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TMI Blog2021 (3) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... servation. 2. The applicant has submitted that they, as a manufacturer of Geo Membrane for Water Proof Lining fabrics have sought classification of the same under HSN 59039090 and have submitted the brief manufacturing process for the said product as under: (a) Tape/Strip Extrusion: Tapes/Strips are manufactured from raffia grade HDPE granules which shall be UV stabilized by incorporating suitable carbon black, UV and Additives. Granules are then extruded through sheet die to produce solid sheet which is further uniformly slitted into number of tapes. These tapes are then passed through hot air oven for twist stretching with proper orientation to the tapes to achieve the required tape width and desired strength. Width of the tape/strip is between(4.1 mm to 4.3 mm) and the Linear Density of the tape/strip is 1500 to 2400 Denier. Tapes/strips are wound on bobbins for further processing. (b) Fabric weaving: HDPE woven fabrics are manufactured on Circular or Flat looms. As per design of woven fabric, Warp and Weft tapes are loaded accordingly. These tapes are then passed through Machine Direction and Cross Direction accordingly to weave the fabric. (c) Film Extrusion: Film is ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... colour (Chapter 39); (4) fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments (usually Chapters 50 to 55, 58 or 60); (5) plates, sheets or strip of cellular plastics, combined with textile fabric, where the textile fabric is present merely for reinforcing purposes (Chapter 39); or (6) textile products of heading 5811; (b) fabrics made from yarn, strip or the like, impregnated, coated, covered or sheathed with plastics, of heading 5604. 4. The applicant has submitted that the Chapter Note 7 of Chapter 59 reads as under: Heading 5911 applies to the following foods, which do not fall in any other heading of Section XI: (a) textile products in the piece, cut to length or simply cut to rectangular (including square) shape (other than those having the character of the products of headings 5908 to 5910), the following only: (i) textile fabrics, felt and felt-lined woven fabrics, coated, covered or laminated with rubber, leather or other material, of a kind used for card clothing, and similar fabrics of a kind used for other technical purposes, including narrow fabrics made of velvet impregnated with rubber, for cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 50 to 55, 58 or 60); (5) plates, sheets or strip of cellular plastics, combined with textile fabric, where the textile fabric is present merely for reinforcing purposes (Chapter 39); or (6) textile products of heading 5811;" 6.3 On perusal of the Note 2 to Chapter Heading 5903, we find that the said heading covers textile fabrics, impregnated, coated, covered or laminated with plastics. Such products are classified here whatever the weight per square meter and whatever the nature of the plastic component (compact or cellular) provided that in the case of impregnation, coating or covered fabrics, impregnation, coating or covering can be seen with the naked eye. The textile fabrics in which impregnation, coating or covering cannot be seen with the naked eye usually fall in 50 to 55, 58 or 60. 6.4 In the present case, we find that the applicant in their submission has admitted that this coating pattern can be seen with the naked eye and the same fact is also confirmed by the concerned officer of SGST-Uttarakhand in his report dated 30.01.2020, therefore the product in question merit classification under Chapter 5903 of GST Tariff Act, 2017." 6. The applicant has submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 containing the headings, sub-headings as well as the rates of Central Tax GST applicable to various goods which are covered under 6 schedules as under: (i) 2.5 per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule II, (iii) 9 per cent. in respect of goods specified in Schedule III, (iv) 14 per cent. in respect of goods specified in Schedule IV, (v) 1.5 per cent. in respect of goods specified in Schedule V, and (vi) 0.125 per cent. in respect of goods specified in Schedule VI Further, Explanation (iii) and (iv) of the said Notification reads, as under: (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticles used in machinery and plant 5911 32 40 --- Jute fabrics and articles used in machinery or plant 5911 32 50 --- Textile fabrics of metalised yarn of a kind commonly used in paper making or other machinery 5911 32 90 --- Other 5911 40 00 - Straining cloth of a kind used in oil presses or the like, including that of human hair 5911 90 - Other : 5911 90 10 --- Paper maker's felt, woven 5911 90 20 --- Gaskets, washers, polishing discs and other machinery parts of textile articles 5911 90 90 --- Other 11. Relevant portion of the Chapter notes of Chapter 59 with respect to Headings 5903 and 5911 read as under: "2. Heading 5903 applies to: (a) textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square metre and whatever the nature of the plastic material (compact or cellular), other than: (1) fabrics in which the impregnation, coating or covering cannot be seen with the naked eye (usually Chapters 50 to 55, 58 or 60); for the purpose of this provision, no account should be taken of any resulting change of colour; (2) products which cannot, without fracturing, be bent manually around a cylinder of a diameter of 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the applicant, the manufacturing process of Geo Membrane for Water Proof Lining fabrics is as under: (a) Tape/Strip Extrusion: Tapes/Strips are manufactured from raffia grade HDPE granules which shall be UV stabilized by incorporating suitable carbon black, UV and Additives. Granules are then extruded through sheet die to produce solid sheet which is further uniformly slitted into number of tapes. These tapes are then passed through hot air oven for twist stretching with proper orientation to the tapes to achieve the required tape width and desired strength. Width of the tape/strip is between 4.1 mm to 4.3 mm and the Linear Density of the tape/strip is 1500 to 2400 Denier. Tapes/strips are wound on bobbins for further processing. (b) Fabric weaving: HDPE woven fabrics are manufactured on Circular or Flat looms. As per design of woven fabric, Warp and Weft tapes are loaded accordingly. These tapes are then passed through Machine Direction and Cross Direction accordingly to weave the fabric. (c) Film Extrusion: Film is manufactured from Polyethylene (PE) granules and required suitable UV stabilizer is added. Granules are then extruded through circular die to produce blow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt of Madhya Pradesh wherein a similar issue with regard to the classification of PP/HDPE Bags or sacks, made of HDPE tapes and fabrics, has been dealt with at length by the Hon'ble High Court of Madhya Pradesh in case of M/s. Raj Packwell Ltd. v. UOI [1990 (50) E.L.T. 201 (M.P.)]. The petitioners in this petition are manufacturing HDPE woven sacks and for that purpose they have installed HOPE tape plants for manufacture of oriented tape (plastic tape). The petitioners made representations to the Assistant Collector, Central Excise, Indore Division, to the effect that the HDPE woven sacks are articles of plastic and are thus classifiable under Chapter 39 of the Central Excise Tariff Act, 1985. The contention of the petitioners was not accepted by the Assistant Collector, Central Excise, Division Indore and he passed an order dated 11-11988 wherein it was held that the HDPE strips of an apparent width of 5 mm are classifiable under sub-head No.5406.11, of Polypropylene under Chapter sub-head 5406.90 and fabrics thereof under Chapter heading 5408.00. Relevant portions of the said judgement of the Hon'ble High Court are reproduced hereunder: "16. Similarly the CEGAT Special Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... silk or other fibre, and includes fibre". Therefore, according to the above definition, any fabric or cloth or yarn or garment if made wholly or in part of cotton, wool, silk, artificial silk or other fibre shall be called textiles. The definition of 'fibre' includes the regenerated cellulose, rayon, nylon and the like. Nowhere in the aforesaid definition of 'fibre' or 'textiles' plastic has been mentioned as a commodity to be included in the definition of 'fibre' or 'textiles'. Now in Shree Radhe Industries case (supra) and the Shellya Industries case (supra) irrespective of the entries in the tariff as prevailing then, it has been held that the HDPE sacks are articles made of plastic; they are made of high density polyethylene which is a plastic raw material and it has further been held that they are not man-made, filament yarn but are articles of plastic. The circular of the Central Board of Direct Taxes dated 20-1-1985 also clearly says that the Board has decided that so long as the finished articles of plastic is made out of plastic material falling under Tariff No. 15A(i), even if at the intermediate stage articles classifiable under Item No. 15A(ii) if any tariff item eme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner as discussed above, the registration by the DGTD of the factory of the petitioner, the definition of 'textile' and 'fibre' as discussed above, the process of the manufacture of the HDPE