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TMI Blog2021 (7) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... llate authority for advance ruling U/s 98(5) of the GST Ac. Section 98(5) of CGTST/SGST Act specifies that where the members of the Authority differ on any question on which the advance ruling is sought, they shall state the point or points on which they differ and make a reference to the Appellate Authority for hearing and decision on such question. The opinion of both the authorities were as follows 3.1 The CGST authority is of the view that the PVC carpet mats are classifiable under Customs Tariff Heading 5705.00.49 and is liable to GST @ 12% as per Sl. No. 146 of the Schedule II of the Notification No. 1/2017. 3.2 The SGST authority is of the view that the Floor covering of plastics are covered under HSN 3918 of Customs Tariff Act, 1975. Therefore PVC carpet Mats would fall in the Entry No. 104A of Schedule-III thereby attracting tax at the rate of 18% (28% Upto 14.11.2017 and 18% thereafter as per Sl. N o. 104A of Schedule-III to Notification No. 43/2017). 4. M/s. Soft turf had submitted that they are engaged in the manufacture and supply of Carpets and Mats also known as PVC Carpet mats (herein after referred as carpets mats). It is submitted that manufacturing of the Carp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s further submitted that the present application is maintainable under Section 97 of KSGST Act, 2017. 9. The applicant contents that the carpet mats manufactured are classifiable under Tariff Item 5705.00.49 of Customs Tariff Act, 1975 and in view of entry 146 of the Schedule-II of the Notification 01/2017 Integrated tax date 28 June 2017, the applicable rate of GST on the PVC carpet is 12%. It is also submitted that this application is preferred on the apprehension that the activity could be considered as a supply of goods under Sl. No. 43 of Schedule IV of the Notification No. 1/2017 Integrated tax |(rate) pertaining to Floor coverings made of plastic, which attracted rate of tax at the rate of 28% upto 14/11/2017 and @ 18% from 15/11/2017 as per Sl. No. 104A of Schedule-III inserted by Notification No. 43/2017-Integrated Tax (rate) dated 14/11/2017. 10. It is further submitted that the Govt. of India, on the recommendations of the Council, has vide Notification No. 1/2017-Integrated Tax (Rate), dated 28-06-2017, (as amended) notified the rate of the IGST that shall be levied on the inter-State supply of goods. As per the Notification, the applicable rate of tax that shall be l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carpet mats are chapter headings 3918 and 5705. 15.1 The entry for 5705 is being reproduced for ease of reference Chapter/Heading/Sub-heading/Tariff Item Description of goods 5705 Other carpets and other textile floor coverings, whether or not made up. - Other carpets and other textile floor coverings, whether or not made up. --- Carpets. --- Durries; Of Jute: --- Carpets, Carpeting, rugs, mats and mattings; 5705 00 42 --- Mats and Mattings including Bath Mats, where cotton predominates by weight, of handloom, cotton rugs of Handloom. 5705 00 49 --- Other 5705 00 90 --- Other 15.2 Note 1 of Chapter 57 of CTA 1975 provides the kind of products which are covered under this Heading. The said Chapter Note is reproduced below : "For the purpose of this chapter, the term 'carpet and other textile floor coverings' maeans floor coverings in which textile materials serve as the exposed of the article when in use and includes articles having the characteristics of textile floor coverings but intended for use for other purposes". 16. Further, PVC carpet mats is a mat in which the exposed surface ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant, in its entirety, whether removed in forms of big roll or in rectangular shapes is used only to cover a small part of the floor. Chapter note 1 of the Chapter 57 of the HSN explanatory notes, explain 'Carpets and other textile floor coverings' as under : 'Carpets and other textile floor covering' to be floor covering in which textile materials serve as the exposed surface of the article when in use and includes articles having the charateristics of textile floor coverings but intended for use for other purposes'. The chapter does not cover: a. Floor coverings underlays, i.e., coarse fabric or felt paddig placed in between the floor and the carpet (classified according to its constituent material). b. Linoleum and other floor coverings consisting of a coating or covering applied on a textile backing (heading 59.04) 19. In view of the above understanding of 'carpets and other textile floor coverings' it is submitted that since the textile material i.e., PVC mono filament yarn, forms the exposed surface of the final product, the product is covered under the ambit of 'carpet