile material - In the case at hand the bags are shopping bags made of Cotton having an outer and inner surface made of cotton, a textile material and merits classification under CTH 4202 22 20. Further, the Customs Tariff is based on the Harmonious System of Nomenclature(HSN) which is a dependable guide for interpreting the customs tariff. In as much as it is clear that Chapter 42 is not restricted only to article of leather and Tariff Heading specifically covers Shopping bags of cotton, with outer surface of textile materials, we do not find merit in the contention of the appellant that articles of leather or characteristically of leather trade is alone classified un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services Tax Act 2017 /Tamil Nadu Goods Services Tax Act 2017 ( the Act , in Short), this Order may be amended by the Appellate authority so as to rectify any error apparent on the face of the record, if such error is noticed by the Appellate authority on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer or the applicant within a period of six months from the date of the Order. Provided that no rectification which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made, unless the appellant has been given an opportunity of being heard. 2. Under Section 103(1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a). On the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b). On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tively. 3. From 15.11.2017 onwards, Cotton Carry Bags/Shopping Bags are taxable at 6% under CGST Act 2017 and at 6% under SGST Act 2017 as per SI.No. 89 of Schedule II while Non-Woven Carry Bags are taxable to 9% under CGST Act and at 9% under SGST Act 2017 as per SI.No. 124 of Schedule III of Notification No. 01/2017-CT (Rate) dated 28.06.2017 and G.O.(Ms) No. 62 dated 29.06.2017 No. II(2)/CTR/532(d-4)/2017 as amended respectively. 2.1 The present appeal is against the above ruling. The Appellant has received the order on 22.12.2018 as mentioned in their Appeal Form GST ARA-02 and they have filed the appeal on 21.01.2019. In terms of Section 100(2) of the Act, an appeal against Advance ruling is to be filed within thirty days from the date of communication of the ruling and therefore, the appeal is filed within the prescribed time-limit. 3. The Appellant manufactures Stick-Bags / Wedding Gift Bags / Packing Bags made of Non-woven Fabrics of Polypropylene/ 100% Cotton (Grey Fabrics). They have stated that Bags made of Non-woven Fabrics of Polypropylene are rightly classifiable under Tariff item No. 63 05 33 00, as sacks and bags, of a kind used for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds are classified under CTH 6305. However, in the instant case, the goods in question are Carry Bags also called as Re-usable Shopping Bags, Drawstring Gift Bags, Garment Bags. These Bags have handles for carrying. Textiles or jewelry or other items after purchased by the Customers are put in these Bags and given to Customers to carry / take away from the shops. These bags are not used for packing, but for ease of carrying being in the nature of Shopping Bags. Chapter Heading 4202 specifically covers shopping bags depending on the material they are made up of. 4. The Appellant has filed the present appeal against the above ruling. The appellant in the original application before the Advance Ruling Authority has raised the issue of classification of both Polypropylene bags and Cotton bags . In the present appeal, the Appellant is contesting only the classification of Cotton bags manufactured by them. The various contentions raised by the Appellant in the grounds of appeal are as follows: Chapters 41 to 43 of the Customs Tariff comes under Section VIII of the Tariff, which covers Raw hides and skins, Leather, Furskins and Articles thereof; Saddle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80/54/2018 dated 31.12.2018, wherein it has been 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. Non-laminated woven bags would be classified as per their constituting materials. The above clarifications are based on the reasoning that the classification has to be decided on the basis of the constituent material. Applying this test, the woven cotton bags manufactured by them merits classification only under Chapter 63052000 only. Their product is thus specifically covered by para 2.5 of the above circular. As a consequence, thereof, the rate of GST applicable on such woven cotton bags manufactured by the appellant would be 2.5% CGST and 2.5% SGST, if their sale price does not exceed ₹ 1000 per piece as per S.No. 224 of Schedule I of Notification 1/2017 Central Tax (Rate) dated 28.06.2017 and same rate of SGST as per the relevant State notification. Accordingly, the decision of the AAR, to the effect that the cotton bags manufactured by them merit classification under Chapter 4202 2220 and attract 9% CGST and 9% SGST, as per S.No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ristically of leather trade; Cotton fabric has no characteristics of leather. Heading 4202 22 is based on constituent material of the outer surface of the goods. An article which is neither made of leather, nor made of any other material having the characteristics of leather could not at all be classified under Chapter 4 2, as per the General Note The AAR has observed in the impugned order that the articles covered in Chapter 6305 would refer only to those kind of bags which are used for packing of the goods, for example cement bags, fertilizer bags, etc., but the said chapter would not cover those bags, which are used for carrying the goods and are re-usable. The above observation of the AAR is not based on any reasoning supported by Chapter Notes or Section Notes or any interpretative rules. In the absence of any such distinction recognized in the chapter headings, the observation of the AAR is totally without the authority of law. As per Para 2.5 of Circular No. 80/54/2018 dated 31.12.2018 issued by CBEC, Non-laminated woven bags would be classified as per their constituting materials. The above clarifications are based on the reasoning that the classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trunks, suit-cases, vanity-cases, executive-cases, brief-cases, school satchels and similar containers : 420211 -- With outer surface of leather or of composition leather: 42021110 --- Travel goods (trunks, suit -cases, sports bags and other similar items) of leather u 10% - 42021120 --- Toilet-bags and cases, of leather u 10% - 42021130 --- Satchels u 10% - 42021140 --- Brief-cases u 10% - .. 420222 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endable guide for interpreting the customs tariff. The explanatory notes to Chapter 42 of HSN say this Chapter principally covers articles of leather or composition of leather, however headings 42.01, 42.02 also include certain articles characteristically of the leather trade but made from other materials. In as much as it is clear that Chapter 42 is not restricted only to article of leather and Tariff Heading specifically covers Shopping bags of cotton, with outer surface of textile materials, we do not find merit in the contention of the appellant that articles of leather or characteristically of leather trade is alone classified under Chapter 42. 6.3 The next contention of the appellant is that the observation of the AAR is not based on any reasoning supported by Chapter Notes or Section Notes or any interpretative rules and In the absence of any such distinction recognized in the chapter headings, the observation of the AAR is totally without the authority of law. We find that the original authority has considered the issue of classification of the bags in Para 5.1 5.2 of the Ruling. In Para 5.1, the applicability of the Customs Tariff and the rules/General Expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter 39. 3. Fitment committee recommends for issuance of circular on similar lines. . The council agreed to the proposal. The Order No. 8/92 under Section 37-B of Central Excise Act referred to in the proposed clarification orders that HDPE strips and tapes of a width not exceeding 5mm shall be henceforth classified under sub-heading 3920.32 and sacks made therefore under subheading 3923.90 of the Tariff . We find the entire deliberations and the circular is to clarify the PP Sacks and it has no relevance to the case at hand. Further, we find that CBEC, vide Circular No. 19/2006-Cus dated 13.07.2006 issued in File F.No. 609/54/2006-DBK, on the issue of revised All Industry Rates of Duty Drawback has stated that 12. In the wake of switchover to HS classification system, three products viz., cotton handbags, leather caps and plastic combs became ineligible for drawback. It has been brought to the notice of the Ministry that prior to implementation of the new schedule w.e.f. 5-5-2005, the exporters were availing of drawback on cotton handbags under Chapter 63 as made-ups, on leather caps under Chapter 42 as articles of leather a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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