tapes, the earlier judgments of the CEGAT approved by the Supreme Court and accepted by the Department, all clearly go to show that the HDPE bags are the bags woven by the plastic strips and they, therefore, are goods of plastic and the material used for weaving those bags being the strips of plastic made from plastic granules, the strips of plastic used for weaving the aforesaid HDPE woven sacks has to be classified as an Item under entry 39.20 of Chapter 39 and not under entry 54.06 of Chapter 54. Accordingly the entries of the finished goods have also to be made under the proper Chapter of the Tariff Act treating them as the finished goods made of plastic strips. In the result we hold that HDPE strips or tapes fall under the Heading 3920, Subheading 3920.32 of the Central Excise Tariff Act and not under heading 5406, subheading 5406.90. Similarly HDPE Sacks fall into Heading 3923, Sub-heading 3923.90...." 14. In the above decision Hon'ble High Court of Madhya Pradesh ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforementioned case and find that the issue involved in the said case is completely different from the issue in hand. The question involving Advance Ruling in the said case was whether the cotton fabrics manufactured by M/s. Ruby Mills ltd. which was coated or laminated with plastics would be covered under Chapter 52 or Heading 5903 of Chapter 59 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) or otherwise, whereas in the issue in hand, we find that the product of the applicant is not made from cotton but from plastic material i.e. HDPE Granules/HDPE tapes (which is not a textile fabric as discussed earlier) and is thereafter coated or laminated with plastics, which the applicant claims, merits classification either under Heading 5903 or Heading 5911. In view of the above, we find that the decision cited by the applicant is not applicable to the issue in hand. Even otherwise, decisions of Advance Ruling Authorities cannot be relied upon by the applicant, since, as per the provisions of Section 103 of the CGST Act, 2017, the Advance Ruling pronounced by the Advance Ruling Authority or the Appellate Authority shall be binding only on the applicant who had sought i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or included, of plastics or of other materials of headings 39.01 to 39.14. We, therefore, reach the conclusion that the product namely "Geo Membrane for Waterproof Lining fabrics(also referred to as Pond Liner) would invariably be covered under heading 3926 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). Heading 3926 as appearing in the First Schedule to the Customs Tariff Act, 1975 reads as under: 3926 OTHER ARTICLES OF PLASTICS AND ARTICLES OF OTHER MATERIALS OF HEADINGS 3901 TO 3914 3926 10 - Office or school supplies : --- Office supplies of a kind classified as stationery other than pins, clips, and writing instruments : 3926 10 11 ---- Of polyurethane foam 3926 10 19 ---- Other --- Other : 3926 10 91 ---- Of polyurethane foam 3926 10 99 ---- Other 3926 20 - Articles of apparel and clothing accessories(including gloves, mittens and mitts) : --- Gloves : 3926 20 11 ---- Disposable 3926 20 19 ---- Non-disposable í--- Aprons : 3926 20 21 ---- Of polyurethane foam 3926 20 29 ---- Other --- Plastic stickers for garments : 3926 20 31 ---- Of polyurethane foam 3926 20 39 ---- Other --- Collar stays, patties, butterfly, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence. Throughout this Schedule any reference to "plastics" also includes vulcanised fibre. The expression, however, does not apply to materials regarded as textile materials of Section XI. 2. This Chapter does not cover: (a) lubricating preparations of heading 2710 or 3403; (b) waxes of heading 2712 or 3404; (c) separate chemically defined organic compounds (Chapter 29); (d) heparin or its salts (heading 3001); (e) solutions (other than collodions) consisting of any of the products specified in headings 3901to 3913 in volatile organic solvents when the weight of the solvent exceeds 50% of the weight of the solution (heading 3208); stamping foils of heading 3212; (f) organic surface-active agents or preparation of heading 3402; (g) run gums or ester gums (heading 3806); (h) prepared additives for mineral oils (including gasoline) or for other liquids used for the same purposes as mineral oils (heading 3811); (ij) prepared hydraulic fluids based on polyglycols, silicones or other polymers of Chapter 39 (heading 3819); (k) diagnostic or laborator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r unit which predominates by weight over every other single comonomer unit. For the purposes of this Note, constituent comonomer units of polymers falling in the same heading shall be taken together. If no single comonomer unit predominates, copolymers or polymer blends, as the case may be, are to be classified in the heading which occurs last in numerical order among those which equally merit consideration. 