and other textile floor coverings'. The product of the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state the carpets come into existence is accepted, it cannot be denied that the article can be considered as other floor coverings meant for other application. We also find that in the interpretive notes for rule 3(a) in HSN, where by way of an example, it has been clarified that 'textile carpet identifiable for use in motor cars to be classified not as accessories of motor cars in heading 8708 but in heading 5703 where they are more specifically described as carpets'. Though, in common parlance the impugned product may not be considered as carpets, in view of the wordings of the chapter, the section notes, chapter notes and the explanatory notes extracted above, we are of the considered opinion that the impugned goods is correctly classifiable under chapter heading 5703.90.90 as claimed by the assessee". 22. The applicant also places reliance on CCE, Bhubaneshwar-I Vs. Champadany Industries Ltd. Reported in 2009 (241) ELT 481 (SC), wherein the Hon'ble court considered the classification of 'Jute Carpet' under Chapter 57 and also made a finding regarding scheme of classification under Chapter 57. The relevant portion of the decision is extracted below for ready refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnur. The applicant also relies on explanations under Chapter 57 of Customs Tariff Act, 1975. It also contended that the dealers have been paying Tax under HSN 5705 at applicable rate @ 12%. 25. DISCUSSION & FINDINGS 25.1 We have through the facts of the case, in the application for advance ruling filed by M/s. Soft Turf and various submissions made by the applicant in course of proceedings before the lower authority and before us including during the course of personal hearings, the manufacturing process of the commodity, samples of the commodity and other evidences on record. The issues for determination before us are as follows : 1. Whether the impugned goods viz. PVC Carpet mats are classifiable under Tariff Item 5705 00 49 as claimed by the applicant and held by the CGST Member or under Tariff Item 3918 as held by the SGST Member; and 2. Consequently whether the said impugned goods are chargeable to GST @ 12% in terms of entry 146 of Schedule-II of the Notification No. 1/2017-Integrated Tax (rate) dated 28.06.2017 or @ 28% in terms of Entry No. 43 of Schedule-IV of Notification No. 1/2017-Integrated Tax (rate) dated 28.06.2017 till 13.11.2017 and thereafter @ 18% in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a PVC backing as the base, and the product is essentially for use as floor covering. These facts including that the said goods are predominantly made of Poly Vinyl Chloride, are not in dispute. 25.4 The two competing entries in the Tariff which contain description of the goods covered therein and the description emerging from the respective Notification 1/2017-Integrated Tax (rate) or 43/2017-Integrated Tax (rate) are as under : 25.4.1 3918 : "Floor Coverings of Plastics, whether or not self-adhesive, in rolls or in form of tiles; wall of ceiling coverings of plastics" The relevant extract of chapter heading 3918 in Customs Tariff is as follow : Tariff Item Description of goods Unit (1) (2) (3) 3918 Floor covering of plastics, whether or not self adhesive, in rolls or in the form of tiles: wall or ceiling covering of plastics, as defined in note 9 to this chapter 3918.10 Of polymers of vinyl chloride 3918.10.10 Wall or ceiling covering combined with knitted or woven fabrics, non-woven or felts Kg 3918.10.90 Other Kg 3918.90 Of other plastics Kg 3918.90.10 Floor coverings of linoxyne Kg 3918.90.20 Wall or ceiling coverings combined with kni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods under any tariff item/sub-heading/heading/chapter shall be done using the General rules of interpretation of the First Schedule of the Customs Tariff Act, 1975 including the Section and Chapter Notes and the General Explanatory Notes to the HSN of the First Schedule of the CTA, 1975. 25.6 We note that Textile & Textile articles are covered by various chapters under Section XI, while Plastics and Plastic articles fall under Chapter 39 of Section VII. Hence, respective section/chapter notes and HSN Explanatory notes relating thereto would be applicable. The applicant has claimed that their product being in the nature of textiles is excluded from chapter 39 of Tariff by virtue of Chapter note 2(p) of chapter 39 and the same is covered udder Chapter 57 by virtue of chapter note 1 to Section XI. 25.7 The SGST Advance Ruling member has held that the said goods is appropriately classifiable under Tariff Item 3918 as the same are made up of PVC, which is nothing but Plastics. However, the CGST members has held the same classifiable under Tariff Item 5705 as the same is made up of textiles fibres/non-woven monofilaments of PVC. 25.8 In this regard, it is important to appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. 