5. Chemically modified polymers, that is those in which only appendages to the main polymer chain have been changed by chemical reaction, are to be classified in the heading appropriate to the unmodified polymer. This provision does not apply to graft copolymers. 6. In headings 3901 to 3914, the expression "primary forms" applies only to the following forms: (a) liquids and pastes, including dispersions (emulsions and suspensions) and solutions; (b) blocks of irregular shape, lumps, powders (including moulding powders), granules, flakes and similar bulk forms. 7. Heading 3915 does not apply to waste, parings and scrap of a single thermoplastic material, transformed into primary forms (headings 3901 to 3914). 8. For the purposes of heading 3917, the expression "tubes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and other protective plates. SUB-HEADING NOTES : 1. Within any one heading of this Chapter, polymers (including copolymers) and chemically modified polymers are to be classified according to the following provisions: (a) where there is a sub-heading named "Other" in the same series: (1) the designation in a sub-heading of a polymer by the prefix "poly" (for example polyethylene and polyamide -6,6) means that the constituent monomer unit or monomer units of the named polymer taken together must contribute 95% or more by weight of the total polymer content; (2) the copolymers named in sub-headings 3901 30, 3903 20, 3903 30 and 3904 30 are to be classified in those sub-headings, provided that the comonomer units of the named copolymers contribute 95% or more by weight of the total polymer content; (3) chemically modified polymer are to be classified in the sub-heading named "Other", provided that the chemically modified polymers are not more specifically covered by an other sub-heading; (4) polymers not meeting (1), (2) or (3) above, are to be classified in the subheading, among the remaining sub-headings in the series, covering polymers of that monomer unit which pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). The same reads as under: Sr.No. Chapter / Heading / Sub-heading / Tariff item Description of goods 111. 3926 PVC Belt Conveyor, Plastic Tarpaulin. It is found that there is another entry No.45 in Schedule-IV of the said notification (wherein GST rate is 28%(14% SGST + 14% CGST) which reads as under: Sr.No. Chapter / Heading / Sub-heading / Tariff item Description of goods 45. 3926 [other than 3926 40 11, 3926 90 10] Other articles of plastics and articles of other materials of headings 3901 to 3914 [other than bangles of plastic, PVC Belt Conveyor, plastic beads and plastic tarpaulins]. 20.1 Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 has been amended vide Notification No.27/2017-Central Tax(Rate) dated 22.09.2017 wherein the following amendments have been made: In Schedule-III (ii) in S. No. 111, in column (3), for the words "Plastic Tarpaulin", the words, "Plastic Tarpaulin, Medical grade sterile disposable gloves, Plastic raincoats", shall be substituted; In Schedule-IV (ii) in S. No. 45, in column (3), for the words, " plastic tarpaulins", the words "plastic tarpaulins, medical grade sterile disposable gloves, plastic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as Pond Liner) 39269099 (i) 28%(14% SGST + 14% CGST) upto 14.11.2017. (ii) 18%(9% SGST + 9% CGST) from 15.11.2017 onwards. 21. Further, we would also like to rely on the decision of the Advance Ruling Authority, Gujarat in the case of M/s. Gujarat Raffia Industries, Ahmedabad decided vide Advance Ruling No.GUJ/GAAR/R/ 87/2020 dated 17.09.2020. In the said decision, a similar product manufactured and supplied by M/s. Gujarat Raffia Industries, namely 'Pondliner', was classified under Sub-heading 39269099 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) on similar grounds. 22. In the light of the above, we rule as under : RULING The classification of the product manufactured and supplied by the applicant M/s. Ananta Synthetic Innovations, Survey No.345, Ananda Viramgam Medaadraj road, Manipur, Kadi, Mehsana-382728 (as per the First Schedule to the Customs Tariff Act, 1975(51 of 1975)) as well as the corresponding rate of GST (as per Notification No.01/2017-Central Tax(Rate)) dated 28.06.2017 (as amended from time to time) is as detailed in the table below: Sr.No. Name of the product Classification as per the First Schedule to the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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