25.12 We further note that the General notes to Chapter 39 in HSN about Plastics and Textile combinations, reads as under : "Plastics and Textile Combinations Wall or ceiling coverings which comply with Note 9 to this chapter are classified in heading 39.18. Otherwise, the classification of plastics and Textile combinations is essentially governed by Note 1(h) to Section XI, Note 3 to Chapter 56 and Note 2 to Chapter 59. The following products are also covered by this Chapter : (a) Felt, impregnated, coated, covered or laminated with plastics, containing 50% or less by weight of textile material or felt completely embedded in plastics; (b) Textile fabrics and non-wovens, either completely embedded in plastics or entirely coated or covered on both sides with such material, provided that such coating or covering can be seen with the naked eye with no account being taken of any resulting change of colour. (c) Textile fabrics, impregnated, coated covered or laminated with plastics, which cannot, without fracturing be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15°C and 30°C; (d) Plates, sheets and strips of cellular plastics combine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pter the expression "textile fabrics" applies only to the woven fabrics of Chapter 50 to 55 and headings 58.03 and 58.06, the briads and ornamental trimmings in the piece of heading 58.08 and the knitted or crocheted fabrics of headings 60.02 to 60.06. 2. Heading 59.03 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 or 60); for the purpose of this provision, no account should be taken of any resulting change of colour; As chapter 59 covers woven fabrics only, it does not apply to the product under discussion. 25.14 From the above discussion, it can be concluded that though the exposed surface are of non-woven materials, same are excluded from the scope of Textile & Textiles articles. Hence the contention for classification in Chapter 57 as Carpets/mats on the ground that the exposed surface of the mat is textiles fails. On the other hand, Chapter 39 includes even textile/plastic combinations also, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-woven structures as well as lace and crochet goods. 3. Descriptive of processes, organizations, personnel associated with the manufacture of products from fibres or yarns. Textile Material- An inclusive term of fibres, yarns, fabrics and products that retain relatively the same tensile strength, flexibility and properties of the original fibres. From the above definitions, it is inferred that textile refers to fabric of any nature and textile material includes fibre, filaments and yarns which are primarily used to manufacture textiles, or fabric. 25.17 Coming to the goods in question, the exposed surface of the article does not contain fabric or fibres, filaments or yarns, but is a web of PVC made from a moulding process in which T-shaped monofilaments result in the intermediate process. It is not the case of the appellants that they manufactured the non-woven product (PVC web) by use of monofilament yarns. Instead, the monofilament, if any, airising in course of manufacturing as per applicant's contention is coming into existence at intermediate stage only. There are no identifiable fibres, filaments or yarns in the exposed surface of their product but the web like structure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause provided under Section XI vide Note 1(h). But this claim is against their manufacturing process which states that "under stages 2, the web formed in Stage 1 his impregnated with a lamination of clear coat of liquid PVC". 25.21 As regards the argument of the appellant that if product equally merits classification under 2 difference chapter headings, as per interpretative rules, the chapter occurring later will apply, we observe that there is no much case of merit classification of the said goods under 2 different chapter headings equally. Instead, the said goods are specifically classifiable under 3918 as PVC floor covering, and invoking Rule 3 is not necessary when classification can be decided under Rule 1 itself. 25.22 In view of the above discussion, we hold that the PVC Mats manufactured by the appellant, a sample of which was produced before us, are specifically covered under HSN 3918 as Floor Coverings of PVC in terms of Rule 1 of the Rules of Interpretation of Customs Tariff read with Note 1(h) to Section XI and Note` to Chapter 57. Accordingly, we pass the following order : Order No. AAR/11/20 DATED 01-03-2021 We hold that the impugned goods viz. PVC carpet Mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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